“Smart” meters are fast becoming all the rage in tracking electricity use for residential consumers. Smart meters are able to track electricity flow into a home in real time, with rates typically set higher during peak demand hours. Strongly backed by utility companies, smart meters allow new alternatives to the traditional billing system which incorporates an average monthly rate.

Utility companies expect this new technology and time-based rates to help avoid blackouts, lessen greenhouse gas emissions, and defer the need to construct new power plants. These meters no longer simply record electrical flow and wait for the meter reader’s monthly visit. Now, the meter itself can communicate with the power company AND the consumer.

The program, expected to become dominant but still in its pilot stage, will hopefully save electrical grid customers significant amounts of money. So far, on the whole, things are looking positively in that direction. However, it is a two way street. Homeowners cannot just sign up for a smart meter and then go about business as usual–indeed, this would likely only raise rates. That majority which has saved money in the pilot programs took important steps to curb their own energy use, in general and especially during peak hours when rates are more expensive.

What the meters do is give the homeowner a real time market price and/or present rate by which they can decide to do the laundry later or shut off the pool pump until night falls. Critics of smart meters contend that such a system cannot be for everyone. In one pilot program in Pennsylvania, about 25% of participants saw their bills rise on average over three years–a result the utility companies were blamed on a lack of consumer knowledge (i.e., consumers did not do their part to conserve during peak hours). In another program in Illinois, the average participant paid 7 percent higher on their bills than they would have with an average monthly rate. Again this was blamed on an especially dry summer and Hurricane Katrina (the program took place in 2005).

What all this means is that, while smart meters may in fact save money overall, they can open the consumer up to volatile energy markets and complicate their electric bills. But is that a bad thing? It’s arguable. How often do many of us actually look at our power meter? Perhaps a more detailed, itemized look at our personal energy usage would be a good thing–an incentive for change and conservation. That is certainly what utility companies are positing. Yet even these companies admit that a smart meter might not be for everyone, especially those who do not work during the day when demand is highest, do not have electric heat, or have a medical condition that would make it difficult to regulate personal electricity consumption.

As of yet there is no sign that smart meters will become mandatory and some consumer advocates are pushing for cost benefit guarantees from utilities. Others warn that power plant owners could manipulate supply to keep prices high and inflate their own profits in a highly fluctuating market. Nonetheless, the majority of participants in the smart meter pilot programs have saved money. It is as yet unclear to me what effect smart meters will have on solar electric system users, especially in net metering states. It would appear that nothing but good could come from higher rates during the day when a solar system is likely pumping electricity back into the grid at a higher buyback price than during the night when it will draw power from the grid, but at a lower cost. Regardless, a solar customer is a prime candidate to save a good grip of cash with a smart meter by paying lower prices at night, even if excess energy collected during the day is not sold back to the utility at the higher cost.

Link: Smart Power Meters Track Electricity Usage Source