Smart Meter — Sibling of Enron

by Robert Schmidt, November 17, 2010

Did you ever wonder what that smart meter that your gas and electric company wants to install on your house is going to cost? Maybe you are off the grid with your own solar panels and you think, “I won’t have to pay for that.” Sorry, there will be a bill and almost everyone will be on the hook to pay. Utilities aren’t telling us us much about this, and for good reason. Their fear is that if we learn the true cost we might just decide we don’t want new smart meters and we would like to keep our old reli­able inexpensive one, thank you. So what is the sticker price for smart meter technology?

Let’s take the State of Maryland as an example. In the summer of 2009 the department of Energy (DOE) offered Baltimore Gas and Electric (BGE) $200 million to jumpstart a smart meter program. That works out to about $167 per customer. The fine print in this deal is really important. In order to get this money, State regu­lators and BGE had to agree to charge their ratepayers all remaining costs. Gas and electric customers would be forced to pay a monthly surcharge that would increase over time. There are additional hidden costs as well. Smart meters will allow utilities to adjust energy costs by the minute. This is called “dynamic pricing.” At times your electric rate may zoom to over $1 per kilowatt-hour. This means that even though you and your neigh­bor use the same amount of energy in a month, one of you might have a much higher bill. When bugs are found in smart meter software there will be an additional charge for the fix, and of course, ongoing charges will be levied to maintain the vast new network of hardware and communications.

Given all this, it is not unreasonable to expect that over time ratepayers will be charged more than $1000 for their smart meters. For this high price you might think that customers would get something substantial in return.

Unfortunately, there are only a few crumbs on the con­sumer’s plate. A joint report issued by Accenture and The World Economic Forum finds, “…a lack of clear consumer benefits.” Who then stands to harvest this vast tidal wave of booty? Most of it is destined to go to a select group of hardware, software and communications providers.

Beside this high cost, there are security concerns as well. The National Institute of Standards and Technol­ogy has identified 189 security requirements that are of concern. Smart meters and the data they generate threaten the privacy of the homeowner, the security of businesses, and ultimately our national security. Our pre­sent system is secure, paid for, and robust enough to withstand almost any attack. Smart meter technology, however, would open a new door to malicious hackers and foreign terrorists. Homeowners do not like the idea of their utility company having the ability set their ther­mostats or switch their appliances on and off. They see this as an unwelcome invasion of their homes. Busi­nessmen see this as a poorly conceived and wasteful measure. They worry about the costs associated with the scrapping of millions of functioning electromechanical meters with many years of useful life left. Which landfill will they wind up in?

Smart meters can be helpful in some instances, but only if used on a limited and voluntary basis by indus­tries that consume large amounts of electricity or gas. This is where we get the most return for the smallest expenditure and at the least risk. Installing them every­where, on the other hand, gives stakeholders the least return for the most investment and that is definitely a poor business decision for ratepayers.

In summary, the widespread installation of smart meters and their associated technology is unwise. It is neither green nor financially sound. The Hawaii Public Utilities Commission has pulled the plug on that state’s smart meter program saying that it did not appear to be cost effective. We should pull that plug too. If you are a business or homeowner you can refuse to allow the installation of smart meter equipment on your property. If it has been installed, you can contact your utility and insist that they remove it and reinstall the electrome­chanical meter. Consumers need full disclosure of all costs, benefits, risks and liabilities. Once they have this knowledge, they can drag this monster out into the light and deal with it in the appropriate way.

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