Growing field of ‘smart grid’ technology faces opposition over pricing, privacy

November 12, 2011

Ralph Izzo, the chief executive of the New Jersey’s Public Service Electric and Gas Co., isn’t your average utility executive.

At Columbia University, he studied mechanical engineering as an undergraduate and later earned a doctorate in applied physics. At the Princeton Plasma Physics Laboratory, he did numerical simulations of fusion experiments and published or presented 35 papers on something called “magnetohydrodynamic modeling.”

So it’s not surprising he would say that he “fell in love” in 1998 with the gadgetry commonly known as “smart grid” technology — as Izzo puts it, “customer communication technology, real-time price signals and fantastic sensory capability.”

But 13 years later, Izzo says, “I have only now come to realize that what I really wish my customers would do would be to use more caulking.”

The smart grid has been one of the most talked-about issues in energy policy. Experts — and manufacturers of equipment and software — have promoted the idea that “smart meters” could enable utilities to flip household appliances on and off to ease the load of summertime electricity demand and that the devices would help homeowners manage their refrigerators, lights and air conditioning, even controlling them remotely with cellphones, laptops or tablets. Smart grid technology is also seen as critical for integrating renewable energy sources onto grids designed to carry power one way only, from big clunky generating stations to the home.

All this depends on software, networking devices and smart meters, tens of millions of which have been installed across the country. If the grid is modern society’s central nervous system, then the smart meter could become the brains of the operation.

Yet many utilities have come to the conclusion Izzo has: You can install smart meters in homes, but the homes probably still have dumb appliances and homeowners who are too busy to be bothered. At least for now, simple measures such as caulking might save more energy.

“Somehow all of us collectively decided to skip the low-hanging fruit and go for the top of the tree,” he said at a recent energy conference sponsored by The Washington Post.

Nonetheless, entire industries have sprouted up around the idea of a “smarter” electricity grid, one in which people would know more about their consumption, utilities would gain more power over the places hogging too much electricity at peak hours, and broken transmission equipment could be isolated and repaired more quickly.

Utilities say that more sophisticated meters will let them know which homes lose electricity in a storm without having to send a truck. That could speed the restoration of power.

“Empowering consumers with information about how much energy they use and when is huge and gives consumers, for the first time, the opportunity to adjust their own energy usage and be a lot more active in how they use energy,” said Lena Hansen, a principal at the Rocky Mountain Institute, a Colorado-based nonprofit think tank.

Improving the grid wouldn’t take much, given its condition. As Bob Shapard, chief executive of the Texas utility Oncor Electric Delivery, says, most meters being replaced date from the 1960s — “older technology than rotary phones.”

This problem has drawn the attention of some of the nation’s largest manufacturers, including Siemens, which does everything from automating electrical substations to writing software to manage meter information; Oracle, which makes grid management software; Echelon, Landis & Gyr and Itron, manufacturers of meters; and Cisco Systems and Silver Spring Networks, which provide communication links.

Other companies are working farther from the home meter, doing things such as measuring more precisely how much energy a line can hold or diagnosing and isolating disruptions so that wide-scale blackouts can be avoided and reliability improved.

“Over the last 30 to 40 years, most of our focus has been on generation,” said James W. Morozzi, president the Gridwise Alliance, a trade association devoted to transforming the grid.

But with greater attention to greenhouse gas emissions, that’s changing.

Doing something to limit electricity consumption is crucial. The country’s 142 million customers consume 4,200 billion kilowatt hours a year, and those numbers are expected to increase to 160 million customers and 5,200 billion kilowatt hours by 2020, Morozzi says. “Saving even 1 percent is important.”

A hard sell

Connecting with customers, however, hasn’t been easy.

In Bakersfield, Calif., in the summer of 2009, homeowners rebelled when the utility PG&E installed smart meters. It didn’t help that PG&E raised rates, or that Bakersfield had an unusually hot summer. Customers accused the utility of using inaccurate meters, though an independent audit later said the new meters were more accurate than the old ones.

Smart meter foes — they have a Web site, StopSmartMeters.org — say that 47 cities and counties have adopted resolutions opposing installation of the devices. The California Public Utilities Commission, which, unlike those towns, has authority over meter installations, has ordered PG&E to allow customers to opt out.

“After Bakersfield, we totally changed the way we roll out a new technology in a community,” PG&E spokesman Greg Snapper said. First, the utility does a lot more explaining about how the meters work. It now has installed 8.7 million new meters, though it has not fully utilized them.

In Nevada, the state Public Utilities Commission is conducting an investigation of health complaints people have tried to link to the meters, though the meters’ radio frequency emissions are lower than cellphones or many other appliances.

In Boulder, Colo., voters upset about Xcel Energy’s “SmartGridCity” plan passed a measure Tuesday that would allow the city to take over the local utility.

In Maryland and Illinois, plans to install smart meters have triggered fights with AARP, which has argued that the meters will come with new pricing plans that will hurt the poor and elderly.

“People like us can turn down the air conditioning when we go to the office,” said Scott Musser, AARP’s associate state director for outreach and advocacy in Illinois. “But those who are home could be penalized by paying the peak rates at peak times. ”

In Maryland, installation of the meters was blocked.

In Illinois, the governor, backed by AARP, vetoed a measure that would let the state’s two big utilities charge customers enough to cover $2.6 billion of investments — half of it for the “smart grid” — over the next 10 years. But the legislature overrode the veto.

The meters “could be cool and fancy, but nobody knows what benefit may or may not come of it,” Musser said.

There is little trust or affection between homeowners and their utilities, and that becomes clear when questions about security crop up. The utilities will gain data that essentially tell them when people leave home — for instance, when the electric garage door opens or the heat is turned down. Consumer groups worry that hackers or corrupt utility workers could use the information to break into homes.

Assessing the benefits

Gridwise Alliance’s Morozzi says that utilities “have to engage consumers and make clear that there are benefits.”

What are those benefits?

For utilities, they are clear. The meter reader will become extinct. Diagnostics done by trucks will be done from a central office. And if homes and businesses cut energy use in peak demand hours, utilities can avoid building power plants that will operate only a few hours a day for just a few days a year. In California, for example, peak usage can be two-thirds higher than the demand at other times of the day. With climate change, the differential could become even more extreme.

For homeowners to benefit, they need to figure out how to cut consumption, identifying electricity guzzlers and paying attention to rates that will vary during the day. Oncor’s Shapard says that 1,000 consumers who took part in a smart meter pilot project in north Texas, featuring a contest with prizes for winners, cut consumption by 8 to 12 percent. Most of that, however, was done by 50 homeowners, who averaged a 24 percent drop in consumption.

Gregory Kats, who manages investment funds, sits on the board of a software company called Tendril Networks, which has agreements with 100,000 homes. In return for financial compensation, the homeowners allow utilities, for example, to lower their air conditioning on hot summer days.

Information is key, say advocates of smart meters.

Itron President Philip Mezey says that presentation matters. His company, working with Cisco, has adopted an open architecture, anticipating that people will come up with new applications and gadgets for controlling electricity use at home. “We need to engage with the larger community of innovation,” he says.

Without smart meters, Shapard says, using electricity and getting monthly bills is “like going to the grocery store and throwing bacon, eggs and cheese in the basket without knowing the price, walking out and getting the bill sent to them later.”

Steven Mufson covers energy and other financial news.
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