Why Smart Meters Might Be a Dumb Idea (cont.)

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In helping to create the smart-meter industry, politicians from both parties have done what’s best for the industry rather than for consumers. The smart-meter industry persuaded congressional Democrats and Republicans to back the introduction of smart meters in both the 2005 and 2007 energy acts, which were signed into law by Republican President George W. Bush. Then, when Congress included DOE grant money to help to pay for smart meters in the 2009 American Recovery and Reinvestment Act (ARRA), Democratic President Barack Obama signed it into law. All that action doesn’t even include the tax credits that lawmakers have passed for the manufacturers of smart-meter-related devices.

Sen. Maria Cantwell, D-Wash., says that without smart-meter technology, the nation would need to spend tens of billions of dollars to build more power plants and infrastructure. But the smart-meter movement also will bring a lot of jobs to her home state. Itron, which stands to make a financial killing in the smart-grid transition, is based in Washington. Itron got $2.3 billion in advanced-energy manufacturing tax credits under ARRA for expanding its meter factories, under a provision that was championed by Cantwell. So it’s no surprise that Cantwell tells Consumers Digest that time-of-use rates when coupled with smart-meter technology will reduce costs for consumers.

But already there’s mounting evidence that smart-meter systems might not significantly curtail electricity use. As the disappointing energy-savings data that were generated from some of the first areas to use smart meters illustrate, there’s plenty of reason to wonder whether consumers will ever see the energy and cost savings that are being promised by political cheerleaders, industry proponents and many state regulators.

So far, smart-meter systems have produced little energy savings except in small and carefully controlled projects in which consumers have basically been spoon-fed on how to realize the maximum benefits. These projects have included time-of-use pricing and often include home-area networks that allow participants to monitor and control electricity use.

For instance, Baltimore Gas and Electric (BGE) outfitted 1,000 of its customers with smart meters in 2008 and found that customers cut energy use by 20 percent to 40 percent on peak-power-demand days during the summer. The reduction in electricity use amounted to energy-bill savings that totaled about $100 over roughly 3 months, according to Mark Case, who is senior vice president of strategy and regulatory affairs for BGE. Those savings sound impressive, but we believe that it’s unrealistic to assume that most consumers will realize anything close to those savings even if they comply fully with smart-meter adoption, because the pilot project has spoon-fed its users on how to achieve the maximum benefits.

There have been other pilot programs in which small groups of customers received smart meters, home-area monitoring and control networks, price signals from utilities as to the varying cost of power, and training and outreach about how to use the systems. In those cases, electric companies have found that their customers trim energy use by around 15 percent during peak periods, according to PG&E spokesperson Paul Moreno. Savings might amount to just $100 per year on a PG&E residential electricity bill, according to Moreno.

Of course, $100 is nothing to sneeze at. But we crunched the numbers, and when you consider all of the costs that consumers will have to pay for equipment and services, if you save $100 per year, it’ll be at least 23 years before you’ll get a return on your investment.

But what if you decide to fork out even more money—figure at least $2,000 each—to buy new smart appliances? And don’t forget that you’ll continue to pay—directly and indirectly—for the inevitable hardware and software upgrades for smart-meter systems.

Let’s be honest: Even if smart meters help you to save on electricity use, it’s difficult to imagine how most consumers would save any money in the long run.

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