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Investigative Report

Why Smart Meters Might Be a Dumb Idea

Smart meters are supposed to help to give you more control over your energy use. But many experts doubt that you’ll ever see the electricity and cost savings that electric companies and smart-meter manufacturers tout.

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If your house doesn’t have a smart meter that measures the amount of electricity that you use, there’s a good chance that your electric company will install one in the years ahead.

Although it might sound appealing to have a “smart” digital device instead of your old analog meter, you’d better curb your enthusiasm and get a firm grip on your wallet. More than half of all homes in the United States will have smart meters within the next 10 years, experts say.

Smart meters are designed to give consumers and electric companies more-accurate and immediate information about your electricity use. Think of a smart meter as a communications link between your home and the electric company. That two-way link will give you and the electric company the ability to share real-time data about the amount of electricity that you use and when you use it. Knowing this allows you to better control your power use and save money on your monthly electric bill. But based on our investigation, it’s clear that smart meters won’t soon deliver the promised benefits, particularly the energy and pocketbook savings that are being touted by practically everyone who’s connected to smart meters.

We interviewed 35 experts, including smart-grid- and utility-industry executives, government regulators and consumer advocates. We also reviewed thousands of pages of government documents, filings with state utility commissions, materials from smart-meter-makers, and reports that were produced by the emerging smart-grid industry. A few experts suggest that smart-meter conversion represents little more than a boondoggle that is being foisted on consumers by the politically influential companies that make the hardware and software that are required for the smart-meter conversion. And based on our investigation, it’s difficult to disagree. From a consumer’s perspective, the potential negative consequences outweigh the benefits in three critical areas:

Cost: Although the smart-meter industry receives billions of dollars in government subsidies that are paid for by taxpayers, you still face fees on your monthly electric bill that cover the electric companies’ cost of installing the smart meter. In addition, you’ll eventually be encouraged to fork over hundreds of dollars to purchase in-home equipment that works with your smart meter and is designed to help you to monitor and control just how much energy that you use.

Rate Changes: Electric companies will change the way that they charge you for electricity after smart meters become the standard, because it’s the best incentive that the industry has to get you to buy all of that monitoring equipment and thus get the most out of the smart meter. Many consumer advocates fear that you’ll be charged higher rates during peak-use times. That might hurt particularly those who don’t shell out money for monitoring devices, because they won’t be able to control their electricity use as precisely as those who have the equipment.

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Energy Savings: Pilot projects where smart-meter technology is in place suggest that the smart-meter industry and electric companies overestimate how much that your electricity use will decrease unless you are forced to pay more during peak periods and unless you commit to using all of the appropriate equipment.

What’s discouraging about the all-but-mandatory dynamics of the smart-meter transition is that it’s appealing only if you’re willing to pay a lot of money to save a little electricity. “They should not install smart meters and the smart grid,” says Nancy Brockway, who is an attorney who specializes in electric-utility regulation and who served on New Hampshire Public Utilities Commission from 1998 to 2003. “These [changes] are very expensive, and the benefits have not yet been proven enough to cover the cost.”

FULL OF ENERGY. To the emerging smart-grid industry, smart meters and the ancillary equipment that is designed to communicate with them—smart appliances, smart thermostats and electricity-monitoring-and-control systems that you can set up at home or remotely over the Internet—represent a new market that is worth hundreds of billions of dollars in the years ahead.

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