Why smart meters aren’t so smart

The meters aren’t enough to make our busy selves pay attention to water and energy use. But we will pay attention if given a reason that’s worth our time.


I live on a farm where it’s a 12-mile round trip just to get a dozen eggs. A trip to see “Ant-Man” will be 32 miles. My girlfriend lives in Milwaukee; that’s 162 miles back and forth. No surprise, then, that I fill my gas tank a few times a week.

More to the point, however, I know exactly how much I spend to fill the tank each and every time I do since the gas pump tells me right down to the one-one thousandth of a percent per gallon. It’s all right there in front of me. Today, for example, cost $22.95 for 7.501 gallons of gas at $3.059 per gallon.

As such, I’m prone to lament the uptick in price per gallon, roll in the money saved when the price drops, and assume the conspiratorial worst when the price of a barrel of crude falls to $40 while gasoline climbs well past its typical high summer price tag.

Can I say the same when it comes to how much other types of energy I consume? Not me. Take electricity, which provides me with more than just juice to the outlets. My stove, dryer and water heater are all powered by electricity. Even so, there’s an electric meter spinning behind my house that doesn’t get any of my attention. I can’t remember the last time I’ve even looked at it.

Of course, my electric meter is a “dumb” meter. Quite unlike the "smart" meters I’ve been reading about lately. They’re smart because they can help homeowners determine how much energy they are consuming. Smart because all those digital zeros and ones hold out the promise to help us save on energy and water.

Smart meters, however, aren’t so smart after all.

Water meters

Let’s take a look at smart water meters first – that is, if you can find any to look at. They remain a rarity in the U.S. According to IHS Inc., an international market research firm, smart meters comprise less than 20 percent of the 100 million water meters in use throughout the country.

But, expect more and more smart meters to replace their older, dumber cousins. Take a look at what’s been happening in San Francisco, which has spent the past five years on a $60 million program to replace 20-year-old meters that had about reached their useful lives with 178,000 smart meters.

Other parched California cities are joining in. Sacramento used to charge a flat rate up until 10 years ago, but has recently started installing 40,000 smart meters out of roughly 74,000 not-so-smart meters installed when the city started to meter water. Meanwhile, San Diego is in the middle of a $6 million test program with 12,000 smart meters.

But will that be enough to get people to cut back on water use? Well, metering water is certainly better than not metering water. Particularly, if we single out California where the drought is measured in years rather than one hot summer, and the governor wants everyone to cut back water use by 25 percent from 2013 levels by next February.

For example, early smart meter data from the East Bay Municipal Water District, which provides water and sewer service for 1.4 million customers in San Francisco, uncovered that a quarter of its single-family homeowners already had some sort of leak in their plumbing systems.

‘Rational inattentiveness’

Discovering a leak and fixing it is an easy way to save plenty of water. It gets our attention. Right away. However, from what I’ve read it will take much more than a smart meter to make many of us curtail our energy and water use day to day. The problem is what economists dub “rational inattentiveness,” which we can boil down to a simple maxim: Attention, like any natural resource, is a scarce resource and one that must be consumed wisely.

To be sure, there’s a lot more to a smart meter campaign than just the smart meters themselves. For example, California’s Pacific Gas & Electric (PG&E) provides a website where homeowners can see their smart meter data and compare it with neighboring households. However, PG&E shows the main weakness about such plans: They don’t provide energy use in real time. It might lag by a half of a day or more.

Chances are most of us won’t pay attention if we don’t know what something costs right now. So, what could get our attention?

More research in this area has been conducted on smart electric meters, if only because they are much more prevalent than smart water meters. According to the Edison Foundation’s Institute for Electric Innovation, 43 percent of all U.S. homes have a smart meter for electricity – some 50 million meters.

In my case, for example, it’s not that I don’t want to cut back on my electricity use, but what information do I have to act on? Do I know how much electricity I’m using in the middle of the month well before my bill comes? Not really. I could read the meter, but what does a kilowatt-hour cost me? Sure, I suppose I could figure it out. According to my power company, my TV needs around a half of a kilowatt-hour to run for an hour. I’m already confused just reading the sentence I wrote. None of this ciphering is easy – certainly not like seeing how much I spend on gasoline to fill my tank.

I’m not stupid, but I’m busy. We all are. And so, we pay more attention to some things and less to others. But, all of us will pay attention if given a reason, a reason that is worth our time.

Fill ‘er up

The information we glean at the gas station might provide us that reason.

Would it help, say, if instead of outside the house a meter of sorts was inside the house? And instead of telling me how many kilowatt-hours I was using, would it help if that was displayed in dollars?

I’ve read some research into the success of providing such real-time information and how it can change everyday energy use. An article from The Washington Post published in January related a case study that examined the energy habits of more than 430 Connecticut households.

The homes were randomly put into one of three groups:

All homes received a smart meter that provided electricity use every 15 minutes. For the control group, that’s all the information they got.

One other group, meanwhile, received news in advance about so-called “dynamic pricing” as to when the utility would charge much more per kilowatt-hour.

And the last group also received the news of price hikes, but something else – an in-home display that tabulated energy use and real dollars – sort of like a gas pump.

The result of the study? The group that knew in advance of price hikes did cut back their energy use. But, the group that had the news and the in-home displays cut back the most – as much as 14 percent. The researchers concluded that those with in-home displays were able to experiment and consider how changes in energy consumption would lead to real savings.

While such a setup isn’t common in the U.S., it’s a different matter across the pond. Utilities are providing 53 million smart gas and electricity meters throughout Britain between now and 2020. According to the British Department of Energy and Climate Change, every single energy user will be offered an in-home display.

So, in order for smart meters to work effectively, the Connecticut study underscores the additional need for not only real-time displays, but also this notion of dynamic pricing.

Variable pricing

It’s a mistake to think that the data for smart meters is just a one-way street toward the consumer. The data is also going back to the utilities, which can help them better forecast demand, build a much smarter grid and move into the direction of pricing that – call it what you want – dynamic, smart, variable – could end up costing us more in some situations rather than the one rate most homeowners are used to.

The Washington Post Science and Environment reporter Chris Mooney put it best when he used the example of a well-known app.

“Smart pricing is based on the observation that consumers generally pay a fixed amount per hour for electricity, even as wholesale prices swing all over the place as demand waxes and wanes,” he wrote. “If electricity price reflected the actual cost of power, overall bills would do down because utilities could reduce their generating costs – but people would also pay more in situations of extreme demand, much like with surge pricing on the Uber app.”

Of course, not many of us are on anything other than a flat rate plan for electricity, but the Connecticut study isn’t just research. Mooney points out a program from the Oklahoma Gas and Electric Co. that combined smart thermostats with variable pricing and showed that customers saved almost $200 a year on average.

So, we might save money or we might not, but we’ll need to know to make a decision. Talk about the best way of getting our attention. 

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