The other side of smart meter talk

As featured on TM Forum's the Insider blog

Despite all we read and hear about the benefits of smart meters there is a growing public movement against them in some countries. That may sound surprising considering what we are told about better management and distribution of power generation via the smart grid, home power management through dynamic tariffs and the promise of reduced bills for homes that generate their own power and feed back into the grid.

Governments promoting the rollout of smart meters are being asked who is actually paying for them and what real benefits they bring consumers. The sceptics are quick to point out that the public always ends up paying somehow, and do they really want to have to check their meters to decide when to do the washing, or take a shower, or even cook dinner, simply to benefit from lower off-peak prices. As if we don’t have enough to worry about with modern living. What’s wrong with just have two simple tariffs that can already be determined by historic peak usage times.

In fact, the increase in ”peak demand” remains the industry catch cry to rationalise rampant spending, even though peak demand in many countries, has actually been falling for three years. As reported in one revealing newspaper story, as the myth of peak demand is now harder to propagate, industry is pushing for smart meters. The smart meter is the next big ruse.

The same story claims that smart meters and ‘flexible pricing’ merely shift the business risk from the electricity company to the consumer. And then, as if to add insult to mobile operators, the statement that “like mobile phone bills, their sheer complexity will enable the promoter to game (take advantage of) the customer.”

The article also claims there is little evidence yet that smart meters lead to lower energy bills. Whilst we don’t know how well they work, we do know that they are expensive - and that expense is borne by the consumer. “For industry, smart meters promise enormous returns - and not just via tricky pricing opportunities and the transfer of risk to the customer. As it is likely the devices will spur a fall in consumption at times of peak demand, the power companies can expect a rise in profit margins.”

Strong arguments? Maybe not, but, just like most other public services, questions are being asked about the efficiency of the power industry. At times of peak demand, not always planned, where power generators have to be brought on line, or ‘fired up’, the cost of a kilowatt hour skyrockets and distributors are forced to pay the extra prices, often via a spot-market system. But it’s the end user that ends up paying. The electricity retailers benefit by reduced costs (meters are read automatically), remote control over supply to a property, faster and more accurate billing and the subsequent reduction of bad debt.

While not ubiquitous, smart meter opt-out programs are gathering momentum across the US creating more consumer choice but also bringing new challenges for utilities and regulators. For a variety of reasons, including health and privacy concerns, a small percentage of customers remain unconvinced or hesitant about having a smart meter in their home. Accommodating this group creates its own set of challenges.

Perhaps ”demand management” initiatives and energy efficiency are the answers to lower power bills, not smart meters. The technology required for successful demand response already exists in today’s marketplace, and many agree that the potential for financial savings exists as well. Electricity and water are commodities of everyday life and increasing their prices does not lead to lower demand. Educating consumers and more energy efficient appliances will achieve this, not costly smart meter hardware that has to be manufactured, distributed and installed without a clear or yet proven return on investment.

Views like these may temper or even dissuade CSPs from wanting to be end-to-end suppliers of smart meter technology, but it should not deter them from being an integral part of the ecosystem in managing and providing the communications links for them.