Energy consultant Craig Miller, who spends much of his time
working to make the smart grid a reality, got a jolt when he
mentioned his work to a new acquaintance. The man, who
happened to be a lineman at a Pennsylvania utility,
responded earnestly: "Smart meters are a plot by Obama to
spy on us."
The encounter was a disheartening sign of the challenge
ahead for proponents of the smart grid, who say that the
technology can help the industry meet power demand, fix
problems faster, and help consumers lower their electricity
bills. Advocates of such a 21st-century grid are learning
that they need to take privacy concerns seriously. Though
smart meters are not, in fact, a domestic espionage scheme,
they do raise questions: In a world where households start
talking with the power grid, what exactly will be revealed?
And who will be listening? (See related quiz: "What You
Don't Know About Electricity.")
The term "smart grid" encompasses an array of technologies
that can be implemented at various points along the line of
transmission from power plant to electricity user, but for
many consumers, it is symbolized by one thing: the smart
meter. A majority of U.S. states have begun deploying the
wireless meters, which can send electricity usage
information from a household back to the utility remotely at
frequent intervals. According to the U.S. Energy Information
Administration, more than 36 million smart meters were
installed across the nation as of August 2012, covering
about a quarter of all electrical customers. In the European
Union, only 10 percent of households have smart meters but
they are being deployed rapidly to meet an EU mandate that
the technology reach 80 percent of households by 2020.
Because smart meters can provide real-time readings of
household energy use instead of the familiar monthly figures
most customers now see in their electric bills, the devices
offer a new opportunity for consumers to learn more about
their own power use and save money. But the ability to track
a household's energy use multiple times a day also presents
some unsettling possibilities. In theory, the information
collected by smart meters could reveal how many people live
in a home, their daily routines, changes in those routines,
what types of electronic equipment are in the home, and
other details. "It's not hard to imagine a divorce lawyer
subpoenaing this information, an insurance company
interpreting the data in a way that allows it to penalize
customers, or criminals intercepting the information to plan
a burglary," the private nonprofit Electronic Frontier
Foundation noted in a blog post about smart meters.
(Related: "Pictures: The Energy Drain of Recreational
Drugs")
The European Union's data protection watchdog warned earlier
this year that smart meters, while bringing significant
potential benefits, also could be used track whether
families "are away on holiday or at work, if someone uses a
specific medical device or a baby-monitor, how they like to
spend their free time and so on." The European Data
Protection Supervisor urged that member states provide the
public with more information on how the data is being
handled. (Related: "The 21st Century Grid")
A State-by-State Effort
As with many of the rules governing utility operations,
regulations to address privacy concerns in the United States
are currently embedded in a patchwork of state laws and
public utility commission policy. Most experts point to
California as a leader: Last year, the California Public
Utilities Commission (CPUC) adopted rules governing access
to, and usage of, customer data. The state has also passed
legislation that requires utilities to obtain the customer's
consent for release of their information to any third party.
The CPUC was involved in producing a comprehensive report on
privacy with the National Institute of Standards and
Technology (NIST) that summarizes, often in chilling detail,
the many ways in which privacy breaches could occur on the
smart grid, and recommends best practices for preventing
those breaches. "As Smart Grid implementations collect more
granular, detailed, and potentially personal information,
this information may reveal business activities,
manufacturing procedures, and personal activities in a given
location," the NIST report said.
George Arnold, national coordinator for smart grid
interoperability at NIST, points out that many of these
privacy and security issues have been dealt with in the
health care and telecommunications sectors, for example.
"Protecting the privacy of the information [on the smart
grid] has been taken very seriously. . . . I think it's a
good news story that policymakers recognize the importance,
and both policy and technical tools are well in hand to deal
with this," Arnold said. (See related photos: "World's Worst
Power Outages.")
But no existing federal or state laws can be counted on to
protect consumers' utility data as smart meters are rolled
out across the country. At least one utility in California
argued early on that it was subject to a number of existing
laws that would address privacy concerns, according to Jim
Dempsey of the Center for Democracy and Technology, which
worked with the CPUC on its privacy framework. However,
Dempsey's group found that no single law provided a clear
answer regarding utility data, and that a new set of rules
was necessary. "Almost every state has some kind of
[privacy] law already," Dempsey said. "But the point is,
those laws predate the smart grid, and they do not really
account for the complexity of the smart-grid ecosystem."
Home Radiation Meters
With other states including Colorado, Maine, and Texas—now
formulating policy on smart meters, a consensus is emerging.
Jules Polonetsky of the Future of Privacy Forum, which
advocates for responsible handling of consumer data, says
there is general agreement that utilities should have rules
that govern how they can use smart meter data, and that a
customer should be able to know and have access to the data
being collected. Still, Polonetsky points out that as
energy-saving applications and devices (such as the Nest
wireless thermostat) proliferate, state privacy frameworks
may have limited power. Utility sharing of data is
restricted, but "some device that I buy and I activate may
not be subject to utility regulations," Polonetsky said. His
organization has introduced a privacy seal for companies
that handle smart-grid data, with the goal of highlighting
companies that are being proactive about privacy.
Resistance to smart meters in some areas, though confined to
a small fraction of utility customers, has been vociferous
enough that a handful of communities have declared
moratoriums on installations. The city of Ojai, California,
for example, declared such a moratorium in May, though it is
effectively unenforceable. In Texas, one woman pulled a gun
on a utility employee who was trying to install a smart
meter. Beyond privacy issues, many smart-meter opponents
cite fear of exposure to radio frequency waves, even though
radio frequency exposure from smart meters falls
"substantially below the protective limits set by the
Federal Communications Commission (FCC) for the general
public," according to a study from the Electric Power
Research Institute, the nonprofit research organization
funded by the electric power industry. (Related: "Putting a
(Smiley) Face on Energy Savings")
Some states, including California and Maine, which has the
highest penetration rate in the country for advanced meters,
have allowed residents to opt out of smart-meter
installation. So far, few customers have done so: In
California, according to Chris Villarreal of the CPUC, the
opt-out rate was less than half of one percent. The Texas
Public Utility Commission is currently weighing whether or
not to allow customers to opt out.
Miller, the energy consultant, has been working on a $68
million effort partially funded by the U.S. Department of
Energy to implement smart-grid technology with rural
electric cooperatives. He said many of the concerns about
smart meter privacy run counter to how utilities actually
operate. "The utilities go through all kinds of effort to
reduce the amount of information they get," he said. "They
see no advantage [in] collecting data with no operational
value. If the data did not allow you [as a utility] to make
a better decision about the operation of your grid, then
there's no reason for a utility to collect it, and they
won't."
High Ambitions, Low Public Awareness
Protecting homeowner data from interested outsiders will be
crucial for the electric industry as it seeks customer
buy-in on the smart grid, but the real challenge may lie in
boosting the interest of homeowners themselves. "Our
research shows that consumers generally overwhelmingly are
unaware of the smart grid [and smart meters] and don't even
know what those terms mean," said Patty Durand, executive
director of the Smart Grid Consumer Collaborative (SGCC), a
nonprofit dedicated to consumer education about the smart
grid.
In most cases, the utility notifies the customer that the
smart meter is coming, swaps in the new meter, and recovers
the cost of deployment through a slight rate adjustment, so
a homeowner may have little involvement in the installation
process. That decreases the likelihood that a homeowner will
understand what the smart meter does or how it is
beneficial. (Related: "Smart Meters Take Bite Out of
Electricity Theft")
"For the longest time, the relationship between the utility
and the customer has been, 'Here's the power and you can pay
for it'," said Villarreal of the CPUC. "Now with smart grid
and smart meters, we're asking the customers to get more
involved and providing them with a lot more information, and
now they're starting to ask questions."
Villarreal said that not all utilities have been quick to
embrace a world that demands more of a dialogue with
customers. In response to the notion of posting a privacy
policy, one utility representative from another part of the
country told him, " 'We don't want to do that, because we
don't want customers calling us and asking us questions
about it.' That's not a very proactive response to working
with your customers. You're probably just raising the ire of
customers more than solving the problem," he said.
California's public utilities have learned to employ robust
communication strategies for smart-meter rollouts. San Diego
Gas and Electric (SDG&E) sent out at least five
notifications to customers leading up to installations. "I
think that really helped, because it wasn't like it was
somebody knocking on the door," said Caroline Winn, SDG&E's
vice president of customer services and chief customer
privacy officer. "People weren't surprised to get the smart
meter when we installed them."
While a combination of proactive communication and opt-out
policies can help prevent customer confusion and minimize
backlash against smart-meter rollouts, utilities have the
long-term task of making sure that they add value for both
customers and themselves. Some benefits involve little or no
customer engagement: Smart meters can tell utilities, for
example, when outages occur and help generate outage maps
for customers (in the analog days, the utility didn't know
about an outage unless a customer called).
Other aspects of smart meters involve more attention from a
household. Pacific Gas & Electric (PG&E), which has
installed 9.1 million smart meters across northern and
central California at a total cost of $2.2 billion, has
experimented with a variety of methods for getting customers
more interested in their data. "We deploy reporting with
your bill that shows you your usage compared to your
neighbor's, and that's highly motivating for some people,"
said PG&E Chief Information Officer Karen Austin.
PG&E's other programs include rate incentives for energy
conservation during peak times, text messages that alert
customers when their electricity usage crosses into a new
pricing tier, and participation in the Green Button
Initiative, which allows people to download their
energy-usage information in a standardized format. The goal
is to create a level of engagement with energy-usage data
among consumers that has barely existed before. Ultimately,
the hope is that when consumers see how much energy they
use, they can try to use less.
"The utilities have been challenged with not properly
educating consumers and not understanding who their
consumers are, because they've never had to," said Durand of
the SGCC. "In the past, it's been a one-way relationship . .
. but those days are over." (Related: "Can Hurricane Sandy
Shed Light on Curbing Power Outages?")
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