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The Wise Grid Series, Part 1: Smart Meters Are Not Smart

Smart Meter

When we look at important issues facing our nation today, we inevitably find commercial interests influencing policy. Industries, understandably, are eager to advance their own agendas. Briefings and impact analyses presented to policymakers can be incomplete for this reason. They can tell a narrow, limited story to attract government support—whether for a contract, funding, or legislation. Unfortunately, important sides to the story that are highly relevant to quality of life in America are often left out.

This scenario is playing out today in the U.S. electricity sector, where federal spending to help the utility industry is having unintended negative consequences for our economy, privacy, the environment, safety, security and health, while stalling our transition to a renewable energy economy, with consequences of its own.

As was explained in the National Institute for Science, Law & Public Policy’s Getting Smarter About the Smart Grid report by Timothy Schoechle, PhD, the new meters help the utility industry’s bottom line, as by a law the utilities can charge ratepayers enough to recoup their investment, plus an additional a 10-13 percent return, depending on the state. But the billions spent on meters is wasting federal tax dollars, increasing ratepayer utility bills and, importantly, not delivering on the benefits claimed.

The ‘story’ about the value of the “smart” meters is that the meters are necessary to upgrade the electricity grid, that they have energy efficiency benefits, and that installing them will facilitate integration of renewable energy technologies. This is what communities across the country are being told. None of these claims are true.

Wasting billions of taxpayer money on unneeded new meters would have been bad enough if the meters had been safely hard-wired. But the meters are wireless, which means they come with additional risks, such as privacy, security, health, fire and safety risks. The former head of the CIA James Woolsey called the vulnerability of the new grid using wireless technology a “really, really stupid grid”. It is no wonder there are protests about the “smart” meters in dozens of states today. The award-winning film on this topic, Take Back Your Power, of which I was an Executive Producer, is a must-watch film to get up to speed on this whole topic.

There will be national economic consequences from propping up utilities set on resisting transformation to a renewable energy economy. As other countries race ahead to tap into the potential for clean energy abundance, our industries in the end will suffer in the global marketplace if the U.S. does not reconfigure its electricity system to embrace distributed, renewable energy and the rooftop revolution. 

More than likely, fortunately, as Tim Schoechle, PhD discusses in Getting Smarter About the Smart Grid, the revolution will happen from the bottom up through innovative communities moving to secure their renewable energy future, like Boulder, CO is doing. And, through innovative technologies, such as advances in storage.

Very recently, Tesla announced a battery for the home, the Powerwall, a leapfrog forward offering consumers the ability to store backup power, minimize peak time use of utilities’ electricity at high prices and even get off the power grid entirely.

Transformation of the electricity sector may be able to be delayed by wasting billions of federal tax dollars on unnecessary meters, and large long-distance transmission lines, but it cannot be stopped. It may be a politically rocky transition for the foreseeable future, but I am confident America will certainly achieve energy independence and clean energy abundance.

9 Problems with the Smart Meters and Present Electricity Approach

1. Data to be collected by the smart meters, including intimate personal details of citizens’ lives, is not necessary to the basic purpose of the smart grid, such as supply/demand balancing, demand response (DR), dynamic pricing, renewable integration, or local generation and storage, as promoters of the meters, and uninformed parties, routinely claim.

2. Federal, state and local governments have mistakenly believed that the installation of smart meters will somehow lead to reduction in use of fossil fuels, greater electricity efficiency and long-term energy economy benefits for the U.S. In fact, efforts to further develop and standardize those technologies that could achieve those goals have languished, while investments with stimulus funding have instead been made in technologies that merely serve the short-term economic interests of the utility industry and its suppliers instead of the interests of a true smart grid which could economically integrate renewable technologies and distributed, or decentralized, power generation.

3. Much of the multi-billion dollar federal subsidy for smart meters does not benefit ratepayers, nor support economic growth, but primarily benefits meter and meter networking manufacturers, while financially propping up unsustainable Investor-Owned Utilities (IOUs). Regulated utilities can charge back their capital investments to ratepayers, with a guaranteed 10-13 percent rate of return (ROR) on assets, by law. Thus, investors in utilities gain from the smart meter deployment, as they would from any other capital expenditure, while there is no clear gain and significant new risks (privacy, security, health & safety, costs) for the ratepayer. The allocation of stimulus dollars to subsidize smart meters has also been a net job destroyer, eliminating meter readers and creating manufacturing jobs overseas, while being an egregious waste of federal resources that only supports corporate interests and delays the needed transformation of the electricity grid.

4. Because Investor-Owned Utilities (IOUs) are paid on a per-kilowatt-of-energy-sold basis, and also receive a guaranteed rate of return on assets, they do not have a financial incentive to encourage less energy usage, or to invest in technologies that would help citizens reduce energy consumption.

5. Because coal plants must run at near capacity to achieve necessary economies of scale, adding renewable energy to the power mix may be in fact cost-additive for utilities, not cost-reducing, and ultimately cost-additive for ratepayers. Thus, there is an inherent conflict between coal-based power generation, the dominant means of electricity generation in the U.S., and a transition to renewable energy technologies that could lead to sustainability. The report recommends the U.S. “move away from dependency on baseload generation, particularly coal, as quickly as possible” to facilitate renewable integration and reach our potential for energy independence.

6. Despite paying lip service to the public’s interest in incorporating renewable energy, as evidence in their marketing materials, utilities actually ‘curtail’, or waste, much of the renewable energy now generated in order to protect the economics of investor-owned coal plants. This explains why state initiatives wanting to fulfill the promise of a 30 percent or higher renewable portfolio standard (RPS) is practically impossible in a coal baseload system. The paper suggests that decommissioning coal plants, possibly through a public bailout, may be required to move the United States to a renewable energy future.

7.  U.S. policy statements “reflect the mistaken belief that the basic solutions involve fixing or modernizing the existing electricity grid, rather than complete structural transformation of electrical service, which goes beyond particular ‘smart’ technologies.” In reality, shaving peak energy usage by shifting loads may actually increase energy bills as well as CO2 emissions by increasing dependency on coal baseload generation—the most expensive generation there is when considering the totality of subsidies and externalized costs. Increasing baseload dependency will not lower energy costs, as it appears our Administration believes, and it will further obstruct integration of renewable sources.

8.  Expected growth in electric vehicles within a coal-based system will only worsen the nation’s baseload dependency, thus making the needed shift away from coal to a renewable energy future that much more pressing.

9.  Leadership in the energy sector is unlikely to come from the top, due to conflicts of interest and ‘regulatory capture’ unless forced by a catastrophic event or consequence. At present, there appears to be little evidence utilities and their regulators want to or know how to make the needed changes to the utility business model, leaving it to the American public, through community-based initiatives and municipalization efforts, to drive the needed change toward renewable technologies and distributed, non-centralized power generation—as is now happening in such places as Boulder, Colorado.

When I learned billions of dollars were wasted on meters purporting to be “smart,” I realized how desperately we need accountability in Washington. The magnitude of the misspending is mind-boggling. I wonder how policymakers could not have understood the technology’s limitations. Did they just not do their homework, swayed by utility industry lobbyists? Did they not realize stimulus funding could have been better spent on other investments to move us forward faster toward a clean energy economy? Is there any mechanism at all in Washington to independently evaluate the impact of potential spending, and to make decisions strategically with long-term impacts in mind?

In the next blog post in The Wise Grid series, my colleague, Tim Schoechle, PhD will summarize his critique of the recent “Future of the Grid” report by the Department of Energy (DOE) and the Gridwise Alliance. Stay tuned!

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