Key Takeways

  • More than half of the nation’s 152 million electricity customers were hooked up to smart meters at the end of 2017.
  • Residential customers represent about 88 percent of advanced meters installed through 2017.
  • Utility spending on meter upgrades doubled over the last decade to enhance customer interaction and allow for smart applications.

Industry Insight

The spread of advanced meters across the U.S. has come a long way, with over half of the nation’s 152 million electricity consumers now hooked up to the devices. But further deployment of the technology, seen critical for a more responsive and reliable grid, is at risk amid heightened scrutiny from regulators, who are increasingly bowing to concerns over the costs to consumers.

Dominion Energy Inc.‘s 10-year, $6 billion grid transformation program, featuring the installation of the so-called smart meters, was roundly rejected by the Virginia State Corporation Commission in January. The regulator found that the program lacked adequate cost information for the installation of the devices, and that the utility failed to show that the expenses would be prudent. Last spring, a similar fate befell Public Service Company of New Mexico’s $121 million plan to roll out the meters amid concerns about the risk of rate hikes and the excessive opt-out fee. Last May, National Grid, Eversource Energy and Unitil were denied authorization for advanced metering deployments after the Massachusetts Department of Public Utilities concluded that it needed to re-examine the customer benefits of the program. Add to the list of failed proposals a $340 million initiative by Kentucky Utilities Co. and Louisville Gas & Electric Co. The Kentucky Public Service Commission echoed the stance of other regulators, saying that the utilities came up short in proving that the benefits of the plan outweigh the costs.

Concerns about the costs and questions about the benefits of the devices have prompted regulators to urge a go-slow approach. The New Hampshire Public Utilities Commission staff called for utilities to provide an opt-in provision, and recommended a strategic, targeted roll out of the technology, and to consider full-scale deployment when a cost-effective case can be made. And last year, Washington state regulators directed utilities to provide an opt-out option for residential customers in response to concerns over safety, privacy, cyber security and customer billing.

U.S. utility investments in advanced meter technology have doubled over the decade even as regulatory scrutiny has intensified and consumers have sounded the alarms over privacy concerns and costs. Utilities say the collection of real-time data from the devices has tremendous benefits. The up-to-the-minute transmission of consumption data from the meters helps utilities balance electric demand, integrate intermittent renewable supplies, minimize or reduce outage durations, and create dynamic rate structures that cut peak time usage and save energy — all benefits that observers expect and demand from what is seen as the modern grid.

U.S. Smart Meter Penetration Reaches 50 Percent

U.S. electric utilities had nearly 79 million advanced meters in 2017, with residential customers accounting for almost 90 percent of the installations. Smart meters accounted for nearly 52 percent of the nation’s 152 million electricity meters by the end of 2017, according to the EIA’s annual electric power industry report released last December. Smart meters can communicate between electric utilities and customers to support demand response, renewable generation, and to provide outage information to enable quicker service restoration and shorter disruptions. Smart meters automatically record information about customer usage compared to analog meters that are read manually each month. These meters transmit data more frequently – hourly intervals or real-time – through a built-in two-way communication. Real-time data helps utilities balance electric loads and lower outages, and create dynamic rate structures that enable ratepayers to use the information to lower their peak time usage and save energy.

Annual capital investment by major electric utilities, representing about 70 percent of total U.S. demand, almost doubled from 1996 to 2017. The agency noted that spending related to customer accounts and sales dropped, but utilities continue to invest heavily on customer services and information systems to provide better outage communications and outreach tools.

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Author:
Jonathan oversees EnerKnol's portfolio of weekly research publications, drawing from a decade of experience reporting on U.S. energy policy and markets. Previously he served as reporter at Bloomberg News, heading up coverage of the Federal Energy Regulatory Commission. Before that he was lead reporter of the U.S. Environmental Protection Agency at SNL Energy, now a part of S&P Global. Jonathan earned a Master’s degree in journalism from the Philip Merrill College of Journalism at the University of Maryland, College Park.

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