Smart Electric Meters:
Are the data inaccurate or just ugly?
13 Nov 2009 in Regulatory Economics, Information Quality
California is at the vanguard of pricing electricity by the time of day it is used. The reason is that it costs more to produce (or buy) electricity at peak times. By charging prices linked to marginal cost, electricity consumers can be motivated to use power when it is less expensive.
The movement toward marginal cost pricing is encountering opposition.
ClimateWire reporter Debra Kahn says the program, which is being implemented by the Pacific Gas & Electric Company, has been challenged by a lawsuit claiming that the meters are inaccurate:
The class-action lawsuit, filed Oct. 16 in Kern County [CA] Superior Court, alleges that PG&E's smart meters are measuring customers' energy use inaccurately, resulting in bill increases of as much as 300 percent.
If the problem really is information quality, then the lawsuit will be settled quickly and easily by determining whether the meters and their communications networks adhere to established standards. American National Standards Institute standard C12.20:2002 (link here; $67 to purchase a copy) appears to be the most relevant. It's possible that the meters are upwardly biased, but the fact that they are used widely elsewhere without controversy makes that scenario unlikely.
However, if the problem is that the data from smart meters are not wrong but ugly, then complaints about information quality should not get the plaintiffs very far. Kahn's reporting suggests that opponents may be trying to manufacture uncertainty about meter accuracy in order to stop or delay the program:
A consumer advocate group, the Utility Reform Network, or TURN, is asking PG&E to stop installing smart meters until the [California Public Utilities Commission] comes to a conclusion. "Regardless of who is right on this, there is a huge crisis of consumer confidence on this," said TURN Executive Director Mark Toney, citing hearings in Bakersfield and Fresno that drew upward of 200 people each.
It's certainly possible that hundreds of consumers attended public meetings because they had genuine concerns about the accuracy of smart meters. But it is much more likely that the "consumer confidence" problem arose because they didn't like the data, which showed that they were using a lot of electricity when its marginal cost was the highest.
Marginal cost pricing can motivate behavioral change, but that does not mean the people being motivated will be happy about it.
