Nov 19, 2015 | Greg
Miller, Senior Technology
Analyst
If you think we
live in a connected world, you ain’t seen nothin’ yet.
By the time the
Internet of Things (IoT) gets up to speed, just about everything will be
connected to the web – systems, networks, devices, homes, appliances… you name
it.
The upside here?
Greater streamlining and functionality, as well as bigger
savings.
But there’s a
downside, too – one we’ve previously highlighted:security
concerns.
One of the most
controversial IoT devices is also one of the first – smart
meters.
These meters –
whether for water, gas, or electricity – hold the compelling promise of both
reducing energy demand and saving millions of dollars for consumers. With
electric meters, for example, consumers could ease demand for the fuels needed
to produce electricity.
But in many
cities, these meters, particularly the electric ones, have met with
opposition.
So what’s the
truth here?
Smart
Meters: Friend or Foe?
We’re All Getting a Raw Deal
Your Smart Meter Checklist
We’re All Getting a Raw Deal
Your Smart Meter Checklist
- Who’s installing the meters? Presumably, the utility will do it directly. But will a senior electrician sign off on each installation before turning the power on?
- Who checks meters for accuracy? Is there a tester independent of both the utility and manufacturer? Do utilities have an easy way for new smart meter customers to dispute their bills, or will customers have to Twitter-shame them every time they’re wrong?
- Who gets usage information? Does the law prohibit utilities from selling the information to third parties? How will utilities try to prevent hacking and improper use of the information by third parties?
- How much of a discount will homeowners get for nighttime electricity use? The appropriate amount will vary depending on where you live and how your utility gets its power, but the discount should be substantial – a real long-term saving if you schedule big electricity usage for off-peak hours. If the utility doesn’t have time-of-day pricing, why not?
- How will these meters work with self-generated electricity?I’ve warned before that utilities are starting to feel a big challenge from solar power and they’re changing how they bill consumers to discourage further solar development.
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To be blunt, many
of the concerns and fears over smart meters are downright farcical. For
example…
Smart Meters Make
You Sick:
Yes, some people
really believe this. It’s entirely baseless.
However, it’s not
uncommon for such fears to accompany new technologies. Remember when cellphones
were supposed to give you brain cancer? They didn’t – and they
don’t.
Some early smart
meters used public spectrum similar to Wi-Fi, but almost all of them now use the
same frequencies as your smartphone. So if you have a smartphone and don’t get
sick from it, the same theory applies to your smart meter when it reports data
back to the utility – it’s that simple.
Similarly, there
was a remarkable phenomenon once known as Wind Turbine Syndrome – people said
the windmills were making them sick.
But when Simon
Chapman, a public health professor in Australia, looked into it, he found that
not a single complaint had been lodged by people on land where the turbines were
actually located when they received rent from the turbine
company.
It turns out that
the “cure” was money! So if people think smart meters are making them ill, the
“cure” is for them to save money.
Smart Meters Are
Harmful to Wildlife:
Another claim
that’s devoid of evidence. Unless you believe we should tear down every cell
tower over a specific concern about smart meters, it’s
unwarranted.
Smart Meters Are
Dangerous:
Specifically, this
refers to the fear that electric meters are prone to catch fire. Well, one
now-discontinued model in particular was allegedly responsible for an unusual
number of fires.
But there are also
fires associated with standard meters. After all, whenever you have electricity,
there’s a fire risk. But a properly installed, modern smart meter that meets
National Electric Safety Code standards doesn’t have any hazards that old-school
meters don’t already have.
Smart Meters
Infringe Civil Liberties:
This one does have
some factual merit – but only a little. You see, these meters not only
reporthow
much water, gas, or electricity you consume, but
when.
They also report
this data much more efficiently, easily, and immediately. The concern is that
authorities might use the data to snoop on people or sell the information to
other parties.
It’s true that law
enforcement has used electric data in the past in order to identify indoor
marijuana-growing operations. But on balance, this is a minor concern, easily
remedied with legislation.
In fact, smart
meters can actually increase
your privacy. Under the old system, whenever a utility employee walks
onto your property to take a reading, you can’t stop
him.
How’s that for an
invasion of privacy? With smart meters, human readers become unnecessary and
utilities won’t be on your property unless there’s a
malfunction.
Smart Meters Are
Inaccurate:
Some smart meter
opponents claim that the new meters are woefully inaccurate and, far from saving
consumers money, actually lead to higher
electric bills.
There was indeed
an issue with this several years ago. But today’s smart meters are really quite
accurate. In fact, if they were as inaccurate as opponents say, they wouldn’t
have privacy concerns!
Even if a consumer
ends up with a “lemon” smart meter, there’s an easy way to guard against
overbilling: Simply keep your old bills!
Electric usage
doesn’t change much from one year to another unless there are big temperature
differences. You should compare new bills to old ones and ask about any usage or
billing discrepancies.
The real concern
with smart meters isn’t overbilling, though. It’s that they might not save
consumers as much money as they should!
But it’s still
better than the old-school method…
For years now,
consumers have gotten a raw deal from utilities. That’s because they’ve tended
to be charged a flat rate per kilowatt hour – with that rate based on the
utilities’ average cost of producing or buying the
power.
But there’s no
such thing as an “average cost.”
As you know,
electricity tends to be more expensive during the day when there’s greater
demand from businesses. By contrast, it’s cheaper at night. In fact,
sometimes
the nighttime cost of energy even becomes
negative.
Unlike businesses,
though, home consumers use most of their electricity at night. That means they
should pay less per kilowatt hour than business customers. Smart meters make
that possible.
But even in areas
where utilities have introduced time-of-day pricing, they haven’t shared the
full benefits with homeowners. Why? Two reasons…
First, much of a
utility’s costs lie not in producing or buying the power, but in the electricity
grid that gets it to customers. That cost is more or less fixed and it’s higher
for homes than for businesses per unit of power sold.
Second, utilities
aren’t installing all these expensive smart meters with the idea of losing
money!
So if you have a
smart meter now or if your utility proposes installing them, here are the
real
questions you should ask:
With smart meters,
utilities should pay daytime rates for the power they buy from solar homes, but
only charge nighttime rates when the home is taking power off of the
grid.
If you get proper
answers to these questions, you should welcome smart meters. You’ll probably
save some money and you’ll help lower the amount of resources dedicated to
electricity generation.
If you don’t get
satisfactory answers, then it’s fair to ask what the utility is hiding and
what’s actually in it for you.
To living
and investing in the
future,
Greg
Miller
Greg Miller has spent over 20 years in the financial industry, working up from analyst, to portfolio manager, and eventually to an institutional investor, where he managed over $400-million worth of assets in mutual funds and private accounts.
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