by: Joseph Galantee and Mark Chediak
PG&E (PCG), Cisco Systems (CSCO), and General Electric (GE) are all betting that energy-monitoring devices will catch on in homes. Convincing consumers that the gizmos are a good thing is turning out to be a tough sell.
Power companies have traditionally relied on workers walking house to house to monitor electricity use. Smart meters are designed to give utilities a real-time picture of electricity consumption, eventually allowing them to create pricing plans that will encourage conservation during peak hours. Around 43 percent of U.S. homes will have the new meters by 2014, according to forecasts from researcher Parks Associates, up from 14 percent at the end of last year.
Even with $3.4 billion in U.S. stimulus funds behind it, the race to install smart meters is starting to lose momentum. In Hawaii, regulators rejected a $115 million plan in July by Hawaiian Electric to install smart meters that residents and businesses would pay for. Almost a dozen California cities and counties have asked regulators to halt installations, saying the devices send inaccurate data to utilities. Homeowners in Bakersfield, Calif., have filed a class action against PG&E, accusing the utility of overcharging since smart meters were installed in homes. "The meters don't benefit the consumer; they cost a lot of money, and we can't opt out," says Joshua Hart, the California-based director of Scotts Valley Neighbors Against Smart Meters
A study by independent consultant The Structure Group found that PG&E's smart meters are more accurate than the older versions they replaced. PG&E spokesman Paul Moreno says the meters will save customers money over the long term.
Utilities and the companies that manufacture the meters are joining together to overcome the mounting resistance. In March, GE, IBM (IBM), and Silver Spring Networks, among others, formed the Smart Grid Consumer Collaborative to sell consumers on the benefits of the technology. "We, as an industry, need to continue to educate folks. That is a good part of the problem," says Ron Sege, chief executive officer of Echelon (ELON), a Silicon Valley company that makes hardware and software for smart meters to communicate with utilities.
Consumer opposition isn't the only obstacle: Power companies must also get the approval of public utility commissions before deploying the meters, a process that has been stymied in some states. Duke Energy's (DUK) proposal to install 800,000 meters in Indiana was rejected by regulators because of concern that the cost of the project would outweigh potential benefits to consumers. The company is awaiting a decision on a pilot plan encompassing just 40,000 households. The Charlotte (N.C.)-based utility is also taking more time to build support for the changeover in Ohio, where it already has received approval to install about 1.2 million meters. "We've taken a more paced, deliberate approach to try to get in front of customers and those stakeholders groups as soon and as early as possible," says Mark Wyatt, vice-president for smart grid and energy systems at Duke Energy. Despite the roadblocks, companies continue to invest heavily in meters. On Sept. 2, Cisco announced plans to buy Arch Rock, a San Francisco company that makes wireless technology to transmit data from smart meters to utilities. Says Charles Carmel, Cisco's vice-president for corporate development: "The smart grid will be a multibillion-dollar opportunity for players like Cisco and others for a number of years to come."
The bottom line: Utilities and companies that make smart meters are uniting to overcome resistance from consumers in California and elsewhere.
Power companies have traditionally relied on workers walking house to house to monitor electricity use. Smart meters are designed to give utilities a real-time picture of electricity consumption, eventually allowing them to create pricing plans that will encourage conservation during peak hours. Around 43 percent of U.S. homes will have the new meters by 2014, according to forecasts from researcher Parks Associates, up from 14 percent at the end of last year.
Even with $3.4 billion in U.S. stimulus funds behind it, the race to install smart meters is starting to lose momentum. In Hawaii, regulators rejected a $115 million plan in July by Hawaiian Electric to install smart meters that residents and businesses would pay for. Almost a dozen California cities and counties have asked regulators to halt installations, saying the devices send inaccurate data to utilities. Homeowners in Bakersfield, Calif., have filed a class action against PG&E, accusing the utility of overcharging since smart meters were installed in homes. "The meters don't benefit the consumer; they cost a lot of money, and we can't opt out," says Joshua Hart, the California-based director of Scotts Valley Neighbors Against Smart Meters
A study by independent consultant The Structure Group found that PG&E's smart meters are more accurate than the older versions they replaced. PG&E spokesman Paul Moreno says the meters will save customers money over the long term.
Utilities and the companies that manufacture the meters are joining together to overcome the mounting resistance. In March, GE, IBM (IBM), and Silver Spring Networks, among others, formed the Smart Grid Consumer Collaborative to sell consumers on the benefits of the technology. "We, as an industry, need to continue to educate folks. That is a good part of the problem," says Ron Sege, chief executive officer of Echelon (ELON), a Silicon Valley company that makes hardware and software for smart meters to communicate with utilities.
Consumer opposition isn't the only obstacle: Power companies must also get the approval of public utility commissions before deploying the meters, a process that has been stymied in some states. Duke Energy's (DUK) proposal to install 800,000 meters in Indiana was rejected by regulators because of concern that the cost of the project would outweigh potential benefits to consumers. The company is awaiting a decision on a pilot plan encompassing just 40,000 households. The Charlotte (N.C.)-based utility is also taking more time to build support for the changeover in Ohio, where it already has received approval to install about 1.2 million meters. "We've taken a more paced, deliberate approach to try to get in front of customers and those stakeholders groups as soon and as early as possible," says Mark Wyatt, vice-president for smart grid and energy systems at Duke Energy. Despite the roadblocks, companies continue to invest heavily in meters. On Sept. 2, Cisco announced plans to buy Arch Rock, a San Francisco company that makes wireless technology to transmit data from smart meters to utilities. Says Charles Carmel, Cisco's vice-president for corporate development: "The smart grid will be a multibillion-dollar opportunity for players like Cisco and others for a number of years to come."
The bottom line: Utilities and companies that make smart meters are uniting to overcome resistance from consumers in California and elsewhere.
Source : Bloomberg businessweek (16 Sept 1020)
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