States Get Smart: Encouraging and Regulating Smart Grid Technologies

July 2013

By Cassarah Brown

Since its construction in the late 19th century, the US electric grid has been upgraded in a manner that has left many portions outdated, unable to fulfill the needs of a more diverse and distributed energy supply. Energy resiliency, economic development and efficiency— increasingly important aspects of state policy—are also driving the effort to modernize nation’s energy infrastructure. Research by McKinsey & Company has shown that proper smart grid deployment may save the U.S. $130 billion annually by 2020.

What is a Smart Grid?

A smart grid utilizes modern communications and electronics technologies to improve the reliability and efficiency of electricity distribution – from smart meters and appliances to state-of-the art technologies that can adapt swiftly to energy supply and demand. A smart grid improves utility-consumer communication, providing both with more awareness and control and of energy use.
 
States have an important role to play in smart grid development through policies that enable or encourage smart grid development and reduce the regulatory or market barriers to innovative grid technologies.   
 
Potential Benefits of a Smarter Grid
Grid modernization offers the ability to sense, in real time, the flow and usage of electricity, allowing utilities to quickly respond to power shortages and blackouts. A modernized smart grid system also gives more control to consumers, who can better track and control their personal energy consumption. In addition, new grid technologies increase energy efficiency by better tracking supply and demand and allow for the better integration of renewable resources.   
 
Controversy and Barriers to Smart Grid Development
While many hail the potential benefits, the upfront costs of smart grid developments can be an obstacle. With disparate state approaches to electricity and utility-consumer relations, there is no simple universal solution to address the question of cost versus benefit.   
 
Smart grid technology is still emerging, which can increase the risks associated with early adoption. For example, both Texas and California, early adopters of smart meter technologies, encountered trouble with malfunctioning or incorrectly installed meters that later adopters largely avoided.  Smart meters have also faced opposition due to fears about data privacy protections.

State Action

States are actively introducing legislation to address a broad array of smart grid related issues, encouraging smart grid development but also working to regulate emerging technologies and to protect consumer interests and concerns. There at least 61 enacted or pending 2013 bills being considered by 21 states.
 
Encouraging Smart Grid Development
Massachusetts, New York, New Jersey, and North Carolina have pending legislation that actively encourages smart grid developments. North Carolina Senate Bill 652 would provide a smart grid tax credit to promote modern electric grid technologies research. New York has three pending bills–A.B. 6508, A.B. 1932, and A.B. 126–to encourage smart grid development and establish a smart grid system. In New Jersey, Senate Bill 2429 and Assembly Bill 3816 require public utilities to file infrastructure improvements plans that include the installation and use of smart grid infrastructure and smart meters. Massachusetts’ Senate Bill 1607 and House Bill 792 would assemble an Emergency Task Force that would include smart grid implementation as a possible path toward emission reductions.
 
Some states are encouraging smart grid developments more subtly by incorporating smart grid upgrades into clean energy or energy efficiency definitions. Connecticut House Bill 6360, awaiting signature from the governor, includes smart meters within its definition for clean energy improvements. Pending New York Senate Bill 3206 and enacted Virginia Senate Bill 493 classify smart grid technology, especially smart meters, as energy efficiency measures. In Washington, pending Senate Bill 5555 includes smart metering technology as innovative energy technology.
 
Regulating How Utilities Use Smart Meters
There are at least 28 pending or enacted bills in 14 states regulating how utilities may use smart meters. States are working to enable the authorization of smart meter use as well as consumer opt-out and data privacy protections.
 
New York Assembly Bills 178 and 8082, and Senate Bill 369, all pending, allow tenants to request smart meters be installed. Pending North Carolina’s House Bill 921, and Pennsylvania House Bill 899 and Senate Bill 816 authorize utilities to use smart meters. Pennsylvania includes provisions for the cost recovery of smart meter technology related costs. New Jersey’s pending Senate Bill 1481 supports the installation of energy saving devices, including advanced metering technology.
 
In the midst of controversy over how smart meters affect health and the possibility of smart meter malfunction or overbilling, seven states (Iowa, Massachusetts, New York, Rhode Island, Pennsylvania, Tennessee, and Michigan) have pending legislation to enable consumers to opt out of residential smart meter installation. These bills typically require a form of written customer consent and prohibit utilities from providing financial disincentives to those who refuse smart meter installation.
 
Several states are actively working to address and regulate the use of personal energy data provided by smart meters. Both Michigan and Vermont have pending bills ( H.B 4728 and H.B 402, respectively) to require utilities to treat customer data confidentially to prevent unintended disclosure of personal information. Texas House Bill 1600 and Kansas House Bill 2128, both enacted, prohibit utilities from sharing or disclosing information collected from a smart metering system. California and Pennsylvania currently have similar bills pending and require customer consent before third party data disclosure.
 
Net Metering and Integrating Renewable Energy Resources
Net metering allows customers who own their own electricity generating equipment, most often solar panels, to receive credit for the electricity they produce to reduce their electricity bill. Virtual net metering, also known as neighborhood or group net metering, allows communities or groups of people with shared ownership of electricity generating equipment to receive credits proportional to their ownership. Such metering practices can assist in integrating renewable resources into the electricity grid and are made easier due to advanced meter technology. Regulations permitting or prohibiting net metering can greatly impact smart grid development and the integration of renewable energy sources into the national energy supply portfolio.
 
States have actively introduced legislation to enable net metering, especially virtual metering. Virginia House Bill 1695, enacted, establishes net metering for agricultural and community customers. Six states (Hawaii, New York, New Jersey, Nebraska, and New Hampshire) have bills pending to enable or regulate virtual metering.
 
As the technology continues to emerge and develop, states are likely to expand their actions related to the use of these new technologies that promise to enable a more efficient and resilient electricity grid system.
 
For a more detailed description of smart grid related legislation, please refer to Table 1 for enacted legislation and Table 2 for pending legislation.

Table 1: 2013 Enacted Smart Grid Related Legislation

 

State

Bill

Status

Description

Connecticut

H.B. 6360

Enacted

Concerns implementation of Connecticut's comprehensive energy strategy and implements the Governor's budget recommendations. Defines clean energy improvements to include smart meters, provided that such improvements are applicable to a residential dwelling unit of a customer of an electric distribution company or gas company. Provides for electric distribution companies to provide virtual net metering to municipal, state, or agricultural hosts.

Kansas

H.B. 2128

Enacted

Provides that a public agency shall not be required to disclose records of a utility concerning identifiable customer information or utility records related to cyber security threats, attacks or general attempts to attack utility operations.

Texas

H.B. 1600

Enacted

Prohibits an electric utility or transmission and distribution utility from selling, sharing, or disclosing information generated, provided, or otherwise collected from an advanced metering system or meter information network. The commission shall allow an electric utility or transmission and distribution utility to share information with an affiliated corporation, or other third-party entity, if the information is to be used only for the purpose of providing electric utility service to the customer or other customer-approved services.

Virginia

H.B. 1695

Enacted

Requires the State Corporation Commission to establish net energy metering programs for agricultural customers and community customers and allows a customer that operates a renewable energy generating facility to aggregate in a single account the consumption and generation measured by meters.

 

S.B. 493

Enacted

Defines energy efficiency programs to include demand response, combined heat and power and waste heat recovery, curtailment, or other programs that are designed to reduce electricity consumption so long as they reduce the total amount of electricity that is required for the same process or activity. Utilities shall be authorized to install and operate such advanced metering technology and equipment on a customer's premises, but customer consent required.





























 

Source: Various state websites

Table 2: 2013 Pending Smart Grid Related Legislation

 

State

Bill

Status

Description

California

A.B. 77
S.B. 72
S.B. 84

Pending

Prohibits the Public Utilities Commission from authorizing recovery from ratepayers of any expense for research and development projects that are not for purposes of cyber security and grid integration and would limit total funding for research and development projects for the purposes of cyber security and grid integration from exceeding $35 million.

 

A.B. 1274

Pending

Prohibits the sharing, disclosing, or otherwise making accessible to any third party a customer's electrical or natural gas usage without customer consent and stating to whom the disclosure will be made and the use of the data. Requires the entities involved to implement and maintain reasonable security procedures and practices to protect the data. Prohibits an incentive or discount to the customer for accessing the data without prior customer consent.

Hawaii

H.B. 94
S.B. 379

Pending-Carryover

Establishes a virtual net metering pilot program for renewable energy projects to be proportionally allocated between utilities and provides the opportunity for the commission to revise the bill credit mechanism for renewable energy credits.

 

H.B. 728

Pending-Carryover

Requires utilities to provide group net metering to eligible customer-generators. Includes virtual net metering as a type of group net metering.

Iowa

H.B. 465

Pending-Carryover

Provides that a public utility shall not install a smart meter at a customer's residence or place of business without first providing the customer the opportunity to consent to the installation or to refuse such consent. The utility will offer to remove a smart meter free of charge if it was installed without customer consent.

Massachusetts

H.B. 792

Pending

Assembles the RePower Massachusetts Emergency Task Force to make recommendations to the Secretary and the legislature for meeting the target of 100% emission reductions by Jan. 1, 2020. The Task Force will evaluate issues including amendments to participation in the Regional Greenhouse Gas Initiative, amendments to the renewable energy portfolio standard, options for phasing out the use of alternative renewable energy sources that have positive net greenhouse gas emissions by Jan. 1, 2022, amendments to reinstate authority to the executive that was removed during utility deregulation, wind-siting reform, creating a state or regional mechanism to price carbon, smart grid implementation, and deep energy efficiency investments.

 

H.B. 2926

Pending

Relates to utility meters and the rights of utility ratepayers. Provides that utilities provide ratepayers a choice regarding the type of meter installed and operated and requires utilities to obtain consent to install a wireless smart meter. Provides ratepayers with the right to request the removal of currently installed smart meters. Prohibits a utility from shutting off service to ratepayer based on amount of utility usage or the based on ratepayer having a wireless smart meter. Prohibits utility from imposing disincentives for not installing wireless smart meters.

 

S.B. 1607

Pending

Assembles the RePower Massachusetts Emergency Task Force to make recommendations to the Secretary and the legislature for meeting the target of 100% emission reductions by Jan. 1, 2020. The Task Force will evaluate issues including siting reform, the challenge of intermittency & smart grid, battery storage and other solutions, accurate carbon pricing, the needs of low income and minority communities, the health, job creation, and other benefits of eliminating carbon emissions from electricity generation, the opportunity to eliminate further emissions from the transportation sector through electric vehicles, and through electric heating.

Maine

H.B. 76
H.B. 577

Pending

Prohibits a transmission and distribution utility from charging a customer a fee or a higher rate for declining the installation of a wireless smart meter or using a meter other than a wireless smart meter.

 

S.B. 436

Pending

Implements the recommendations of the Maine Economic Growth Council regarding prosperity. Reduces energy costs by improving efficiency and expanding the portfolio of available and economically viable alternatives for residential, industrial and commercial customers. Supporting the goals of the Efficiency Maine Trust  includes supporting time-of-day pricing options and smart meter technology.

Michigan

H.B. 4315

Pending

Provides for certain requirements and prohibitions in utilities' use of advanced meters. Utilities prohibited from refusing service to customers that refuse installation of advanced or smart meter. Utilities may not provide financial incentives to encourage adaptation of smart meters. Installation of advanced meter contingent upon customer consent.

 

H.B. 4728

Pending

Prohibits certain use of data from advanced meters. Requires data from an advanced meter be encrypted so it cannot be intercepted by a wireless device not used by the utility. Provides for customer identity protection.

Missouri

S.B. 6

Pending

Allows telecommunications and broadband service providers to attach equipment to rural electric cooperatives' utility poles for smart grid or broadband purposes. Requires written agreement between the rural electric cooperative pole owner and the attaching entity.

North Carolina

H.B. 921

Pending

Provides that each electric utility in the state equip premises within the utility's service area with a smart meter to help its customers control their energy usage and costs.

 

S.B. 76

Pending

Requires a comprehensive long-range state energy policy that addresses requirements in the short midterm and long term to achieve maximum effective management and use of present and future sources of energy. Such policy to include but not be limited to energy efficiency, renewable and alternative sources of energy, research and development into alternative energy technologies, and improvements to the State's energy infrastructure and energy economy, including, among others, smart grid development.

 

S.B. 652

Pending

Provides a smart grid tax credit for research regarding modern electric grid technologies.

Nebraska

L.B. 557
L.B. 598

Pending-Carryover

Changes provisions relating to net metering and authorizes community solar gardens. A local distribution utility shall provide, at no additional cost to any customer-generator with a qualified facility, a metering system that is capable of measuring the flow of electricity in both directions and may be accomplished through use of a single, bidirectional electric revenue meter that has only a single register for billing purposes, a smart metering system, or another meter configuration that can easily be read by the customer-generator.

New Hampshire

S.B. 98

To Governor

Adds and modifies certain definitions related to group net energy metering, and authorizes utilities to charge customer-generators for system upgrades. Establishes a committee to study reimbursement rates for excess electricity generated by customer-generator groups.

New Jersey

A.B. 2966
A.B. 3025
 

Pending

Makes changes to solar renewable energy programs and purchase requirements, and directs the Board of Public Utilities to adopt standards for virtual net metering aggregation.

 

A.B. 2988

Pending

Authorizes sale of certain property interests in public roads by local governments to connect certain electric generating facilities with customers and provides for net metering, virtual net metering and connections by public utility.

 

A.B. 3816
S.B. 2429
 

Pending

Creates the Public Utility Reliability Investment Act and requires public utilities to file infrastructure improvement plans to increase service reliability with Board of Public Utilities. This includes the installation and use of smart grid infrastructure and smart meters that would have the ability to alert the electric utility when and where electric utility service is lost, find service disruption locations quickly, and notify a customer when to expect restoration of service. The plan shall allow a customer to opt out of receiving a smart meter.

 

S.B. 827

Pending

Authorizes the sale of certain property interests in public roads by local governments to connect certain electric generating facilities with customers. Provides for net metering, virtual net metering and connections by the public utility.

 

S.B. 1481

Pending

Directs the Board of Public Utilities to establish certain energy-conservation programs; and establishes programs to assist large commercial and industrial electric power customers with reduction of their energy usage through demand-side management programs offered by the PJM Interconnection, L.L.C. the regional electric power transmission organization serving New Jersey. These demand-side management
programs would include the installation of various energy-saving devices such as hourly meters, real-time telemetry equipment and advanced meter technology.

New York

A.B. 126

Pending

Includes smart grids among considerations for any transportation infrastructure project.

 

A.B. 178

Pending

Authorizes tenants to request the installation of smart or advanced meters.

 

A.B. 1932

Pending

Enacts the "New York grid modernization act" to address the aging infrastructure, establishes the grid modernization program, and creates the smart grid advisory council. Allows a customer to opt out of receiving a smart meter.

 

A.B. 6065
S.B. 3217
 

Pending

Authorizes virtual net energy metering and provides for the ownership and operation of energy generating equipment by municipalities and groups of farmers and businesses for their joint benefit. Provides for the net energy metering of the electricity used by the members of such entities.

 

A.B. 6508

Pending

Establishes a smart grid system.

 

A.B. 7799
S.B. 3379
 

Pending

Provides consumers the option to elect not to use smart meters and provides that the commission shall not charge a fee to consumers making such election.

 

A.B. 8082

Pending

Provides residential electric customers with an option for greater control of the cost of such service by the installation of real time smart meters; and  establishes sales, rental and service providers to be certified by the public service commission.

 

S.B. 369

Pending

Authorizes tenants to request the installation of smart or advanced meters.

 

S.B. 1642

Pending

Provides residential electric customers with an option for greater control of the cost of such service by the installation of real time smart meters; and establishes sales, rental and service providers to be certified by the public service commission.

 

S.B. 3206

Pending

Amends the Public Authorities Law and relates to emerging technology industrial classifications for clean environment and energy technologies. Includes smart grid as energy efficiency measure.

 

S.B. 4722

Pending

Establishes provisions for the net energy metering of neighborhood electricity usage.

Pennsylvania

H.B. 899
S.B. 816

Pending

Provides for smart meter technology and time of use rates. Electric distribution companies may file a smart meter technology procurement and installation plan with the commission for approval. Provides for cost recovery of smart meter technology related costs. Meter installation requires customer consent.

 

H.B. 902
S.B. 818

Pending

Allows customers to  opt out of receiving smart meter technology by notifying, in writing, the electric distribution company. The electric distribution company shall provide an opt-out form to consumers, upon request, and may provide a method for consumers to opt out electronically through the electric distribution company's Internet website. The commission shall create and regulate a surcharge for consumers who elect to opt out of receiving smart meter technology under this subparagraph.

 

H.B. 906
S.B. 817

Pending

Electric distribution companies shall, with customer consent, make available direct meter access and electronic access to customer meter data to third parties, including electric generation suppliers and providers of conservation and load management services and government agencies.

Rhode Island

H.B. 5027

Pending

Would allow consumers the right to decline the installation of a wireless smart meter and substitute a wired smart meter, or to completely decline the installation of any smart meter technology.

Tennessee

H.B.373
S.B. 283

Pending-Carryover

Establishes standards for electric and natural gas utilities for smart meter gateway devices.
No electric or natural gas utility that sells or provides electricity or natural gas shall install a smart meter gateway device on or in a customer's home, business, facility, or structure without the customer's written and signed consent, regulate or restrict the amount of electricity or natural gas a customer uses, discontinue service to a customer when the customer declines to install or use a smart meter gateway device, charge a customer any fees for not installing or using a smart meter gateway device, obtain data from a customer's smart meter gateway device more than once per month, unless otherwise requested by the customer, or share any data from a customer's smart meter gateway device with any person or entity other than the customer's electric utility or natural gas utility.

Vermont

H.B. 402

Pending-Carryover

Relates to a privacy policy regarding smart meters, requiring customer detail to be treated as confidential. Requires company to develop measures to prevent unintended disclosure of information, and requires customer’s written consent before smart meter installation.

 

S.B. 62

Pending-Carryover

Proposes to create additional notice and reporting requirements under Vermont's smart meter law. Allows customer to choose a wired smart meter, at no additional charge. Requires written customer consent for wireless smart meter communication.
Requires Commissioner of Public Service to report on smart meter related savings, breeches to company’s cyber-security infrastructure, the number of customers that have chosen not to have wireless smart meters, and the number of smart meter related complaints.

Washington

S.B. 5555

Pending -Carryover

Enacts the Washington State Renewable Energy Space Heating Act. Includes smart grid or smart metering technology in definition of innovative energy technology.
 
Source: Various state websites