What is a Smart Meter?
Smart meters are replacing traditional analog electric meters as the U.S. energy grid becomes increasingly digital. Also known as advanced metering infrastructure (AMI), smart meters measure and record electricity use at least hourly and feed that data to utilities and consumers at least daily. These meters enable two-way power and information flows that provide a digital link between electric companies and their customers and open the door to new and expanded services, such as time-based pricing, load control, budget billing, high-usage alerts, push notifications and web services for energy management.
The general term "advanced meters" also includes meters with one-way, meter-to-utility communication (called automated meter reading, or AMR).
Many consumers and utility companies favor smart meters over traditional meters due to their expanded service options, and experts consider them vital to grid modernization as they connect the electricity needs of one consumer with the rest of the grid. Information from smart meters can help consumers save money by letting them manage energy use in real-time, while utilities save money because they no longer need to send meter readers to every home in a service area on a monthly basis.
By taking real-time measurements, smart meters also provide outage notification and power quality monitoring that help utilities restore service quickly during a storm or other disruption. The data from smart meters help improve grid operations, integrate distributed energy resources like residential solar panels, provide customer services, and support innovative electricity pricing.
Why Would Someone Want to Opt Out?
Smart meter opponents have expressed concerns about health impacts, consumer and data privacy and increased cybersecurity risks smart meters potentially pose. The North Carolina Public Utilities Commission has taken these concerns into account, ruling in June 2018 to waive opt-out fees for customers with notarized doctors’ notes confirming health issues relating to AMI technology.
Other public utility commissions have concluded that these claims are largely unfounded. The Maine Supreme Court has also weighed in by ruling that smart meters do not pose a credible health or safety threat, basing its opinion on over 100 peer-reviewed scientific studies about the technology’s safety impacts.
To assuage concerns over customer privacy, several states—including California, Illinois, New Hampshire and Texas—have enacted laws or implemented new regulations restricting how utilities can use customer data collected through smart meters. These new laws generally restrict utilities from sharing customer data with third parties without fully disclosing the secondary commercial purpose to customers and receiving their permission. Aggregated data tends to be excluded from protection under these laws because it is not personally identifiable.
State Opt-Out Policies
With these concerns in mind, at least seven states have created statewide policies that allow consumers to opt-out of smart meter installation or to have their smart meter replaced by an analog meter. Montana may join this group in the coming year; a state law passed in 2019 requires the Public Service Commission to determine whether to establish a statewide opt-out program by July 1, 2020. At least another 22 states have allowed electric utilities to implement opt-out programs through proceedings with public utility commissions.
Only New Hampshire has established an opt-in policy, which requires utilities to obtain written consent from customers to install smart meters, while Pennsylvania statute implicitly prohibits opt-outs by mandating deployment of smart meters to all residential customers. In Idaho and Wisconsin, the public utility commissions have denied requests to allow opt-outs. The Kentucky Public Service Commission has expressed its general opposition to opt-outs but has still approved opt-out programs for several utilities. In March 2019, the Kansas Corporation Commission took a similar approach, deciding not to mandate opt-out programs, instead of leaving their implementation up to the utilities’ discretion.
In almost every case, customers who elect to opt-out of smart meter installation are charged to do so—often through a one-time “set-up fee,” followed by monthly fees associated with the cost of sending out meter-readers. The fees can vary considerably. A utility in Rhode Island charges a one-time fee of $27, while a Texas utility’s one-time fee is $171. The monthly fees range from around $9 to $32.
California’s state policy established a one-time fee of $75 and a monthly fee of $10, which is similar to other states that have set fees. However, the state makes an exception for income-qualified customers who wish to opt-out, with the one-time fee dropping to $10, and a $5 monthly fee.
Most states with opt-out programs either require that a customer allow a smart meter to be installed or pay to opt-out. Maine, however, offers a suite of options: Customers can retain an analog meter for a one-time fee of $40 and a monthly fee of $15.66; they can choose to have a smart meter’s transmitter turned off for a one-time fee of $20 and a monthly fee of $13.98; or they can choose to pay for the cost of relocating the meter farther from their home.
Other states have tried different routes. Illinois doesn’t allow opt-outs for customers in certain service territories but has permitted those customers to defer installation until 2022, at which point all homes in that service territory are required to have smart meters. Similarly, a Virginia utility doesn’t allow opt-outs but will turn off the two-way communication on their smart meters at customers’ requests.
Only two states allow customers to refuse smart meters at no cost: New Hampshire and Vermont. However, in a February 2019 decision, the Iowa Utilities Board ruled that Interstate Power and Light’s residential customers must be allowed to opt-out at no additional charge following a tense rate case. The ruling does not preclude Interstate or any other utility from submitting opt-out fee proposals for future consideration.
Legislation to implement statewide policies have been introduced with increased frequency as more utilities begin AMI deployments. Since 2016, legislators in at least 17 states have introduced smart meter opt-out bills, although few of these have passed. In most cases, these bills would permit customers to opt-out without incurring any additional costs. However, in 2016, a bill in New Hampshire would have reversed the state’s opt-in policy by permitting utilities to assess a surcharge on customers who choose to opt-out of smart meter installation. Though the bill ultimately failed, its consideration demonstrates that the state’s earlier decision to allow customers to freely decline smart meter installation is not without its critics.
Supporters argue that as smart meter installation becomes more common and customers become more familiar with the technology, the issue of smart meter opt-outs is likely to fade. Until that time, however, some states will continue to consider opt-out policies to provide greater customer choice.