Consumers Resist Smart Meters After $3.4 Billion Stimulus Push

PG&E Corp., Cisco Systems Inc. and General Electric Co. are all betting that energy-monitoring devices will catch on in homes. Convincing consumers that they’re 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. About 43 percent of U.S. homes will have the new meters by 2014, up from 14 percent at the end of last year, according to Dallas-based market researcher Parks Associates.

Even with $3.4 billion in U.S. stimulus funds behind it, the race to install smart meters is starting to lose momentum, Bloomberg Businessweek reports in its Sept. 20 issue.

“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.

In Hawaii, regulators rejected a $115 million plan in July by Hawaiian Electric Co. 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, California, have filed a class-action lawsuit against San Francisco-based PG&E, accusing the utility of overcharging since smart meters were installed in homes.

A study by Structure Group, a Houston-based independent consultant, found that PG&E’s smart meters are more accurate than the older versions they replaced. Paul Moreno, a PG&E spokesman, says the meters will save customers money over the long term.

‘Educate Folks’

Utilities and the companies that manufacture the meters are joining to overcome the mounting resistance. In March, GE, International Business Machines Corp. 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,” says Ron Sege, chief executive officer of Echelon Corp., a San Jose, California-based company that makes hardware and software for smart meters to communicate with utilities. “That is a good part of the problem.”

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.

‘More Paced’ Approach

Duke Energy Corp.’s 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, North Carolina-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.

Even with the roadblocks, companies continue to invest heavily in meters. On Sept. 2, Cisco announced plans to buy Arch Rock Corp., a San Francisco-based company that makes wireless technology to transmit data from smart meters to utilities.

Says Charles Carmel, vice president for corporate development at San Jose-based Cisco: “The smart grid will be a multibillion-dollar opportunity for players like Cisco and others for a number of years to come.”

To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net

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