Utilities' smart meters save money, but erode privacy

By Andrew Maykuth

Inquirer Staff Writer

Those new smart meters Peco Energy Co. and other utilities will install soon are being touted as money-savers that will give customers more control over their electric bills.

But for the utilities, the meters' real worth lies in the information generated, including details that some customers might prefer remained secret.

Already, Peco is analyzing daily readings to spot thieves who intermittently bypass the meters and steal power. And experts looking at meter data can discern the telltale signs of illicit activity, such as a marijuana "grow house."

But the new generation of smart meters that Pennsylvania utilities are required to install will produce far more data, generating readings at least hourly. The meters could record material so frequently that power flows could be interpreted like DNA to reveal unique electrical signatures of individual appliances.

Some experts imagine an Orwellian future in a carbon-constrained world, where consumers are cited for excessive electricity use, or divorce lawyers comb through meter records and ask: Who used the hot tub while the spouse was away?

"The privacy implications are astounding," said Susan L. Lyon, a Seattle lawyer who specializes in data-security issues. She compared the smart grid's potential benefits - and risks - with those of the Internet.

"The drive to retool the United States' electricity generation and distribution networks may inadvertently raise a monster with unparalleled abilities to invade residential privacy," Elias Leake Quinn, a research analyst at the Center for Energy and Environmental Security in Boulder, Colo., wrote in a recent paper on smart meters.

Last month, the Colorado Public Utilities Commission opened an inquiry into the privacy implications. Other states are expected to follow.

"I think smart meters do raise issues around cybersecurity and data security that the industry in general hasn't addressed fully yet," said Bernard Bujnowski, president of Utilimetrics, a utility-technology association.

Peco announced plans last month to spend $650 million in 10 years for improvements to its distribution system, including installing 1.6 million smart meters. It applied for a $200 million federal stimulus grant to accelerate the plan and deploy 600,000 meters in the next three years.

Smart meters, which Pennsylvania is requiring for all large electric utilities, allow for two-way wireless communication with customers. They will set the stage for time-of-day discount pricing to encourage off-peak consumption. And for customers who consent, utilities can control some home appliances, such as air conditioners, remotely by sending a signal to a smart meter.

Smart meters also will allow utilities to shut customers off remotely; currently, a crew has to physically disconnect the meter. They also will improve utilities' ability to detect and manage outages.

But because they capture so much information, the meters also can reveal intimate details about activity inside a customer's house: when they are home; when they sleep; when they eat.

"What if insurance adjusters determined that you were coming home night after the night when the bars closed?" asked Quinn. "The smart grid will contain a library of information."

He acknowledged that some of the fears were hypothetical and "off the wall": Will the diet police really want to know who opened the refrigerator at 3 a.m.? And that utilities are adept now at keeping things private.

"Utilities tend to be very protective of their information, especially for big users where electrical usage is a trade secret," Quinn said.

Still, he recalled that in 2007, the day after Al Gore's climate-change documentary, An Inconvenient Truth, received an Oscar, Tennessee political activists released the purloined electric billings for Gore's Nashville mansion to embarrass him - his usage was nearly 20 times the national average.

The Pennsylvania Public Utility Commission, in its smart-meter directive in June, acknowledged public concerns about keeping data secure. The PUC also said that it did not intend to preclude third parties from obtaining raw meter data "with customer consent."

"We wouldn't share customer data unless we had a contractual arrangement and a disclosure around privacy," said Charles H. White, a director in Peco's customer-operations department.

Analysts are only beginning to exploit the flood of data produced by the current generation of digital meters, which utilities such as Peco installed in the last decade to replace manual devices that had to be physically read every month by a meter reader.

"Utilities were putting that data on the shelf and not using it - terabytes of information," said Rick Brakken, chief executive officer of DataRaker Inc., a Sausalito, Calif., firm that specializes in analyzing energy data.

Brakken said DataRaker had devised algorithms that compared meter readings with weather patterns and public information on properties to detect abnormal consumption - too high, too low, or conspicuous interruptions.

Officials in Peco's Revenue Protection Unit, which investigates meter tampering, speak highly of DataRaker's services, which they have employed for two years. Peco investigators verified thefts at more than 80 percent of the accounts flagged through DataRaker's analysis.

Because bills are based on a single monthly reading, electricity theft often is committed by customers who systematically bypass meters when they mistakenly believe readings are not being taken.

Brakken's software demonstrated its value a few years ago at PPL Electric Utilities Corp., whose meters take hourly reads, said Bujnowski, who headed advanced metering at the Allentown utility before he joined Utilimetrics.

The analysts pinpointed the records of a customer in an affluent all-electric subdivision whose consumption shut down every Friday and resumed at the end of the weekend, Bujnowski said. At the house, PPL investigators found the meter rigged with a switch that allowed the customer to divert power.

Theft detection is only one benefit utilities say they will derive from more thorough meter analysis. Some utilities are analyzing data to pinpoint customers whose consumption is falling inexplicably, a sign of a failing meter that needs replacement.

Peco said it was exploring using DataRaker to identify customers with excessive energy use compared with their neighbors and offer them weatherization or low-income assistance. By targeting heavy users, the utility can maximize energy-conservation grants.

And after a Peco meter analysis revealed winter consumption had grown dramatically in some North Philadelphia neighborhoods where customers switched to electrical heaters, the utility last year replaced 17 overloaded transformers in danger of failing.

Brakken said he believed some benefits of smart meters were overhyped for the small savings they would provide.

But helping utilities understand their customers, and helping customers better understand their usage, can reap real dividends, he said.

"The real value of smart meters is the information."

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