Some Question the Intelligence of Promoting Smart Meters

Originally published: 10.01.12 by Charlie McCrudden


The government has invested in their implementation, but concerns plague this energy-regulating technology.

Smart meters have experienced a bit of negative press lately, and their proponents are on the offensive.

Smart meters are supposed to be the wave of the future, part of the futuristic “smart grid” of electricity distribution lines that use technology to solve some of the common problems that vex homeowners and utilities alike.

In a perfect world smart meters and the smart grid would help prevent brownouts and blackouts caused by overloaded grids, direct crews more quickly to outage areas, and help homeowners reduce their electricity bills.

Utilities like smart meters because they help to reduce their peak loads during hot weather, allow them to charge variable rates based on the time of day, and have more interaction with their customers.

Many utilities companies across the country have been installing smart meters on residential dwellings and commercial buildings within their service areas, but how they work and what happens when they fail to work properly has caused a number of utility commissions to slow down or even halt their implementation.

Some contractors have experienced smart meter-induced headaches when they get calls from homeowners upset because their air conditioning isn’t working. Sometimes it’s a legitimate service call, and sometimes it’s because the smart meter has automatically adjusted the system to reduce the peak load.

Concerns like these have contributed to a curtailing of installations as utilities and the companies that manufacture smart meters react to the resulting negative feedback.

To better understand the emergence of smart meters, you have to go back to Congress’ response to the economic crisis in 2008, the Emergency Economic Stabilization Act (EESA). While EESA’s most talked about provision was the Troubled Asset Relief Program (or TARP), the bill ended up as weighted down as a Christmas tree — a must-pass piece of legislation covered with other bills and amendments. 

For example, HVACR contractors found that EESA extending the Section 25C residential energy tax credits for 2009, extended the Section 179D commercial building tax deduction until 2013, and extended the $2,000 new energy-efficient home tax credit that could be claimed by home builders.

Section 306 of EESA allowed utilities to apply an accelerated recovery period for the depreciation of smart meters and smart grid systems, so they could write off the purchase of smart grid technologies over a 10-year time frame instead of 20 years.

Accelerated depreciation is a common way of using the tax code to encourage the purchase and implementation of newer and better — but typically more expensive — technology.

Congress has used the tax code to implement accelerated depreciation to benefit construction and replacement of restaurant, lease-held, and retail buildings where a building owner can write off certain improvements at a 15-year rate instead of the typical 39 years.

ACCA and its industry partners have been trying for years to get an accelerated depreciation on commercial HVACR equipment. The current rate at which a building owner can write off a new chiller is 39 years.

But everyone knows a properly installed and maintained piece of equipment has a 20- to 25-year life expectancy at best. So there’s no incentive to buy a new one when there’s no tax advantage.

The provision in EESA reducing the depreciation schedule from 20 years to 10 was estimated to cost $915 million dollars over 10 years. The end result is the government pays $90 million a year to see an investment in the smart grid infrastructure and greater potential in energy efficiency and consumer savings.

Within five months the American Recovery and Reinvestment Act (ARRA or the Stimulus bill) infused more federal investment in the smart grid and smart meters by creating a $3.4 billion grant program intended to lead to the rollout of about 18 million smart meters, 1 million in-home energy management displays, and 170,000 smart thermostats, as well as numerous advanced transformers and load-management devices.

Many utilities across the country now offer their residential customers money if they sign up to have their regular analog meter replaced with a smart meter. My own electricity provider’s program offers me an initial credit plus a monthly credit based on how much control over my thermostat I cede to them between the months of June through October.

When the really hot and humid weather hits the metro D.C. area, the utility can then dial back the energy use by controlling the thermostat in thousands of homes, thereby reducing the chances of blackout or grid overload.

While this may seem to be a mild inconvenience for some, not everyone is willing to relinquish control of their air conditioner or heat pump, especially when they need it most. Still other, more serious problems have plagued smart meters over the last six months.

Incidents of smart meters catching on fire have been reported in Alabama, Florida, Pennsylvania, Illinois, and Texas. 

One utility in Pennsylvania suspended its smart meter installation program while it investigates 29 cases where the smart meters caught fire or overheated, and in two cases the fire caused serious damage, according to a story in the Philadelphia Inquirer.

A Chicago utility attributed three fires to the fitting and connection between the smart meters’ and the homes’ older socket.

In Maryland, the Public Service Commission (PSC) convened a hearing with the state’s utilities to discuss their smart meter implementation plans.

While no incidents have occurred in Maryland, the PSC called the hearing in response to citizen concerns about not only the fires, but also reports that there are health and privacy issues related to the wireless signals transmitted by the smart meters. 

A local advocacy group there is arguing that exposure to the electromagnetic and radio frequency signals from smart meters might have negative health effects on the children, the elderly, and pregnant women. The Texas Public Utility Commission held a contentious hearing in August.

Individuals opposed to the smart meters came out in force, and many were spurred on by conservative talk show hosts who argued that the smart meters were a new form of government approved surveillance. These concerns arise out of how the meters continuously monitor the home’s energy use and report that data back to the utility.

In response to all these problems, the companies that manufacture smart meters are making improvements so they shut themselves down in the event they overheat.
And in states where the smart meters are part of an installation rollout, citizens, lawmakers, and public utility commissions are calling for an “opt out” option.

Already Vermont, California, Maine, and Nevada allow residents to keep their analog meters.

The federal and state governments have bet billions in lost revenue through tax incentives that smart grid infrastructure and smart meters will lead to greater efficiencies, positive economic benefit, and a more stable electric infrastructure.

It’s not clear if that gamble has paid off, in part because the game is still being played. Better smart meters that can’t catch fire won’t alleviate the health or privacy concerns, so it’s unlikely these issues will go away.

Since a building or home’s HVAC and hot-water systems are responsible for more than 50% of a structure’s energy use, utilities might be better served by helping homeowners afford higher efficiency appliances that are installed to ANSI recognized standards, such as ACCA’s ANSI/ACCA 5 QI – 2010 (HVAC Quality Installation Specification). 

Charles McCrudden is Vice President/Government Relations for the Air Conditioning Contractors of America, www.acca.org. He can be reached at charlie.mccrudden@acca.org.


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