Customer revolt may threaten rollout of smart grid

Consumer backlash and cost concerns may cause delays in the nationwide rollout of "smart" utility meters at the center of the Obama administration's $8 billion push to update the U.S. electricity grid.

PG&E, owner of California's largest utility, halted meter installations in Bakersfield, north of Los Angeles, after hundreds of customers complained that readings weren't accurate.

The meters, part of a so-called smart-grid initiative billed as clearing the way for more renewable-energy use, are designed to help consumers conserve power during periods of peak demand.

Martha Johnson, pastor of a church in Bakersfield, said her utility bill almost doubled from a year earlier to $874 in July after her new meter was installed. "That caught my eye because I've never had a bill that high," said Johnson, 64.

PG&E, which faces a lawsuit from a Bakersfield customer who's seeking class-action status, says its meters are accurate and hot weather and increased rates led to higher bills than consumers expected.

The state Utilities Commission ordered an independent study of billing accuracy.

Whether PG&E's complaints stem from perception or defects, they may slow U.S. installations of the meters.

"If customers lose confidence in smart meters, I would expect regulators would be more reluctant to grant rate increases to install new meters across the system," said Travis Miller, a utility analyst at Morningstar.

The devices allow utilities to check energy use remotely, eliminating the need for employing meter readers. They can be connected to equipment that shows customers when rates are highest, allowing households and other consumers to shift power use to less costly periods.

Smart meters also give utilities more control of demand, helping them match usage with renewable electricity flows, such as from wind and solar power.

There are about 8 million smart electric meters in the U.S., and that count will jump sevenfold by 2019, according to the Institute for Electric Efficiency.

"Other states are looking very closely at what is happening in California," said Mindy Spatt, a spokeswoman for the Utility Reform Network, a consumer group in San Francisco. "What we know for sure about the meters is they are job killers and they are very expensive. The rest is just pie in the sky."

Utility-consumer groups across the country have raised cost concerns about meter projects, said Charles Acquard, executive director of the National Association of State Utility Consumer Advocates.

Ben Schuman, an Portland-based analyst who covers such meter makers as Spokane Valley-based Itron at Pacific Crest Securities, said the devices installed so far have proved accurate. The unknown is whether consumers will use the technology to cut power costs, he said.

Regulators in states such as Connecticut and Texas are pressing utilities to show how smart meters will benefit consumers. In November, Indiana regulators rejected a proposal by Duke Energy to install about 800,000 smart meters after concluding the company didn't show the plan's long-term rewards. Duke plans to reapply in January.