Just Exactly What is a Smart Meter?

What is a Smart Meter?

Electric Utilities are pushing ahead with smart meter installation. Just what is a smart meter, you might ask? This initiative is the first step toward an eventual smart grid that will handle green energy effectively and increase the efficient use of electricity. According to the U.S. Energy Information Administration, almost 25 percent of households had smart meters installed in 2011, with the installed base increasing at about 10 percent per year. Essentially, a smart meter measures electricity use just like the old meters, but it can have storage, data processing and data transmission capabilities. Some smart meters are smarter than others.

Smart Grid

The concept of a smart grid addresses two major problems that utilities face over the long term. Because all the cheap energy sources are already being used and new plants have to meet environmental standards, new power generation is going to be very expensive. The least expensive green energy, wind power, is not reliable because the wind can stop blowing. A smart grid addresses both these problems by making more efficient use of existing generating capacity and adding the ability to reduce load when power from sources like wind generation fails.


Electric MeterUtilities see both the expense of additional generation and the intermittent nature of wind power as overload problems. If they have growing demand and can’t build new plants, they have a long-term overload problem. If wind generation suddenly fails because the wind stops blowing, they have a short-term overload problem. But a lot of the power plants produce no power most of the time. They only produce power when there is a peak in demand producing an overload.

It takes a long time to start up a power plant so the utility has to keep them running on standby in case there is a peak. If a utility could avoid the peaks, it wouldn’t have to run power plants on standby, reducing costs. Even better, it could use some of the standby plants to generate power, addressing the long term overload problem and avoiding the need for new power plants.

Load Shedding

A fast and efficient way to address short term overloads without running power plants on standby is to reduce the load. Utilities have always had this type of arrangement with large industrial customers. They offer uninterruptible power at a high price and interruptible power at a discount. When there is a peak, the utility disconnects the interruptible power, which industrial customers use for non-critical equipment like storage tank pumps and bulk material heating. A short time later, the utility reconnects the power. Often the company doesn’t even notice, but pays much less for the interruptible power. Smart meters, along with other smart devices such as smart thermostats, will eventually let you get the same benefits as large industrial customers.

What is a Smart Meter?

Simple smart meters measure the voltage and the current, record the values digitally, and calculate the power used. They send this information to the utility, which uses it to bill you. Since it gets digital values of your power usage at any given time, the utility can use the information to more accurately predict load peaks for your area. You can often access the same information on a website and analyze how you use electricity.

More powerful smart meters will have the capability to interact with thermostats and devices controlling other loads. You’ll be able to program the devices to reduce your power consumption during peak usage when power will be more expensive.

Peak Power Management

When powerful smart meters are in place, along with other smart devices like thermostats, you’ll be able to manage your electricity use the way you want. You can turn some management over to your utility, program your devices yourself or do the controlling manually. Your utility will charge different prices depending on the time of day and peak power usage.

You may, for example, allow your utility to disconnect your electric hot water heater and adjust your thermostats slightly during short-term peaks. You would then pay less for the power you use. Alternatively, you can program your devices to function during periods when power is cheap and turn your air conditioning down during high cost periods, such as early evening when people get home from work.

Smart Meter Issues

Some people object to the new meters, ask what is a smart meter and have other valid issues. The new meters are electronic and generally more accurate than the old ones. If you see substantially different readings after the installation of a smart meter, there was probably something wrong with the old one or the new installation is faulty. Privacy concerns are valid and many utilities have not addressed them.

Data transmission has to be encrypted and you have to be able to access the same data that the utility receives to check for discrepancies. If you don’t want your utility to switch your loads, you have to be able to opt out. Most utilities allow residents to opt out of their smart meter programs, but, in that case, you will be paying the higher rates that would apply without the smart grid.