Smart meters are devices that can report on a household’s power usage, and in some cases they can control newer appliances. A smart meter is more complex than the traditional power meter. The power company has to purchase and install the smart meter, which adds a cost to each customer’s bill.

Power meters in Northern California caused a lot of controversy. After the installation of these meters in households in the San Francisco Bay Area, around Fresno, and near Eureka, many residents saw their power bills increase. This was not because of the smart meter installation costs alone. The traditional power meter is not as effective at recording all of the energy a household uses, so the smart meters often provide a higher power usage reading.

Since the smart meter can record detailed information about the appliances in a consumer’s home, many power company customers are concerned about privacy. Harvard University states that Texas established a state law which says that the usage information that the smart meter collects is the property of the customer, not the power company.

It is possible to use the smart meter data to find out whether residents are home, or which appliances the residents are using. A paper from the University of Massachusetts states that a traditional power meter only shows how much power a household uses in one month, but the smart meter can provide a precise reading of power usage at any time. A spike at a certain time can show whether a resident is preparing lunch or dinner, or is heating up hot water to take a bath. The smart meter does transmit information to and from the power company, so it is possible for a hacker to intercept the data. A good smart meter system design should include encryption, especially if the smart meter uses wireless networks to transmit information.

One of the main benefits of the smart meter is that it is connected to the power company remotely. Power companies in the past had to hire a meter reader, who would drive around the neighborhood and read the information off each meter. Sometimes the meter reader had to make another trip because the household had junk blocking the meter so the reader couldn’t see it, which could lead to an additional fine for the household. The power company does not need to have the meter reader drive through the neighborhood anymore once it installs smart meters, which reduces fuel costs and auto maintenance costs.

It will take many years to pay off the cost of the smart meters. From the Harvard University study, one project had an installation cost of around $700 million, operating cost of $200 million, and savings of $200 million. The power company will pay off this $700 million by charging each customer $3 a month, or $36 a year.