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Consumer Advocates Question the Benefits of Smart Meters

AARP says more consumer protection is needed

Rudolph and Catherine Soto of Glendale have an electricity plan that charges higher rates from 3 to 6 p.m. Both in their 70s, the retirees avoid using the clothes dryer or dishwasher during those hours. They check their energy use online twice a month through their utility's "smart metering" system, and they have been able to cut back when the bill looked like it might be too high.

Last year, they saved about $400 and they expect to save even more this year. "When we started to see some savings, it got our attention," Catherine said.

In Arizona and almost every state, smart meters, which allow utilities to track and control power usage in homes and offices by using cellphone-like radio signals, are rapidly replacing traditional electric meters — and the workers who read them.

Arizona's two utility giants, the Salt River Project (SRP) and Arizona Public Service (APS), have installed smart meters in 1 million households. Most of the rest of the state, another million homes, will be hooked up by 2013.

With the new metering system, customers can go online and compare energy use daily, even hour to hour. That helps them better estimate their energy costs for the month. Mike Lowe, SRP customer service manager, said the new information can help those on fixed incomes see whether they need to cut expenses elsewhere or reduce their energy use.

Tammy McLeod, vice president and chief customer officer for APS, said smart meters also help utilities restore power more quickly after storms because they don't have to wait for customers to report outages. With the smart meters, utility workers can better pinpoint areas with outages and get repair crews out faster.

Concern over remote cutoffs

While the long-term goal is to reduce peak demand for energy, the new meters have their critics. Consumer advocates, including AARP, the Consumers Union, Public Citizen, the National Association of State Utility Consumer Advocates and the National Consumer Law Center, are concerned that smart meters will allow utilities to disconnect customers without sufficient warning.

"People shouldn't have their electricity cut off in Arizona's heat without having a visit from a utility company employee," said Steve Jennings, AARP Arizona associate director.

Utility officials say they will make phone calls or send e-mails, but independent consumer consultant Barbara Alexander, who helped prepare a report on smart meters for AARP and other consumer organizations, said those methods don't work for many frail or mentally challenged older people.

"Utilities used to pat themselves on the back for being a presence in neighborhoods. They were another pair of eyes to spot residents who need help," she said.

Soto has sleep apnea and uses a breathing machine at night. He has an agreement with SRP that it will not disconnect him without prior notice. He urges other people with medical conditions that require constant power to contact their utilities. Customers who show proof (such as letters from their doctors) that they have a medical condition that requires energy-dependent equipment such as respirators or breathing machines, can ask to be placed on a "do not cut off" list for power.

Consumer advocates also argue that the utilities should bear a greater share of the meters' cost. The utilities do not specifically charge to install smart meters but spread the costs to all customers.

"The cost of the new smart meters should be shared by the utility and not borne entirely by the consumer," Jennings said.

Alexander urges state regulators and lawmakers to create additional consumer protections to keep up with the technology. Privacy is an issue, she said, because utilities are gathering an immense amount of information about how we live. They know when you are home and what appliances you are running. "Many businesses would love to have access to that kind of information."

Utilities say concerns unwarranted

Arizona utility executives dismiss those concerns, saying state law prohibits selling customer information. They also point to their cybersecurity safeguards, but Alexander notes that hackers sometimes break into seemingly secure databases.

Ellen Zuckerman of the Arizona branch of the Southwest Energy Efficiency Project said smart meter installation needs to be accompanied by consumer outreach and education. Otherwise, she said, "consumers might not know how to realize the benefits of this technology."

Although California residents have made thousands of complaints about smart meters to the state's utility regulatory commission, hardly any have been filed here, said Arizona Corporation Commission spokeswoman Rebecca Wilder. She said customers with concerns about smart meters should call their utility company first. If they still aren't satisfied, they can contact the commission by calling the consumer service line at 1-800-222-7000 or they can e-mail

Lowe, of SRP, said he is only aware of about a dozen complaints, primarily from customers who have seen their bills go up when the new meters were installed. It has usually been for one of two reasons: either a meter was installed just before a hot spell and customers linked a higher bill with the meter change or customers had older mechanical meters that had become less accurate with age. He said the new meters are more accurate.

Prepaid meters result in higher rates

Another concern is that the smart meters will accelerate the move toward prepaid utility services (similar to prepaid cellphones) for poor-credit customers. The Salt River Project, the nation's third largest utility, is already considered a national leader in prepaid power metering for low-income families. A review of M-Power, as it is called, by the Arizona Republic in 2010 showed the program results in higher rates and automatic disconnections for the poor. Traditional regulation, bypassed by prepaid metering, discouraged utilities from disconnecting the elderly poor.  

Arizona Public Service is also moving into prepaid power. The Arizona Corporation Commission in February granted APS permission to install 2,000 prepay meters, a move strongly opposed by AARP.

"APS sold this as a way of getting ratepayers to conserve energy.  It definitely will — when a senior's money runs out the meter automatically makes the house go dark." Jennings said. "This plan removes the current legal protection that a personal visit is required before electricity can be terminated. … Our citizens deserve better from the Arizona Corporation Commission than their quick approval of the utility's plan with a promise to address consumer protection later."

AARP Arizona is looking for volunteers to attend Arizona Corporation Commission meetings when issues related to smart meters come up on future agendas.

"We need to keep informed on this important issue," Jennings said. Call 1-866-389-5649 toll-free if you'd like to volunteer.

Maureen West is a freelance writer based in Phoenix.

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