Smart Meters Save Big Money for Michigan Town

Smart Meters Save Big Money for Michigan Town
December 22, 2011

Ann Arbor—Michigan’s sixth largest city, with a population of 114,000—estimates the university town saves $300,000 a year since implementing smart meters in 2005 to measure home and business energy use. The figure cited by city officials doesn’t reflect additional savings achieved by reducing Ann Arbor’s full-time, meter-reading positions by 80 percent.

The considerable savings to the city and its energy consumers confirm the decision to employ the automated meters, said Sue McCormick, Ann Arbor public service administrator.

“In all honesty, we started with a set of conservative expectations so that we would not overestimate benefit and payback,” said McCormick. “Turns out we have seen benefits significantly beyond what we expected, most notably the ability to share the information from the meters with our customers and use it for our own planning and rate-making.”

Customers Extremely Receptive
Smart meters are a major component of a larger effort known as the Smart Grid. The purpose of the technologies is simple: to get consumers to use less energy, especially during high demand periods, and to minimize power outages.

Ann Arbor, home to the University of Michigan’s main campus, joins a rising number of cities that have adopted smart meter technology. Smart meters transmit data about energy use from consumers’ homes and businesses in real time via low-frequency radio waves to utility companies. The meters enable homeowners to monitor their usage to save energy and lower utility bills by scheduling energy-intensive tasks such as dishwashing and laundry during off-peak hours.

The frequencies employed by the meters have been deemed safe for humans by the Federal Communications Commission.

Customers are extremely receptive to smart metering technology. In fact, when the devices are installed in homes, 82 percent of customers check their devices at least daily, and 87 percent make adjustments in their energy usage based on the results, according to a study conducted by CenterPoint Energy, a Houston, Texas-based company specializing in electricity transmission and distribution, natural gas distribution, interstate natural gas pipelines, field services, and natural gas sales and services.

Concerns Raised
Despite the major advantages of smart meters, some residents around the country have raised concerns about health effects, privacy, and higher costs. In Maine, the state’s public utilities commission investigated complaints about the state’s smart meters. In Texas, a lawsuit was filed claiming smart meters are improperly overcharging customers. In California, there were also charges the installation of smart meters was causing rate increases. Researchers at the University of South Carolina conducted a study showing they were able to “spoof” the devices and display fake data.

Amy O’Hair, assistant director of research for Stop Smart Meters, an advocacy group in California, claims consumer bills are rising because of defective meters or the transition to smart meters and she raises health concerns over involuntary exposure to electromagnetic signals, plus worries about collection of detailed home usage data by a utility.

“Who owns it, and what are they allowed to do with it?” O’Hair asked in an email.

Many Benefits Cited
Ann Arbor Customer Service Manager Wendy Welser says the town has put in place a mechanism that would detect such abuses, and the city receives a daily report that tells whether any meters in the system could have been tampered with.

Whereas the city once employed five full-time meter technicians, Welser explained, it currently requires one person to monitor smart-meter data. Prior to adopting the new technology, “the average age of the meters in the system was more than 20 years old, and [they] required considerable maintenance,” she said, noting 350 “remote-read” devices had to be repaired annually.

Customers with smart meters can access their usage 24/7 as opposed to the old system that gave once-a-quarter readings, which made it difficult if not impossible to respond to higher billing complaints, Welser said. “The benefits to customers and the city are widespread,” she said.

Tom Gantert (gantert@mackinac.org) is senior capitol correspondent for the Mackinac Center for Public Policy in Midland, Michigan.