How smart are smart meters?
By Michelle Warren • Bankrate.com

Aileen Leblanc looks forward to getting a smart meter to measure her electricity consumption. The Toronto woman has noticed a sharp increase in her hydro bill of late and thinks a smart meter will help her figure out why.

"I don't know what I'm doing differently, so hopefully it will help me see where it's going," says Leblanc, a recent retiree who lives on a fixed income.

However, if Leblanc plans to conduct any kind of experiment by turning different appliances on and off to see which ones eat the most electricity, she's out of luck. Like many consumers, Leblanc is under the impression that her smart meter will come equipped with an indoor monitor that will allow her to track every morsel of energy consumption. But that isn't the case.

"There are different meters being used across (Ontario), but they're not required to have inside monitors," says Martine Holmsen, a spokeswoman for the Independent Electricity System Operator, which connects all industry stakeholders, including generators that produce electricity, transmitters that send it, retailers that buy and sell it, industries and businesses that use it in large quantities and local distribution companies.

While indoor visual display units are available and were used in some of the pilot projects around reducing consumption, they are not part of the program rolling out across Ontario, which aims to install a smart meter in every home and business by 2010 at an estimated cost of $1 billion. Similar programs are being introduced at varying degrees across the country.

That leaves consumers wondering just how smart these smart meters are.

What is a smart meter?
Smart meters will be the new norm within a couple of years, as they replace traditional meters across North America and Europe. That's because while the old meters measure electricity use over time, they don't reflect how much electricity is consumed in a given moment.

Smart meters, however, record electricity consumption on an hourly basis and send the information directly to the utility provider. As a result, the new meters will bring an end to estimated billing and relying on meter readers to trudge from house to house recording readings.

Why switch to time-of-use pricing?
When everyone uses electricity at the same time, it creates what are known as a peak demand periods. This translates into higher costs, because higher demand often drives up market prices. By measuring consumption on an hourly basis, providers will be able to determine peak periods more accurately and introduce time-of-use, or TOU, rates.

At the moment, the cost reflected on our bills is determined by averaging out the more expensive daytime rates with less expensive nighttime and weekend rates because current meters cannot measure when we used the electricity. TOU pricing is meant to better reflect how the electricity market works and provide consumers with accurate billing based on when they consume electricity.

The Ontario Energy Board has not yet established a date for mandatory TOU charges -- at the moment, each utility is working on its own timeline. Bruckmueller says Toronto Hydro has already introduced it to 250,000 households and it is expected to be fully in place by January 2010.

The argument for indoor meters
One of the ideas behind the investment in smart meters is to help people manage their consumption, use less energy and cut costs. However, studies show smart meters fail to reduce consumption if people cannot see how much they are using.