NASUCA letter raises cost concerns of smart grid technologies

The National Association of State Utility Consumer Advocates (NASUCA), in its letter to President Barack Obama, urges rejection of the request by General Electric, smart grid vendors and other signatories who are seeking to link access to federal programs related to electricity distribution and energy efficiency to smart grid technology access. NASUCA argues smart grid technologies are expensive and evolving and should not be forced on consumers.

President Barack Obama
The White House
1600 Pennsylvania Avenue, NW
Washington D.C. 20500

Dear Mr. President:

Recently, your office received a letter dated April 5, 2010 from General Electric and other smart grid vendors, as well as a handful of environmental organizations and public policy think tanks, asking your Administration to "adopt the goal of giving every household and business access to timely, useful and actionable information on their energy use." The undersigned groups believe such a policy which would link access to important federal programs related to distribution and energy efficiency to smart grid technologies will have detrimental effects on utility customers across the nation and urges you to reject this request.

Among the appeals made by the signatories of the letter is that you "(d)irect the Department of Energy and the Environmental Protection Agency and ask the Federal Energy Regulatory Commission to add the availability of timely, useful and actionable energy information to consumers as a criterion for consideration in rulemakings, grants and other programs related to end use electricity distribution and energy efficiency." The letter further requests that your Administration encourage the purchase and installation of technologies, devices and methods of delivery of energy consumption data, and should "consider access to this information as part of any program aimed at improving home and building energy performance."

Although not explicitly stated, the industry letter appears to request that you direct the aforementioned federal agencies to precondition access to essential energy efficiency and weatherization funds, such as LIHEAP (Low Income Heating and Assistance Program) and HWAP (Home Weatherization Assistance Program) on the deployment and availability of real time energy consumption and pricing data through smart grid technologies. This suggestion, if acted upon, could have devastating consequences to the millions of consumers who rely on LIHEAP and HWAP assistance to ensure access to essential, affordable utility services. In these times of economic uncertainty, access to federal energy assistance programs is critical to ensuring the health and safety of millions of utility consumers, and should not be predicated on whether consumers have access to smart grid technologies and specific pricing plans.

While potentially promising, smart grid technologies are expensive and evolving. There is evidence in California and Texas that consumers associate the installation of smart meters with higher electricity bills. We believe that achieving the laudable goals of shifting and reducing energy usage must be done in the most cost-effective manner. For example, there is much untapped potential in the promotion of cost-effective energy efficiency and demand response measures that have not only proven to reduce energy usage, but also lower monthly utility bills. To that end, we believe that it is essential that states, federal agencies and utilities conduct detailed analyses of the costs and benefits of smart grid utility proposals before they are approved for deployment and utility customers are required to pay for them. While a customer's access to his or her own usage information is beneficial, consumers have legitimate concerns over the release of information to third-parties, including vendors, without permission, and the privacy and security of such information. States must be permitted to retain authority over these important decisions that impact the daily lives and budgets of energy consumers.

Moreover, advanced meters and the pricing options associated with such technology must be offered on a voluntary basis and must be accompanied by considerable customer education. If customers are suddenly put on price-responsive tariffs without understanding them, the consequences to these customers could be economically dramatic, particularly for low-income senior citizens on fixed incomes. Further, such dramatic consequences could result in customer rejection of the concept. Customers who are offered these rate designs must understand how they work so that they can take advantage of pricing design options.

We urge you to reject the request from the various vendors and other signatories to the above-referenced April 10th letter to link access to federal programs related to electricity distribution and energy efficiency to smart grid technology access. We, too, stand ready to assist you in your commendable efforts to reduce energy usage while ensuring that utility services remain affordable to all customers.


National Association of State                              Public Citizen
Utility Consumer Advocates

National Consumer Law Center                           National Community Action
(On behalf of its low income clients)                    Foundation

Consumers Union

Obama Letter5 20 10

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MAY 20 2010
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