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Smart Grid in America and Europe (Part II)

Past accomplishments and future plans.

Fortnightly Magazine - February 2011

which will be funded by $130 million in federal grants and $236 million in ratepayer contributions. 22

Consumer dissatisfaction with smart meters and cost recovery of smart meters are examples of the larger issues of consumer education and paying for the smart grid. Successful smart grid implementation requires that these issues be dealt with seriously. 

Consumer Privacy

Another smart meter challenge is protecting the privacy of consumer information. 23 Smart meters generate more detailed information, stored in a digital database. They can detect power spikes of appliances in a home, like dishwashers, medical equipment, and water heaters. They can generate between 750 to 3,000 data points a month, hundreds of times more than traditional meters that are read once a month or once every three months. 24 Consumers are concerned that the new information can be used as surveillance by a variety of parties, including government entities. Furthermore, a variety of businesses and organizations are interested in the valuable information about daily life activities, patterns, and behavior. The information can even be used by life insurance companies to assess premiums. Another related concern is the security of the information transmission paths. If providers use unsecured paths to transfer information, then the private electricity consumption data can be available to hackers. 25 

Other than traditional consumer information privacy rules, no rules address the unique privacy challenges relating to smart meter data. 26 The E.U. Commission Task Force for Smart Grids examined consumer privacy and suggested, among other things, that the group first determine how the existing E.U. privacy framework can apply to privacy and data protection issues associated with the smart grid. 27 Despite the large rollout of smart meters in Italy, consumer privacy has not been addressed. In 2009, the Dutch First Chamber refused to approve a bill making smart meters mandatory in all homes pursuant to an E.U. Directive. The Dutch First Chamber considered the mandatory nature to violate privacy rights and, similarly, a consumer organization found that the bill violated the right to privacy as guaranteed by Article 8 of the European Convention on Human Rights. 28 The E.U. does not have privacy laws specifically addressing data generated by smart meters. 29

In the U.S., privacy specific to smart meters and smart grid technology is being addressed at the federal level. 30 NIST is looking at privacy issues preliminarily. The recently finalized 2010 Guidelines for Smart Grid Cyber Security discussed privacy principles derived from international standards such as those from the Organization for Economic Cooperation and Development. NIST listed the following privacy principles as important when developing the policy: 1) management and accountability; 2) notice and purpose; 3) choice and consent (ownership of information); 4) collection and scope (granularity); 5) use and retention; 6) individual access; 7) disclosure and limiting use; 8) security and safeguards; 9) accuracy and quality; 10) openness in utility activities, monitoring, and challenging compliance to privacy rules. 31 The Department of Homeland Security also has similar privacy principles. 32 Some states are in the process of developing their own smart grid privacy rules. California mandates