Smarter Rules for Smart Meters — Episode 204 of Local Energy Rules

Michael Murray:

I think a lot of utilities are in that position. For 15 years now, they’ve successfully deployed smart meters all across the country, air quotes around successfully. I think so often they’ve given short shrift to the consumer benefits. But there’s a playbook for investor-owned utilities to follow. And now I think they’re at the point where the technology has advanced that it’s raising much more serious questions that they just weren’t prepared to answer.

John Farrell:

In the next six years, U.S. electric utilities will deploy 55 million computers on homes and businesses. These sophisticated smart meters will unlock a remarkable amount of data that consumers and entrepreneurs could use to reduce electric bills and support electrification in particular through home energy efficiency programs supported by the Inflation Reduction Act. But the promise can only be fulfilled if the platform remains open. Michael Murray, president of Mission:data Coalition, joined me in February, 2024 to discuss a proposed smart meter deployment in Rhode Island that’s threatened to install a permanent private gatekeeper between customers and their data, and to talk about how we can overcome this common problem everywhere smart meters are being deployed. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system. Michael, welcome back to Local Energy Rules.

Michael Murray:

Thank you, John. It’s a pleasure to be here.

John Farrell:

So I want to start with this. I don’t think I asked you this question when you were on the first time, but am enjoying asking this question to folks who are on the podcast, which is what got you into doing smart meters and utility data and customer data. It seems like a very specific niche. How did you get there?

Michael Murray:

It is. So I started the company with some friends from college and a professor. And so I was young and idealistic and somewhat naive and thought, hey, let’s do an energy management software company right out of college. And as the company was developing, it was sort of the height of the hype cycle for smart meters across the U.S. So in the late two thousands, a number of utilities were starting to invest in advanced meters. And my company, which was called Lucid, we wanted information from meters to just do some basic analytics. Our customers were school districts and colleges and universities, and we used to install submeters in these buildings to get the data that now utilities were saying was going to be much more available as a result of these investments. So we were happy by the prospect of not having to install meters in buildings and just use the utilities infrastructure for that purpose. And as soon as we asked some of the utilities, where’s your automated programming or API for access to this information? Then that’s when they gave us these puzzled looks and said, well, we can’t really give that information to you. There’d be cybersecurity problems. This is not the intended use. We really just wanted to send you bills more accurately. And that was that I saw this yawning gap between what the potential and the vision was that utilities were telling regulators and the public on one hand, and then on the other hand what the reality was, which is it didn’t really meaningfully change anything for the energy management industry. And so one thing led to another and the Mission:data Coalition was put together about 10 years ago with some of my colleagues in the industry who were facing very similar problems. So whether they were in the residential energy management or rooftop solar industry or a commercial and industrial demand response, they all had this common problem of how do you access the information about the customer that is uniquely and exclusively developed by the utility, like the meter electric usage data, and more importantly, how do you access that in a way that is really inexpensive on a per unit basis? And that’s where if you have over 3000 electric utilities in the US and they all do it differently. And so I just realized, hey, there really needs to be an organization that’s focused on this challenge because I didn’t see many other people working on it at the time.

John Farrell:

That’s great. Thanks for sharing that. It’s so funny, this thought came to my mind as you were describing how utilities were saying, oh, we will put in these smart meters and you’ll get access to the data that you’ve previously had to put in your own submeter to get, it’s almost like as they put in these smart meters, which are really sophisticated computers, in some cases it’s like using an iPhone, but just for the call quality, right?

Michael Murray:

Right.

John Farrell:

I’m just going to make a better phone call with this. That’s it. We’re going to bill you more accurately. What a sad, sad story.

Michael Murray:

Exactly. And that’s where the wheels started coming off for me is utilities have interests that are similar to but different from the consumer’s interest. And so when it served the utilities, I think they were happy to deploy the technology and tell the regulators what they wanted to hear. But when it came to delivering on the direct customer side of the benefits for energy management for insights into what they’re doing for access to third party competitive market of energy management services, that’s where the utilities clammed up and said, actually, we’re not really interested in providing any help in that department.

John Farrell:

So I was really interested to have you on because you and I exchanged an email about investor owned utility PPL out in Rhode Island that was going to do a no bid contract on their smart meter deployment in Rhode Island, which you described as giving the vendor a quote, “toll booth authority,” which has started ringing bells for me because of course we have a report called Amazon’s Toll Booth that has looked at the same issue of a company that controls a platform or marketplace and uses that to hinder competition and that this no bid vendor contract would give them a lot of control over the state’s energy policy for the next 20 years. So I was hoping that you could, first, you’ve already kind of alluded to this, these smart meters are going to give a lot more data or can provide a lot more data than the meters that proceeded them. So can you talk a little bit about what it is that they could do? What is the combination of the technology, the hardware and the meter and the software able to provide if we have access to it?

Michael Murray:

So back to the question of consumer benefits that I mentioned before. The biggest change with these new generation of smart meters is that they come with a computer on board and they also have Wi-Fi connectivity. And so those are the two fundamental changes that are different from meters even five or seven years ago. And on the Wi-Fi side, that presents some big opportunities but also some challenges from a competition perspective.

The opportunity is that you could have real time electric usage on the order of once every second broadcast to either devices in your home that could then intelligently use that and reduce your peak demand usage. Or if you’re on time of use rates, that could help be aware of your total consumption and reduce it during those peak hours. But you could also send that information up to a cloud-based service that could tie in with other devices. So those smart home ecosystem for example. Or maybe you have a rooftop solar — and you’ve done several shows on net metering and the claw backs of net metering that are occurring. This real-time information would help customers with rooftop solar self-consume more of their power and basically get more return on investment from their existing solar assets. So there’s a number of different values that a consumer would experience just by having real-time information. So not just the bill at the end of the month, but every second what’s happening. Some customers, maybe energy nerds like you and me, we would look at that information pretty frequently and we’d be really curious what is using what. Most customers probably want a service to just help them manage it. They don’t want to pay that much attention while they’re living their daily lives. Nothing wrong with that, but this gives the devices and competitive market access to that information to at least make decisions and potentially provide notifications like text messages on your cell phone saying, hey, your usage went up. If you do something about this right now, you can save $10, something like that.

On the computing side, this is where the phone analogy really comes into play. So we’ve talked about smart meters, to be brutally honest, I think smart meters were really quite dumb up until very recently. And so these new version, and there’s several major meter manufacturers out there making this new technology. They claim that it has reached cost parity with the older version and there’s an app store on the meter. And so you could load or the utility could load apps that serve different functions. Some of those could be just for the utilities benefit. So looking at safety issues. So there’s something called a broken neutral detection. So if your neutral line has an issue that could potentially result in its safety problem, they could detect that, it can scan the voltage. So if you have power quality problems, it can analyze that and send alerts back to the utility.

So those are in the utility management camp, but there’s also benefits for consumers and there’s a technology that’s been around for about 40 years called disaggregation. And this is looking at the patterns of usage for a whole home at a very high level of frequency, a high level of granularity. And through some statistical analysis you can estimate what is using power within the home. So for example, you could say, oh, approximately 5% of your usage is your water heater, 25% of your usage is your air conditioner. And so that device level identification and quantification of that load is something that these new smart meters are capable of doing. And importantly it can do it at zero marginal cost, so zero cost to the consumer.

So these are really transformative changes in the industry. And what PPL had proposed with their Rhode Island subsidiary was to deploy about 700,000 of these meters over a few years. This was a $289 million project. And certainly what was concerning to me was this no bid contract that they had proposed.

John Farrell:

It’s so interesting. I just want to dwell for a second longer on the capabilities because thinking about when you talk about energy nerds, we’re also sort of maybe forecasting a little bit the capabilities. So I have a home energy monitor on my electrical panel made by a company called Emporia. And so it doesn’t use, I didn’t have a smart meter at the time, but it links up inside the electrical panel and it can tell me how much are all these circuits using on fairly small time increments and whatever. It doesn’t have this disaggregation capability. It can’t tell me what is each device using. I can buy a device specific or plug specific thing that also works with it, but I had to pay a couple hundred bucks out of my own pocket. I had to install it myself, I had to set it up, I needed to recognize it wasn’t going to track everything in my house. That was a lot of work. And for me, it was partly about trying to identify things that were maybe using more electricity than I expected, which is helpful, but also because I’m thinking about, oh, I might want to install a heat pump if my furnace dies, which it actually is in the process of doing right now, and I don’t know if I have enough capacity on my electrical panel to do that. Another thing that could be answered.

So the idea that the utility is going to pay for this meter that can serve purposes on their end and pay for itself, but also would offer services like that to me is very exciting. So the idea of, I’m really interested to dig into that how this no bid contract could have impacted that ability to get to this. So why don’t you talk about you filed testimony in response to this proposal by PPL opposing the direction that they were going. Could you talk about some of the key elements that were in your critique and what you were hoping they would do instead?

Michael Murray:

It was very concerning this possibility of basically delegating the state’s energy policy authority to a private entity. And the way that this would work is under the company’s proposal, was that all of the details about how customer data were going to be accessible or useful to customers, what types of information would be available, what Wi-Fi devices would be allowed and which ones would be prohibited from connecting to the meter. All of these major foundational questions from my perspective, were in the company’s proposal kicked to a working group.

So Rhode Island Energy, which is the PPL subsidiary, said, these are important questions, we will address them, but we’re only going to address them in a working group that we will convene after the commission has given us approval and rate recovery for the deployment. And to me, that really felt like an obligation of the public utility commission’s responsibility because there was no requirement for the working group to have consensus. There was no regulatory review of the working group’s findings. We were basically being asked to accept the company on good faith and no promises beyond good faith they would listen to different stakeholders or desires and comments, then they would have unilateral authority to decide whether to act on any of those recommendations.

And when you add in a no bid contract with a metering vendor, it gets more complicated because the way that these large enterprise contracts are executed is there’s a clear scope of work in the beginning, tens of millions of dollars would go into it. I think it’s a four year project timeframe, something like that. And if there’s a change order in the middle of the contract period, that vendor, regardless of who it is, has a lot of authority. The bargaining power really shifts to that vendor to say, oh, it looks like my client here. The utility wants to do something a little bit different. Well, the alternative is for them to rip out all the meters that we’ve already helped them put into place, and that’s going to be really expensive. So I can effectively name my price on additions or changes to the contract. And there’s ways of mitigating some of those effects with a well-written contract. But nevertheless, uncertainty. Changes midstream always go to benefit that incumbent vendor.

And so one of the issues that I raised to the commission was what happens if the state’s energy policy or climate policy changes such that let’s say there’s an EV charging program that the Rhode Island Public Utilities Commission wants to see enabled, but that the metering vendor, let’s say has a competitive spat with certain EV charging companies. And that conflict between those businesses ends up disadvantaging rate payers because you’re in the middle of a contract, the contract’s already been signed, it would be very difficult to change it or replace it. And I said, the state of Rhode Island may discover much to their dismay that maybe there’s smart thermostat programs or EV charging programs that they’re now unable to access because they’ve been locked into a 20 year contract. And so that’s what I meant by this delegation of policymaking authority. We really, just as a matter of monopoly regulation, we really shouldn’t be in the habit of delegating these things to companies that the regulator needs to retain the ability to on fair and reasonable terms, have the utility byproducts and services that meet the stated policy objectives.

John Farrell:

I think you mentioned this in your comments, but about what some of the implications were, for example, for the implementation of the Inflation Reduction Act around this decision, like if the commission had gone ahead and just rubber stamped what the utility had proposed? I think you’ve kind of touched on this already, right? You mentioned EV charging programs, smart thermostat programs, but the Inflation Reduction Act is pouring money into clean energy investment. Where might there have been some dissonance there between would’ve could have come out of this contract and getting the dollars out the door to support clean energy deployment?

Michael Murray:

One of the biggest opportunities with the IRA, which I don’t think gets talked about very much, is not the tax credits but the home energy rebate program that’s referred to as HOMES. It’s a sort of gobbledygook acronym. It’s contrasted with HEEHRA, which is the electrification rebate program. And HOMES under the IRA is 4.3 billion for measured energy savings in homes. And the state of Rhode Island was getting 30 or 32 million under that program. The US Department of Energy is just now starting to send the money to the states. So this is why people haven’t heard about it because it hasn’t really come to their state yet, but it will soon.

And this is potentially really transformational. We’re talking about 2 to $8,000 per home to fund efficiency improvements. And to prove those improvements, in order to get the rebate, you have to have your energy usage data. And it’s importantly, this is both electric and gas and if you have delivered fuels like propane fuel oil, things like that, which is pretty common in the northeast, you need all that information to demonstrate the reduction. And what was concerning to me about Rhode Island Energy’s proposal was that they really hadn’t thought about that, about how the implementing the IRA HOMES and their Office of Energy Resources, which is the state agency that’s going to be receiving and administering the funding, how they would actually interact with it and use it. And one example is natural gas data. So although this was an electric application for spending on the electric side, we had recommended that the state require Rhode Island Energy to include natural gas usage data. And the argument was this is an absolute necessity if you want to administer these funds coming into the state. Your listeners may not know, but Rhode Island actually has one of the most aggressive climate laws in the country with a very aggressive decarbonization target in 2045. And so this opportunity really can’t be missed.

And so the idea that waiting for a working group one, two or three years from now to then consider the question of, well should natural gas be included, that just was not going to sit well and not comport with the aggressive climate policy of the state. And so that was an example of I think that there’s several others too involving exactly what types of information. For example, if you’re using under the IRA, there’s something called a BPI 2,400 that’s standard from the Building Performance Institute for tracking for basically doing a modeled calibration of energy usage in a home so that you can see how much energy you’d save as a result of some intervention and you need to have in order to pass that standard. A lot of meter readings need to have both, whether it’s an actual meter read or whether it was estimated. So estimated meter readings do happen and that can negatively affect your ability to get a rebate through the IRA. And so again, Rhode Island energy could just decide not to include that actual versus estimated attribute of energy usage and that would throw the administration of this program into chaos.

So those are just some of the examples that made me very uneasy about shifting a lot of this responsibility into a working group.

John Farrell:

So one thing I’m really curious about, and this of course comes from my bias of working a lot on solar where we see a very clear utility opposition to solar, very rationally rooted in the way that utilities often make money. So I’m just curious if you could speculate maybe about why you think the utility proposed this approach in the first place and whether or not there’s some particular financial or other advantage to the utility having a gatekeeper at the smart meter?

Michael Murray:

In this case, it’s always hard for me to speculate on motivation, but I think the pattern that I’ve seen with other utilities, we work in about 10 or 12 states every year, is that the utility wants to give sort of the minimum amount of lip service to consumer benefits with as little accountability as possible while focusing on the capital expenditure and the operational efficiencies that really benefit their bottom line. And as you say, that’s a rational economically speaking approach. And what I think was concerning was twofold. One, shifting some really key questions to a subsequent working group with basically no power and after all the financial decisions had already been made.

That was obviously concerning, but it was also pretty clear that the company hadn’t really thought about any of these big questions. So the fact that there are computers inside the meter, the fact that there was Wi-Fi, I don’t think they’d really wrestled with that role and what that means for them as a sort of digital platform monopoly in addition to just being a wires and poles monopoly. And so I think they were genuinely curious and hadn’t heard opposition of the type that I was putting forward. And I think a lot of utilities are in that position. For 15 years now, they’ve successfully deployed smart meters all across the country, air quotes around successfully. I think so often they’ve given short shrift to the consumer benefits, but there’s a playbook for investor and utilities to follow. And now I think they’re at the point where the technology has advanced that it’s raising much more serious questions that they just weren’t prepared to answer.

To some extent, I’m happy to provide some education both to the utility and to the regulator in this type of context, but this is a nationwide issue. According to our calculations, there will be over 55 million of these new meters with Wi-Fi and computers on board deployed across the country by 2030, many of which with federal funding as a result of the IIJA, which is the Infrastructure Investment and Jobs Act. These are key questions just as we’re asking questions about app stores with Google and Apple. We also need to be thinking about Monopoly questions on our electric.

John Farrell:

We are going to take a short break. When we come back, I ask Michael what the Rhode Island Commission decided to do. We examined what other states are doing and I asked Michael what he’d do if he had a magic wand to create the best possible data access policies. You’re listening to a Local Energy Rules podcast with Michael Murray, president of Mission:data Coalition.

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John Farrell:

Having now made people wait for 20 minutes, what did the Rhode Island Commission ultimately decide in this case? Were you surprised? Do you feel like they got it right? Do you feel like their decision was an exception to what usually happens? How did it turn out?

Michael Murray:

They got many things right. It is not a perfect decision. What they got right is they allowed the smart meters to go forward, but there is a requirement that two months after the smart meters start to be deployed, the company has to present a plan for the commission’s approval that’s comprehensively addressing number one, how historical usage data is going to be accessible to customers. So this includes the green button connect technology for exchanging historical usage data. They have to address the natural gas question that I mentioned before. On the Wi-Fi side, they have to provide technical specifications and requirements for what types of devices are allowed to connect.

So this is an opportunity for transparency. Those who’ve worked in this home area network industry as it’s often called, are familiar with the term bring your own device or BYOD. And that’s the idea that I shouldn’t have to get pre-approval or only receive a Wi-Fi device that has been approved or certified somehow by the utility. And so the utility has to provide a plan about this bring your own device functionality, which is a very positive step forward.

And the third item that I thought was a win was the commission required them to provide a plan for the terms and conditions between the app store operator and a software developers who might write apps for the meter and the terms and conditions. It maybe sounds pretty boring. Lots of people agree to terms and conditions when they use websites today, but the terms are really important because this is the interface between a monopoly and a competitive marketplace. And so for example, if the meter vendor, which is also invested in electric vehicle charging programs and smart thermostats, if they had terms and conditions that were unfair or coercive, things like you’re not allowed to connect your home EV charger over Wi-Fi to the meter because that would disadvantage our product. That would be an example of an unfair term. And so the commission required the utility to put forth a plan for how they’re going to address these fair, open, non-discriminatory terms with software developers. So I thought that was really positive.

On the negative side, they did punt a lot of these issues. They didn’t rule on the merits of many of them. They just said we’re going to have a separate proceeding in the future to consider all of these details. So we’ll have a second bite at the apple, if you will, on those. But at least there’s a roadmap, there’s a table of contents that the commission wants the utility to fill. In the last point on a sort of disappointment, was the commission approved to move forward with this no bid contract. And I’m definitely disappointed by that given number one, the rapid technological development in the space. I think it’s reasonable to do RFP, but also it’s just as a public entity. Yes, there are inefficiencies associated with doing a request proposal, but if you’re spending public money, I just think it feels wrong when you don’t do that. I don’t think you’re doing right by rate payers, but the commission reasoned that PPLs other investments with this metering vendor from Pennsylvania and Kentucky warranted basically an extension of that contract and they felt that that was at a low enough price that an RFP was not necessary.

John Farrell:

Interesting. So the broader utility PPL has subsidiaries that operate in other states that already have contracts with this vendor?

Michael Murray:

That’s right. And this is for multi-state utilities with holding companies. This is pretty typical. So the larger jurisdictions, like in the case of National Grid at New York and Massachusetts, those are the larger jurisdictions. Those were the ones that carry really the bulk of the cost for this infrastructure. And then the smaller jurisdictions are often sort of forced along to follow. And the argument there, some of which is legitimate, is that it’s just easier to extend some of the software at back office infrastructure for a few hundred thousand customers in Rhode Island than it is to start over with a new business process and new backend software and databases and things like that. Again, I think the efficiency argument can be made, but my view was why not do an RFP and see for yourself if in fact it is more efficient to use the incumbent vendor? If so, great, then everyone will feel good about making that decision. But not even requesting the information from other bidders just felt like a fatal flaw to me.

John Farrell:

It’s kind of interesting too because my perception of those holding companies and their subsidiaries is that their operations are largely separate. Xcel Energy, which serves me in Minnesota, has subsidiary in Colorado and in New Mexico and in Minnesota. And when we’ve asked about whether or not they can do things that are going on in the other state in our state or vice versa, the story is usually like, well, those are separate entities. So it’s funny to me that they’re like, oh yeah, because we work with this vendor somewhere else. I’m like, yeah, you do. But generally speaking, your infrastructure is pretty distinct by state because the regulatory oversight is by state. So there’s not actually a lot of working together. I mean, I suppose you can call up the engineer that works for the company in Colorado and be like, how did you implement this? But it’s funny to me to hear it characterized that way. To be fair, I’m not looking under the hood here, but my perception is that they’re really not that connected in a way that would allow for those kinds of efficiencies to be captured.

Michael Murray:

And I see utilities all over the map on that question. Theoretically, the reason that these states allowed the holding companies to acquire the jurisdiction electric utilities in other states was that back office efficiencies would result in rate decreases or at least lowered revenue requirements. That at least was part of the pitch that was being made. We saw that with Exelon, with Xcel, with many other utilities, and I think some utilities do have a shared back office infrastructure and they use that quite well as I think they should. But then there’s others, particularly ones that have acquired entities recently where it’s going to take many years to get those systems integrated. So I would say you’re touching on an important topic and especially when it comes to merger review, this is something that should be carefully looked at. The per seat cost of extending PPLs contracts from Pennsylvania and Kentucky to about 600,000 customers in Rhode Island is it should be relatively small. You’re not starting from scratch. And that’s something that just I think needs more scrutiny in general.

John Farrell:

Well, for people who are interested in diving in on merger stuff, I did have Scott Hempling who wrote a book on utility mergers issues on the podcast back in episode 109, and he gave a full chapter in verse on how in general those efficiencies that are supposed to come from mergers don’t generally accrue benefits to customers.

Michael Murray:

I’m shocked.

John Farrell:

There’s lots of shocked expressions all around on this podcast right now. Let me pivot a little bit. So we’ve talked a lot about this case in Rhode Island. I’m curious if you have found that other states are trying to address this issue of data access and smart meters, and especially as it relates to IRA programs like HOMES?

Michael Murray:

Yeah, there’s a really exciting development in New England, which is a Northeast regional data hub. And one of the problems for smaller jurisdictions is that it takes a lot of effort for distributed energy resources companies like solar installers, heat pump installers, et cetera, to write software that interfaces with a given utility. And so if you have 10 or 15 utilities in a certain area, it’s 10 to 15 times the work for getting that software to ingest the customer data and provide products and services. It’s much easier if the utilities bond together and then there’s one place you can go to access this information as opposed to 10 or 15. So we’ve made some progress on that front.

New Hampshire actually has some enabling legislation and the commission approved in 2022 a settlement agreement, which I was a part of, and which calls for a statewide repository. So there’s three electric and gas utilities and there will be one point of entry essentially for the secure and permission based exchange of billing data, account information, usage data. So that’s great and that’s going to really help their administration of the IRA funding.

Where we’ve been leveraging federal funds most recently is we filed a preliminary application called a concept paper to the U.S. Department of Energy under their GRIP program. This is a grid resilience and innovation partnerships, and we’ve pitched a regional approach. So there would be utilities from Massachusetts, Connecticut, and potentially Maine all involved in this effort. And that also happens to overlap with the ISO New England footprint. So if there are aggregations of DERs participating in wholesale markets, they’d have a much easier time moving from jurisdiction to jurisdiction across state lines. So there’s a lot of efficiencies to be gained there and potentially lower power prices on the wholesale market for consumers. So that’s really positive.

We’re still in the sort of early application phase on that, but it is a trend to combine these utilities data systems into one place. And New York has actually made a big effort on that called the Integrated Energy Data Resource, the IEDR, and that’s going live. It has gone live with several features last year, the permission based exchange of individual customer usage data that is going online I think this month. So there’s a lot happening in the Northeast on this topic, and it’s going to be really exciting for the heat pump installers of the world, the installation providers to really make the most efficient use of the IRA funding.

John Farrell:

I mean, there’s a lot of funding as we mentioned, and we’ve talked about the IRA specifically. Is there anything else that you feel like the federal government can do to help unlock customer data access? For example, there’s a petition that ILSR has been involved in to the Federal Trade Commission, which oversees a lot of issues of competition. And in these cases we’re talking about competitive markets already that can be supplied data is there, the Energy Information Administration collects a lot of data from utilities. I don’t know, are there other things that you’re thinking about where the federal government could take action to be helpful?

Michael Murray:

Yeah, that’s a great question. There’s so many things that the federal government could be doing much better on this topic. The first one that you mentioned is EIA. And they are in a position to develop a machine readable database of all of the different rate structures across the country. And that would have tremendous benefits for these energy efficiency service providers because rate complexity is a real monster issue. And with 3000 plus utilities, they each have maybe a dozen different types of rates. There’s just no way a human is going to be able in a scalable way, provide somewhat if analyses for customers. So that would be one thing I certainly appreciate seeing.

The FTC petition that you mentioned, there’s a lot that antitrust enforcers can and should be doing on the app store issues with advanced meters that I mentioned. If you think that Google or Apple have some antitrust liability around their app stores, the Epic games lawsuit, which just had a jury verdict, that’s certainly material here. Well, I think the problem is 10 times worse for the smart meters because I can at least choose what type of phone I want to use, but I don’t have any choice about what meter is on the side of my house. And so if there is a violation of antitrust laws, I think that’s very ripe for exploration.

And the last point has to do with the Department of Energy grants. They’re giving a lot of money to utilities for grid resilience. These are very important necessary improvements to the power grid that we need. And one of the requirements from the Department of Energy is that data needs to be provided to customers per green button Connect, and it also needs to be available, in their phrasing, on an “open non-discriminatory real-time basis.” And the question before the department right now is are they going to enforce those requirements? The first round of grants has been awarded to about 34 utilities. This is a billion dollars of taxpayer money going to fund these utility projects. Many of those projects are very important and useful, but is the federal government going to require open non-discriminatory access to the information that’s generated by these meters? That remains to be seen.

I did send some initial inquiries to some utilities asking what their plans were for Green Button Connect after being granted these awards. And I received some initially very puzzled responses like we’re not sure what you’re talking about. Our project doesn’t seem to involve that requirement. So there seems to be some fumbling around here.

And I’d really like to see a more assertive stance from the Department of Energy, just like the U.S. government does with regard to broadband funding, where the government says, we’ll fund fiber, but it needs to be an open network for the life of the investment. And same thing here, if we’re going to fund metering and resiliency improvements with utilities, those improvements should be on an open access basis. So that’s something where the rules are already written. The question is the Department of Energy actually going to enforce it and put it in their contracts?

John Farrell:

That’s great. Those are two really helpful and meaty things that folks can follow up on if they’re interested. I just have a couple questions that I’ve not – realizing that we’re running up on time here. On your prior appearance on Local Energy Rules episode 155, you talked broadly about how data access was kind of a larger issue around monopoly power. We don’t have time obviously to rehash that entire episode, but I dunno if you want to give people a quick preview of that digital platform monopoly report that Mission:data put out a couple of years ago? And I’m also just curious too, as you do that, if there are disparities in this issue of data access around race or income that folks should be thinking about, is there an equity perspective here as well as a monopoly issue?

Michael Murray:

So on the race and equity question, there have been lawsuits from various community groups against utilities for targeting them. So for example, collecting information on their energy usage habits and then selectively some communities information would get sent to law enforcement for investigation versus others. At least these are allegations that we’ve seen made in the past. I am very concerned that that potential only rises with the computers that are onboard the meters. So the potential for more invasive information is very real, that the detail of where using power in your house could be transformational for energy management and for decarbonization, and we’re very excited by that. But if it’s sent willy nilly to law enforcement agencies without getting a court order, without a warrant, that’s deeply problematic. And so we are very supportive of customer privacy and putting customers in control of this. Having some sort of back door in which law enforcement accesses utility records I think should concern everybody. And that’s something that we strongly oppose.

And moreover, this is something we should get in front of because we don’t want lawsuits about very legitimate grievances standing in the way of taking advantage of the energy management capabilities that are here that could really save money on people’s bills in a very tangible way.

As for the digital platform issue, I’ll just say that it is very similar to other digital platforms. So when there is a gatekeeping power, we start to see some of the same behaviors. So there could be discriminatory terms and conditions. There’s a lot of ability for surveillance to occur so of a competitive nature. So if the platform operator sees a successful app on their platform and they say, Hey, that’s actually doing really well, why don’t we copy that? Why don’t we mimic that with our own offering and then make it very difficult for this company who’s young and innovative and invested the time and effort in maybe a riskier project has a much harder time being successful. So those are sort of inevitable incentives that arise with any digital platform and electric utilities are not immune to that.

John Farrell:

If you could wave a magic wand, what is the structure or the rules that you would want to put around the system that collects and customer energy use data, whether or not it’s the ideal? If you have an example of someone you think it really is doing this right, who is that? Where could people look to understand how this could really be done the best possible way?

Michael Murray:

I think the regional approaches to data accessibility and data portability make a lot of sense. So that’s still in its incipient stages in New York and New England, but as a practical matter, that seems to be the way of the future. It really unites red states and blue states. Texas was actually the first state to have this platform, the Smart Meter Texas platform, which was built 12 or 13 years ago to support their competitive market. I don’t think New York and Texas agree on just about anything politically, but now here we are 12 years later and they’re moving towards very similar information technology solutions for customer energy data. So that’s great.

And if I had a magic wand, I think I would really make sure that utility regulators know that part of their job, perhaps an equally important part of their job as setting rates, is ensuring that decisions that they make about the reach of utilities does not disadvantage these adjacent competitive markets. So in your previous podcast with Seth Handy on Rhode Island, which by the way I thought was excellent, he had some really great comments about the market and you had good discussion on antitrust issues. I don’t think regulators understand that. The federal courts have said that the federal government has very limited authority to enforce fair competition laws on government sanctioned monopolies, and some of that is very reasonable. But what that means is that if you’re a utility regulator, it is your job not just to focus on rates and prudence of costs, but you have to be thinking, is the utility entering an energy management offering going to hurt the competitive market?

Because a lot of companies in this space, if you were to take this issue to court and litigate, the federal courts are probably going to tell you, you can’t come to us. You have to go to the state PUC. They’re the ones who are in charge of settling this matter. And so this is just something that I don’t think most regulators think is their job, but the federal courts have made it clear it is their job. In fact, there’s no one else who’s going to do this, who’s charged with this responsibility in most places.

John Farrell:

Well, Michael, thank you so much again for coming back to Local Energy Rules to get into the weeds on a particular proposal and help people understand how the newest generation of smart meters with these onboard computers and Wi-Fi have so much capability and also the danger of letting that be established in a way that gives too much gatekeeping power to the folks who are in charge of that platform. So yeah, thanks for your work on this and for coming back to talk about it.

Michael Murray:

It’s my pleasure. Thank you so much, John.

John Farrell:

Thank you so much for listening to this episode of Local Energy Rules with Michael Murray, president of Mission:data Coalition. On the show page, look for a link to Michael’s prior appearance on Local Energy Rules where he shared the coalition’s research on digital platform regulation, as well as his comments on the Rhode Island Smart Meter proposal. We’ll also have links to our podcast interview with Scott Hempling, episode 109, and the petition to the Federal Trade Commission asking for more scrutiny over monopoly utility behavior. Local Energy Rules is produced by myself and Maria McCoy with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.