Today my friend Commissioner Tim Simon provides us with insight regarding the California Public Utility Commission’s Smart Meter Privacy Order.

Evers: Commissioner Simon, California has long been an energy policy leader. Now with the popularity of the smart grid, the CPUC is often in the national spotlight. Regulators and industry participants nationwide follow your rulings. Recently you did it again, leading the nation with the release of your Privacy and Security of Customer Electricity Usage Data rules. Tell us why these rules are important and how they will help California residents.

Commissioner: The rules established in the recent CPUC Decision are important for a number of reasons. In brief, it protects customer privacy while making customer information available on the customer side of the meter. This will benefit home area networks and other demand response applications. The prudent use information should spawn market applications of customer usage data. When California returns to retail competitive markets this data will spawn innovation in retail ESP power products.

Evers: That is great. Commissioner, it is apparent the Department of Homeland Security’s Fair Information Practice (“FIP”) principles served as a guide to this Commission as you developed the rules. For those not familiar with FIP, please explain the relevance of these principles and how they were helpful to you.

Commissioner: The rules make California practices conform to the best national privacy and security practices. The FIP principles (Transparency; Individual Participation; Purpose Specification; Data Minimization; Use Limitation; Data Quality and Integrity; Security; and Accountability and Auditing) is a widely accepted framework that is at the core of the Privacy Act of 1974 and is mirrored in the laws of many U.S. states, as well as many foreign nations and international organizations. These principles are relevant because they ensure that the use of technology sustains privacy protections relating to the use, collection, and disclosure of personal information and that personal information is handled in full compliance with fair information practices as set out in the Privacy Act.

Evers: Very insightful. Now turning to everyone’s favorite topic, smart meters. Although this sector surely has generated the most passion about smart meters, I am sure you know smart meters are not just for electric companies. Quietly, gas and water companies have been installing smart meters without much fanfare. Why has the Commission declined to apply these important data protection rules to gas companies and other entities as this time?

Commissioner: I want to emphasize electricity use data are different than gas or water use data. While gas and water can be stored, electricity is produced instantly (except for pumped storage).  Naturally, the demand for gas and water does not vary as substantially as the demand for electricity. Additionally, two-way electric smart meters will be capable of feeding power back into the grid. It seems smart meters will provide a lot more personal information on personal electricity use than water or gas use. However, I am not advocating that customer data protection rules should not be applied to water and gas smart meters. Currently the Commission is looking into the electricity smart meters privacy only. Eventually we will have a system where smart meters for electricity, gas and water will be inter-connected with the smart grid.   

Evers: I know this is a bit off the subject but it will be a bonus for my readers…How is the smart meter opt-out going? 

Commissioner: The Commission is in the process of reviewing additional detail and analyses provided by the utilities regarding smart-meter opt-out. We had a workshop on September 14, 2011, to address the following issues:

  • Are the costs/opt-out fees reasonable?
  • What additional procedures, if any, should be adopted for residents in multi-unit apartments who wish to opt-out of a utility’s Smart Meter program?
  • What level of assistance should be provided to low income ratepayers?
  • What provisions are there for ratepayers who wish to delay installation of a Smart Meter at this time?
  • And does it address all the radio frequency concerns?

The proceeding is expected to conclude by the end of this year. I do not expect all parties will be satisfied, but I do anticipate a balanced, cost effective opt-out policy.

Evers: Thank you Commissioner Simon for taking time to provide your insight on these important issues.