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Privacy Rights in the Digital Age

Smart meters

by Gretchen Nobahar

Installed in 38 million locations nationwide, they gather information on household electricity consumption and transmit it wirelessly at regular intervals to electric companies. Smart meters are considered a major part in efforts to develop a “smart grid,” which would more efficiently distribute electricity in the United States. The electric utilities argue that smart meters are intended to ensure that there are fewer power outages, smaller outages and faster service restoration if an outage occurs. The role of smart meters is to measure and report this data, enabling the grid to balance out fluctuations in supply and demand. Through the processing of such data, the smart-grid is then able to regulate the flow of electricity more efficiently and reliably. This will also enable electric utilities to integrate more clean, local, renewable sources of energy. The electric utilities also claim that smart meters would give greater control of customers over their energy use and monthly bills, greater convenience, and improved customer service.

Several privacy advocates, however, argue that smart meters would allow the government to engage in surveillance and conduct searches that violate the Fourth Amendment right against unreasonable seizure. Some activists have argued that smart meters are surveillance devices that would record such personal information as when an individual is at home, what appliances they are using, and a person's habits.

Critics have expressed concerns that consumers would lose their private data to both electric utilities, and possibly to third-party data aggregators (who could use the information for data harvesting). They argue that very private and sensitive information could be disclosed about the home lives of customers, and thus violate the cherished privacy values associated with the home. Data users could make inferences about people's private lives from detailed energy consumption data, including the number of people living at the house, daily routines, various religious practices, and household appliance use. Such exhaustive electricity consumption data would also be valuable to marketing analysts and consumer data aggregators, and would greatly assist retailers, who would use such information to plan new products, improve existing products, or open new stores.

In answering these privacy claims, utilities stress that smart meters retrieve the same data that utilities have retrieved through mechanical devices – namely, measuring energy use. Analog meter readings recorded aggregated energy data (kilowatt hours per month), while smart meters report data on a more granular level, and in real-time. The data collected from both types of meters is being used for the same purpose: billing, settlement, forecasting, demand response, and fraud detection.

One major difference between the two meters is that smart meters have a two-way communication capability, allowing the company to not only receive information from the meters, but also send commands, and receive responses in return.

Denying that smart meters are “surveillance devices” or could be used in wiretapping, electric utilities claim that smart meters measure the amount of energy used at a property as part of a customer's service agreement to purchase electricity from the utility. They do not now record energy usage. Nor do they store or transmit any information about the individuals, or their actions.

To answer the privacy concerns of its customers, many electric utilities have issued policies safeguarding their customers' privacy and protecting their networks and customer data from cyber threats. They also claim to support and comply with laws and regulations that prohibit third-party access to individual customer data unless the customer explicitly requests or approves the sharing of their data, it is necessary for the legitimate business needs of the utility, or the law requires it. They further argue that these practices are consistent with how these companies had protected customer data generated by electromechanical meters.

One major privacy involving third-party collection issue is that law enforcement officials have increasingly been seeking subpoenas of utility data to determine if illegal activity is occurring at a given residence.

In addressing concerns over home security, the electric utilities addressed concerns that cyber-savvy thieves could hack into smart meters and steal consumer information and energy. The utility companies argue that smart meters are no more vulnerable to tampering than mechanical meters. Similar to how all equipment that operate on wireless networks, smart meters may be hacked. One problem in the case of smart meters is the data being transmitted are not encrypted.

Utilities and smart grid developers, however, have implemented safeguards to maximize network security. These safeguards include network resiliency, security software on meters, event correlation improvements, identity management and authorization, meter-to-meter authentication and encryption, meter worm prevention. Implementing these measures would ensure grid security and obstruct meter hacking.

Smart grid designers must continue to make privacy an important priority in their development of hardware, software, and services that interact with a network. Utility companies should continue to develop and refine a comprehensive privacy policy that specifies how individual customer usage data will be used, to what it extent and under what circumstances it may be shared with third parties, and how customers can deny data sharing.

In compliance with the Energy Independence and Security Act of 2007, the National Institute of Standards and Technology (NIST) designated a Smart Grid Interoperability Panel to create standards for smart grid deployment. Operating under this panel is the Cyber Security Working Group, which focuses entirely on smart grid cyber security. In 2010, the group issued guidelines on privacy issues.

Data privacy protections must accompany the benefits that wireless networks like the Internet would provide. Similarly, the necessary safeguards may be implemented for smart meter data. Ultimately, this data can revolutionize the way electricity is distributed so that it is more responsive, more efficient, and more reliable.

In January 2015, the U.S. Department of Energy presented a final draft of a voluntary code of conduct governing data privacy from smart meters. A crucial part of the code would be “customer choice and content,” which includes the principle that customers should control access to their use data that is provided to third parties. Critics, however, have questioned whether the code of conduct would be robust enough to withstand the temptations that this lucrative “big data” opportunities would offer for third party aggregators. Critics have particularly criticized the consumer “voluntary consent” provision in the code of conduct that would allow consumers to permit access to their consumption data perhaps for a price discount, thus, resulting in a major compromise of privacy rights.

Further Reading

1 

Cavoukian, Ann, and Alexander Dix. Smart Meters in Europe Privacy by Design at Its Best. Toronto, Ont.: Information and Privacy Commissioner of Ontario, Canada, 2012.

2 

Doris, Elizabeth, and Kim Peterson. Government Program Briefing Smart Metering. Golden, CO: National Renewable Energy Laboratory, 2011.

3 

Herold, Rebecca, and Christine Hertzog. Data Privacy for the Smart Grid. Reid, Irwin E. Smart Meters and the Smart Grid: Privacy and Cybersecurity Considerations. New York: Nova Science Publishers, 2012.

4 

“Smart Meter Data and Privacy.” Data Privacy for the Smart Grid, 2015, 55–74.

5 

“The Tech Scene: The Know-It-All Smart Card Stirs Privacy Fears.” American Banker, October 18, 2000.

6 

Toledo, Fabio. Smart Metering Handbook. “What Is Privacy?” Data Privacy for the Smart Grid, 2015, 43–54.

7 

Wolf, Christopher Maxwell. “Smart Grids and Privacy. (Regulation and Competition).” Communications & Strategies, October 1, 2009.

See also: Consumer privacy; Electronic surveillance; Fourth Amendment to the U.S. Constitution

Citation Types

MLA 9th
Nobahar, Gretchen. "Smart Meters." Privacy Rights in the Digital Age, edited by Christopher T. Anglim & JD, Salem Press, 2016. Salem Online, online.salempress.com/articleDetails.do?articleName=PRDA_0191.
APA 7th
Nobahar, G. (2016). Smart meters. In C. Anglim & JD (Ed.), Privacy Rights in the Digital Age. Salem Press. online.salempress.com.
CMOS 17th
Nobahar, Gretchen. "Smart Meters." Edited by Christopher T. Anglim & JD. Privacy Rights in the Digital Age. Hackensack: Salem Press, 2016. Accessed May 30, 2026. online.salempress.com.