PREVENTING THE IMPENDING DEATH OF PRIVACY BY THE SMART GRID.

• Author: Vergason, Dustin

1. Introduction 551 II. The Current and Potential Future State of the Smart Grid 554 A. The Rise of Smart Meters 555 B. The Battle Between Privacy Advocates and the Smart Meter 557 C. The Naperville Case and Its Implications 559 D. The Future of Smart Grid Technology 562 III. Advantages and Benefits of a Smart Grid 564 A. How Utilities Benefit from a Smarter Grid 565 1. Grid Reliability, Stability, and Resilience 565 2. Integration of Renewables 566 3. Investm ent and Cost Sav ings 567 B. How Consumers Benefit from a Smarter Grid 567 C. Advertising and Revenue Generation 568 IV. The State of Privacy Laws and a Solution 569 A. Different State and Federal Privacy Laws 570 B. Local Options 571 1. Why Opting Out is Not a Solution 572 2. Anonymity and Security of Information 573 3. Exceptions for Efficiency Programs 574 C. A Balanced Solution 574 V. Conclusion 575 I. INTRODUCTION

   Our own information... is being weaponized against us with military efficiency. Every day, billions of dollars change hands and countless decisions are made on the basis of our likes and dislikes, our friends and families, our relationships and conversations, our wishes and fears, our hopes and dreams. These scraps of data, each one harmless enough on its own, are carefully assembled, synthesized, traded and sold. --Apple CEO Tim Cook (1) Decarbonizing the nation's power grid is critical to fighting climate change. This involves relying more on renewable power sources, such as wind and solar, instead of coal or natural gas. It also involves electrifying our transportation grid to eliminate gasoline and other fossil fuels from automobiles. This great challenge will require changes in technology and how society utilizes that technology. An important part of this decarbonizing effort usually ignored is the smart grid. Composed of two-way communication between consumers of electricity and the utility and other communication devices, a smarter grid can greatly aid the shift from carbon-based power to renewables. (2) The potential advantages of installing a smart grid are enormous. In 2010, the Pacific Northwest National Laboratory, a group funded by the Department of Energy, published a study finding that the smart grid had the potential to reduce total carbon emissions by 12% by 2030. (3) The study found that, by fully utilizing the smart grid, the nation could eliminate sixty-six typical carbon coal plants' worth of power and carbon emissions each year--enough to power 70 million homes. (4) The efficiencies and improved grid reliability could also ease the transition for transportation to electric vehicles by lessening the amount of required expensive transmission infrastructure. (5) The smart grid can greatly aid the nation in the battle against climate change.

   Unfortunately, the early adoption of smart meters, one of the major technologies of the smart grid, has slowed substantially over the last few years as opposition from privacy advocates has risen. (6) Smart meters and other smart grid technology allow utilities to gather an immense amount of information about individual home usage. The information can include real-time information about what appliances are on in the home and what residents within the home are doing. (7) The plethora of information gathered by these smart devices raises a lot of privacy concerns. Privacy advocates have argued that this information could be used by the government for criminal prosecutions. (8) It could also be used by third parties for advertising purposes. (9) More nefarious uses can include blackmail, use by thieves to determine when residents are home, stalking, domestic abuse, and more. (10) Questions also arise about who owns the information collected. Could it be used in court to prove infidelity in divorce proceedings? Could utilities sell the information for targeted advertising by companies such as Amazon or Google? Could insurance companies use it to demonstrate an unhealthy lifestyle or higher risks based on electricity usage and then adjust rates accordingly? Could manufacturers use it to invalidate a warranty showing the product was used beyond the warranty requirements? The massive amount of information generated by smart meters and smart appliances should be deeply concerning for consumers. The variety of uses that the information could enable has been highlighted by privacy groups and used to slow or stop smart meter installation in several areas. (11) Sadly, while this may protect consumers from privacy invasions or nefarious uses, both the consumers and the utilities lose the benefits of having a smarter grid.

   Finding a middle ground where privacy can be properly protected and a smart grid fully implemented is crucial to reducing our carbon emissions in the electrical grid, thus combatting climate change. Because of the profit incentives in selling this information for utilities and their third-party vendors, it is unlikely they will properly protect consumers. State and local laws have had some success at protecting privacy, (12) but many more have either proven woefully deficient by allowing privacy invasions (13) or, on the opposite end of the spectrum, preventing the installation smart grid technology. (14) Proper privacy laws that address smart grid information could be addressed in a nationwide solution but will most likely require a state-by-state effort. Passing a balanced privacy law that allows the full use of a smart grid while protecting consumers will stifle opposition from privacy groups while allowing utilities and consumers to fully benefit from the smart grid.

   Part II of this Comment first defines the smart grid and discusses smart meter installation. Smart meter installation has been the most visible and controversial portion of the smart grid. (15) The initial surge of installation of smart meters has slowed substantially due mostly to the rise of opposition by privacy advocates. (16) After discussing the opposition to smart meters by privacy advocacy groups and its effect, the discussion turns to a recent Seventh Circuit court case and its implications for the smart grid and privacy discussion. This case highlights some of the issues surrounding smart meters and how they can and should be used including the legal risks utilities and consumers face in having smart meters installed. It also demonstrates how courts are poorly equipped to protect consumers in this new technological area. (17) Finally, the Part deals with advances in other smart grid technology and how they will create both enormous potential advantages and risks to consumers and utilities.

   Part III illuminates all the advantages that a fully implemented smart grid offers to both utilities and consumers. In addition to emission reductions and efficiencies, the smart grid has the potential to increase grid reliability and resilience, (18) allow better integration of renewable power sources, (19) and provide better use of the transmission system. (20) It also can generate cost savings for both consumers and utilities in a variety of ways. Convenience and climate change mitigation can also be factors that encourage consumers to adopt the smart grid. These benefits and advantages are worth the trouble of finding a legal solution that will protect consumers' privacy and security.

   The last part, Part IV, discusses the various state and federal protections currently in place and explains that they are mostly inadequate. Possible local solutions to privacy concerns are then discussed, including opting out, anonymization, and efficiency program exemptions. (21) These local solutions, while well meaning, fail to adequately provide consumers protection while still allowing both consumers and utilities to maximize the advantages of a smart grid. (22) The Part concludes by turning to a possible solution, allowing utilities and consumers to fully utilize the smart grid while maintaining privacy and security.

2. THE CURRENT AND POTENTIAL FUTURE STATE OF THE SMART GRID

   The smart grid is more than just the transmission system equipment used by the utilities or smart meters installed by utility companies to monitor electric usage in different customer locations. While digital smart meters have been a lightning rod for the privacy debate because of the amount of information they provide the utility companies, many other new technologies also provide similar control of electricity usage and data collection. (23) Smart appliances, interconnected home systems and wireless devices also raise privacy concerns by enabling consumers of electricity to monitor and control their usage remotely. (24) Google's "Nest" and other devices now give consumers the ability to control lighting and heating within the home. (25) As appliances become smarter and more connected to the internet, consumers are gaining the ability to control a wide range of electrical devices within the home. (26) If this active customer control were coupled with time-of-use electricity rates (charging customers based on the time in which they use power and its cost rather than a set overall price (27)), utility customers would be able to fully utilize demand response to shift usage to less expensive times of the day and use electricity when it is cheap or provided by renewable power. (28) The cost of electricity varies enormously during the day, often peaking during the evening hours when consumers come home. (29) This has led to the "duck curve" (30) problem in states with higher penetration of renewables, with utilities often having to shift to carbon intensive power production to meet the high demand during the peak periods. (31) If consumers were charged according to time of use and were aware of those rates, the higher prices could encourage a shift of usage to other hours, allowing utilities to avoid carbon intensive power production and integrate more renewables. (32)

   The smart grid currently consists of connected devices which allow...