WATT TO KNOW ABOUT SMART METER DATA PRIVACY: A COMPARATIVE ANALYSIS ON HOW TO BEST REGULATE AND ENSURE CONSUMER PRIVACY PROTECTION.

Author:Colton, Allison L.
 
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  1. Introduction

    Electricity is embedded in everything around us, and electric utility meters are unique devices used to measure the consumption of commercially distributed electricity. (1) An electric utility meter generally measures the amount of energy one uses in a given month. (2) While one's daily use of electricity appears simple, it is part of a - nation-wide network comprised of thousands of moving parts, known as the Smart Grid. (3) A part of this ever-growing Smart Grid is the "smart meter," which is the newest generation of energy meters. (4) At its core, the smart meter is the same as a traditional utility meter; however, the smart meter collects energy usage data at much more frequent intervals, making utility bills more accurate and, thus, monetarily more fair for the consumer. (5) The Smart Grid evolution has millions of consumers across the United States installing these smart meters into their homes. (6)

    As smart meter technologies continue to develop, so do concerns about smart meter data security and consumer privacy. (7) These fears fall into two distinct categories: (1) that smart meter data will "reveal the activities of people inside of a home" through the frequent measurement of their electricity use; and (2) that cybersecurity measures will provide inadequate protections for the transmission of the smart meter data collected. (8) Additionally, the rapid development of smart meter technologies, as demonstrated by the growth of the Internet, makes it impossible to predict their future uses and applications. (9)

    In light of the prodigious collection of personal information through smart utility meters today, consumers need to be assured that their privacy rights are adequately protected. (10) Different types of utility companies--some owned by municipalities (hereinafter, "publicly-owned utilities"), some owned by private investors (hereinafter, "investor-owned utilities"), and others owned by the community (hereinafter, "rural electric cooperatives")--have equally different regulatory schemes that provide oversight for the installation and use of smart meters. (11)

    As the United States attempts to find a uniform standard of protection for consumer data, it should look to the Uniform Commercial Code ("UCC"), as well as the European Union's General Data Protection Regulation ("GDPR"), for guidance. Irrespective of which type of regulatory approach is employed to protect energy usage data, all smart meter customers must be guaranteed that they are equally protected from the serious threats to utility data misuse and abuse. Part II of this note examines the history of electricity as a commodity and outlines the development, implementation, and growth of the smart meter. (12) Part III discusses the most common electric utility structures and identifies the three major avenues through which a consumer's smart meter data can be protected. (13) Finally, Part IV analyzes the best methods for providing uniform smart meter data privacy protections. (14) Part IV specifically addresses how the GDPR is the strongest model for ensuring that all electric smart meter customers are afforded the same data privacy protections. (15)

  2. History

    1. The Development of Electricity as a Commodity

      Electric energy first became a commodity eleven years after it was discovered that electric energy could be generated in large amounts. (16) In 1872, Samuel Gardiner capitalized on this discovery and patented the first electric energy meter. (17) Then in 1881, Thomas Edison developed his own "electric meter," which remained in use until the end of the 19th century. (18) Nonetheless, these meters were not well equipped to handle the fluctuating demand for electric energy by consumers. (19) in 1884, Hermann Aron attempted to address this problem when he created the pendulum meter, however this creation was plagued by its limited applicability to direct currents. (20) in response to this obstacle, Aron instead developed a motor-driven meter. (21)

      Despite this new development, the direct current issue remained as electric utility meters must be compatible with alternating currents. (22) The solution to this problem was the introduction of the transformer, which allowed electric utility meters and alternating currents to harmoniously work together. (23) The next generation of the energy meter was born in 1885, with the invention and implementation of the induction meter, which in turn, led to the development of the power grid. (24) Eventually, during the 1960s, the idea of remote metering emerged, allowing electric utility meter data to be viewed and monitored from off-site, remote locations. (25)

      By the 1970s, remote metering merged with newly developed electronic technology, paving the way for the development of today's smart meter technologies. (26) Hybrid meters emerged in the 1980s and combined induction meters with electronic tariff units to establish what are now known as traditional utility meters. (27) By monetizing the amount of energy used over a period of time, these meters provided a consistent system for the pricing of energy consumption. (28) Today's smart utility meters are based on the newest, and continually evolving, technologies. (29) These new technologies provide numerous benefits, including, but not limited to, more accurate readings of energy consumption. (30)

    2. What is the "Smart Grid" and How do Smart Meters Work?

      The theory of the Smart Grid is to provide both consumers and utility providers with the most available, reliable and efficient electric energy. (31) Among the numerous technologies used to accomplish these goals are smart meters. (32) The smart meter infrastructure is comprised of a "communications network, a merger data management system and other software and analytics." (33) This communications network allows utilities to provide their consumers with the information and tools necessary to make educated decisions about their energy consumption, while the utilities simultaneously benefit from accurate data. (34)

      Further, this network uses two additional networks to transmit specific details about a consumer's energy use both inside and outside of the home. (35) The first network is the Wide Area Network ("WAN"), which is used to communicate a consumer's energy usage information to the utility company. (36) The second network is the Home Area Network ("HAN"), which is used to communicate this information directly to the consumer. (37) Communication between a smart meter and a consumer within the home is much simpler than communication with the utility company. (38)

      Although smart meters do not take long to transmit data about energy usage, how frequently they transmit this data varies immensely. (39) For example, these meters can transmit and use data about energy consumption at intervals varying from minutes to hours. (40) Nevertheless, smart meters do not change what information or data the utility company collects. (41) Instead, the meters simply allow the utility company to collect the data more frequently. (42) As a result, this bolsters the communication between the utility companies and their customers. (43)

    3. Regulation of Electric Utilities

      The frequent collection and transmission of smart meter data involves immense amounts of individualized information about the consumer. (44) The authority responsible for regulating the protection of this consumer data depends on both the utility's structure and the type of government the utility company provides electricity to. (45) For instance, there are three different types of electric utility companies Publicly-Owned ("POU"), Investor-Owned ("IOU"), and Rural Electric Cooperatives ("REC"). (46) Each of these utilities is regulated by a different regulatory body. (47) While each of these regulatory bodies essentially performs the same basic functions, there are additional opportunities to implement state-wide protections for utility consumers, and their smart meter data, regardless of whether their utility company is a POU, IOU or REC. (48)

      1. Publicly-Owned Utilities

        POUs are not found in a one-size fits all package, but instead appear in a variety of organizational formats to best accommodate the structure of their respective service areas. (49) Nevertheless, since they are all exclusively owned by a public entity, they are subject to local regulation and control. (50) POUs are not typically regulated by state commissions, but instead by local governing bodies, such as city councils or other municipal government agencies or departments. (51) Additionally, the federal government has little-to-no regulatory control over POUs. (52)

      2. Investor-Owned Utilities

        While POUs are limited to a local municipality or district, IOUs can be extremely large both in their geographical reach and their customer-base. (53) In greater contrast, IOUs are owned by shareholders or investors, and are managed by an appointed or elected board of private-sector individuals. (54) Further, state utility commissions have historically been responsible for regulating investor-owned utility companies and, specifically, the protection of consumer data collected by these companies. (55) These regulations outline extensive precautions necessary to protect consumers' energy usage data and are regularly tested and reviewed. (56) While iOUs are widely regulated by the state, they are also subject to federal regulation, and many companies partner with federal agencies to strengthen and improve their consumer protection measures. (57)

      3. Rural Electric Cooperatives

        Unlike both POUs and IOUs, RECs are membership organizations which are owned by the people they serve. (58) The main focus of a REC is to provide a utility service that best serves the needs of its members, and, thus, RECs are governed by a board of directors elected by the members of the cooperative. (59) But, depending on various factors, RECs may also constitute as a "public utility." (60) If a REC is a...

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