“Smart Grid” Needs Consumer Education, Choice to Protect Privacy: Department of Energy

This posting was written by Thomas A. Long, Editor of CCH Privacy Law in Marketing.

The long-term success of “Smart Grid” energy technologies depends upon understanding and respecting consumers’ reasonable expectations of privacy, security, and control over who has access to energy-usage data, the U.S. Department of Energy said in a report released October 5, 2010. The report, Data Access and Privacy Issues Related to Smart Grid Technologies, focuses on the ways legal and regulatory regimes are evolving to protect consumer privacy and choice, while promoting the growth of innovative energy-management services and technologies that rely on detailed energy-usage data.

Advances in Smart Grid technology could significantly increase the amount of information about personal energy consumption that is available to utility companies and third parties, the report found. For example, “advanced metering” technology that closely monitors electricity usage could reveal such personal details as consumers’ daily schedules, whether their homes are equipped with alarm systems, whether they own expensive electronic equipment like plasma TVs, and whether they use certain types of medical equipment.

“Consumers rightfully expect that the privacy of this information will be maintained,” the DOE said. At the same time, access to consumer data will be necessary to achieve the goals that Smart Grid technologies will advance, such as improved reliability in power delivery, reduced transmission costs, and increased energy efficiency.

According to the DOE, information privacy and access, in the context of a Smart Grid, are complementary values, rather than conflicting goals.

“The practical impact of a Smart Grid depends on its capacity to encourage and accommodate innovation,” the DOE said, “while making usage data available to consumers and appropriate entities and respecting consumers’ reasonable interests in choosing how to balance the benefits of access against the protection of personal privacy and security.”

Utility companies, the DOE said, should be able to access and use consumer-specific energy usage data (CEUD) for utility-related business purposes, such as managing their networks, coordinating with transmission and distribution-system operators, and billing for services. The report recommended, however, that consumers be able to choose whether to affirmatively opt in to any non-utility, third-party use of their CEUD through a secure and trustworthy process. In particular, according to the DOE, the practice of disclosing or selling CEUD to third parties for the purpose of targeted advertising should require affirmative and informed consumer consent.

Consumer education will be critical to the successful adoption and deployment of Smart Grid technologies like advanced metering, the DOE said.

“It is important for consumers to understand the long-term benefits of these technologies, like lowering energy bills,” the report stated.

The Federal Communications Commission’s National Broadband Plan issued last spring called for the DOE to study the privacy and access implications of Smart Grid technologies, and how they were likely to affect the communications needs of utilities. The report complements a companion DOE report, also released October 5, 2010, Informing Federal Smart Grid Policy: The Communications Requirements of Electric Utilities.

Full text of the DOE’s report, Data Access and Privacy Issues Related to Smart Grid Technologies, is available here on the DOE’s website and will be published in CCH Privacy Law in Marketing.