Why Electric Utilities Should Adopt a Smart Grid Privacy Policy

Posted on March 18, 2013
Posted By: Katie R. Thomas

 What is the "Smart Grid"?


The electric grid is one of the greatest inventions of all time. In over a century it has completely revolutionized life on Earth. However, it has not received an upgrade since electricity was first transmitted over a power line in 1882.[1]  Many utilities, state governments, public utility commissions, and even the Federal government have been working on giving the electric grid a face-lift by investing in the "smart grid". The smart grid is a compilation of different technologies and utility policies. It is comprised of smart meters, demand response and automation, energy efficiency, distributed generation, and electric vehicles. [2]  All of these parts together are expected to make great advancements for reliability, security, the economy, and the environment.

The smart grid increases communication between the utility and its customers through the use of smart meters that collect and transmit energy usage data. In addition to automation and increased communication, according to the Department of Energy, smart grid customers will enjoy economic benefits through the avoided cost of construction of power plants, transmission lines and substations over 20 years could save $46 billion to $117 billion. Additionally, increased energy efficiency, renewable energy and distributed generation could save an estimated $36 billion annually by 2025.  Distributed generation can significantly reduce transmission-congestion costs, currently estimated at $4.8 billion annually.[3]  Smart appliances costing $600 million can provide as much reserve capacity to the grid as power plants worth $6 billion.[4]


What is "Smart Grid Data"?


Currently, utilities do not have much information about real-time customer electricity usage. The only information a utility currently collects is from analog meters that a utility usually reads only once a month. The smart grid greatly increases data about customer electricity use. The average home could generate 750 to 3,000 data points each month.[5] This creates more granular data about electricity consumption. Indeed, smart meters are capable of keeping a real-time, live, streaming conversation with the utility, although most utilities receive information in intervals of about 15 minutes. Larger customers may collect information on a more frequent basis.

Smart data can be used in many different ways to decrease electricity consumption, and thus electricity generation. This is generally beneficial for the environment because most of our electricity comes from fossil fuel sources like coal and natural gas.[6] Smart Grid deployment is one feasible approach to climate change mitigation. However, the advantages created by the smart grid do have a social cost. The increased information produced by smart meters has created serious privacy concerns.

What concerns electricity customers is that smart data can paint a detailed picture about daily behaviors and habits inside homes and businesses. When data is created in real time, it is not very hard to tell the difference between the refrigerator and the clothes dryer because the known kilowatt output of one appliance can be compared to another. Customers worry that data about their electricity use could be volunteered to the government or sold to third parties at profit. The Electronic Privacy Information Center (EIPC), which is a public interest research center in Washington, D.C., has created a list of "potential privacy consequences of Smart Grid systems:"[7]

1.         Identity Theft

2.         Determine Personal Behavior Patterns

3.         Determine Specific Appliances Used

4.         Perform Real-Time Surveillance

5.         Reveal Activities Through Residual Data

6.         Targeted Home Invasions (latch key children, elderly, etc.)

7.         Provide Accidental Invasions

8.         Activity Censorship

9.         Decisions and Actions Based Upon Inaccurate Data

10.       Profiling

11.       Unwanted Publicity and Embarrassment

12.       Tracking Behavior of Renters/Leasers

13.       Behavior Tracking (possible combination with Personal Behavior Patterns)

14.       Public Aggregated Searches Revealing Individual Behavior


This list helps explain why so many consumers are concerned that smart meters may not be net beneficial. Some consumers are worried that these harms could outweigh any environmental or economic benefits that come to fruition. Utilities must address smart meter data concerns to guarantee privacy.

Smart Grid Privacy Principles and Model Privacy Policy


Utilities would be wise to adopt a privacy policy to prevent data misuse. Customers have a right to privacy guaranteed by the U.S. Constitution, as explained by the Supreme Court.[8] In the context of the smart grid, this privacy is sacred because data about electricity usage can reveal behavior in homes. Privacy is a fundamental right.[9] People have a right to sue to protect it. [10]  In this new world of smart grid electricity use data customers may be able to sue their utility for improperly sharing electricity usage information. Similar suits have been won against Google[11], Facebook[12], and Yahoo!.[13] Electric utilities should limit their liability by adopting a sound privacy policy based on state and federal privacy laws and regulations. The Institute for Energy and the Environment at Vermont Law School has written privacy principles[14] and a model privacy policy[15] for electric utilities, which are available on their website.[16] The privacy principles for utilities to follow are:


1.      Make Privacy the default setting.

2.      Provide complete privacy protection

3.      Know the law regarding public disclosure in your state.

4.      Only store/ provide access to necessary information.

5.      Obtain written consent before disclosing to most third parties.

6.      Educate customers about the implications of sharing data with third parties.

7.      Notify customers when data is disclosed.

8.      Develop a plan for contingencies.

9.      Make your privacy policy accessible to customers.


While the model privacy policy is just that-a model-utilities should feel free to use it and adapt it to fit the laws in their jurisdiction. There are a few things to consider in your state. First, if your state has a "sunshine" or "freedom of information" law that requires public disclosure of public information, a public utility may be required to disclose electricity use data. Customers should be made aware if that is the case. Second, every privacy policy should come with a contingency plan. In this age of internet hacking, no privacy policy is perfect. Utilities should be ready to recover lost data and inform their customers if a breach does happen. Third, utilities should often remind their customers about the risks involved with disclosing their electricity usage data to third parties. There may be in-home displays or smart phone applications for electricity usage information, but customers should have to provide affirmative consent before information should be shared with such outside services.

Once a utility has committed to deploying smart meters, it should create a privacy policy and plan. The utility should ask in-house counsel or retain an outside attorney to look at the proper state and federal laws to be sure the utility will be complying with privacy laws and regulations. On balance, a privacy policy will make smart grid deployment better for the utilities and the consumers. Privacy does not have to be a headache, and certainly should not deter utilities from moving into the 21st Century. Rather, every utility should embrace the benefits of grid modernization and take steps to shield itself from liability and maintain a positive relationship with its customers as it moves forward.


[1]  Bulk Electricity Grid Beginnings, Ken Klapp, New York Independent Service Operator (NYISO), Available at http://www.pearlstreetinc.com/NYISO_bulk_elect_beginnings.pdf

[2] For more information, visit the U.S. Department of Energy's Smart Grid website at www.smartgrid.gov.

[3] How the Smart Grid Promotes a Greener Future, Litos Strategic Communication (2009). Available at http://www.sgiclearinghouse.org/LearnMore

[4] RG Pratt, et al. Unites States Department of Energy Pacific Northwest National Laboratory, The Smart Grid: An

Estimation of the Energy and CO2 Benefits (2010). Available at http://energyenvironment.pnnl.gov/news/pdf/PNNL-19112_Revision_1_Final.pdf

[5] Chris Cooper and Kevin B. Jones, Vermont Law School Institute for Energy and the Environment, ComEd's Smart Grid Innovation Corridor: Piloting the Regulatory Environment in Illinois. Available at http://vermontlaw.edu/Documents/ComEd%20Case%20Study%20Final.pdf

[6] Annual Energy Outlook 2012, United States Department of Energy, Energy Information Administration (2012) Available at http://www.eia.gov/forecasts/aeo/pdf/0383%282012%29.pdf

[7] The Smart Grid and Privacy, The Electronic Privacy Information Center. Available at  http://epic.org/privacy/smartgrid/smartgrid.html#char

[8] Kyllo v. United States, 533 U.S. 27 (2001)

[9] Lawrence v. Texas, 539 U.S. 558 (2003).

[10] Union Pacific Railway company v. Botsford, 141 U.S. 250 (1891).

[11] This case is currently working its way through the Federal Courts out of California. The plaintiffs claim Google violates the Federal Wiretap Act. In re Google Inc. Street View Electronic Communications Litigation, 794 F.Supp.2d 1067 2011).

[12] This case asserts that Facebook used posts and information about certain users to advertise or make money without the user's permission. Fraley v. Facebook, Inc. For more information visit http://www.fraleyfacebooksettlement.com/

[13] A class action suit has been brought against Yahoo!. The class alleges Yahoo! failed to deploy basic protections to protect users' personal information. As a result, the class members' personal information was publicly posted online. See the Law Firm's website: http://www.girardgibbs.com/yahoo-data-breach

[14] Colin R. Hagan and Katie R. Thomas, Presentation to the Legal Seminar of the American Public Power AssociationVermont Law School Institute for Energy and the Environment (2011). Available at http://www.vermontlaw.edu/Documents/APPA%20Presentation.pdf

[15] A Model Privacy Policy for Smart Grid Data, Vermont Law School Institute for Energy and the Environment (2013). Available at http://www.vermontlaw.edu/Documents/Model%20Smart%20Grid%20Privacy%20Policy%20VLS%20Version%202.pdf

Authored By:
Katie Thomas is a third year student at Vermont Law School, where she is pursuing a J.D. with a Certificate in Energy Law and a Master's in Environmental Law and Policy. She is a research associate at the Institute for Energy and the Environment at Vermont Law School. She has focused her research on issues pertaining to the legal and regulatory challenges to smart grid deployment. She was a legal

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March, 18 2013

Ferdinand E. Banks says

Let's see if we can shed a little light - or darkness - on this subject.

First of all, I don't know what the smart grid is, and I don't want to know. I have however heard that term used by some of the ignoramuses dealing with energy here in Sweden.

What I do know - and know perfectly - is that with 12 reactors, and a regulated electric system, Sweden produced some of the lowest cost electricity in the world, and it was low cost electricity that made a major contribution to one of the most impressive economies in the world. Regrettably however, some of the shine has gone off the Swedish economy, as dumg energy experts pour over the advantages of smartening up the Swedish electric netwrork.

Conclusion: maybe our brilliant politicians and their foot soldiers can find better things to do than providing smart grids for those of us without the slightest interest in this...issue.

March, 18 2013

Len Gould says

"smart grid customers will enjoy economic benefits through the avoided cost of construction of power plants, transmission lines and substations over 20 years could save $46 billion to $117 billion." It is let's say disconcerting at best, to see an article such as this being written in a tone which assumes that the US is the entire world. Not even a single nod to the existence of any other interested readers, and that on this site where at least half the readers are from outside the US. If US citizens would become even a little more educated about views and conditions outside their borders they might do a little better job of avoiding fiascos such as the Iraq conflict etc.

March, 26 2013

Gregory Cmar says

Katie - To your naysayers I would say, "Think globally but act locally!" If they can't profit from such a well-informed and thoughtful piece that addresses a real, local problem then that is their loss.

Your proposed solution, that Utilities voluntarily adopt a privacy policy is a breath of fresh air. We have HIPAA in the health care industry to protect us. We need a similar solution in the USA for the Utilities industry to move forward. I am glad to see that someone has taken the approach to stop denying the dangers of collecting data by the smart grid. Let's hope your article can spark some action.

March, 26 2013

bill payne says

Energy parsittes are in focus.

Energy writers are asked:

1 Do you have a lab? 2 Do you collect data?

Let's see. References or lab field trips please.

Or do you just sit a desk ahd write.

And try to create the appearance you are intelleigent and well-educated?

Best from real micrcontroller world.


Regards, bill http://www.prosefights.org/lenovog580/lenovog580.htm#w8vid

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