Regulating the Use and Sharing of Energy Consumption Data: Assessing California's SB 1476 Smart Meter Privacy Statute

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I. INTRODUCTION

The rise of digital technologies has permanently altered how human beings interact, communicate, and function in the modern world. The marriage of enhanced data processing and internet-based communication enables average citizens and industry to easily access information and efficiently marshal control over complex systems in the physical and virtual world. While these advances have led to breakthroughs in efficiency, convenience, and an ability to tap new markets, the ubiquity of networked digital applications raises questions regarding the loss of individual autonomy, anonymity, and privacy to faceless, unaccountable corporate and government databases. In 2010 alone, both Google, Inc. and Facebook, arguably the world's leading providers of personalized web-based services, acknowledged inappropriate (and potentially illegal) collection of personal data as well as unauthorized dissemination of user information to third parties. (1) Increasingly, networked devices and services that purport to better our lives are being used as portals to collect data about our preferences, behavior, and lifestyles. (2)

Over the next decade, technological changes in the electricity sector will force utilities, regulators, and ratepayers to balance the availability of powerful new capabilities and service offerings with legitimate concerns about consumer privacy. Through what is currently referred to as the "smart grid," electric utilities will be given access to detailed and granular electricity consumption information as a means to improve service reliability, reduce generation costs through reductions in "peak demand," and accommodate the introduction of renewable energy sources and plug-in electric vehicles into the nation's energy portfolio. (3) The U.S. government adopted the creation of a more efficient and reliable electric grid in the Energy Independence and Security Act ("EISA") of 2007 and has since directed nearly $4 billion in federal funding for smart grid technology deployments and demonstration projects. (4) The key to enabling this vision of a "smarter" grid lies in achieving three overarching capabilities: (1) activating communication and digital sensors with capabilities to automate the electricity distribution and transmission systems, (2) providing digitally enhanced metering systems for all customers, and (3) linking direct interfaces between metering systems and customers through "home area network" technologies. (5)

From a privacy perspective, there are concerns that, in the course of helping grid operators establish real-time situational awareness over large swaths of the electric power system, these so-called "smart" technologies will also be collecting, aggregating, and reporting detailed energy consumption information from individual residences. (6) The potential for utilities and other vendors to collect and aggregate energy consumption data from individual homes and businesses raises significant questions about the access, use, and ownership of energy consumption information. (7) Although electric utilities have long accessed customer energy usage for billing purposes, the collection of energy consumption data has not previously raised privacy concerns because (1) electrical meters had to be physically accessed to obtain usage data directly from buildings, (2) traditional meters recorded energy usage over longer time periods and were not capable of collecting the type of granular, appliance specific data possible with smart meters, and (3) under the traditional model, utilities have not had the means nor the economic incentive to share consumer energy consumption data with third party vendors and others. (8)

Recognizing that the collection and storage of data derived from smart meters and appliances raises potential for surveillance of customers and related "physical, financial, and reputational risks," (9) California recently became the first U.S. state to establish guidelines and protections for the collection and treatment of energy consumption data. …