February 2, 2011
Canada, Ontario

Utilities work to prevent privacy backlash over smart grid

SHAWN McCARTHY — GLOBAL ENERGY REPORTER, The Globe and Mail, www.theglobeandmail.com 2 February 2011

Canadian utilities are looking to prevent a consumer backlash over privacy concerns as they roll out new smart-grid technology that will give companies unprecedented access to information about customers’ habits and behaviour.

Working with Ontario’s Privacy Commission, Toronto-based Hydro One Inc. has teamed with major suppliers such General Electric Co. and IBM on a pilot project that ensures privacy protection in a new digitized grid system designed to allow more interaction between companies and customers.

Governments and utilities are aiming to retool the aging grid to reduce electricity consumption, particularly at peak times when the cost of producing power is highest. And the push to upgrade the power system has spawned a whole industry of companies that see a lucrative market in the billions being invested across North America.

The smart-grid concept extends broadly – from the technology that lets utilities better manage intermittent renewable power, to household meters that communicate with distribution companies every 15 minutes to record power usage and furnaces and appliances that can be programmed remotely.

But for the new system to work, consumers have to trust that companies will safeguard their personal household information – such as what kind of high-tech equipment they own, or which hours of the day the furnace is turned down (indicating no one is home).

Ontario Privacy Commissioner Ann Cavoukian said the new technology will result in a massive transfer of personal information to utilities and energy-service providers who will develop applications for the new systems.

“Privacy has been the sleeper issue in smart-grid development over the past few years,” Ms. Cavoukian said in an interview from California, where she is attending an industry show at which she will release a study today on the Hydro One approach.

Hydro One and its partners have just completed a trial run in Owen Sound that includes key privacy provisions in the new system design: No customer identification information will persist in the system other than the company’s own billing records; the utility and its affiliates will not share information with third parties; and customers will have to actively agree to subscribe to programs offered by service companies.

Ms. Cavoukian said the Hydro One model should serve as a standard for all future smart-grid investment. And by paying close attention to the concerns of customers, Canadian utilities can avoid the kinds of problems encountered in other places, she said.

In California, for example, Pacific Gas & Electric is running into an angry backlash against its plan to install smart meters in homes, with loud complaints about intrusion in people’s privacy. In some cases, the utility’s technicians have faced roadblocks as they tried to enter communities to install the equipment.

“Fear is huge [in California]; trust is completely non-existent,” Ms. Caoukian said. “That is what we are trying to avoid – and are succeeding, I would suggest – in Ontario because our utilities are onside. They understand the issues and they are partnering with us to ensure they are taking every measure to embed privacy in the design of the smart grid.”

Like other power distribution companies across the country, Hydro One has begun to install smart meters as part of a move to “time of use pricing” in which consumers pay higher rates at peak-demand hours, and lower ones during hours of spare capacity.

Hydro One vice-president Mike Winters said customer acceptance is key to the success of household applications of the smart grid.

“We are starting our smart-grid journey; we’re starting to come up with the main architecture and design elements,” he said in an interview. “We do recognize that it is very critical that privacy gets [built] in and designed right upfront and not as an afterthought.”