Association for Public Policy Analysis & Management

Advanced metering infrastructure (AMI) is considered as the foundation of a smart grid. As of 2017, nearly half of electric customers in the United States have installed smart meters. Infrastructure upgrade is likely to affect the business models of utility companies. With AMI meters in place, utilities can provide a more diverse set of energy services, such as dynamic pricing, distributed renewable integration, and demand side management programs. However, due to a lack of incentives, many doubt that smart meters are living up to their promise.

The goal of this research is to understand the actual usage of AMI meters by utilities using aggregated macro-level data. The analysis aims to answer the question: are utilities using smart meters just as meter-reading devices, or they are leveraging its function to provide modern energy services? A utility-year panel dataset was constructed based on the EIA 861 form “Annual Electric Power Industry Report” for the year 2007 to 2017. In particular, utility-level smart meter penetration data are linked to utility energy programs data (i.e. daily digital access, direct load control, dynamic pricing and distributed generation). I estimated ordinary least squares regression (OLS) models with utility and year fixed effects, controlling for time variant utility company characteristics (profit margin, summer and winter peak demand, and number of customers). Results show that higher level of smart meter penetration is positively associated with the development of direct load control and daily digital access, however the correlation is insignificant between smart meter implementation and distributed renewable energy. This analysis provides preliminary evidence for understanding the environmental and social benefits of AMI meters.