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Why Texas is the Smart Meter Market to Watch

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When it comes to the future of smart meters, don’t look to California — set your eyes on Texas. The Lone Star State lags California in sheer numbers of meters deployed, but has taken a lead in supporting them with regulations and funding, as well as tying them together in cross-utility platforms. That makes it a market worth watching, if not emulating, in other states.

We’ve been tracking Texas’s distinctive smart meter landscape for some time, including its status as a fully deregulated market. That means big transmission and distribution utilities like Oncor, CenterPoint and AEP (s AEP) have to open their end customers to dozens of retail electricity providers (REPs) like TXU. That also makes the state’s power market a lot more like consumer cable or broadband markets, where companies can compete on products and services.

As I explain in my article for GigaOM Pro (subscription required), perhaps that’s why Texas’s legislature has decided to force its utilities and regulators to push out smart meters. The Texas Legislature passed a law in 2005 giving the Public Utility Commission of Texas a mandate to move forward with smart metering projects, as well as leeway to allow utilities to pass on surcharges to customers to recover the costs of doing so.

That, in turn, has allowed the PUCT to allow utilities to pass on some pretty hefty customer cost increases to pay for smart meters. Texas utility Oncor is charging $2.21 per customer per month, a rate increase that included set-asides for customer education and aiding low-income customers, PUCT Chairman Barry Smitherman said in a smart metering conference call last week. Smaller Texas utility CenterPoint was able to charge $3.24 per month increases for the first two years and $3.05 thereafter.

By comparison, California’s Pacific Gas & Electric — the utility leading the country with some 6.4 million smart meters deployed so far — sought average monthly increases of only 49 cents to 99 cents per customer, and Chicago utility Commonwealth Edison is asking customers to pay just $5 more per year, or about 42 cents per month.

Texas is also leading the way in collecting and presenting its smart meter data to customers. Its Smart Meter Texas Portal went live earlier this year, and allows customers to access information on power usage, billing and pricing, as fast as today’s technology can deliver it. It also opens that information to REPs and other designated third parties — perhaps one reason why Google (s GOOG), which is developing third-party home energy management platform PowerMeter, has pointed to Texas as a model it would like California and other states to emulate in connecting customers to smart meter energy data.

Texas also seems to have weathered the consumer backlash against smart meters pretty well so far. A lawsuit accusing Oncor’s smart meters of jacking up customer bills has been sent back to the PUCT’s more friendly jurisdiction, and a study by Navigant Consulting (pdf) reported this summer that smart meters in Texas are working properly. In this supportive environment, even Texas utilities not subject to deregulation — municipal utilities such as Austin Energy, or cooperatives like Bluebonnet Electric Cooperative — are moving forward with smart meters.

Still, as a recent study by consultancy KEMA noted, Texas customers are like their brethren around the country in that they don’t particularly care about managing their energy use and don’t want to pay more for power. All of the state’s cutting-edge smart meter deployments and customer communications efforts will have to fight those trends if more advanced home energy management, demand response and other next-generation smart meter applications are to take root.

To read my full report, and my daily news articles and story links, check out GigaOM Pro’s Green IT section.

Image courtesy of Tim Patterson.

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