California’s energy privacy rules: The battle heats up

Last month, the California Public Utility Commission published a proposed ruling on how utility customers’ energy data must be protected. The first deadline for interested parties to comment on the state’s new proposed rules comes this week, and there’s still plenty of confusion over the fine print. What’s more, a common thought is emerging: The CPUC’s rules will need to change to avoid stifling the smart grid–home energy marketplace.

California, of course, is a key early market for the smart grid, and these rules will play a critical role in how that market evolves. With that in mind, let’s examine some noteworthy conflicts revealed by the industries’ most recent comments, and what they mean:

Locked vs. unlocked: still a cloudy distinction

Chief among smart grid industry players’ worries is that some of the CPUC’s definitions lack clarity, and that this could cause uncertainty and delay in rolling out products and services to link homeowners and business owners to their energy use.

The CPUC’s rules give “locked” devices a lot more privacy protection and disclosure. But the definition of a “locked” device in this case is vague to the point of frustration. According to the rules, “A device is ‘locked’ to a service provider if that particular device can only be used by that single provider of energy services.” Commenters want the CPUC to clarify that definition or ditch the distinction entirely.

The Center for Energy Efficiency and Renewable Technologies trade group suggested that the CPUC simplify its rules to give utilities authority over only the smart meters themselves and leave everything inside the customer premise under the far more relaxed rules applied to non-“locked” devices.

But what if the customer doesn’t own the device inside her home or business? The Demand Response and Smart Grid Coalition trade group proposed defining a “locked” device as one owned by a third party — the utility or vendor — and an “unlocked” device as one owned by a customer. Doing things this way, however, might not fit with the CPUC’s desire to exercise control over what third parties do with customer energy data.

Conflicts in the chain of responsibility

The CPUC doesn’t have jurisdiction over Verizon, Google or any other nonutility parties that want access to utility customers’ energy data, so its rules seek to extend its policies to those players. The solution proposed? Force utilities to include a “chain of responsibility” in contracts with third-party partners that would require the latter to write privacy protections into contracts.

This concept could hit snags. Utility Southern California Edison insists it can’t be held responsible for what third parties do with data that customers have freely handed over, and it wants its role limited to cutting off all transmission of data to the third party if customers complain of misuse.

But as home energy management player Verizon pointed out, cutting off data could “inadvertently disrupt operations and thereby harm customers in cases where a vendor provides an essential or unique service, function, or product.” If the CPUC’s rules stand as written, smart grid companies will have to devise arrangements to balance these concerns.

The battle over SEP 1.0 vs. SEP 2.0. heats up

We’ve already covered the smart grid industry’s struggles over whether it’s better to use existing Smart Energy Profile 1.0 technology, which only works with ZigBee low-power wireless mesh, or wait for SEP 2.0, which will be usable by Wi-Fi and HomePlug devices as well.

But the CPUC’s rules mandate that the state’s big three utilities push forward on pilot projects to connect smart meters to in-home devices within six months, which is before SEP 2.0 will be ready. That brought an outcry from Pacific Gas & Electric, which worries ZigBee-only, 1.0 deployments could strand it with nonstandard equipment.

The industry trade group Demand Response and Smart Grid Coalition, on the other hand, says SEP 1.0 is already used in Texas, Nev. and elsewhere, and that California utilities should start using it as well. This isn’t surprising, given that DRSG’s members include Comverge, Tendril, Control4 and others using SEP 1.0 in deployments today.

These are just a few conflicts that will need to be worked out as CPUC moves ahead with its rule-making process, and new developments could force some smart grid players to change how they approach the market. Stay tuned for more.

Question of the week

How will California resolve confusion over its new proposed rules?