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July 27, 2011
Brattle Economists Co-Author Report on the Benefits of Smart Meters for the Institute for Electric Efficiency

Brattle principal Ahmad Faruqui and associate Doug Mitarotonda co-authored a report for the Institute for Electric Efficiency (IEE) that highlights the benefits of smart meter programs for consumers. In the report, “The Costs and Benefits of Smart Meters for Residential Customers,” Drs. Faruqui and Mitarotonda, along with co-authors Lisa Wood, Adam Cooper, and Judith Schwartz, found that for most utility companies, the benefits of smart meter investment for both utilities and customers outweigh the investment costs. The authors’ conclusions are based on a defined framework to calculate the costs and benefits of smart meters, more technically known as advanced metering infrastructure (AMI), for differing perspectives across utility types and consumer profiles. The three categorical benefits defined in the framework are operational, consumer, and societal benefits. The authors used these categories to compare potential benefits and costs based on four profiles of utilities, ranging from “pioneer” to “cautious,” as well as four types of consumer behavior, from “basic” users who will not engage in smart meter programs to “green” consumers motivated by environmental concerns. Based on the framework the authors proposed, the report concluded that although results may vary, positive benefits can be attained for all utility types and consumer characteristics over the next 20 years. The report also found that heightened electric vehicle adoption has the greatest potential for a positive financial impact. The full report is available on the IEE website.