What's a smart meter?

Every household has an electricity meter. The meter records the amount of electricity you use and is read by the meter reader - in most cases six times a year. In essence the design of these meters has not changed for over 100 years.

A smart meter replaces the old-style meter with an electronic unit containing a small computer. The amount of electricity you use is still recorded; the key difference is that a smart meter can communicate with your electricity company.

This communication has two important tasks:

• It allows the electricity company to "read" your meter as often as every 30 minutes
• It can also allow the electricity company to send up-to-the-minute price information back to you.

Some smart meters have a small display panel located in a convenient place in your house. The panel displays your current electricity use and the price.

Smart meters have the potential to allow your electricity company to charge using a tiered pricing system that reflects electricity demand during the day. Meridian is not doing this at present. With tiered pricing, you could pay much more during a winter evening, when heaters and stoves are going and the load on the system is high. Later at night it could be cheaper because most people are sleeping and the system load is low.

Big money

If every house in New Zealand (around 1.4 million) had a smart meter that was read by the electricity company every 30 minutes, over 2 billion readings would be collected and processed every month. This is a large amount of data - even by modern computer standards. It means expensive behind-the-scenes computer systems have to be installed and maintained to run the system.

Substantial infrastructure is needed for the two-way communication between the smart meters and the electricity company. In Christchurch, a dedicated network has been built to do this.