A "smart" demonstration home set up by Southern California Edison. (Photo: Lauren Sommer)

California's electric utilities have installed more than 11 million smart meters in homes and businesses around the state. Which means for the first time, customers can see how much electricity they're using every hour, instead of once-a-month when the bill comes.

Consumers use less energy, studies have shown, when they can see that real-time data. But getting customers to pay attention in the first place may be the biggest hurdle.

Digital smart meters provide a stream of energy use data, which industry analysts say has the potential to remake our homes. That's evident just outside of Los Angeles, where Southern California Edison has set up a "smart" demonstration home.

"Above us we have photovoltaic solar panels to the left used for generating electricity and a solar thermal water heating system," says Cynthia Miller as she leads a tour of the "Smart Energy Experience."

"You might notice that we have some nice appliances," she says, pointing to the kitchen. The house is a green gadget-lovers dream. There's an electric car in the garage, LED lights, and a "smart" washing machine that communicates with the dryer.

"They're able to talk to each other so the washer can tell the dryer what its washing and the dryer can determine the optimal heat setting for that particular load of laundry," Miller says.

There's also a small screen in the kitchen that shows how much power the house is using at any given moment. Miller demonstrates what happens when you turn the toaster on. "And we'll see a jump here… and there we go. The jump happened and it's 1.7 kilowatts at 41 cents per hour."

The real intelligence of this house is its ability to communicate with the electric grid through its Home Area Network. So on a hot summer day, when SCE is cranking out power, the utility could send a message to your house that kicks your home into conservation mode.

"You notice my lights have dimmed, the ceiling fan turned on, the shades are coming down," says Miller. The thermostat turns up to 73 degrees and the air-conditioning shuts off. SCE would offer this as a voluntary program with financial incentives to sweeten the deal.

"You know, what we anticipate is the awareness is really going to drive a change in behavior for our customers because this information is compelling," says Miller.

Swimming in a Sea of Data

Of course, our homes today aren't quite as advanced. That's evident every time I log into my PG&E SmartMeter account.

My home energy use on PG&E's website.

My account shows charts of my home's daily and hourly energy use. But, for the average consumer like me, it doesn't tell me a lot. I see a few spikes in the chart where clearly my husband and I used more electricity, but what caused it? Neither of us could figure it out.

"For most people, including for me, that really is not very useful information," says Jim Sweeney, director of the Precourt Energy Efficiency Center at Stanford University.

Studies have shown that consumers reduce their energy use by as much as 10 percent when they have smart meter data like mine. Sweeney says they also studied that with a group of Google employees.

"The results have been very disappointing. In the first month, there was a significant reduction of energy use, but by end of three or four months, they were back to the same amount. This becomes an interesting toy or gimmick for people at first, but then they get tired of doing it and they revert right back to the old behavior patterns," Sweeney says.

No One Said Change Was Easy

Sweeney says using electricity in our homes is a lot like going grocery shopping in a store with no price tags. "There are flank steak and chuck steak and hamburger. But you've never seen a price tag ever in a grocery store. How good a shopper would you be with that little information?"

There are reasons to pay attention to energy, whether it's to reduce your carbon footprint or save money on your utility bill. But even though electricity may seem expensive, Sweeney says it's only a small part of the average household's income.

"We use 2.3 percent of our disposable personal income for electricity, natural gas and all other energy in the house. So if you have work hard to save that, you're probably not going to do it," he says.

Sweeney believes the key is to attach a price tag to the decisions we make the second we make them. So, if you turn up your air conditioning, the thermostat tells you how much more you're spending.

The technology to do that isn't far away. Today's smart meters already have the capability to talk to your house through a home area network. The California Public Utilities Commission also recently ruled that utilities must make customers' energy use data available to third-party companies that sell home energy management systems, if a customer purchases one.

But utilities have a long way to go to get customers to think this way. Only 20 percent of PG&E customers have set up online accounts. And according to one study, consumers interact with their utilities for only six minutes a year on average.

Clean Tech Companies Search for the Secret Recipe

"We have to get it right when we have those six minutes," says Dan Yates, CEO of Opower, a smart grid technology company that's trying to find the secret sauce of behavioral change. PG&E has hired Opower to redesign the website I was looking at. (Check out a preview here.)

"People don't want data, they want insights. So, I always joke that my mom is my litmus test. And I know that she would never spend a minute looking at raw energy data. But what she would love to find out is that her freezer is very energy intensive," he says.

Working with other utilities, Opower says their program has helped households cut their energy use by one to three percent and the change sticks. They do that by showing customers how their energy use compares to similar homes in their neighborhood. (More about what motivates us).

"It's not shame. It is really just recognizing an addressable opportunity to reduce usage. And then when you start to have people's attention, the key comes down to have relevant, targeting insights," says Yates.

Yates says for utilities that are used to dealing with hardware, working with behavioral science is a new challenge. But it's one with the potential to remake the way we consume energy. PG&E's redesigned SmartMeter website will be available by the end of the year.

On September 9th, when the blast hit, Tammy Zapata was cooking dinner at her house on Earl Avenue, about a block from the explosion. Tammy's husband, Mike, was watching Monday Night Football. Their daughter Amanda was doing her homework on the couch. When Tammy heard the roar, she looked outside her kitchen window.

"No matter how high you looked," she says, "all you saw was fire."

You'll find our series of first-hand accounts, "San Bruno Stories" on the KQED News Blog.

She says the pressure of the blast was so powerful, it sucked the air out of her living room. They couldn't move.

It felt, she says, "like when you’re in a dream, and you’re trying to run as fast as you can but you’re getting nowhere. Like you’re in quicksand."

A few blocks away, on Claremont Drive, Kevin Ashley had just finished giving his two young children dinner. Like a lot of people, he thought there had been a plane crash.

His first thought was to put the kids into the car. But then he realized the fire was already too close. "I made a split-second decision. I took the kids and I ran, because if not, we were going to be trapped."

A year later, it's still painful for him to talk about.

"I didn’t want my kids to die," he recalls, choking back tears. "I didn’t want them to be burned. And then I decided, it’s not going to happen."

The family has moved to South San Francisco. Ashley's two kids, like many others in the neighborhood, are in therapy. Kevin's wife, Michele, says moving back to San Bruno was out of the question.

"It’s not a home if you don’t feel safe," she says. "And on that night, it almost killed us. So that was the reason we decided to start over."

The pipes beneath our streets

The San Bruno explosion put a spotlight on something most people rarely think about: the vast network of underground pipes that delivers natural gas to millions of homes across the United States.

One of the main transmission lines in the Bay Area, Line 132, ran under the Crestmoor neighborhood of San Bruno. It was installed by Pacific Gas & Electric in 1956, which makes it an old pipe, but not the oldest in the PG&E system.

The part that ruptured was made up of several different sections, including six short pieces called "pups."

According to David Howitt, a chemical engineer at the University of California, Davis, who studies the behavior of metals, the particular pup that ruptured along a welded seam just wasn't made very well.

"The way that pipe was made was you bend it into shape, rather like you’d fold over a piece of paper," he explains. "And then the two edges of the paper, or pipe, have to be stuck together."

When that gap was filled in with welding material, whoever welded it didn’t use enough metal, NTSB investigators found.

"So what you essentially had was a region of the pipe that was much thinner than it should have been. And that’s where it failed."

The investigation

After the explosion, federal and state investigators descended on the area. They found that the section of pipe that blew up had more than 150 welding defects.

Which begs an important question: Where else might similar, shoddy pipes exist? What other sections of pipe were made by this same pipe-maker, or crew?

This information is critical. Because without knowing how strong a pipe is, there's no way of knowing how much pressure it can withstand. Or, how long it might last.

Investigators hoped to find these answers in PG&E's archives. But according to the utility, those records have been lost.

Richard Kuprewicz is an independent pipeline expert in Redmond, Washington, who has studied pipe ruptures for 40 years. He says it's to be expected that a utility might not be able to produce every record for every pipeline. But for a pipeline such as Line 132, one that carries gas at high pressures, record keeping is a form of due diligence.

"It is extremely unusual to not have certain records related to your pipeline, even pipeline that’s 50, 60, or 70 years old," says Kuprewicz.

PG&E says it has made important changes. It has hired a new CEO, and has reorganized its gas division. It has hired dozens of new gas engineers, and agreed to run expensive water pressure tests on up to 152 miles of buried pipelines in the Bay Area this year, to make sure that they're safe.

But many questions remain. For instance, what final straw caused that pipe to finally burst? Was it changes to the gas pressure over the past 50 years? Was it a job the city approved in 2008 to replace a sewer pipe right next to the part of the gas line that exploded? Or something else? And what lessons can we take from it?

"We want the truth."

For San Bruno City Manager Connie Jackson and many others here, tomorrow's report from the NTSB will be momentous.

"First and foremost we want the truth," says Jackson. "What happened? Why did it happen? And more importantly, what will regulators do in order to assure that this never happens again?"

Over the last year, state and federal lawmakers have introduced legislation aiming to reduce the likelihood of another San Bruno explosion. State Assemblymember Jerry Hill's AB 56, which is currently making its way through the state legislature, would strengthen pipeline safety rules and force utilities and regulators to be more accountable. The federal bills, introduced by Congresswoman Jackie Spieier, from San Mateo, and Senator Diane Feinstein, among others, would increase inspections, and notify people who live above gas lines. They also would require that PG&E install automatic shut-off valves, so that fires could be put out much faster.

Here in Crestmoor, the gas line has been decommissioned, for good. The sound of hammers breaks the morning silence.

Bill and Betty Magoolaghan are one of the first families to rebuild here.

Bill Magoolaghan.

Like other families, the Magoolaghans received money from PG&E to help pay for temporary housing and other expenses. Now, their insurance is funding much of the reconstruction. Even though their house wasn't completely destroyed, water and fire damage have forced them to rebuild almost down to the foundation. They've added a second story, and changed the layout.

Bill says, especially for his children, the excitement over a new house is what will make it possible to return to this neighborhood.

"If the house was exactly the same, I think it would be a lot more difficult for them to come back in. We had to change the house to make it viable that we could move back in. So that’s what we’ve done."

About 100 families, including the Magoolaghans, have filed lawsuits against PG&E, alleging that the company could have prevented the explosion. The first batch is expected to reach trial next summer

Between the living room and the bedrooms, he says, “there can be as much as a 15-degree spread. If we’re watching TV late at night, we’ll be so ridiculously bundled up with blanket and sweatshirts that it’s almost comical.”

Should Sorani decide to fix this problem — by insulating his basement, for example, or buying new windows — he’ll get help doing it from a new state program called Energy Upgrade California.

Listen to the QUEST radio story California's Basement Bargains on Home Efficiency.

The way it works is that utilities – in this case, Pacific Gas & Electric — help pay the costs of insulating customers’ homes, using money collected from ratepayers monthly energy bills. If the Sorani family’s monthly energy bill drops 10 percent, they'll get a thousand dollar rebate. If it drops 40 percent, they’ll get four thousand dollars.

Along the way, the program is designed to give a boost to the state’s building industry, where unemployment rates can be twice as high as other industries. In order to participate, Sorani will have to work with a licensed contractor, one that's been trained specifically to work with Energy Upgrade California. The contractors apply for permits, and complete the paperwork necessary for taking advantage of various rebates and tax credits.

“It’s basically the concept that most of us in California live in homes that aren’t well insulated,” says Dian Grueneich, an an appointee of former Governor Schwarzenegger to the California Public Utilities Commission, which oversees PG&E and other utilities. She’s one of the people responsible for Energy Upgrade California.

“The only way we’re going to change that is this massive effort, of going into every home in the state, and improving them.”

This project will be voluntary and, as you might expect, expensive. To reach the first 52 thousand homes, utilities throughout the state will spend $113 million, all of it collected from monthly utility bills. The American Recovery and Reinvestment Act will provide another $160 million.

But if the program succeeds, Grueneich says the utilities — and by extension, the rest of us — all save money. “You add it up on a large scale like California, and what they don’t have to do is build power plants and transmission lines.”

Of course, traditionally, building power plants and transmission lines is how utilities make money. From an environmental perspective, energy efficiency makes a lot of sense. But what's in it for the utilities?

Three decades ago, California took a major success toward solving this problem, by designing a system known as “decoupling.” It’s now been replicated in several other states. The idea is that by restructuring the market, the system might incentivize efficiency, so that utilities make more money when they sell less energy.

Over the last five years, efficiency has become a very expensive endeavor. In fact, some critics, such as Cheryl Cox, argue that it’s become much too expensive. Cox is a Policy Adviser with the Division of Ratepayer Advocates, a group that's been critical of the utility programs.

“Since 2006, when utilities began administering these efficiency programs, ratepayers have spent about 7 billion dollars – that will be through 2012.”

That comes out to about $3 dollars a month, from almost every home in the state. Where has all this money gone? Well, perhaps the biggest chunk of has gone to pay for one, single technology: light bulbs.

Since 2006 utilities have bought well over a hundred million CFL light bulbs, paid for out of our monthly energy bills. Those bulbs were given away for free or sold at steep discount at hardware stores.

The program has been controversial. On the one hand, CFLs are an easy fix. They use a quarter of the electricity that incandescent bulbs do, and they’re quick to install.

On the other hand, says Cheryl Cox, the light bulb program has a high degree of what’s called “free-ridership.” A lot of people would have bought the bulbs anyway, even without the subsidies.

“We need to be looking at how we can value long-term savings,” says Cox, “not light bulbs that maybe last two years. We need to look at how we can use those ratepayer dollars more cost-effectively and more strategically.”

Enter Energy Upgrade California, which targets not specific gadgets, like light bulbs, but a person’s entire house. Compared to what the state has spent on light bulbs, energy upgrade California is still a small slice of the pie, says Cox, but it’s a start.

Grueneich agrees. “What’s amazing,” she says, “is that we didn’t all embark on this ten years ago.”

When it comes to energy efficiency, Californians have a lot to be proud of, says Devra Wang, of the Natural Resources Defense Council.

“I think the debate is really over whether the programs are doing an amazing job, or just a very good job,” says Devra Wang, who directs the California Energy Program for the Natural resources Defense Council.

Wang says that despite bigger houses, more electronics, and more air conditioning, the average Californian uses as much electricity as we did 30 years ago.

“California has kept its per-capita energy consumption flat over the last 30 years, while the rest of the country has increased about 50 percent.”

The hope, she says, is that Energy Upgrade California will help keep that strong track record in place.

To participate in Energy Upgrade California, the first step is to get in touch with a participating contractor. Rebate amounts depend on how much efficiency work you do.

If you live outside of SMUD, PG&E or SoCalGas service areas, select your county from the pull-down list on the following page to learn about local equivalent energy upgrade programs.

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Ben Bustamante works on Leslie's house—for free! Photo Courtesy of Leslie Jackson.

When Home Energy’s part-time Associate Editor Leslie Jackson got home from a trip to New Orleans, where she did research on the rebuilding since Hurricane Karina, she got a message on her phone. It was PG&E calling to tell her that since she had been accepted into their CARE program, for households whose income falls below a maximum requirement, they wanted to come out and weatherize her home. CARE is a program of discounts on energy bills for qualifying households.

Once you qualify for CARE, you also qualify for PG&E’s Energy Partners Program, meaning you can have your home weatherized for free. Leslie is a renter, but that doesn’t matter, as long as her landlord agrees to have his property enhanced—well duh, who wouldn’t, for free! We’ve paid for these services already, through our energy bills. The California Public Utilities Commission (CPUC) collects the money and directs how it is spent by the utilities.

Leslie called PG&E back and within two days Elvis Tobar came out to do get things started and do a visual inspection. Ben Bustamante came a few days later to inspect the furnace and do a more thorough audit. “I was shocked when they called,” says Leslie. “And I was shocked when they said they would send someone out so soon. But they did! And I was impressed and pleased when someone showed up within the set time window.”

Ben found opportunities and had some concerns. Leslie will get a new refrigerator, CFLs, insulation in her attic, a faucet aerator in her kitchen, and a low-flow showerhead. She has knob-and-tube wiring in her attic, so the attic insulation won’t be installed until she has the wiring inspected. She could have gotten new lighting fixtures and had two new windows installed but she and the landlord wanted to keep the look and feel of the 1920s California bungalow.

And PG&E would have weatherstripped her doors and windows and air sealed her attic, but there was a problem. The vent from her gas furnace terminates in the home’s de-commissioned chimney. That and a well-sealed house are a bad combination. It is easy to depressurize a tight house—all it takes is turning on an exhaust fan. In a leaky house, makeup air can come into the house from all the seen and unseen holes in the building envelope. In a tight house, the makeup air may come from the chimney—taking dangerous combustion gases like CO with it into the home. “I’ll talk to my landlord about fixing the furnace vent. It has to terminate outside and above the house,” says Leslie.

At the time of this writing, Leslie found out that the refrigerator, which was supposed to take eight weeks to arrive, is coming next week!

“Everyone I’ve talked with from the Energy Partners program so far has given me the sense that lots of people who quality for this service turn it down because of privacy and other concerns,” says Leslie. “And that’s a shame.

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There are those who, for selfish, near-term interests, work hard to obscure the truth and only pretend to be part of the solution. When it comes to products and information, buyer beware.

First, the bad news: LG has been caught cheating by rigging it’s refrigerators to pass an energy efficiency test. It’s not the first time for LG (see Watts In Your Kitchen? ). Seems some people in the company not only cheat, but cheat poorly. On the bright side, the CEO of PG&E and a well-respected environmental scientist have collaborated on a very readable white paper on the science of global climate change and a response that will have a minimum negative effect on the U.S. economy in the short term, and very positive effects for the long term.

As reported in The Sydney Morning Harold, LG was caught with an illegal device in its model L197NFS and P197WFS refrigerators. The illegal device kicks the refrigerators into low power mode when it detects the temperature at which the refrigerators are tested in the lab (typically 22°C). So it shows Energy Star-level efficiency in the test, but costs more than $250 (Australian) to operate over a 10 year period than it would if it was energy efficient in the home. LG advertises that the fridges uses 738 kWh per year, when they actually use 876 kWh. There is another problem. The refrigerators can shut off when opened—putting your food at risk of spoiling.

Peter A. Darbee is the Chairman of the Board, CEO, and President of PG&E Corporation. His coauthor of the paper, Climate Change for Policymakers and Business Leaders, is Christopher B. Field, Director, Department of Global Ecology at the Carnegie Institution for Science in Washington D.C. For Darbee, global climate change is a business challenge; for Field, it’s pure science. Among other things, this is what they agree on.

• Global climate change will increase the severity of extreme weather events (including snow storms on the east coast); severely disrupt agricultural growing seasons and therefore create food shortages; increase scarcity of water for drinking, irrigation, and energy production; and make populated coastal areas vulnerable because of rising sea levels.

• Combating climate change through carbon cap and trade mechanisms, improved energy efficiency, and increased renewable energy will, according to the independent Congressional Budget Office, minimally impact U.S. economic output through 2050, while the positive economic effects of investment in energy efficiency and renewable energy, and a cleaner, healthier and more stable planetary climate will dwarf these negative effects.

I believe that, given the right information, more than 50% of us will see an environmental problem clearly and do what we can to fix it. But getting to 50% requires leadership—the kind that Darbee, a businessman, and Field, a scientist, are trying to provide through their white paper. Then there are those who, for selfish, near-term interests, work hard to obscure the truth and only pretend to be part of the solution. When it comes to products and information, buyer beware.

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Three months before the state election, Prop 16 has made headlines in every major state newspaper.

At first glance, Proposition 16 might appear to lack a certain splash-factor — at least compared to other initiatives – like 8 or even 71 – that have appeared on recent California ballots. In short, the proposition would require a two-thirds super majority election by voters before a local government could pool the buying power of consumers to secure energy contracts. (Oh, are you still reading this? Good.)

And yet, three months before the state election, Prop 16 has made headlines in every major state newspaper. The LA Times, the Chronicle, the San Jose Mercury News, and the Sacramento Bee, to name just a few.

From the standpoint of Prop 16's backers, these are not the good kind of headlines. With few exceptions, each article has put a spotlight on a dramatically lopsided campaign: One side of Prop 16 – the "Yes" camp – is funded entirely by a single company, PG&E, which has said it's prepared to spend $35 million on the campaign. The "No" camp has scraped together less than $25,000, nearly all of it from an advocacy group with a staff of 15.

When I asked a Yes On 16 spokesman whether he was concerned that his camp's financial muscle might turn off voters, he said that the issues at hand are simply too important not to put on a ballot. But "important" how? To PG&E's profit margin? Or to the communities interested in pursuing public power? That may be the key distinction guiding voters on June 8.

To view the complete Campaign Finance reports of Proposition 16 opponents and proponents (including details about where money comes from, and where it is spent), click here.

Listen to Battle Over Public Power radio report online.

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To go solar or not to go solar? Homeowners looking to save money on their energy bills have a number of factor to consider.

It's easy to get excited about installing solar panels on your house – particularly when you find out that state and federal rebates can cut the price almost in half.

But, as we've reported before, you might get more bang for your buck from far cheaper (and yes, far less exciting) fixes. Small things like weather stripping your doors, turning down the thermostat or upgrading your refrigerator, can put a dent in your utility bills.

Even if you've done all that, solar panels still might not pencil out. That's because of something called "tiered pricing", which is how most utilities calculate your monthly energy bills. The idea is that energy is relatively cheap as long as you stay within a certain amount. Exceed that, and you're in the next "tier," where the rate increases. At the next tier, the rate is even higher. The difference between top tier and bottom pier can be as much as 44 cents versus 8 cents per kilowatt hour.

That's why solar panels tend to make more sense for people with substantial energy needs – the big, air-conditioned houses, the heated pools, the multiple flat-screen TVs.

The higher your monthly utility bills without solar panels, the faster those panels will pay for themselves once they're installed. Plus, even if those panels don't meet the complete energy needs of your house, they may be enough to bring you down to a lower tier, where the rate is much better.

If you're interested in making your home more energy efficient, this handy and comprehensive online audit from the people at Lawrence Berkeley National Labs is a good place to start.

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The Public Policy Institute of California has been tracking public support for expanded nuclear power over the past several years. Survey participants are offered a menu of four potential energy options, one at a time.

The question posed is: "Thinking about the country as a whole, to address the country’s energy needs and reduce dependence on foreign oil sources, do you favor or oppose the following proposals?" Then the four options are offered, including: "How about building more nuclear power plants at this time."

As recently as 2002, adults surveyed in California opposed the idea by a margin of 59% to 33%. But that gap has been closing steadily in the years since and by this July, Californians were split just about down the middle on the question, with 46% in favor and 48% opposed. The poll has a margin of error of about 2%, making it a virtual tie.

When you dig into the numbers a little deeper, some demographic preferences emerge: support increases with both age and education. Californians 55 and older support more nuclear by a wide margin (58% to 36%) as do college graduates (50%-43%).

Many people use cost as an argument against nuclear but just as the PPIC was phoning around for opinions on the matter, the Palo Alto-based Electric Power Research Institute was finishing up its own report , concluding that trying to reach greenhouse gas reduction goals without baseload technologies like nuclear power, could end up costing much more. Dan Kammen, who runs an energy lab at U.C. Berkeley, would appear to agree. He said in a recent interview for Climate Watch that "Without knowing exactly where things will come down on nuclear, I think that it absolutely has to be part of the equation in a way that it has not been in the past. Energy costs from fossil fuels are rising at almost 5% a year now, and the damage we are doing and are going to do more of, if we don’t stop our fossil fuel expansion, in terms of greenhouse warming, is so large an issue that these technologies have to be back on the table.

But there's a serious question of whether the nation– let alone the state– is in a position to embrace nuclear as it did in the 1960s. Kammen is also a professor of nuclear engineering, and noted with some alarm the rate at which the industry is "graying." Now in his mid-forties, he told me that when he attends technical meetings for nuclear engineers, he's often "the youngest guy in the room–by 20 years." Since the U.S. more or less abandoned its nuclear hopes following the Three Mile Island debacle, the nation has ceded most of its nuclear industrial capacity to other nations, and few young people have chosen to enter the field.

The effective ban on new nuclear plants that California has had in place since 1976 could be reconsidered. But ultimately electric utilities will have to want it and I sense a certain "nuclear fatigue" in that arena.

The Sacramento Municipal Utility District (SMUD) shut down its only reactor in 1989, after a thumbs-down referendum. When I called to ask for an interview on the prospects for a nuclear revival, they declined. They didn't even want to talk about it. Managers at PG&E, whose twin reactors at Diablo Canyon produce nearly a quarter of the utility's output, still claim an interest in nuclear. But when I asked CEO Peter Darbee about it recently, he said he had the sense that most people in California would prefer to look elsewhere for energy solutions. Of course, that was before the latest PPIC poll.

Listen to the New Nuclear radio report online.

Check out an interactive "atomic timeline," marking some of the milestones in nuclear power history in the U.S. By former Climate Watch intern Amanda Dyer.

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Hourly energy use data, now online.

I've never paid much attention to my electric meter. For most of us, it's just that box on the side of the house with a small white disk spinning inside, keeping track of our energy use. But over the next three years, all the meters of PG&E customers will be getting a major upgrade to a new, digital SmartMeter.

I met one customer, Ken Kube in Castro Valley, whose meter has already been upgraded. Since the new meters track his home energy use digitally, Kube can log into his PG&E account and see his real-time energy use. On one level, it's really the ultimate tool for parents who like to remind their kids to turn out the lights. But it's also a powerful conservation tool. Kube could see how much energy he uses at night, when his appliances are drawing power in stand-by more (what's known as "vampire" power).

These meters are just a small piece of the puzzle when it comes to a smart grid. Just what the smart grid is depends on whom you ask, but most people agree it comes down to one thing: communication. The energy landscape is changing rapidly. In addition to increasing demand, there's more renewable power like large-scale solar and wind coming online – which are often far from urban areas and are available intermittently. There's also small-scale solar on building rooftops – which means energy consumers are becoming energy producers. There will also be plug-in electric cars, which need to draw power from grid.

To manage all this, utilities and grid operators need more information than they have. And that's where meters come in. But as Kurt Yeager of the Galvin Electricity Initiative describes, it's a huge networking challenge – and a huge market opportunity.

A number of companies have jumped into the smart grid market as a result, from Silicon Valley start ups to international corporations. As Eric Miller, the Chief Solutions Officer for Trilliant describes, managing the information flow in smart grid will be the biggest challenge.

Other smart grid companies are banking on the consumer market. Google is developing the PowerMeter, an online tool that tracks home energy use. They're partnering with GE, who is positioned to work with utilities, with its meter technology, and with consumers, with smart appliances, as Sunil Sharan, the Director of the Smart Grid Initiative explains.

More on the smart grid: check out the Smart Grid at Home radio report and a slideshow of grid technology, old and new.

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