Last month, the Seventh Circuit held in Naperville Smart Meter Awareness v. City of Naperville, No. 16-3766, that Naperville, Illinois’ collection of smart meter data from its residents constitutes a reasonable search that is not in violation of the Fourth Amendment or the Illinois Constitution. In so doing, the court acknowledged Naperville’s legitimate interest in deploying smart meters in order to reduce utility costs, provide cheaper power to consumers, encourage energy efficiency, and increase grid stability.
Naperville received an $11 million grant from DOE to update its grid and used the funds to replace residential, analog energy meters with digital smart meters. Residents were not given the option to opt-out of the program. These smart meters collect residents’ energy usage data at 15-minute intervals, and data may be stored by the city for up to three years. A group of concerned citizens, dubbed Naperville Smart Meter Awareness, brought a Fourth Amendment challenge in federal district court, alleging that the collection of smart meter data permits the city government to surveil citizens in their homes, since the data reveals when people are home, when people are away, when people sleep and eat, what types of appliances are in the house, and when those appliances are used.
The Seventh Circuit took up the question after the district court dismissed the complaint for failure to state a claim and denied leave to amend on futility grounds. The appellate court agreed that the data collection constitutes a search, but found the search reasonable when balanced against Naperville’s legitimate interest in modernizing its grid. The court reasoned that Naperville had made clear in a “Smart Grid Customer Bill of Rights” that the city’s public utility would not provide customer data to third parties or law enforcement without a warrant or court order. And it acknowledged that smart meters play a “crucial role” in grid modernization by allowing utilities to restore service more quickly, offer time-based energy pricing, and reduce labor costs.