How Electric Meters Work (and How Solar Fits In)

Your electric meter may not draw attention to itself, but it’s a critical piece of equipment in our electrically powered modern world.

It’s your connection to the electricity grid, your gateway to solar benefits like net metering, and, yes, it’s how your electric company knows how much you owe them every month. Whether you’re working to reduce your electricity consumption or looking to install home solar panels, your electric meter is in the mix, even if it goes unnoticed.

Why you should care about your electric meter

Let’s start with a simple question: “What is an electric meter?” In basic terms, an electric meter (also called an electricity meter, electrical meter, or energy meter) is a device that measures the amount of electricity a building consumes.

Older electric meters only show how much electricity has been consumed between readings. Your utility can only say you used at least that much electricity since the last time it was read. Newer electric meters can record when you use electricity, how much you use at any one time, and how much electricity you send back to the grid. 

These extra insights have allowed for new types of electricity rates. 

• Time-of-use rates: The rate you pay for power varies based on the time when you use that electricity.
• Demand charge rates: You are billed based on the maximum amount of energy you draw from the grid at any one time.

Depending on the type of rate your utility uses, and when you use electricity the most, you may end up paying more or less for your power with a smart meter. If your utility collects more data on your power usage, they may share that data with you, which you can use to better understand how your energy use impacts your monthly bill.

Why wait for your utility to share that data? The free Palmetto app gives you real-time insights into your energy use, breaking it down into simple weekly goals and showing you exactly which changes make the biggest difference on your bill.

The type of meter you have can also impact solar panel installation. Smart meters provide more granular data about your energy usage, which can be useful in designing a solar panel system. And depending on your utility company, it may not be necessary to install a new meter after going solar if you already have a smart meter.

Read more: What is the Average Cost of Solar Panels?

Who owns the electric meter?

Your utility owns the electric meter and is responsible for installing, maintaining, and reading it. Tampering with a residential power meter is not authorized, and is a punishable offense. (Not to mention it can be highly dangerous!)

If you need to have your meter changed, moved, or adjusted, you must work with your utility to get that work done.

How does an electric meter work?

You’ve probably stared at the spinning numbers on a power meter and wondered, "What does an electric meter do, and how does it calculate my energy consumption?"  The disc in an analog meter simply spins as you pull kilowatt-hours (kWhs) of electricity from the grid. When the meter is read, the difference between two readings — the current reading and the previous reading — is how your utility company determines your energy usage and the amount they should bill.

If you have a newer meter, a utility worker won’t physically visit your home, because a smart meter is designed to communicate your electricity usage directly with your utility.

Some smart meters communicate via a cellular signal, but it is also possible that your smart meter is emitting radio waves, and a utility worker will drive through your neighborhood to collect meter readings without visiting the actual meter.

If you decide to install a solar power system, your utility may require you to swap your old meter for a new one. If you live in an area with net metering, the new solar meter will help determine how much electricity you are pulling from the utility, as well as how much energy you are feeding back into the grid.

How an analog electric meter works

The vast majority of electric meters in the US are smart meters, but some are still analog, or mechanical. Mechanical meters are normally enclosed in a glass or plastic housing (to reduce the possibility of tampering) and have a metal disc inside that spins when you are drawing current from the utility’s service wires. Keen observers might notice the disc moves slower or faster depending on how much electricity you’re using.

A mechanical electric meter has two conductor coils that create magnetic fields. One coil is impacted by the voltage going across the conductor, and the other is affected by the current going across the conductor. The magnetic fields generated by the interaction of these coils then turn a thin aluminum disc at a controlled speed proportional to the amount of electricity consumed.

The spinning of the disc moves the dials that indicate the total electricity consumed in kilowatt-hours. A utility worker must visit, read, and record the current readings for you to be billed. You can also read the meter yourself to determine how much electricity you have consumed, and confirm that utility charges are accurate.

How to read a mechanical electric meter

When reading your electricity meter, review and write down the numbers as they appear on the dials from right to left. In case the pointer is directly on a number, look at the dial to the right. If it has passed zero, use the next higher number. If it hasn't passed zero, use the lower number. If the dial falls between two numbers, use the smaller of the two numbers.

Keep in mind, your electricity meter never ‘resets’, so you need to take two readings at two different times and compare them to understand your electricity usage over time.

How a digital electric meter works

There are several types of digital electric meters. The oldest style of digital electric meter is similar to a mechanical meter, measuring electrical flow from the grid into your house, and then uses an analog-to-digital converter (ADC) to convert the readings to a digital signal.

Modern digital meters come equipped with AC (alternating current) sensors that detect amperage and voltage from the grid. These meters do a better job of recording all of the power in a circuit, making them somewhat more accurate than ADC or mechanical electric meters.

Digital meters, unlike their mechanical counterparts, have an electronic display that displays the current reading. You can read the display manually, and the utility company can get readings from the meter with high-frequency signals.

If you have solar power and are participating in net metering, your digital net meter will record your usage, as well as track the energy fed back into the grid, and help utility companies determine your total (net) energy usage and the amount they should bill.

What units does an electric meter measure?

An electrical meter installed in your home measures watts of electricity. A watt is the product of voltage and amperage (aka current) in an electrical circuit: 1 watt = 1 volt x 1 amp. But a watt is only a measure of electrical potential, so an element of time must be added to measure the actual energy usage.

Thus, electrical usage in the home is a measurement of watts consumed over a period of time (hours) and is expressed in the unit kilowatt-hours. To put it simply, a kilowatt-hour is 1,000 watts of electricity used over 1 hour of time.

For instance, if you leave an 60-watt light bulb on for 24 hours, the energy usage will be calculated as follows:

60 watts x 24 hours = 1,440 watt-hours (1.44 kilowatt-hours)

(For a complete guide to watts and other electricity terms, check out: Understanding Solar Power Electricity Terms: Volts, Amps, and Watts.)

How accurate is an electric meter?

Electric meters are designed to record electricity consumed within an acceptable level of accuracy. Any significant error affects both the consumer and the utility company and can result in under- or over-billing. The degree of accuracy required is established by local laws where the meter is installed. These laws also lay out procedures for a meter accuracy dispute.

For example, in the United States, the American National Standards Institute (ANSI) has created voluntary standards that form the basis of the testing requirements set by most utilities and utility commissions for their meter requirements. Meters fall into three accuracy classes, 0.1, 0.2, and 0.5, meaning that the meters have an error rate under test conditions that does not exceed .1%, .2%, and .5% respectively. With net metering, the test conditions must be applied twice – once with energy flowing in the forward, or “delivered,” direction and once with energy flowing in the reverse, or “received,” direction.

If there’s a dispute over a meter’s accuracy, the meter can be compared with a check meter functioning alongside the disputed meter, or more thoroughly tested at a specified calibration laboratory to verify accuracy.

Note: Most disputed meters are found to be operating as required. If a laboratory can prove the meter has been misregistering, a refund is usually provided, based on how long it’s estimated the meter has been misreading for.

What is a smart meter?

A smart meter operates similarly to a traditional electrical meter, only it sends usage information back to the utility via radio signals or cellular communication — something traditional analog meters can't do. A built-in communication chip allows the smart meter to send meter reading details directly to the utility company, and in return, the utility might share that data with the consumer so they can better understand their electricity usage.

Take control of that smart meter data today. The Palmetto app turns those readings into actionable weekly challenges, complete with rewards for beating your targets. See your progress daily instead of waiting for that monthly bill surprise.

Why are more utilities switching to smart meters?

Smart meters allow utilities to determine how much energy you pull from the grid at any point in time. With this information, utilities can come up with better ways of pricing the electricity they provide. Because no workers are required to read smart meters, electricity companies save money on labor and operating costs.

If you decide to go solar, your utility company might require you to switch to a smart meter, because this will give them better information about your energy usage, and make sure they are billing you accurately. According to the US Energy Information Administration, 72% of residences had a smart meter as of 2022.

Should I be worried about smart meter radiation?

Smart meters give off radiofrequency (RF) waves (aka low-energy radiation) and some people are concerned.

According to the American Cancer Society, “RF radiation doesn’t have enough energy to remove charged particles such as electrons (ionize), and so is called non-ionizing radiation. Non-ionizing radiation has enough energy to move atoms in a molecule around or cause them to vibrate, which can lead to heat but it can’t damage DNA directly.”

Because smart meters are typically installed outside and there are often walls between you and the meter, the amount of radiation you’re exposed to is much lower than that from cell phones or other electronic devices, the American Cancer Society says.

The US Food and Drug Administration says there is not enough evidence to support the idea that RF radiation causes cancer, according to the American Cancer Society.

What is net metering?

Net energy metering (NEM) credits solar system owners for the excess solar electricity they produce and export to the grid. Your meter measures both the electricity you draw from and send to the grid, and you can earn credit when you produce more than you consume. You can often bank that credit and use it to offset the cost of electricity in months where you use more than your panels produce.

The details of net metering vary from place to place, but if you’re thinking about going solar, net metering (or its close cousin net billing) can provide financial benefits.

Time-of-use metering

Time-of-use (TOU) metering allows utilities to charge different rates for electricity, depending on when that electricity is used. The utility divides the day into tariff slots, with low tariff rates at off-peak load periods, and higher rates at peak load periods. By financially incentivizing homeowners to shift their electricity usage to off-peak times, TOU metering helps even out supply and demand.

With TOU metering, consumers may be more likely to use electricity when prices are lower, switch to energy-efficient appliances, or even add solar power to their home.

Do I get a new electric meter if I go solar?

You will often get a new power meter when you go solar. If you’re in an area with net metering, your utility company will swap out your old power meter for a new net energy meter. If you’re part of the majority of homeowners that already has a newer smart meter, you may not need a new one, but your solar installer will work with the utility to confirm what’s needed.

Slow down your electric meter with solar

Getting a huge electricity bill is not something anyone looks forward to. When you’re using a lot of electricity and the electric meter is spinning quickly, you probably wish there was a way you could just slow it down or make it run in reverse.

You can basically do that with home solar. By producing your own electricity, you can reduce the amount of electricity that you need to pull from the utility’s grid and pay less for your utility power. If you have net metering, you can export power to the grid, essentially running the electric meter in reverse.

Ready to see how much you would save with home solar, and its impact on your electricity meter? Get a free savings estimate today.

Frequently asked questions

How do smart meters send data?

Smart meters send data in two primary ways: radio frequency or cellular data. That data might be sent automatically to the utility or require a utility employee to drive through your neighborhood.

What is net metering?

Under net metering, for every kilowatt-hour your solar system sends to the grid, you receive a one kilowatt-hour credit on your electric bill. Other methods of compensating solar owners for the extra electricity their panels generate, like net billing, might reward you less for the electricity you send to the grid, while still adding to your solar savings.