Robyn Meeks (Duke University), Jacquelyn Pless (MIT Sloan School of Management), and Zhenxuan Wang (Duke University)
The United States’ aging infrastructure is crumbling, creating substantial economic and social losses that threaten growth and competitiveness. In this paper, we show how modern digital technologies equipped with “smart” capabilities can improve the quality of infrastructure services by examining the impact of utilities’ smart meter rollouts on electricity reliability and disentangling whether these improvements are achieved through consumer- or provider-level behavior. We start by implementing a difference-in-differences research design to study the effects in Texas—where we observe power outage information at a very granular level—and find that smart meters decrease outages by 6 percent, on average. This effect triples when the proportion of meters is “high,” and outage frequency decreases by 7 percent. The improvements appear to be driven by service providers leveraging functions that enable them to control consumption. We then take our analysis to the U.S. level and find that, consistent with these findings, smart meter rollouts reduce electricity losses and increase revenues. Our findings suggest that digital technologies facilitate better energy management that improves service quality.