top of page

What is a Smart Meter? And How Xcel Energy’s Solar Reward Metering Works

Updated: Apr 25, 2023

If you are in the greater Denver area, then it is very likely that you may live or work within one of the 1.6 million homes and businesses where Xcel Energy is installing a “smart meter” before the end of 2023. On homes, apartments, and corporate high-rises alike, Xcel has been informing their electricity customers with 90, 60, and 30-day notices before physically installing the new smart meters onsite.

As a company built in Denver, Xcel Energy is one of the many utilities that we work with every day to install solar panels in Colorado and Southern Wyoming. To help our customers and neighbors understand their electricity bills, we’ve developed this guide to help answer some of the most frequently asked questions about smart meters including how they work alongside Xcel’s Solar Rewards Metering program.

Smart Meter FAQ

While relatively new to the area, smart meters are being installed all over the country and world, bringing in a new era of technology to distributed electricity. Although we are just getting started here in Colorado, there are other states such as California, Maine, Oklahoma, Georgia, and Nevada in which over 80% of residential customers already have smart meters installed.

What is the difference between a smart meter and a regular electric meter?

The key difference between a smart meter and a regular (or analog) electric meter is the smart meter’s digital interface and technology. Smart meters are, well, “smart” (like a smartphone vs. a landline) and can measure electricity usage in sub-hourly intervals, instantly transmitting the data back and forth between the property and the utility.

The functionality of traditional, analog electric meters is extremely limited, with a simple dial that moves forward as energy is consumed, and backward as energy is produced from a rooftop solar energy system. For decades, utilities have sent people to physically read meters every month, so “smart meters” are helping to bring residential electricity into the digital world, by enabling instant exchanges of information.

How does a smart electric meter work?

According to The Department of Energy, a smart meter’s defining characteristic is the ability to provide two-way communication between a home and a utility. Not only does this allow for more detailed readings of electricity consumption and production, but real-time communication with the utility can also help pinpoint blackouts and notify personnel.

By breaking down the data into sub-hourly intervals, utilities are able to charge different electricity rates for energy consumption throughout the day based on when it was consumed. On electricity bills, these rates are often reflected as “peak” and “off-peak” hours in addition to special designations for weekends, holidays, and seasonal rates.

Xcel's current Time of Use Pricing structure

Are Smart Meters a good idea in 2022?

Although many utilities like Xcel tend to present smart meters as a way for energy-conscious consumers to save more money, many customers are skeptical about whether or not the new technology can actually help reduce electricity bills. Below, we look at some of the most commonly associated smart meter pros and cons for residential electricity consumers.

Pros of smart meters:

They are able to better analyze electricity use and provide more accurate billing.

  • They can help break down usage by each appliance to spot overconsumption.

  • They are set up to alert utilities instantly about outages and blackouts.

  • They encourage more conscious electricity consumption, for lowered bills and energy use.

Cons of smart meters:

  • They are typically installed with additional fees and new rates.

  • Customers may be forced to make lifestyle changes to keep costs low.

  • Some people have concerns with health and data safety and security from the radio transmitted information

  • Any kind of new technology may experience unexpected hiccups.

Bottom Line:

At the end of the day, smart meters becoming “the norm” is completely inevitable, as the technology is being leveraged to provide more accurate information while eliminating the need for a physical utility meter reading.

And while peak demand charges may disrupt schedules for those trying to reduce costs, we believe that solar customers can benefit the most from time of use rates imposed by newly installed smart meters.

Xcel Energy’s Solar Reward Metering

While net metering has been around for over a decade in Colorado, installations with smart meters are only now becoming more commonplace. Thanks to the two-way, time-of-use communication of the new smart meters, utilities like Xcel are now able to customize both electrical use and production billing in more advanced ways.

With Xcel’s Solar Reward Metering, any excess electricity produced beyond what is consumed in a household is stored in a virtual “solar bank.” In a tiered structure where peak utility demand falls within daily sunlight hours, solar customers can be rewarded with higher valued production rates for any solar electricity being produced in the afternoon, when the sun is at its most intense.

Two instances in which different bills create a "net user" and a "net producer."

From there, production credits can be rolled over onto each month’s electricity bill or held for a year-end payout. Combined with smart consumption habits, residential Xcel customers with full-size solar energy systems are often paying very little for their electricity each month aside from a few, unavoidable fixed costs.


So although smart meters may be making your electricity bills more complicated, the new technology is necessary for helping shape the future of the energy grid with serious benefits for solar customers. With increased awareness about electricity habits, smart meters can create smart customers that are able to pinpoint unnecessary usage, and reduce their energy consumption.

Unfortunately, utility bills savings can only occur with a smart meter if the behavior within a home or building is adapted to fit the billing structure, as actual electricity rates are very unlikely to ever be lowered. And while utility rates were one of our top 3 reasons to go solar in 2021, smart meters and new time-of-use billing make an even more compelling case for solar in 2022.

We know that Xcel Energy is not the only electricity provider in the area. Please see our blog on how solar works with other Colorado & Wyoming utilities for links to up-to-date information about your local electric service.


bottom of page