How do electric meters work?
From analog to smart meters: What your electric meter type means for your bill and solar options.
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Unless you live in an off-grid home, you have an electric meter. It tells your utility how much electricity you've used over a given time period so they know how much to charge you each month. There are a few types of electric meters, all of which function in slightly different ways—including net meters designed for solar homes. In this article, we'll break down the different types of meters, how they work, and why the type of meter you have matters for your electricity bill.
We'll look at your home details and show you how home electrification projects can lower your energy bills.
Key Takeaways
Electric meters track how much electricity you use and report that information to your utility for billing purposes.
The type of meter you have determines which rate plans your utility can offer you, including time-of-use rates that can save you money or cost you money depending on your habits.
If you install solar, your utility will likely upgrade your meter to track both what you pull from the grid and what you send back to it.
Your electric meter tracks how much electricity you pull from the power grid. Older analog meters used gears and dials that spun as you consumed more kilowatt-hours (kWh) of electricity, and required a utility worker to physically walk to the side of your home and record the reading to determine your bill amount. As technology evolved, utilities introduced radio-enabled meters, allowing utility workers to collect readings by driving by in a specially equipped truck.
Today, about 73% of U.S. residential electric meters are smart meters, also called advanced metering infrastructure (AMI). These devices track your electricity usage in much finer detail (down to 15- or even five-minute intervals) and automatically communicate the info with your utility.
If you install solar on your home, your utility may replace your meter with a net energy meter that tracks how much electricity you draw from the grid and how much solar electricity you send to it. You may also get a production meter to measure how much electricity your panels generate, which is useful for local incentive programs (more on that below).
If you have a smart meter, your utility likely gives you access to your usage data through an online account or app—no manual reading needed. If you have an older analog or digital meter, here's how to read it:
Analog meter: Read the dials from left to right, noting the number each pointer has most recently passed. The difference between your current reading and the previous one (in kWh) is what you've used.
Digital meter: Read the number displayed on the LCD screen. Subtract your previous reading from the current one to calculate your usage.
If you suspect a billing error, taking your own meter reading on your bill date and comparing it to what your utility charged you is the simplest way to verify accuracy.
The type of electric meter you have directly influences the kind of rate your utility can charge you for electricity.
With an older analog meter, your utility only knows how much electricity you've used between readings, not when you used it or how much you used at any one moment. That means they can only charge you a single flat rate for all the electricity you consume.
With a smart meter, your utility has a much clearer picture of when and how much electricity you're using. That insight allows them to offer, or in some cases require, more nuanced rate structures, including:
Time-of-use (TOU) rates: The rate you pay for electricity varies by time of day, with higher rates during peak demand hours (typically afternoons and evenings) and lower rates overnight. If you can shift your usage to off-peak hours, TOU rates can work in your favor. If you can't, they may cost you more.
Demand charge rates: These charge you based on the maximum amount of electricity you pull from the grid at any one moment, rather than just your total consumption. More common for businesses than homes, but worth knowing about.
If your utility has insight into your hourly usage, they'll likely give you access to that same data in your account, which is helpful to understand your consumption patterns and find opportunities to reduce your bill. To find out what type of rate your utility charges and whether switching makes sense, check your bill or call your utility directly.
Your electric meter plays a central role in how solar savings are tracked and credited. Here's what to know:
Net metering: When your solar panels produce more electricity than your home needs, the excess flows back through your meter to the grid. If you live in an area with net metering, your utility credits you for that exported electricity—essentially running your meter in reverse. At the end of the month, you're only billed for the net difference between what you consumed and what you generated.
Production meters and local incentive programs: Some states and utilities require a separate production meter to track exactly how much electricity your solar panels generate, separate from what you actually consume. This is important for programs like Massachusetts' SMART program, which pays solar owners based on total generation rather than net usage. Similar incentive structures exist in other states—check the EnergySage solar incentives database to see what's available in your area.
Smart meters and solar installation: If you already have a smart meter, your solar installer can use your detailed usage data to design a more accurately sized system for your needs. Depending on your utility, you may not even need a separate net meter installed—your existing smart meter may already be capable of tracking both consumption and export.
Regardless of what kind of meter you have, installing solar is one of the most effective ways to lower electricity costs because you generate your own power rather than buying it. Use the EnergySage Solar Calculator to see how much you could save, or register for a free account on the EnergySage Marketplace to receive custom quotes from local, vetted installers.
We'll look at your home details and show you how home electrification projects can lower your energy bills.
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