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A smart meter is an electronic device that records consumption of electric energy in intervals of an hour or less and communicates that information at least daily back to the utility for monitoring and billing. Smart meters enable two-way communication between the meter and the central system. Unlike home energy monitors, smart meters can gather data for remote reporting. Such an advanced metering infrastructure (AMI) differs from traditional automatic meter reading (AMR) in that it enables two-way communications with the meter.The term Smart Meter often refers to an electricity meter, but it also may mean a device measuring natural gas or water consumption.

Similar meters, usually referred to as interval or time-of-use meters, have existed for years, but "Smart Meters" usually involve real-time or near real-time sensors, power outage notification, and power quality monitoring. These additional features are more than simple automated meter reading (AMR). They are similar in many respects to Advanced Metering Infrastructure (AMI) meters. Interval and time-of-use meters historically have been installed to measure commercial and industrial customers, but may not have automatic reading.

Research by Which?, the UK consumer group, showed that as many as one in three confuse smart meters with energy monitors, also known as in-home display monitors.[8] The roll-out of smart meters is one strategy for energy savings. While energy suppliers in the UK could save around £300 million a year from their introduction, consumer benefits will depend on people actively changing their energy use. For example, time of use tariffs offering lower rates at off-peak times, and selling electricity back to the grid with net metering, may also benefit consumers.