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By Jeff Siegel

Last year, a group of about 200 people decided to sue Pacific Gas & Electric, claiming that newly-installed smart meters had jacked up their usage.

Considering these new smart meters were being paraded around as the beginning of a major step in smart grid development, stories about faulty meters were not doing PG&E any favors...

But the stubborn California utility maintained that there was nothing wrong with the meters, and that the lawsuit was without merit. Nonetheless, the California Public Utilities Commission brought in a third-party auditor to review the accuracy of the installed meters, and to see if these smart meters had actually caused higher energy bills — which more than 600 consumers claimed.

The results of that audit came in last week.

Turns out that the meters worked just fine, and that higher utility bills were a result of hotter temperatures during the heat wave of 2009.

Of course, those with even an ounce of sense knew that it was very likely that the meters were not faulty, and those who have long opposed smart grid development were simply using this as an opportunity to either deter progress or just make a quick buck.

In fact I interviewed close to a dozen industry experts after that smart grid story broke, and most of them found the complaints to be nothing more than a minor hiccup.

Some even laughed it off, saying the only people that would benefit from all of this would be those conducting the audit — which ended up costing PGE $1.4 million.

Either way, there should be no doubt that smart grid development is happening.

And there should also be no doubt that the opportunities for smart grid investors will only continue going forward...

A pretty big deal

Last week, Itron, Inc. (NASDAQ: ITRI) announced that it would be licensing and embedding Cisco's (NASDAQ: CSCO) internet protocol technology within its OpenWay meters. This enables wired and wireless communications among various components of smart grids.

This alliance will target power utilities, which could end up deploying as many as 10 million devices in the next few years alone — and will require a common platform to manage them.

This is a pretty big deal, as it allows both Itron and Cisco to further advance the standardization of smart grid architecture.

Today, Itron trades around $59 a share. But long-term, this is a solid smart grid play. In fact after the Cisco deal was announced, the stock got two upgrades from Jeffries and Canaccord, with price targets of $78 and $80, respectively.

Of course, Itron is just one smart grid opportunity. There are dozens more, including Telvent (NASDAQ: TLVT), Echelon Corporation (NASDAQ: ELON), and ABB (NYSE: ABB).

Source: Smart Grid Investing Ideas