The U.S. electric grid is going through a massive overhaul. That's not just power lines, but also the boxes that connect that power to your house. And these new, smarter devices can do much more than just figure out your bill. This begs the question of who owns the information being created from your power use. It's a question that Illinois is tackling head on.

The smart grid
It used to be that an electric meter did one thing and one thing only, tracking a customer's total consumption. A utility employee would then go to every house and read the meter. The difference between the end tally each month was what created your bill. A lot has changed since then.

At first the upgraded meters from companies like Badger Meter (NYSE:BMI) and Itron (NASDAQ:ITRI) were about remotely collecting monthly data, so the local utility wouldn't have to send a human being out to collect the information. That saved them money. However, that was just the first step; there's so much more possible now that meters are connected to computers.

For example, Opower (UNKNOWN:OPWR.DL) takes customer data and does fancy number crunching before spitting it back out via the Internet, applications, and, yes, old fashioned paper bills. It allows customers to compare their use to other customers and their historical consumption patterns. This, in turn, should allow customers to better control their power use.

Opower indirectly touches around 32 million customers around the world. Part of its competitive advantage is its massive collection of customer usage data, clocking in at over 300 billion meter reads. In fact, in 2013, the company did over 100 billion meter reads, so that database is getting bigger, fast. And the product Opower offers is basically a cloud-based subscription service, so each new utility customer is relatively inexpensive to add to its platform.

From an investment standpoint, this is all great. However, step back for a moment and ask yourself who owns that data. Clearly Opower is using it, but what could that ultimately mean?

(Source: Rotbuche, via Wikimedia Commons)

For example, one way to find an illegal marijuana grow house is to examine electricity consumption. One PG&E (NYSE:PCG) customer was nicked for growing pot when it was discovered that their electric usage was 10 times the normal for the area in which they lived. While that's an extreme example, it shows clearly that your data can tell a lot about you.

Stepping in
That's why Illinois is tackling the issue head on and why you should care. There's a fine balance, since Opower claims that its services were responsible for nearly 40% of National Grid's (NYSE:NGG) power conservation in 2013. In other words, big data can do a lot to help customers save money and the environment, while at the same time saving utilities money. However, it needs access to your information and that has long-term implications.

Illinois is looking to ensure that customers' rights are protected, while still making sure that power companies get the data they need to make a difference. Right now the plan is to let customers own the data and allow them an opt out right. That's probably a good balance. However, what about services that aren't offered by a utility or regulated by a government body? Like Google's (NASDAQ:GOOG) Nest home thermostats...

(Source: grantsewell, via Wikimedia Commons)

By purchasing a smart thermostat, are you going to be giving Google legal access to your usage data? Such access would allow a database powerhouse like Google to add significant value to its product offering. But what is it allowed to do with your data? Give it away? Sell it to third party software providers?

The implications
Privacy issues in the days of cloud computing are complex. And companies looking to genuinely help consumers make better power choices, like Opower and Google's Nest, probably aren't looking to take advantage of you. However, it's better to address this risk up front, before your electric data is laid naked for the world to see—whether you want it to be or not. And the implications of who owns that data could be big for utilities, but even bigger for a company like Opower since the answer could force it to makes changes to its business model.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Google (C shares) and National Grid. The Motley Fool owns shares of Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.