Silver Spring Networks has signed a $17 million deal to sell smart-metering equipment and software to the Modesto Irrigation District in central California, the company said Monday.

The equipment will deliver energy information from 108,000 residential and commercial customers served by the irrigation district, which also provides electricity to industrial and agricultural customers, said Kate Hora, a district spokeswoman. The district has a total of 112,000 electric customers.

Silver Spring, based in Redwood City, Calif., is providing circuit boards, which will be embedded in meters built by Landis+Gyr, as well as the wireless gateways and software to manage the Internet-based network. The irrigation district will pay another $1 million to $2 million for the Landis meters.

The irrigation district will hire an installer to set up the network, which could be completed as early as the first quarter of 2009, Hora said.

The deal with the irrigation district followed a Silver Spring agreement with Pacific Electric and Gas Co. earlier this year to provide network equipment and software to connect PG&E's five million electric customers in California.

Smart meters, so called because they have two-way wireless communications capabilities that allow utilities and their customers to better monitor and adjust electric, water and gas use, have gained a greater acceptance over the past year. Unlike older meters, smart meters provide real-time consumption data and alerts about equipment failures or other problems. In the past, utilities would dispatch workers to read meters manually.

Smart-meter startups are attracting more investments lately. Last month, Trilliant, based in Redwood City, Calif., raised $40 million from Mission Point Capital Partners and Zouk Ventures (see Green Light post).

Silver Spring also has attracted a large sum. The company has raised nearly $70 million in venture capital, debt financing and warrants since 2007 (see Green Light post and VentureBeat post).

But the company is competing with a growing number of smart-meter companies, including Eka Systems in Germantown, Md. Eka last month launched a new monitoring device for water meters (see Eka Systems Dives Into Waterworld).

The deal with Silver Spring isn't the Modesto irrigation district's first smart-metering project. The district previously installed automated meters capable of two-way communication for a community of 3,000, a small portion of its service area.

The district chose Silver Spring's meters because they come with a feature that will allow customers to program their appliances' energy use once programmable appliances appear on the market, Hora said. The idea is that, once these appliances become available, customers will be able to schedule their air conditioners to turn on and off – and to operate at different levels - at certain times, for example.

The smart meters, which can notify the district of equipment troubles, also are intended to help the district deal with meter-tampering problems, which contribute to revenue loss.

"We are a nonprofit," Hora said. "So any time we can reduce revenue loss from meter tampering will help all of the other customers."

Quantifying the consumer savings that come from using smart meters isn't easy, Hora said, but a pilot project that will be launched in the next few months will help the district determine that.

As part of the project, the irrigation district will start charging a small group of residential customers higher rates during hours of peak energy demand, in the hope that higher rates – combined with information about their energy use – will encourage customers to conserve power.