How does an electricity meter work? — Margaret, Hayward, Calif.
The following video shows a typical electric meter:
The thing to notice is the spinning disk below the dials. The disk is moving slowly in this video – about one RPM. In most common electric meters in the U.S., it is the rotation of this disk that lets the electric company measure the amount of electricity you are using.
The disk is made of aluminum. The electricity entering the house runs through a pair of loops that induce a magnetic field. The magnetic fields can be made to create an eddy current in the aluminum disk and cause the disk to rotate at a speed proportional to the amount of power being consumed.
These aluminum-disk meters are in the process of being replaced by computerized meters. The new units use a simple loop wrapped around a wire to measure current. Combined with a digital voltage measurement, the unit can calculate wattage. In the following video you can see both a traditional power meter and a digital ammeter. Notice that the ammeter simply wraps a loop around the wire and can read the amperage flowing through the wire. This technology is the heart of the new electric meters:
For more info see: How Electricity Works