There is a standard for smart meters called DLMS [1]. It's the most used protocol for smart meters for a while now. The protocol supports two way authentication and uses AES-GCM.
Providing a secure medium for meter communication is in the interest of both the user and the power companies: Users are protected from malicious commands to the meter (using the breaker to disconnect your power, changing the used tariff, ...) and power suppliers prevent fraud.
It's mainly used in Europe. The US has a very similar, but older protocol called ANSI C12. The C12.22 spec includes authenticated encryption, but I'm not familiar with the details.
Ouch, thats bad :) C12.22 is pretty old, AES didn't even exist yet. It seems that it got an update recently (2011) with the smart grid and smart metering use case in mind. The are now using an EAX called EAX prime [1] put it seems to have it's own issues [2].
Providing a secure medium for meter communication is in the interest of both the user and the power companies: Users are protected from malicious commands to the meter (using the breaker to disconnect your power, changing the used tariff, ...) and power suppliers prevent fraud.
[1] http://www.dlms.com/