Abstract: The renewable energy sources like solar and wind power will be economical in future due to upward pressure in fossil fuel prices, progress in renewable technologies as well as economy scale resulting from large scale production of renewable energy sources. As the usage of renewable energy sources will increase, decentralized supply and demand side management will be used instead of conventional centralized supply side management in future smart grids. Smart meters offer solution to this by allowing more sophisticated measurement of consumption and the implementation of real time pricing. Using power scheduling of appliances we not only reduce the peak demand but operate the appliances when price is low. In this paper real time price based demand response management for residential appliances using intelligent metering and billing system using smart meter is described. Next generation meters will use Automated Meter Reading (AMR) and provide more sophisticated services to the customers. Here architecture of smart grid that is capable of automated reading, alert management (for various events like exceeding peak demand, exceeding monthly target bill etc.) and web dash board to view and control the consumption of various appliances is introduced.