The role of Demand Side Management (DSM) with Distributed Energy Storage (DES) has been gaining attention in recent studies due to the impact of the latter on energy management in the smart grid. In this work, an Energy Scheduling and Distributed Storage (ESDS) algorithm is proposed to be installed into the smart meters of Time-of-Use (TOU) pricing consumers possessing in-home energy storage devices. Source of energy supply to the smart home appliances was optimized between the utility grid and the DES device depending on energy tariff and consumer demand satisfaction information. This is to minimize consumer energy expenditure and maximize demand satisfaction simultaneously. The ESDS algorithm was found to offer consumer-friendly and utility-friendly enhancements to the DSM program such as energy, financial, and investment savings, reduced/eliminated consumer dissatisfaction even at peak periods, Peak-to-Average-Ratio (PAR) demand reduction, grid energy sustainability, socio-economic benefits, and other associated benefits such as environmental-friendliness.