A direction sensitive optical shaft encoder includes an optical shutter disk mounted to a shaft for rotation therewith, the optical shutter disk bearing at least first and second radially concentric tracks having alternating light transmissive and light blocking areas formed thereon. The light transmissive and light blocking areas of one track are angularly offset with respect to the light transmissive and light blocking areas of an adjacent track. A pair of light emitters and light detectors are disposed on opposite sides of the optical shutter disk and aligned with the first and second concentric tracks, respectively. Because the pattern of light transmissive and light blocking areas on the two tracks are angularly offset, the output of the light detectors follows a unique pattern which is dependent upon the direction of rotation of the optical shutter. The frequency of repetition of the pattern of outputs by the light detectors is indicative of the speed of rotation of the optical shutter. A suitably programmed microprocessor can be used to detect the frequency and pattern of outputs of the light detectors to determine the angular speed of rotation of the optical shutter and its direction of rotation. If the pattern of detector outputs does not follow an expected pattern an alarm condition is generated indicative of a failure of one of the light emitters and/or light detectors or possible tampering with the optical shutter. The optical shutter may be used, for example, to determine the angular speed and direction of rotation of the eddy disk of an electricity meter.