Consumer Concerns About Smart Grid

Phil Carson | Jul 12, 2010

 

Mary Healey has a simple message:

Run cost/benefit analyses for smart grid initiatives' impacts on consumers. If the balance is positive, develop your messaging around that. Existing regulatory frameworks - the evidentiary hearing for utility rate cases, that is - can handle such matters.

Healey's day job is consumer counsel for the Connecticut Office of Consumer Counsel, which covers electricity, natural gas, water, cable television and telephone services. Last year she was elected to a two-year term as president of the National Association of State Utility Consumer Advocates (NASUCA). She told me her experience as general counsel at a natural gas utility has been invaluable in understanding consumer concerns. And she is conversant with the implications of smarter grids.

"Work on your relationship with your consumer advocates in your respective states," Healey said. "That's a critical relationship to develop, to know what we're thinking and for us to know what you're thinking - outside the somewhat adversarial setting in the hearing room at the public utility commission - especially if ratepayers are going to bear the cost of an initiative. Lo and behold, you might find consumer advocates supporting it."

Consumer advocates operate under oversight as well, she said. 

"We are the public persona for the invisible ratepayer and we operate in a fish bowl," she said. "So our position has to pass muster with the media and with independent, state attorneys general. If the latter doesn't like what the consumer counsel is doing, they'll say so publicly."

The crux of a consumer advocate's role, according to Healey, is to demand that cost/benefit analysis from the ratepayers' point of view.

"If you can reach consensus with the utility, then you go into the hearing room and, instead of an adversarial hearing, it can be a more supportive one," Healey said. "Building a relationship provides more of those opportunities."

Healey implied that last month's decision by the Maryland Public Service Commission to deny a rate increase to Baltimore Gas and Electric Company illustrated her point.

"The gist of the decision was that, first of all, the smart grid can't be mandatory for every single ratepayer, because they are not the same or similarly situated," Healey said. "Each has different needs and wants and one size smart grid doesn't fit all. That doesn't just mean low-income, vulnerable and elderly people. That also means the working middle class and others with concerns that have nothing to do with their income levels.

"Secondly, you can't put all the risk of this enterprise on the ratepayer. Some of that risk needs to be on the utility's shareholders. Baltimore Gas and Electric wanted to immediately recover all of its costs from day one from ratepayers, without some kind of measurement and evaluation of the benefits that would've supported those costs."

Healey said she didn't think that a template for cost/benefit analysis could be applied nationwide, due to the variety of utilities and customer bases.

"That's why there's a well-established evidentiary hearing process - to have experts on all sides weigh in and aid a good decision by the commissions," she said. "The utility bears the burden of making its argument."

That said, Healey cautioned, consumer advocates are all for appropriate changes in how electric utilities manage the grid and interface with consumers.

"We know smart grid is here and will be rolled out in some fashion," Healey said. "We want to be part of the solution. We're not naysayers by any means. We support using energy more efficiently and wisely. But there's a right way to do it. This Maryland decision helps to clarify how we might improve the utility's application. I've read some trade press that said that was a terrible decision. I think it's an opportunity for us to get it right."

The White House and the U.S. Department of Energy have reached out to electric utility stakeholders, including consumer advocates, in an attempt to "get it right." NASUCA is one such stakeholder and it will issue a white paper on consumer concerns, including data privacy, by the end of this month.

As for smart grid "messaging" - what to tell the consumer, so accustomed to flipping a light switch and fairly oblivious to electric industry issues - Healey takes a common sense approach.

"You can't substitute snappy messaging for cost/benefit analyses," she said. "You must have a robust, defensible cost/benefit case. Then, your value proposition, your messaging, should be driven off that. If the cost/benefit analysis isn't there, your message isn't going to fly."

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757