Smart Energy Practices, Customer Engagement

Phil Carson | Jul 22, 2010

 

For Judith Schwartz, the question of how utilities prepare customers for managing their energy use brings a sense of—in Yogi Berra's inimitable phrase—déjà vu, all over again.

Back in the 1980s, Schwartz, principal of consultancy To the Point, took on selling the personal computer in her role at Apple Computer, helping the "propeller heads" communicate the value that their technology enabled, not the plastic-encased circuits themselves.

(Yesterday we discussed possible drivers for why utilities ought to be communicating with residential customers in the first place, which drew a number of comments. One reason: pending adoption of electric vehicles, the subject of the preceding column.)

Schwartz has written "Smart Energy Practices Start with Intelligent Customer Engagement," a thought piece laying out key concepts in today's quest to communicate value from utility to customer.

"I've been a marketing person on the forefront of disruptive technology for the past 30 years," Schwartz said, "so I've been involved in education and explaining complicated subjects to different audiences."

The level of change needed to encourage conscious energy consumption and management is similar to the change involved in adoption of the personal computer and the Internet, Schwartz argued. Use of the digital tools we now take for granted evolved over 20 to 30 years.

Yet at the national policy level, a clear, integrated vision has not been articulated. Schwartz expressed interest in contributing to the National Action Plan for Demand Response, the subject of a June meeting in Washington, D.C., as a vehicle. (To be clear, that plan is no longer a vision but a blueprint for imminent action, according to Dan Delurey, executive director of the Demand Response Coordinating Committee.)

Schwartz pointed to milestone ideas that captured technology innovation and adoption. She cited Everett Roger's 1962 coining of the term "early adopters," who will pay more, tolerate inconvenience and participate in working out kinks. Three decades later, Geoff Moore coined "the chasm," to describe situations where later adopters never materialize. Breaching "the chasm" means selecting the most receptive target markets for early efforts, positioning the product, developing market strategy and selecting distribution channels and pricing.

It occurred to me, while I spoke with Schwartz, that "the product" thus far has been elusive.

What is the electric utility industry selling? Cost savings? Energy management devices and skills in the face of rising costs? Behavioral changes with unquantified benefits to the consumer? Smart meters? Smart grid?

Some of these are ideas, some are hardware. How will the industry combine the two and in what order will valid ideas be communicated?

Certain ideas may have to be abandoned. We've heard recently from two different camps that cost savings can and should be sold to the public, and we've heard emphatic rejection of that notion - that "selling smart grid on the basis of cost savings is a loser."

Schwartz advocated segmenting the customer base to understand who is most receptive—likely those early adopters—and the most effective mode of reaching them. But all customer motivations must be respected and addressed, she said.

Utilities need to accept that other segments have different concerns: "comfort lovers" may seek to maintain their lifestyle with automation, regardless of costs, "bargain hunters" may change behavior when saving money is an option, for intance.

"There needs to be an emotional hook - that's what sets great marketing apart," Schwartz said. "People will pay more for a commodity if they see the value."

So, where is the traction for these ideas in a utility setting?

Sacramento Municipal Utility District and Southern California Edison are following this kind of thinking, according to Schwartz. Portland Gas and Electric has done good job on community outreach about grid efficiencies, without smart meters, she said. Coops seem to be focused on the most cost-effective means of grid efficiency first, she suggested. In the coop case, that could mean distribution automation or enabling smart thermostats and demand response programs with incentives.

"We have a window of opportunity," Schwartz said with a sense of urgency. "Negative publicity is pervading people's minds. It would be a shame if we miss the boat because of issues such as fairness, for example - which can be resolved - just because smart meters got installed the wrong way."

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