The customer: still utilities' ally to lose

Few consumer negatives around smart grid, which remains fuzzy

Phil Carson | Mar 04, 2012

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There's good news and, of course, its corollary, bad news, in recent consumer perception studies.

Consumer awareness of smart grid and smart meters remains low, those familiar with the terms have positive or neutral impressions and, when presented with smart grid benefits, two important ones are popular.

The Smart Grid Consumer Collaborative (SGCC) earlier this year released its recent findings, which we'll take a minute to consider.

If after nearly two years of what appeared to be very negative media around smart meters and, to some degree, federally funded stimulus projects relating to the grid, there remains little awareness of those two topics, perhaps those making the noise have had little impact. Unfortunately, that includes positive messages, presumably including utility-sponsored communication and education on the topic.

But there's some cause for optimism, in that respondents in the SGCC surveys said they favored smart grid benefits such as fewer outages of shorter duration and—get this—that smart grid would reduce greenhouse gases by easing the connection of renewable energy to the grid.

This appears to corroborate recent findings by the Brookings Institute, a center-left think tank, which has found a rebound in the number of Americans who accept that the global temperature is rising. The rebound reached the mid-way point between the high point of such beliefs, registered in late 2008, and the low point, in 2010.

The exploration of customer interest in and satisfaction with prepaid electricity accounts comes in the context of prepayment options in other industries, where it has become relatively common, particularly favored by younger Americans, ages 18-30. 

Prepayment of electricity accounts holds obvious attractions for utilities in the form of cash flow, fewer collection actions and disconnections. For consumers, for whom it remains in the realm of an opt-in option, it serves as a crude form of energy use feedback and energy budgeting.

EcoAlign recently looked at prepay electricity markets in Texas and Arizona, currently the two largest such markets in the United States. In these two states, prepayment remains nascent, but the survey found about 7 percent of Texans use prepay, while that figure is 10 percent in Arizona.

Because prepaid accounts have built-in feedback loops—usage gets communicated back to the user via text message, email, the Web or an in-home display—they have the potential to cut overall energy use. Salt River Project's M-Power prepaid program in 2010 reported an average decrease of 12 percent among prepaid customers.

The top line findings of a recent EcoAlign survey are that customers associate prepay with better management and control of their account, with the potential to save money, though the potential negatives include uncertainty around pricing and the potential for fees or overpayment. The biggest concern, expressed by more than half the respondents, is service disconnection when a prepaid balance runs out. Half of respondents don't know whether prepay is more or less expensive than post-paid accounts. (Some industry discussion has focused on whether prepaid service should be less expensive, as a matter of financial fairness and to entice greater participation.)

 Previous EcoAlign survey results and Salt River Project's prepay program were detailed in "Slice of Electricity Consumers Favor Prepayment" and "Survey: Electricity Prepayment Moving Mainstream."

Finally, Pike Research recently released the results of its "Energy & Environment Consumer Survey" around clean energy concepts. Better than half of respondents positively viewed solar energy, wind energy, hybrid vehicles, electric cars and natural gas cars. Less than half of respondents had favorable or very favorable views of "clean coal," nuclear power, biofuels, smart meters and smart grid, among other concepts.

Pike's findings on unfavorable impressions were topped by carbon offsets/credits, nuclear power and cap and trade. Only 9 percent had strongly unfavorable or somewhat unfavorable impressions of smart meters and fewer—6 percent—held unfavorable views of smart grid.

Yet those who said they were unfamiliar with smart grid comprised about 30 percent of respondents and those unfamiliar with smart meters comprised about 28 percent.

As one writer who has made much of the ludicrous demonization of smart meters, warning that it threatens to infect the general public, and castigated utilities for failing to educate customers about grid modernization, the results cited here make me something of a Chicken Little. On the other hand, these survey results are snapshots, not trends. It would be faulty logic to cite these results to justify continued lethargy in making the case for investments in grid modernization. People understand that investments in the grid could generate greater reliability and they're aware of environmental drivers, including global warming.

Complacency in the face of opportunity doesn't strike me as much of a strategy.

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

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Comments

Imbalance of smart grid benefits

It's no surprise to me that the rollout of smart meters here in Northern California drew out so many of the tinfoil hat crowd. PG&E did a miserable job of communicating the potential benefits to consumers, then compounded the error by installing meters 1)before the communications infrastructure was in place, and 2) before there was a customer service application in place that would yield any tangible benefits to customers.  The first issue cost them some of the "novelty" value of a new gadget that would have engaged people whereas the second just made people bored--or angry like me. The original web UI for interval data seemed to be designed to thwart any attempt to derive actionable information, and I say this as a person who has helped design those UIs since the mid-90s. You could not compare interval data from one day to the previous day, or the most recent month to the same month the previous year. You had to download individual days or months one at a time and paste them together in Excel to derive any useful information. The newer Opower version is supposed to be better, but I wouldn't know. I lost any access to interval data when I installed solar. I had to install my own shadow meter to get inteval data. I've build a few metering back-ends over the past dozen years. Handling energy in/energy out meter channels is not rocket science. There's really no excuse.

One would think that the public would generally be receptive to "smarter" anything. We all seem to like smart phones, smart cars, smart DVRs, even smart appliances. It's a pretty low bar to get our gadget-happy society enthusiastic about anything with LEDs or an LCD display. The problem was that many utilities were so eager to stick their snouts in the ARRA trough they didn't have time to sell the "vision." The perceived benefits therefore mostly accrued to them (e.g., remote shut-off and reduced meter-reading labor costs). Those are not insigificant benefits, and utilities are busily extractive even more value with analytics. However, the pendulum needs to swing back some in the other direction.

To fully derive benefits from smart meters, utilities will have to start by providing tools that actually allow people to derive value from the data. Being smart doesn't just mean being told to use less, it means getting the same utility out of your electrical service while spending less. You don't need a smart meter if the message is simply "use less and you will pay less." It's probably going to require some tariff changes, Many current tariffs (mine for example) provide no rewards for being smarter--unless that means moving to Motel 6 for the latter part of each bill cycle. Ultimately, we're never going to get it right as long as tariffs are being used as instruments of social policy and income redistribution. They should reflect the true costs of production--environmental externalities included--even if initially only for the "smart" energy consumer.

Greg Tinfow
CEO, Energy Informatics LLC
www.energyinformatics.com

Utilities’ use of pre-payment

Utilities’ use of pre-payment options is usually engaged for what may be expressed as “slow-pay” or “no-pay” customers.  The major pilots in the US, as well as most of them around the world, started and gained traction among these customers because, unlike other utility customer groups, a large part of their discretionary income goes toward their utility payments.  I believe this helps to explain why more than half of the EcoAlign survey respondents were concerned about service disconnection when a prepaid balance runs out.  The important thing to understand about this group is that they are one of the most loyal to the existing utility structure mainly because there is no other viable option for them.  This is the reason for the slow “switching” acceptance of this customer base.  They would rather deal with the “devil” they know than the “unknown devil”, unless they are forced to.  The impact to their lives is devastating if they inadvertently chose the wrong option.  This group is one that can whip up great political impact against utilities (for reasons I do not have time to discuss in detail here).  Yet, I believe this group will be at the center of forward motion as the industry changes.   They will change quickly once a viable option is presented to them.  This demographic is one of the fastest growing groups using cellular internet and gaming technologies in new ways.  They care very little about smart grid, HAN solutions, or smart appliances.  Their immediate and constant concern is the bottom-line savings impacting their limited budgets.  The consumer market is pushing back on fee charges/changes like additional airline fees, cell phone charge changes, and other nickel and dime charges added on to basic daily services.  They want one simple charge that they can understand, and they want to know how it will impact their daily budgets.  Tap that pent-up demand and the industry will change at a rate no other industry has seen before.  Of course, this is because no other industry touches every man, woman, and child where they work, play, and live in the same way as the utility industry.  Richard G. Pate Pate & Associates, Principle rgpate@pateassociates.com www.pateassociates.com

Thanks

Richard,

Sounds like you've broken down the pre-pay group into two sub-groups: low-income/worried about service disconnects and young, "transient" college students/20-somethings hip to social media and concerned only about lowest-cost service.

Would that be a correct interpretation of your viewpoint expressed here?

Regards, Phil Carson

On second thought...

John,

Thanks for your comments. Indeed, individual, neighborhood and community solutions to reliability and some degree of energy independence via distributed generation will likely crop up where conditions are ripe. That is, where egregious utility behavior coincides with the ability of these political units (that is, the individual, the neighborhood, the community) to organize, focus and solve the challenges.

Looking back on what I wrote here, and the survey results I quoted, these are top-level generalizations, which mask progress (and problems) in individual utility service territories. A number of investor-owned utilities have made headway in communicating their modernization approach, while municipal utilities and co-ops have that built-in community that often means they're "there" already. That said, modernization for munis and co-ops isn't a slam dunk.

Some co-ops, in fact, have extremely diverse constituencies, such as the Delta-Montrose Electric Association, which we've featured in these pages. Yet, even among the ranchers-small business-newcomer constituencies, the common theme is self-sufficiency, use of local resources, wise use of those resources and support for whatever investments and technology upgrades will bring those resources to bear on current energy supply and demand.

They may be a modest market, but I think the co-ops (and communities pursuing EE, RE and DG) are where some of the most interesting conversations are taking place.

Regards, Phil Carson

Shift the Focus to Community Energy

Great article as usual, Phil! I was drawn to the succinct conclusions of the Pike Research survey - to paraphrase: "consumers find distributed energy developments more relevant than utility improvements."

These new technologies hold tremendous potential, yet much of our debate remains centered on utilities, and is presented from the perspective of grid improvements, important as they are. The nature of distributed energy technologies is to take the solution directly to the energy consumer. Shifting the focus of our communication to the consumer perspective and to new distributed technologies, and the potetential impact on local communities should have tremendous payoffs in how our energy future is perceived in future consumer surveys.

Consumers who engage more directly in energy with these new technologies gain a far more relevant and immediate personal perspective. When enough have that perspective, the seeds of a Community Energy policy are sown. We are at the dawn of a new era where consumers, the buildings in which they live and work, and  their communities become the new focus of energy discussions. Local communities will have far more relevance to consumers than the abstract grid and electric utility bills that are complex and confusing, that take minutes of their time each month, that cost 2-5% of their household budgets, and over which they have little control, other than to be made victims of unfair rate increases or inconvenient outages, or to some, dangerous radiactive smart meters - small wonder interest and awareness remains so low.

John Cooper, President, Ecomergence