Independence Day: It's complicated

Fear and reason compete for the customer

Phil Carson | Jul 04, 2012

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I'd been thinking about Independence Day on Tuesday when an email popped into my in-box from the general manager of a rural cooperative utility.

What to do about psychotic narcissists such as Glenn Beck, who's spewing paranoid fantasies about "Agenda 21," the latest focus of fear since Commies were hiding under your bed? Beck was mentioned because he's doing his level best to tie smart meters to a pernicious, United Nations.-driven effort to control your mind, your behavior, your home, the entire world, etc., etc.

On the one hand, the good old U.N. is consistently derided as an ineffectual institution that nonetheless manages to dangerously impede U.S. sovereignty and has an agenda to control (fill in the blank with your worst fear). Apparently, power utilities are in cahoots with this effort and have sent their agents to attach meters on your home to assist in gathering data about your lifestyle. 

That's an expensive and time-consuming way to go about gathering information that the U.N. bureaucrats can use against you, when it'd be cheaper and quicker just to go to your bank, grocery store, gas station or Internet provider for more damning information. 

But the central question is a dang good question and we've kicked this around before. See the last discussion we had when I offered up quotes from a citizen penned op-ed piece in the column, "Meters = Surveillance?"  

First, let's acknowledge that the granularity of data from interval meters can produce appliance-specific data and that needs to remain unexploited. Second, the behavioral patterns revealed by smart meter data needs to be disconnected from the individual who creates it. Unless, of course, the owner of the data (that's the customer) authorizes its release to a third party because that party has a value proposition that the customer decides outweighs the privacy risks. 

Much of the current dilemma (what to do about demagoguery) also stems from the issue of trust. While cooperatives and municipal utilities by and large have the trust of their constituents, investor-owned utilities don't, and for good reason. IOUs tend to favor their investors over their ratepayers, simple as that. So in the eyes of the customer, the IOU speaks with forked tongue. 

Is that always true? Is that fair? No and not necessarily. However, we're in that swampy region known as "perception" and perceptions matter. So, IOUs tend to enter the game with a deficit. Further, one of the pillars of trust is transparency and, for many reasons, including competitiveness, IOUs cannot simply draw back the curtain on all their plans. So, mistrust can fester.

Further, consider that the vast majority of smart meter installations have not been followed by any substantive value propositions, apart from seeing your energy use on a Web portal. Dynamic pricing, rewards programs, etc. remain elusive. Even folks who trust their utility (and there are many in the silent majority) have no idea what's coming down the pike. Rumors and misinformation flourish in a vacuum. 

Thus I think the power industry has a substantive challenge on its hands; it's not just perception. AND it has a perception problem. Finally, we get to the topic we began with, as the power industry also has a nut-job challenge on its hands.

In the recent column cited above, our readers weighed in on the psychology of dealing with the more off-the-wall craziness. To connect the dots, the fact that there is an underlying, legitimate nugget of concern (meters can record granular data betraying occupant behavior and the resulting concerns over data privacy) means the crazies can't be dismissed out of hand. Add to that the nascent craziness over dynamic pricing and all of a sudden you're swimming against the tide.

My only prescription is simple. Total transparency. If a utility has figured out how it's going to use smart meters to offer value, it should say so. If it hasn't, it should say so. I realize that's about as likely as Glenn Beck shutting up. So the other option is for a utility to spell out clearly how it's approaching data privacy, exactly what smart meters do for grid efficiencies and the range of options under consideration for delivering direct customer value.

If a utility can't do one of those three things, it should turn off the lights and close the business.

Independence Day should mark the birth of a nation, but it should also stand for independent thinking.  

I might be right, but I could be wrong. Just in case, next time I take a shower, I'm going to crank up the microwave, just to throw "them" off.

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

 

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Comments

The benefits just aren't there

I'm not a UN black helicopters type of person, but I do have some concerns about smart meters. I live in Boulder, CO, and back in 2008 Xcel began a series of (ill-fated) upgrades to make us the first "Smart Grid" city, complete with smart meters. Even at that time, there were Boulder residents who called for use of smart metering to charge more for electricity used for A/C during the summer.

Every month Xcel reports to Boulder each Boulder customer's total use of electricity so that customer can be taxed by Boulder for its Kyoto compliance project. So already our individual usage is identified to outside parties. I'm not sure how much of a violation this is. After all, I pay a sales tax to the city at the grocery store based on my total purchases. But in this case the city does not know who is making the purchase. And the technology similar to smart metering exists where, for example, the city could tax me more for purchasing ice cream instead of broccoli. Most people would be upset by this, so why not with smart metering?

Boulder may one day form its own utility, so at that point the third party issue will become moot. The city as a utility will have all the usage data for everybody, which it can hand over to the city as a taxing authority. I don't believe there were any kind of guarantees in the municipalization ballot issues about customer privacy, so it will be interesting to see how the city deals with its new powers, especially under the kind of pressure from citizens that I talked about above.

To say that the full potential of smart metering has never been achieved so there's no need to worry means nothing. The kinks in the technology will be worked out one day. And as others have said here, what really is gained by smart meters? You can buy a meter for $25 which will very quickly identify how much electricity each device in your home uses. It's then a simple matter to cut back where you can. I saved a lot on my electric bill by doing that. It's not clear how much more smart metering will save me. To be honest, I have never even seen the need to go to the Xcel site where I can view my electricity usage history.

       Milton Scritsmier

       Boulder, CO

Too Many Priorities?

One of the problems we seem to keep running up against is a variety of policy priorities that tend to be in conflict with one another.  Modernization (especially with no clear value proposition) costs money, which undermines affordability.  TOU pricing could make electricity more affordable, but it measn collecting granular data and billing accordingly.  Some states are pushing distributed generation, but that leads to reduced sales overall and higher prices for those who can't or won't install their own DG (affordability).

There's an old adage from management that if everything is a priority, nothing is a priority.  Regulators and policymakers need to pick a few policy priorities - perhaps no more than two - and forget about the rest.  I'm pretty sure affordability trumps all, which means the rest are unimportant.

Jack Ellis, Tahoe City, CA

Based on the data so far....

Jack, 

Cogent point, as usual. If indeed affordability is a priority, I'd say numerous programs of potentially direct benefit to the customer could run under that flag. 

It seems to me that demo projects on dynamic pricing, as well as real-world experience at, say, Salt River Project, have established that opt-in dynamic pricing can actually help customers manage their costs of energy. A significant response such as SRP has achieved (22 percent) is big enough to forestall their capacity issues -- to some degree. If SRP's TOU program didn't do that, it would not have run 30 years. 

Back to your point, one does need to question the motivations of innumerable utilities that took stimulus funding and, it should be emphasized, ponyed up 50 percent matching funds, to install smart meters without following up with innovative programs of direct value to customers. 

My best guess would be that the internal efficiencies afforded by interval meters were worth that 50 percent matching funds. And that with the uncertainties around federal energy policy, state-level regulatory attitudes towards pricing innovation (fear of departure from traditional flat rates for all but industrial customers) and simple lack of willingness to push for innovative, future-oriented business models, that they've dipped their toes in the water and found it too chilly to dive in. 

Meters actually went in before utilities got their strategies straight on engaging the customer. Now that the meters are installed, the utilities are stalling.

Please readers, straighten me out on how this is not true and your utility is actually proceeding with a detailed plan to provide smart meter-enabled services that relate to affordability for the customer. We'll run that conversation here. 

Regards, Phil Carson 

So, what is the purpose of individual consumer smart meters?

Mr. Carson,

If the concern of utilities is truly to gain insight into consumer electrical consumption patterns, they do not need individual smart meters on each consumer's location.  They can see the usage patterns just fine with metering of the circuits feeding specific areas.  It is nice to have the information on energy consumption available to see when I use the most power at the house and then see what I may be able to do to adjust that but that can be done with a bit of common sense even without the smart meter.

So, what is the point of individual smart meters if not to eventually push consumers into time-of-use-pricing?  Who do you think will feel the greatest burden of time-of-use pricing?  Whether it is a one-world-government plan or not is certainly debatable but the fact is individual consumer smart meters are potentially very intrusive devices and history has shown that someone always comes up with a way to use such information for their own purposes, whether it is good for the consumers or not.  And if some 'elitist' group got into positions of authority and felt they know better than everyone else exactly how everyone else should live, then the information from those meters is a pretty useful tool.  One does not have to look very far to find examples of elitism at work in government or those who would influence government with their money.

Mark Wooldridge