Professor teaches utilities to walk the smart grid talk
Published In: Intelligent Utility Magazine May/June 2010
INSIDERS AT COMMONWEALTH EDISON figured they would ace their advanced metering infrastructure (AMI) pilot program rollout. Who, after all, wouldn't be thrilled to delve into a survey and eight scintillating pages of intricate text detailing all the bells and whistles that automated metering infrastructure makes possible?
Their customers, it turns out. Consequently, last summer's introduction landed with a resounding thud.
''Our focus groups were totally confused,'' said Val Jensen, vice president of marketing and environmental programs at the Chicago-based investor owned utility. ''When we tested our prototype, we found out we completely missed the boat.''
Enter Peter Honebein. Call him the smart grid ''demystifier'' for the common man. As carbon constraints and digital technology revolutionize electricity delivery, the energetic marketing professor and entrepreneur is intent on teaching ComEd and others how to engage, enlighten and educate customers.
His first lesson? Veer away from the acronym-heavy alphabet soup of utility-speak and drop the Big Brother act. People tend to (yawn) shut down when utilities drone on about ''demand response,'' ''load shaping'' and ''price signals.'' But they perk up when talk turns to incentives, saving money and comprehending their Sanskrit-like power bills.
''Customers haven't been doing this all of their lives,'' said Honebein, who teaches classes in fields such as marketing and customer experience design at the University of Nevada, Reno. ''You can't expect them to reduce energy use right off the bat. But over time, small steps can shift their behavior.''
Don't wait for customers to absorb terminology such as critical peak pricing and time-of-use rates via osmosis, he continued. Instead, explain them in practical terms so customers understand they are beneficial, not punitive. For smart meters to become more than sleek, beautifully mounted hunks of metal and plastic, utilities have to ditch their paternalistic patterns and offer convenience, choice and control.
Efforts need to resonate
''This is about teaching utilities to look at everything from how to deliver a bill to how to charge an electric vehicle from a customer perspective,'' Honebein said. ''Utilities are essentially monopolies so the need to engage customers hasn't been necessary until now.''
He sketched a theoretical blueprint for utility success in the June 2009 issue of The Electricity Journal. His article, ''Will Smart Meters Ripen or Rot? Five First Principles for Embracing Customers as Co-Creators of Value,'' offers a list of suggestions that researchers, regulators, utilities, interveners and vendors can employ as they wrestle with business cases, regulatory filings and strategic plans.
Each utility requires a champion in upper management who believes customer communication is the right way forward, Honebein said. That's how these needs can penetrate finance, engineering, information technology and other utility departments that are more isolated from customers.
Piloting the lessons learned
Jensen and his ComEd team are taking Honebein's two-way-street lessons to heart. To forge ahead with what they proudly call the most sophisticated test of customer applications in the country, they simplified the message for the 8,000 households who would eventually participate in the yearlong AMI pilot.Indeed, ComEd's pilot rollout is complex. Through May 2011, it will test five different rate structures in combination with three types of in-home energy measuring devices.At Honebein's direction, ComEd slimmed down the introductory packet, rewording it so customers would immediately understand that these changes could literally give them more power over their electricity bills. Those wholesale changes registered with a second focus, Jensen pointed out.
''Usually, when people hear they are going to be under a new rate structure, they think you are raising their rates,'' Jensen said. ''But what people took away this time is that they could save money with different rates.''
That's the whole point, Honebein emphasized. Such adaptations will be an abysmal failure unless utilities tune in to the knowledge, skills and attitudes of their customers. Utilities need to learn details such as how customers want to be billed and how they want to be notified about energy conservation measures.
ComEd listened and responded in other ways, too. Several more mailings are planned, including a postcard mailer to remind customers about the pilot start-up this spring. Participants have access to a Web site where they can log in to monitor their personal energy use and a special call center operated by the local Center for Neighborhood Technology where representatives can answer any queries.
''Over the course of all of this, we learned a lot and changed our mind a lot as a result of what stakeholders were telling us,'' Jensen said. ''This pilot was collaboratively designed and the results will be collaboratively shared.''
Still, Jensen has a number of concerns. One, ComEd is a summer peaker and he's curious if a pilot rollout so close to the warmer months gives participants enough time to adjust to a new utility model.
And two, though the public utility commission approved ComEd's experimental plan, Illinois is a competitive retail state so marketing anything beyond a flat rate is a squishy arena. Who, he wonders, will fill that ''behind-the-meter'' niche? Will it be Google with its PowerMeter or some other entity? It's a major policy issue that each state needs to solve, he said.
''It's important that somebody has a business model that delivers value to customers,'' Jensen said about taking flexible rate structures beyond the pilot stage. ''The whole value proposition is something we're trying to understand better. That is kind of the Holy Grail with this.''
Ultimately, Honebein said, matchmaking between the smart grid and customers boils down to utilities changing how they introduce products, services and programs. Turning a marriage of convenience into a partnership is a matter of coordinating efforts with outsiders such as market research firms, project managers and vendors of specific products.
Understanding lifestyle types
Honebein's observations indicate customers fall into four basic lifestyle categories-frugal, green, convenience and technophile. Utilities need to understand what drives each type before they can figure out a mutually beneficial approach to energy savings.
For instance, a technophile might likely be an early adopter who drives a plug-in hybrid electric vehicle. As a utility customer, that person will want to know if they have the proper infrastructure for charging a PHEV, prime times for charging at the lowest cost and how much money he can save by doing it then.
''The idea is to translate these types of situation into a scenario and tell a story,'' Honebein said. ''When you tell a story, you transition from the rational to the emotional, and the emotions and desires of the customer come to life. Technophiles have an emotional bond with data. Engineers at a utility might ask who needs to know all of that, but utilities need to figure out how to contribute to that customer's happiness.''
In Honebein's ideal world, utilities will either adapt or lose out on a once-in-a-century opportunity.
''What you don't want to say as a utility is, 'Here's your new rate, it's critical peak pricing. We'll talk to you later this summer,' '' he concluded. ''Interaction allows cool things to emerge. Customers begin to explore and experiment, nature takes its course, and some of those results can be evolutionary.''