Sacramento Municipal Utility District (SMUD) is implementing its smart grid project, called SmartSacramento, to realize operational efficiencies and improve system reliability, as well as to test customer acceptance and participation in various dynamic pricing options. SMUD is one of 11 utilities conducting customer behavior studies designed and done in conjunction with the Lawrence Berkeley National Laboratory. Almost 150,000 customers from across the United States are involved.

The utilities listed in the table above are evaluating different rates and customer systems in their studies. Most of the studies are assessing customer acceptance and response to time-based rates on an opt-in basis; a few also are testing opt-out options.

SMUD has installed all of its smart meters, and nearly all of the customers invited to participate in the customer behavior study have opted in, thus the SMUD project offers a good sample of the potential benefits of smart meters for both a utility and its customers.

SMUD Overview

From the early days when the industry was talking about the benefits of an intelligent grid, SMUD was looking at smart meters from an operational savings perspective to reduce costs in meter reading and disconnects. Receiving $127 million in federal funds just sped up the process of implementing SMUD’s $308 million smart grid project. The utility was looking for technology that would be flexible and scalable for the long term and used for the smart grid as a whole. By April 2012, approximately 626,000 Landis+Gyr smart meters were installed across the entire service territory.

A Silver Spring Networks radio frequency mesh network provides the communications infrastructure. The meters communicate amongst themselves and through access points with a backhaul. AT&T grabs the data at the access points and communicates it through SMUD’s firewall into the utility’s applications. As another component, SMUD selected the Itron Enterprise Edition Meter Data Management system to gather the data. In the past, the utility used monthly reads for all of its customers. Now, commercial customers’ meters are read every 15 minutes and residential customers’ meters are read once a day.

In the midst of doing the last meter deployments, SMUD changed its rate structure for 65,000 customers. “Before smart meters, in order to implement that change, we would have had to go out into the field with the optical port and reprogram all those meters,” said Erick Krause, project development manager for SMUD. “This would have taken years to complete. With the smart meters, however, it only took six months, and four or five of those months were spent developing the technology. This saved about $10 million in staff time.”

In addition to cutting costs in meter reading and field services, the smart readers provide 99.87% accuracy on readings, which has virtually eliminated estimations. With fewer estimations, there are fewer billing errors, which has greatly reduced the number of call center calls.

Only one-tenth of 1% of SMUD’s customers opted out of the smart grid program. For those few, their meters were replaced with non-transmitting digital meters. These can be used if SMUD offers a time-of-use (TOU) rate on a regular basis or if data needs to be collected.

“A key to the success of the program is that we installed the network before we installed the meters, which prevented a lot of billing issues,” said Chris Capra, SMUD’s spokesman. “We installed 80,000 meters in a customer acceptance period in a downtown area, a suburban area with rolling hills and a rural area. We didn’t do full deployment until we determined that the system would work in these three topographical areas. We also did double and triple checks to confirm the billing.”

SMUD Dynamic Pricing

SMUD is run by a board of directors rather than being an investor-owned utility, so the utility had planned to use its two-way digital meters for dynamic pricing from the start. The utility is using some of its grant money to conduct consumer behavior studies, done in conjunction with the Lawrence Berkeley National Laboratory, that look at customer attitudes and adoption trends for various pricing models. The focus is on the impact of customer response during peak hours and critical peak events.

The study involves 57,000 residential customers for a test period from June 2012 through September 2013. The analysis of the study will be available in 2015. The study will provide insight for SMUD as well as for other utilities wishing to leverage their advanced metering infrastructure to reduce peak. Three pricing structures are being studied:

  • A TOU pricing overlay with opt in and opt out available
  • A TOU and critical peak pricing overlay with opt out available only
  • A critical peak pricing overlay with both opt in and opt out available.

The TOU rate is scheduled for 4 p.m. to 5 p.m. SMUD can call up the critical peak pricing up to 12 times per year. All customers have access to information through a web portal and some customers also are given an in-house display to determine how that impacts participation. Programmable thermostats are not offered as part of the program. The study was run in the summer of 2012, will run again during the summer of 2013, and then will be analyzed and the results reported in 2015. Approximately 10,000 customers out of 550,000 resident customers participated.

 “We had more customer participation than we needed for a statistical sample,” said Rachael Huang, SMUD’s manager of customer strategies. “We did an extensive communication effort with customers and explained the smart grid technology to them. We regularly communicate now through e-mail, texts and the in-home displays to let them know when to reduce power. Overall, we communicated a positive message that here was a way that customers could control their energy costs. The marketing team did some innovative outreach, such as creating videos that showed customers how to cook in the hot summer months to keep electricity costs down. Next summer, we will perform an extensive outreach again to remind customers they are participating in the program.

SMUD Lessons Learned

Krause explained that focusing on customer engagement from the outset of the project was critical to its success.
One speed bump in the process has been using the in-home displays.

 “The technology standards are still evolving on the in-house displays, so our customers were on the cutting edge of using the equipment, which has created some usage challenges,” Huang said. “Also, many customers requested the in-house displays, but not all are motivated to use it, so we are trying to determine how to encourage usage. As a whole, the study will show us which dynamic pricing models are most popular and effective. It also will show whether customers need the in-house displays or whether they can just get the information off the web. Lastly, we are learning whether customers need a test or e-mail reminder to shape their energy usage behavior.”

The project has posed technical challenges as the utility ensures the system is capable of managing such a large volume of data. The utility also is integrating its customer information systems, demand-response systems and metering management application to run together seamlessly, to support dynamic pricing.

One foundation of the program’s initial success has been the utility’s use of targeted websites. Each study participant’s portal is tailored to the pricing program in which they are participating.

The overall objectives of SMUD’s smart grid program are grid reliability, integrating renewables and increasing energy efficiency with a focus on customers that will provide information benefiting many utilities, particularly in the area of new pricing options.