I have a case of demand-side deja vu. For those of us who have been in the utility industry for many years, the current focus on energy efficiency and demand reduction is reminiscent of the early 1980s. Time-of-use rates and energy-use advisors were common in many utility companies as energy prices soared. A major problem with the acceptance of these rates was that residential customers only had data after they received the bill. Too late to matter.
Fast-forward to 2011. Thankfully, the tools that will aid consumers to manage usage have appeared on the scene. There is a lot of data available with smart meters and smart grid implementations, but how does our industry turn that data into an essential element for success — demand response?
The challenge is to turn that data into knowledge for consumers and have that equate to demand and usage reductions. According to the Edison Foundation, it is estimated there will be 60 million smart meters installed in the United States by 2019. Smart grid funding from U.S. Department of Energy grants is pouring millions more into the development and implementation of the myriad of devices and systems that will build out the utility electric systems with sophisticated technologies. Most industry experts agree that, done properly, these systems should save utilities money in operations while leading to improved reliability.
Our customers would gain significant value from our investments in smart grid if they participate by reducing energy use and embrace load shifting. I've read dozens of articles that encourage utilities to change their relationship with their ratepayers. But what should we do to engage consumers in this future? I propose utilities implementing smart grid must change their relationship with consumers.
No longer ratepayers, customers will chose to partner with the utility when it suits their needs. This new paradigm will not come easy to most utilities. In fact, I see a few leading-edge exceptions, including Com Ed with its customer-centric program and San Diego Gas & Electric with its customer communications programs.
As change management experts will stress, before behavior changes can occur, understanding must occur. Many consumers simply don't understand the terms we use in the world of electricity, they don't understand complex rates and they certainly don't understand all the utility acronyms.
We have plenty of evidence that our industry has not invested sufficient time or resources to educate the “ratepayers.” And we will find even fewer in our industry that set out to actually listen to customers to find out what their energy interests and concerns might be.
Recent criticisms on smart meter billing from customers in Texas and California show that we need to do more work in connecting with customers in our energy dealings. And despite many state regulatory commissions requiring energy-efficiency programs of utilities for 30 years, few consumers take advantage of these programs, even though utilities promote them as required. Before consumers' behaviors change, they will have to understand “What's in it for me?”
Two straightforward customer gains would be to save money on their electric bill and to help the environment because a person is motivated to “do the right thing.” Only after understanding their benefit will they want to know how and when to make changes in their consumption habits.
To move communication forward with customers, it comes down to having a well-designed smart grid customer experience strategy that requires three key elements:
Education. We need to move customers from “I'm not ready” to “Yes, I will.” Then answer their “What's in it for me?” questions on demand-response and energy-efficiency programs.
Enrollment. Customers need to understand the reasons, whether societal or economic, to change behaviors. They need to know the what, when and how details before they change.
Partnership. Ongoing support is required to successfully manage energy use tailored to individual customer needs. Proactive and two-way communications of pricing and new programs is critical.
Today, the bulk of consumers are in the education phase. Providing them the education to move to enrollment, rather than blanketing all customers with enrollment data, which is costly and ineffective, will allow more customers to move into the “Yes, I will” segment in a cost-effective manner and on to a partnership with the utility.
The process of moving consumers through these phases is the essence of an overall long-term consumer smart grid communications program and it will take time. Let's not déjà vu now that we are 30 years smarter and have the tools through smart grid implementations to develop partnerships with customers. Let's not repeat the 1980s and end up with few customers effectively using smart grid programs.
Ellen Krohne (email@example.com) is managing principal at Yellow Energy Consulting. She previously served as a customer service executive at a Midwest utility.