I recently had to download a smart phone app to be added to a waiting list to be seated at a restaurant. The app required my phone number and email address, and I’m certain to be spammed as a result. Almost all transactions these days include a data transfer of some sort, leading me to conclude the old economic adage: There is no such thing as a free lunch. Or, as my recent experience shows, companies still want your data, even when you pay for your own lunch.
Utility Analytics
The data revolution is disrupting many established industries and business models, and the electric utility industry is no exception. The utility industry has had data for a long time, but the amount of data has significantly increased due to the smart grid and AMI meters. I recently attended a Day of Analytics hosted by the Utility Analytics Institute in Chicago and learned that the overall amount of data collected is doubling every two years. There is estimated to be 44 zettabytes of data by the end of 2019. That is equal to 99 billion years of music files, 686 billion 64gb tablets, or 1.4 billion years of HD video.
In today’s environment, data analytics must be a part of the utility strategy. The utility industry cannot afford to ignore operational and customer-related data. It can lead to operational efficiencies, balancing supply and demand, customer insights and new rate plans, to name a few possibilities. It can also work hand in glove to optimize other technological advances such as artificial intelligence, electric vehicles and blockchain. However, one of the primary challenges to big data is that of privacy and we must be sure to also incorporate consumer privacy protections into our plans.
Digital Privacy & Trust
In the age of “big data” and business analytics, concern over consumer data protection is increasingly at the forefront of customers’ minds. Massive data breaches have caused serious economic, social or psychological harm to customers by releasing personal information and have also severely damaged the consumer-trust relationship with the companies at issue, forever tarnishing their brands. Consumers are often unable to make informed decisions about their digital privacy because they are in a position of asymmetric information regarding what information is collected and the rationale for doing so. Government privacy regulations are increasing across all industries and will likely continue to grow in the future. Some of the more well-known regulations include:
- General Data Protection Regulation in the European Union
- Canada’s Anti-Spam Law
- California Consumer Privacy Act.
There are also predictions that there will be a comprehensive U.S. federal data privacy law passed within the next three to five years, and many companies have already voluntarily elected to roll out GDPR-type controls globally.
A complicating factor and potential source of consumer resentment is that utilities are monopolistic, and consumers are not often able to leave their utility company if they don’t like their privacy policy. So, utilities and regulators are articulating rules regarding the use of personally identifiable data. A handful of states have already enacted specific regulations which have placed limits on consumer information sharing by utilities, including California, Washington and the District of Columbia. Often, the topic at issue is the ownership of individual data, with utilities permitted to use it for billing only. Aggregated data that aids in system planning, operations or maintenance may be accessed by the utility. Customers must opt-in to allow third-party access to that data.
A Reasonable Search
The City of Naperville, Illinois, U.S., was sued in 2011 over its use of smart meters. The trial court dismissed the case, but a group called Naperville Smart Meter Awareness filed an appeal. The group alleged that collection of usage data in 15-minute increments by a city utility constitutes an unreasonable search under the Fourth Amendment.
In 2018, the U.S. Court of Appeals for the Seventh Circuit ruled against the challenge saying the interval data does constitute a search, but it is not unreasonable. “The ever-accelerating pace of technological development carries serious privacy implications. Smart meters are no exception,” the appeals court said. However, the court also warned that its holdings were specific to the facts of this case and could change, if for instance, a city were to collect the data at shorter time intervals.
The Green Button initiative is an industry-led effort to provide utility customers with secure access to their energy usage information. Customers can also control which third parties may be given access to that data. To date, over fifty utilities have signed on to the initiative.
So, is big data akin to big brother? In the utility indutry, it all depends on the use case, system protections and just as importantly, the communications to and perceptions by customers. Ultimately, the impetus is on utility companies to communicate their privacy policies to customers. Informing consumers and implementing flexible consumer solutions, such as the Green Button initiative, can only help.
If you are interested in learning more about the use of utility data analytics, check out our sister brand, Utility Analytics Institute at: www.utilityanalytics.com.
