Monday, November 25, 2013

Smart grid stakeholders: under pressure, but talking

By Patty Durand, executive director, SGCC

On Nov. 4, I attended the
Illinois Smart Grid Policy Forum in Chicago, hosted by the Center for Business and Regulation, University of Illinois Springfield. The stated theme was “Measuring Progress and Charting Directions,” but the forum’s declared scope and purpose was to help foster stakeholder collaboration:

“The Illinois Smart Grid Policy Forum has been created to encourage open discussion among stakeholders, policymakers and other interested parties concerning the development of smart grid in Illinois. Smart grid investments are made to achieve a variety of goals including improved service reliability, direct and indirect cost savings for consumers, and to achieve broader public policy goals such as integration of local generation and the promotion of smart energy usage.”

The backdrop in Illinois, of course, is
Commonwealth Edison’s $2.6 billion, 10-year smart grid program approved by the state legislature in 2011. The dollars and the decade needed for implementation speak to its scale. And a few key facts and statements that emerged during my attendance really spoke to issues that affect most of us, clear beyond Illinois.

Essentially, the three major stakeholders – utilities, regulators and consumers – all face considerable pressures as they attempt to align their interests to pursue grid modernization. That’s true for stakeholders in other states too.

You can glance at
the forum’s agenda here; I particpated on a panel on consumer benefits and smart grid investment which gave me an opportunity to share some of the SGCC’s research on those topics. But listening to others’ presentations, I realized how complex and ambitious the State of Illinois smart grid program was, and I was encouraged by the dialogue and daunted by the challenges. This truly is an industry transformation taking place before our eyes, and we are a part of it.

In my my view stakeholders must understand each other’s drivers and constraints in order to collaborate on grid modernization and the needed investments to make it happen. Perhaps, then, it is no surprise that I found the keynote address particularly compelling.

Rich Sedano, principal and U.S. programs director for the Montpelier, Vermont-based Regulatory Assistance Project, delivered the keynote. Sedano, a power engineer, served as a commissioner in the Vermont Department of Public Service for a decade. His slide deck was steeped in big themes and fine details relating to the pressures on utilities and regulators as we move ahead on smart grid-related projects.  

First, despite a decades-long trend of steadily rising demand, utilities of late have faced a drop in demand driven by the 2008 recession. It was really clear to me as I watched his presentation that as utilities address all of these costs including infrastructure renewal, de-carbonization strategies such as shifting from coal-based to natural gas-based power, increasing energy efficiency and the addition of renewable energy, there are many updward pressures on cost. Indeed, some state policies for energy efficiency call not just for efficiencies, but significant drops in demand, particularly during peak hours.

So with a large proportion of U.S. utilities still profit by volume sales, and a drop in sales coupled with a rise in costs, they are under pressure. De-coupling utility returns from volume sales might be a solution. But it might not, and even if so it’s only the first step.

Regulators are under pressure, as well. Utilities have the staff and the time to put together complex business cases and technology roadmaps that regulators must understand and perhaps approve. Regulators must grasp grid modernization measures that make sense in terms of financial return and customer value.

As the forum’s scope and purpose make clear, improved service reliability, energy efficiency, distributed generation, as well as direct and indirect consumer benefits, are all goals of the legislation. Also discussed were the critical benefits of job creation and economic growth. That’s been a major theme of ComEd’s program and, indeed, ComEd reports quarterly on job-related and economic growth outcomes generated by its project.

Finally, I’d add that, from my corner, consumers too are under pressure. They are scrutinizing their bills and need help controlling thei energy costs as the upward pressure on costs causes utilities to file for rate increases. Regulation has to adapt to the changing technological and economic times. Utilities have to develop credible business cases that offer solid consumer value while providing a return on investment. Consumers need to be engaged and educated to understand why we need to make considerable investments in their local grid as well as across the country.

Forward progress would seem to require that these stakeholders all understand each other’s drivers and constraints. Multi-dimensional pressures abound. But I still see all three groups’ mutual interests served by adaptation, collaboration and concerted action. At least that was my takeaway in Chicago in early November.  

Monday, November 4, 2013

Consumer Empowerment and Transactive Energy Markets

By Patty Durand, Executive Director, SGCC

In my last blog, I offered a glimpse at the new SGCC report, Smart Grid Economic and Environmental Benefits: A Review and Synthesis of Research on Smart Grid Benefits and Costs, which quantifies costs and benefits per utility customer per year of various smart grid enhancements to the grid.

It’s important that we document the value of smart grid investments for the consumer, who after all, pays the tab. But the focus on the present shouldn’t preclude looking ahead to where smart grid technology will lead us all in the future.

Consider the notion of “transactive energy markets.” The idea is that, once intelligence is extended across the distribution system, including smart meters for homes and businesses, and intelligence is applied to loads (heating/cooling, lights, electronics, electric vehicles) in those homes and businesses, we’ll have a complex web of supply and demand for electricity.

Here is my take on it: imagine affordable, distributed generation for homes and businesses, most likely in the form of solar photovoltaic panels, and couple it with affordable energy storage.  Then at some point every customer’s combination of generation and load will sometimes make demands on the grid and sometimes add surplus electricity to the grid.

The thinking on transactive markets is that a market will arise that optimizes the entire grid and its many nodes, or customers, by charging for electricity demand according to near-real time pricing, and rewarding those who contribute their surplus by paying the same time-sensitive prices.

Although this is complex and futurist, a trade group has been formed to focus on this topic. The Transactive Energy Association
explains its mission here. Between savvy practices and in-home automation, utility customers should be able to reduce their electricity uses when electrons are expensive and draw more when it’s inexpensive. With best practices plus distributed generation and storage, it’s possible to create a surplus, thus providing financial incentives for energy efficiency and wise use.

Those who don’t wish to deal with potential price volatility might purchase subscriptions as a hedge. Others may invest in automation for long-term gains.

Yes, much has to happen to make this vision a reality. And, yes, not all consumer segments will want to be involved.  But we’re closer to such a market than you might think. Consider net metering, which is a reality in many states: when a customer produces excess solar energy in California, for instance, the value of that contribution is figured into the utility bill. Likewise, in current demand response and dynamic pricing scenarios, those who cut their use at critical peak times are rewarded in some fashion.

Yet we’ll need affordable home energy management systems that can prioritize our personal loads and optimize the timing of their electricity use by monitoring dynamic market prices. Regional markets and clearinghouses will need to be organized and run efficiently to enable transactions.

It’s difficult to foresee how a market with millions of nodes, all automated to maximize the end user’s benefits, will affect the current, two-peak-a-day load profile. Will new, expensive peaks and low-price troughs emerge? Will the load profile flatten to a more consistent level across the 24-hour cycle?

And it’s hard to forecast how transactive energy markets will affect the utility business case. In the near-term, the efficiencies gained might well contribute to lower demand for peaking (and highly polluting and capital-inefficient) power plants.  We can’t ignore the potential outcomes for utilities and, for the foreseeable future, they will have an important role that’s properly rewarded. The promise for consumers, however, is a level of engagement that rewards efficiencies and wise use, which should benefit them personally, as well as cutting carbon emissions by rewarding distributed generation.

For more background on the concept of transactive energy via a WorldWatch Institute blog is available here.

Friday, October 18, 2013

Building Support and Knowledge for Smart Grid Investments: This Just In

By Patty Durand, Executive Director, SGCC

On Oct. 8 we released our latest report,
Smart Grid Economic and Environmental Benefits: A Review and Synthesis of Research on Smart Grid Benefits and Costs, which is available for download at no charge. Our intent is to provide consumer and environmental advocates with real numbers in order to build knowledge and support for investments in a smarter grid. We expected, and this report shows, that such investments pays big dividends to individuals as well as society.

By conducting a careful meta-analysis of existing data, we outline the value to be found from the economic, environmental, reliability and customer choice benefits of a smart grid. Wherever possible we present the findings in terms of the metric “per customer per year,” based on actual data from smart grid deployments.
We analyzed investments along a spectrum of nine smart grid capabilities. The Smart Grid capabilities with the highest economic and environmental benefits are:

·                     Integrated Volt/VAr Control
·                     Remote meter reading
·                     Time-varying rates

Some Smart Grid capabilities, such as the ability to integrate higher percentages of renewables, have the potential to produce savings and environmental benefits well in excess of these benefits; however, more research is needed to fully quantify this potential.

An important concept in the report is Net Present Value (NPV), which is an analytical technique for converting future benefits and costs into present-day dollars for comparative purposes. The report provides a NPV for a conservative “Reference Case” projection as well as for a more optimistic “Ideal Case.” We found the ratio of benefits to costs ranges from 1.5 to 1 in the Reference Case and 2.6 to 1 in the Ideal Case.

This report was written in a lay-reader friendly style so that non-experts can use the findings to understand utility investment decisions as well as generally understanding smart grid concepts. We also prepared a guide for technical terms to be used in conjunction with the report for those needing more help understanding the concepts that exists within the U.S. electric grid. That publication, Technicaland Economic Concepts Related to the Smart Grid – A Guide for Consumers, is a companion resource for the new report.

How do each of the Smart Grid capabilities contribute to available benefits?

In summary, the key findings of the study are:
  • Smart Grid capabilities offer significant cost savings, on the order of $89.36-154.65 per customer per year.
  • Smart Grid capabilities also offer environmental benefits, reducing CO2e emissions per customer by 55-592 lbs per year.
  • Smart Grid capabilities increase reliability by 25%, or 27.2 minutes of avoided outages per customer per year.

In closing, I’d like to add that SGCC research reports have been garnering substantial power industry attention. I had the opportunity to write a piece calling attention to our latest findings for Renew Grid, while and Fierce SmartGrid ran their own articles, Electric Light & Power and Yahoo! Finance ran our press release and Smart Grid Network linked directly to the new report. I’d like to thank these publications for their interest in our work.

Further traction is up to each and every one of us. Please assist us in sharing this report with your colleagues and constituents so its findings are widely read and fully understood. Please also join us for our fall webinar series at

Tuesday, October 1, 2013

What Is Smart Grid?

By Patty Durand, executive director, SGCC

To the many members who took the time to travel to DC and be with us for our annual member’s meeting, thank you! It was great to reconnect or connect with you. This was the first one we have done that went for two days, which we did because we wanted to share with details of our exciting new Smart Grid Energy Corps program and ask for your help on writing a consumer value proposition (details to come in future blogs).

For now I want to share with you details on the Smart Grid Consumer Collaborative’s new consumer-oriented Web portal,  We toured our members through this website in detail at the member’s meeting and I want to share it with you now.
This website was created for average consumers: we present factual insights in an accessible format to raise awareness and understand of what the smart grid is, and help explain the value of smart grid-related investments for consumers through this website.

First, the home page interactively engages visitors on the aggregate value of incremental energy efficiency efforts by demonstrating graphically what a 9 percent energy savings by individuals could mean collectively.  For instance, we offer the insight that Las Vegas consumes a staggering 423 billion kilowatt hours each year and show how a 9 percent drop in individual energy use across the nation could power 207 cities of Las Vegas’ scale. Or that the same amount of electricity could power an electric vehicle 1.7 trillion miles, equivalent to 70 million laps around the Earth.  That’s far! We use examples like these to bring the 9 percent energy savings to a human scale that consumers can relate to.

The site includes a link to the 423 billion kilowatt hour “factoid” that takes the curious visitor to the Energy Information Administration website to learn about electricity demand, including the fact that residential and commercial energy use largely accounts for growth in demand. In other words, the American consumer could take minor steps to curb wasteful use and save themselves a little money, with outsized results on the cost of utility systems and environmental impacts.

Scroll down and the visitor sees four self-selecting choices under “What Kind of Energy Consumer Are You?” The choices correspond to motivational categories that most energy consumers belong to as determined by our Smart Grid Consumer Pulse and Segmentation research. Visitors choose the statement that best describes themselves such as “I want to learn more,” “I care about the environment,” “I care about saving money” and/or “I want to be empowered.”

The most exciting part to me is our consumer testimonial portal, which is a video-based platform called “Submit Your Own Story” and is a way for consumers to relate their positive experiences with smart grid to other consumers. Giving consumers the means to speak directly to their peers should produce credible and fascinating results, we hope. To help raise visibility we are offering a $25 incentive to anyone who submits a story.

Americans are open to the logic that small steps that both help themselves and have an impact on the greater good are worth exploring. And they need solid, unbiased, factual information to make informed choices. That is a role the SGCC will continue to play through its research, outreach and this new consumer-facing portal which gives people access to the simplest, straightforward facts in an easy, fun format. Let people decide for themselves how much they want or need to know and make it easy for them to learn and access the next level of information.  Please help us get this website in front of everyone we can by including it in your newsletter, tweets, blogs, and web links.  Click here:

Monday, September 9, 2013

Will Consumers Pay the Cost?

By Patty Durand, Executive Director, SGCC

On July 31 we hosted another webinar in our Thought Leadership Series, “Are Consumers Willing to Pay the Cost?”   We wanted to call attention to the value of consumer engagement and the role of costs in persuading consumers to support smart grid investments. Our thoughts leaders were Chris King, global chief regulatory officer, Smart Grid Solutions at SiemensSmart Grid, and Wilson Gonzalez, senior energy policy advisor, Office of the Ohio Consumers’ Counsel.

In an effort to continue to learn from what we learned, I want to highlight a few things we learned from Chris and Wilson last month, and I want to tie that together with an effort SGCC is making to create a consumer value proposition for a smarter grid that everyone understands and agrees with. So here is a summary of what we learned:

Chris noted that consumer benefits are largely driven by consumer behaviors in the categories of energy efficiency (i.e., lower energy usage), the integration of renewable energy and electric vehicles, and peak load reductions. In fact, in a slide that captured the costs and benefits of grid modernization, Chris pointed out that customer-driven efforts at energy efficiency also present the largest societal benefits in terms of dollars.

The consumer reaps the benefits of his/her own actions when it comes to efforts to reduce their electricity usage. To my mind, that means that SGCC efforts to connect the dots for consumers – essentially, that individuals can benefit themselves and society by participating in these programs and helping them understand the transformation underway is well worth the effort and can build support for this transformation to grid modernization and consumer empowerment.

Chris reported that pilot programs show that energy use feedback, enabled by granular data on each household’s use, leads to 5.1 percent to 8.7 percent savings on monthly bills. The notion is that simple awareness of usage leads to more conscious and more prudent use of energy. According to Chris’ data (from VaasaETT, a global energy think tank), here is the breakdown: web portals lead to 5.1 percent savings, a detailed invoice leads to 5.9 percent savings, “other” methods provide 6 percent savings and in-home devices lead to 8.7 percent savings.

While that data is welcome and may be useful generally, I think SGCC research on customer segmentation can be applied to this issue for a more nuanced picture that links customer segments with their preferred means of energy use feedback. Such a linkage will help utilities and their partners more effectively market energy use feedback by offering each segment its preferred method, and therefore save money not marketing to everyone exactly the same.

We would probably also find that while some segments might scoff at 5 percent savings on their monthly bill, other segments who place a higher value on being green will link their efforts to societal savings and lower environmental impacts and fully participate.

That’s the principle behind the encouraging fact I remarked on in my last blog that Chris called out in the webinar: only 10 percent customer participation in peak load reduction is needed for system-wide (and therefore societal) benefits. I can imagine campaigns that ask something akin to “Have You Joined the Ten Percent Club?” I’m not the world’s best sloganeer, obviously, but you see my point.

Our second panelist, Wilson Gonzalez, senior energy policy advisor, Office of the Ohio Consumers’ Counsel, also presented some encouraging information. His office has found that willingness to pay is linked to the specific utility and to the consumer’s locale, education and the information available on the value proposition.

Wilson’s office has pushed for accountability in utility proposals for smart grid projects in several forms. One is shared risk between consumers and the shareholders of investor-owned utilities. He cited a few others: robust cost/benefit analyses, performance-based cost recovery, front-loaded consumer benefits, a third-party audit to establish operational savings and a requirement that utilities make annual improvements in their traditional reliability metrics.

Wilson’s presentation encouraged me to think that the interactions of consumers, consumer counsels, utilities and regulators can result in building public confidence for the smart grid business case and, by extension, the consumer value proposition.

Speaking of that, please join us for our annual member’s meeting on Tuesday and Wednesday September 24 and 25 in Washington, DC. On the second day we will review and edit a draft consumer value proposition document, work to gain consensus and understanding around the value proposition, and then create an action plan so that consumers hear and understand common messages when they hear about the smart grid.

Please mark your calendars to join and register on Friday, Sept. 27 at 1 p.m. EST for SGCC’s next Research Brief Webinar: Smart Grid Environmental & Economic Benefits.

Wednesday, September 4, 2013

Wildfire reminds us of the criticality of our electric system

By Patty Durand, SGCC Executive Director

This week a wildfire the size of Chicago is threatening San Francisco’s water and power supply as it advances towards major transmission lines and a reservoir that supplies water to a majority of residents there. This reservoir, Hetch Hetchy, is closely being watched by San Francisco and State authorities to ensure that ash falling from burning embers does not pollute the reservoir and cause water quality problems for millions of people. Interestingly, not only were water supplies affected by the wildfire – electricity was affected too but received much less attention. San Francisco authorities reported that a hydroelectric unit was damaged by the fire last week, and while the unit has been repaired it was still not contributing electricity while technicians worked to re-energize the transmission lines. So while water supplies were not affected at all, the San Francisco Utility Commission spent about $600,000 on supplemental power supplies from outside sources because of the fire-related disruption.

Also, Governor Jerry Brown declared a state of emergency on August 23 for San Francisco because of these threats to the city’s water and power infrastructure. Wildfires have been in the news a lot this year. Why is that? More frequent bouts of extreme weather, which cause massive wildfires like the ones at Yosemite and in Arizona this summer, are just one of the results of global climate change, triggered in part by greenhouse gases that are not able to escape from our atmosphere. Other causes of increased wildfire include more developments in the region, more frequent and more severe drought, and untamed underbrush. “This is probably the new normal,” according to Professor Wuebbles from the University of Illinois, co-author of a federal report linking climate change to an increase in severe weather trends.

While a smart grid may not be able to prevent the impacts of a massive wildfire, it could help our nation reduce the amount greenhouse gas emissions by electrifying transportation which is a cleaner source of transportation than gasoline-powered cars.  A smarter grid is a more efficient grid and studies show that a smart grid will reduce carbon emissions by as much as 18 percent when fully deployed, even without electric-powered transportation.

Most consumers don’t realize or understand the importance of our electricity supply until it is being threatened or until we lose power. Strengthening our nation’s grid and making it smarter not only increases our grid’s resiliency but it will help us deal with the major issues facing the quality of our air and water supply, and the quality of life which we have grown accustomed to in this country.

I encourage you to both visit and spread the word about our new consumer-facing website,, which explains the many benefits of a smarter electricity system. Together, we can help to inform and educate, and move the needle toward a smarter, cleaner and more convenient electricity system.

P.S. - Help stop smart meter misinformation. Today, SGCC released a video and fact sheet to set the record straight about smart meters. We hope you will take time to learn and share the facts. Visit our new website, download our video, fact sheet, and other information that can help you communicate with your customers, friends, family and colleagues. 

Friday, August 16, 2013

SGCC’s response to negative smart meter misinformation: “Take Back Your Power”

By Patty Durand, Executive Director, Smart Grid Consumer Collaborative 

Take Back Your Power. It’s ironic this statement is the title of a forthcoming documentary spreading misinformation about smart grid and smart meters, as mentioned in an August 12 USA Today article titled “Documentary looks at possible problems with smart grids.”  The statement “take back your power” should be associated with the benefits of a smart grid for consumers --- after all, a smart grid will give consumers the ability to take control over their energy usage, have more information about their energy consumption and experience fewer surprises on their energy bill than ever was possible before. We live in an increasingly digitized world, and digitization means more data and more knowledge for everyone, especially consumers.

The transformation of our electrical system to a smarter grid, which combines our electrical system with an information technology overlay, essentially allows a two-way flow of information about energy usage and delivery. Benefits include the potential to decrease carbon emissions as much as 9 percent, decrease the average household electric bill as much as $500 a year, and onboard more renewable energy resources like wind and solar power.

A critical element of a smart grid is digital meters – electric meters that enable two-way communication between consumers and their utility. Digital meters do this wirelessly, without the utility having to go onto private property to read a meter. Armed with this data, consumers can take control over their energy consumption and monthly bills and a utility can make better decisions about how they produce and dispatch electricity.

Yet the installation and deployment of digital meters as a foundational element of a smart grid occasionally comes under attack by various groups concerned about the health and privacy impacts of the digital meters. Research shows these concerns are unfounded:
  • Health: The Radio Frequency (RF) emissions emitted by digital meters is well below the limits set by Federal Communications Commission and is ten-times below levels produced by other common household devices like cell phones, baby monitors, satellite TVs, and microwaves. 
  • Privacy: The privacy of consumer data is protected now as always. Ongoing efforts to protect utility data continues just as it does for banking, health, telephone, and all data. Utilities work constantly to safeguard it and that will not change with the use of smart meters.
The bottom line: the benefits of a smart grid will allow our nation to improve our aging electrical infrastructure and improve management of the growing demand for energy into the future. Most important of all, it will empower consumers, the opposite of what the article and documentary says. To learn more about the benefits of a smart grid, we encourage readers to visit Too bad the Take Back Your Power crowd doesn't realize their position actually gives away consumer empowerment to manage their electric bill and know details about their usage.

SGCC has a working group responding to anti-smart meter campaigns. If you would like to become involved please let me know. We welcome your participation.

Tuesday, August 6, 2013

Engagement moves the needle, at least in webinar poll

By Patty Durand, SGCC Executive Director

We tried an interesting experiment last week on our Thought Leadership webinar, “Are Consumers Willing to Pay the Cost?” (Meaning, will they pay for a smarter grid?).  Attendees were polled as the webinar began, and they answered: “It depends” (50 percent), “No” (44 percent) and “Yes” (6 percent). I couldn’t help wonder, as you might, at the reasons for such apparent pessimism.

The same poll, taken after presentations by Chris King, global chief regulatory officer, Siemens Smart Grid Services, and Wilson Gonzalez, senior energy policy advisor, Office of the Ohio Consumers’ Counsel, reflected that the proverbial needle had moved. The results at the end of the webinar: “It depends” (43 percent), “No” (30 percent) and “Yes” (26 percent).

Though this wasn’t a scientific poll with a valid sample size, I was impressed by the degree to which minds had changed in a one-hour session. Call me biased, but I found grounds for optimism in the results.  Here’s my thinking:

The webinar attendees admittedly were a self-selecting group apparently interested in learning more about the question in the webinar title. Yet the only thing that changed between the two pollings was the audience’s fresh awareness of smart grid value propositions and results from pilot programs for dynamic pricing across the country delivered by our speakers. Customer value was a theme.

My takeaway: an interested audience, presumably with some background on the issue, found the value propositions convincing. And if the audience did, they also felt other consumers will as well.  The two value propositions that I found worthy of communicating is that 1) the payback on smart grid investments is considerably higher than the initial investment, and 2) individual consumers involved in dynamic pricing programs had managed to save money.

We also heard that only a fraction of the customer base is needed to reduce peak energy use in order to provide system-wide benefits – benefits that accrue to all customers.  I’m encouraged, that our common mission to engage and inform will pay dividends and that the way forward is rather straightforward, if not easy. After all, SGCC research has demonstrated that when consumers are given clear and concise explanations of grid modernization and its impacts on reliability, costs and environmental benefits, they want to learn more. And, it would seem from our webinar’s impact, that learning more means understanding and embracing the value propositions offered by grid modernization.

After the webinar, Chris told me that, in his view, the large proportion of attendees that responded “It depends” on consumer support for smart grid had based their view on the cost-benefit analysis. The change in sentiment by the end of the webinar seemed to reflect that consumer support is contingent on a positive analysis of costs and benefits. Once a net positive benefit is clearly explained, minds change.   

Personally, I found the fact that meaningful peak load reduction—that is, at a level that could preclude or defer the need for peaker power plants on some systems – is possible with just a fraction of the customer base is very encouraging. I had previously heard as little as 20 or 30 percent of the customer base needed to engage, but last week Chris report that as little as 10 percent of the customer base can make a difference. Our task in changing utilities’ load shape is not as monumental as I once thought.

All of these points are timely and may soon have further corroboration. The SGCC’s Wave IV research, now underway with results due in October, will focus on consumer interest in and willingness to pay for various smart grid-related programs and technologies. The data we obtain this fall will indeed be scientifically valid and should provide a baseline by which to gauge whether our collective efforts are moving the needle.

The prospects look positive for garnering public support for grid modernization and its positive impacts on reliability, grid efficiencies and environmental quality – not to mention the nation’s productivity and economic competitiveness.

I’d like to publicly thank Chris King and Wilson Gonzalez for their informative presentations. Chris serves on the SGCC board and Wilson has advised us on our research efforts. Also, the efforts of our own SGCC staffer, Greg Schwartz, continue to make our Thought Leadership series a success.    

Tuesday, July 16, 2013

National Town Hall shines spotlight on Demand Response

By Patty Durand, Executive Director, SGCC

I was in Washington, D.C., last week for the National Town Hall Meeting on Demand Response and Smart Grid. Let me share a handful of take-aways.

Keynoter Pat Hoffman, the assistant secretary, Office of Electricity Delivery and Energy Reliability at the U.S. Department of Energy (DOE), opened the conference by saying that data is key: extracting value from data will serve both consumers and utilities alike.

Smart grid investments to date, which include interval meters and advanced metering infrastructure (AMI), are producing data that provide customers with their energy usage data, Hoffman noted. And data should enable utilities to operate the grid more efficiently in terms of peak load reduction, demand response and outage restoration.

Although many stakeholders are already familiar with these ideas, Hoffman really emphasized that rigorous analysis of available data should begin to yield not only customer and utility benefits, but metrics that measure those benefits and lay the foundation for further, cost-effective investments in grid modernization. She noted the rise in consumer expectations for reliable service, using extended outages caused by Hurricane Sandy as an example, and she pointed out that a power outage also means a loss of communications when people can’t charge their cell phones.

Most interesting to me was the point she made that consumers are looking for utilities to prioritize restoration – for example, can utilities provide ways for customers to charge cell phones even if the rest of the grid is not up so they can work, communicate with others, and obtain information. And she suggested that utilities would benefit from tracking the use of smartphone-based apps by young people to understand the emerging customer expectations for services and information from power providers.

Modernizing the grid should provide greater reliability, resiliency, environmental performance and cost effectiveness, Hoffman said, and the creation, collection and objective analysis of related data is the path to achieving these goals.

In a panel session, Paul Centolella, currently vice president of the Analysis Group and a former commissioner of the Public Utilities Commission of Ohio, suggested that the current focus on changing customer behavior to achieve demand response is misguided and that automation is the solution. He used the examples of various Web-based, consumer-centric services such as Kayak, for low-price travel options, and Pandora for music. Why not apply the same thinking to energy consumption? Centolella asked.  Matt Rogers, founder and VP of engineering for Nest, which produces Nest Learning Thermostats, joined him in that viewpoint.

An audience poll at the town hall meeting established that demand response generally is not well-understood by stakeholders and that there’s a lack of “information signals” to customers. Both findings seemed to underscore Centolella’s point on automation. A home energy management device, system or service offered by a utility or third party could make the process much simpler and easier for consumers to adopt the practice and realize benefits.

Frankly, I found myself agreeing with these points. Data analysis is increasingly used in all fields to extract meaningful insights. Doing so in the power sector could help establish the basis for cost-effective investments and that, in turn, could provide convincing evidence for consumers of the benefits of grid modernization. After all, consumers pay for the cost of grid modernization and the power industry will need to clearly establish the benefits in order to win regulatory approval to recover their costs. Persuading the consumer with bona fide data on the benefits and cost-effectiveness of investments is a much-needed step in the process. This aligns well with the mission and focus of the Smart Grid Consumer Collaborative. 

Finally, I’d like to note that the DOE released
Voices of Experience: Insights on Smart Grid Consumer Engagement,
at the National Town Hall meeting. SGCC was directly involved in the leadership team that produced the guide and we will stay engaged going forward, by helping steward the document and being the driver for getting the guide into the hands of industry stakeholders who can use it.

On that last point, this new guide is designed to be “user friendly” and the panel that introduced it specifically pointed out the “At a Glance” section on page 6 that lists both the characteristics of consumer engagement as well as the steps to achieve it. No matter where you are in the process of an AMI deployment, the guide can help you understand how to plan for, think about, and execute a consumer engagement program. Even if you are post AMI deployment, the guide has a section on leveraging your new relationship. Please download it and pass the link along to your colleagues.  

Friday, June 28, 2013

The “Surveillance State” and Smart Meters

By Patty Durand, executive director, SGCC

The recent revelations about the National Security Agency’s (NSA) surveillance of domestic communications made me cringe. While too many unanswered questions remain to draw firm conclusions, the impression that a government agency is monitoring Americans’ cell phone, email and Internet traffic could play right into the hands of smart meter critics.  That would be a leap in logic, in my view. And I’ll tell you why. But these developments also underscore why the engagement process resulting from our Smart Grid Consumer Pulse and Segmentation study is deserving of even greater support. I’ll share my thinking on that point as well.

The mass monitoring of electronic communications to find patterns of potential terrorist activity appears to have little relevance to personally identifiable, home energy use data. Yet the topic is worth exploring further, if only to better understand how smart meter data is collected, protected and analyzed by utilities.  However, legal and well-established security-related concerns trump interest in anyone’s personal home energy use.

The power sector already is concerned with hackers seeking to disrupt the grid as well as the reliability of the grid’s aging components.  Every U.S. industry has similar concerns with protecting their own assets and customers. For the power sector, the collection and analysis of home energy use in aggregate – i.e., patterns – helps manage the safety, security and efficiency of the grid. It would not be rational to forego that value out of fear that individual data would be misused.

Americans are already aware that life in a digital world involves trade-offs between convenience and privacy. That calls for discussion and debate of those trade-offs and might need to include whether the trade-offs apply to smart metering data. Living in a digital world and understanding and balancing these trade-offs would seem to require more robust engagement among the relevant parties, rather than indulge in fear and a search for bogeymen.  

While the constitutionality and legality of the NSA surveillance needs to be openly reviewed, let’s take a deep breath and consider whether this is a game changer for power utilities and their efforts to run the grid more efficiently and with a greater degree of environmental responsibility.

Smart meters are being implemented to provide:
  •   more accurate billing than aging electro-mechanical meters,   
  •  end-of-line sensors to provide insight into outages,
  • dynamic pricing that will reflect the true cost of electricity provision on 24-hour and seasonal bases,
  • data for the homeowner to better understand and manage their electricity usage.

Placed into context, the use of smart meters to enable more sophisticated energy use by the consumer and more efficient, sustainable grid-related practices by utilities makes at least as much sense as other technologies where the trade-offs between value and privacy are less clear.

That said, utilities and public utility commissions remain responsible for robust data privacy practices and policies with sufficient transparency to allay their customers’ concerns. The movement toward offering opt-out policies, with corresponding fees, is one step in that direction. An iron-clad policy that any personally identifiable information derived from smart metering is the sole property of the account holder is another step, which is already widely embraced.

We’re really at the beginning of important conversations about how to live in a digital world while retaining a sense of privacy.  Let’s recognize that’s where we are. The power industry and its customers have yet to grasp, fully explore and, perhaps, resolve related issues involving smart meters. The moment is ripe for engagement on the actual issues, to ensure safeguards and maintain confidence in the institutions that enable our digital lives, particularly the power sector that drives so much of modern life.  News of the NSA’s domestic surveillance of electronic communications should drive that engagement rather than plunge us into a murky world of pervasive paranoia. Many people have worked hard to assure consumers that their energy data is safe as always.  I want to avoid this news raising new concerns and more unfounded attacks by critics, but would welcome informed debate and transparency.  I hope that happens.

On a related note, the SGCC will soon unveil the results of several major initiatives that serve consumers and their engagement with the power sector.  We have a new fact sheet called Becoming a Smart Power User; we are launching a brand-new consumer-facing website which leverages our segmentation and educational research about how to engage and inform consumers; we are beginning two new pieces of research – an update on Smart Grid Consumer Pulse and Segmentation study (Wave 4) and one on the economic and environmental benefits of smart grid technology investments. And much more. Please stay tuned. 

Wednesday, June 5, 2013

Research-based facts over conventional wisdom

By Patty Durand, Executive Director, SGCC

As I travel around the country presenting the SGCC’s research findings, I’m running into other presenters who say things like, “All people want is to flick a switch and get power. That’s all they care about.” Or: “All people want is cheap electricity. They don’t care about the details.”

These dubious statements often are backed up by man-in-the-street video interviews in which the interviewer exposes the interviewees’ ignorance on smart grid concepts and terms, as if that were evidence of anything.

This frustrates me because those statements have no basis in fact and the ludicrous videos establish nothing, other than that power utilities have only just begun to educate their customers.

At best, these blanket statements are the product of “conventional wisdom,” an unexamined train of thought without supporting evidence. The speaker is simply imposing his or her own thinking on an issue deserving of careful analysis. At worst, these are self-serving statements designed to reach a foregone conclusion.

In contrast, the SGCC’s research reflects that the supposedly homogenous group, “people,” is composed of five distinct consumer segments, each with their own motivations and aspirations. Two of the five segments – Traditionals and Easy Street –prefer flat rates and want to pay their bill and be done with it, though they comprise a minority of the U.S. general population at 30%.

The other three segments – Concerned Greens, Young America, and Do-it-yourself & Save – show avid interest in energy issues. Several of these segments show interest in adopting energy practices that align with their personal outlooks.  And their numbers comprise 70% of the U.S. general population.

As it turns out, the American consumer is largely aware of the implications of electricity generation and consumption as they relate to the issues of our time. They may not yet understand the concepts, terminology or technical aspects of power or “smart grid,” and they cannot define what a kilowatt hour is, but they “get” the issues at stake. And many care a great deal.

So, SGCC research has exposed conventional wisdom for what it is: lazy projections of the speaker’s thinking that fall apart in light of bona fide research.

Even more insidious than lumping “people” into one homogenous group and dismissing their interest in understanding the implications of today’s grid is the implicit assumption that people don’t care and/or don’t wish to be educated. Another of the SGCC’s research-based findings is that there’s significant consumer interest, almost across the board, in learning about electricity provision and its implications. Environmental concerns are completely mainstream today, as are concerns about the nation’s energy posture.

Of course, consumers are concerned about the cost of electricity and its affordability. The recession we are just emerging from underscored that while electricity remains relatively inexpensive in this country, the electric bill – and the factors that govern it – is a significant expense for many. But to pretend that cheap, reliable electricity is everyone’s only concern is a fallacy.

As you know, the SGCC’s mission is to understand consumers’ motivations and aspirations in order to assist in educating them about their electricity use and the implications of various practices. Let’s begin by respecting the consumer.

If “conventional wisdom” has any basis in fact, that’s because consumers have for a century been treated as passive ratepayers. Utilities themselves acknowledge that their success in providing safe, affordable, reliable electricity has made it challenging to educate their customers now that grid modernization is underway and a utility-customer relationship is beneficial to both parties.

So, let’s supplant the unexamined mantras of conventional wisdom with actual research and use the latter as the basis for educating consumers on what they need to know to be savvy customers. At the very least, consumers will need to “get it” in order to support the tens of billions of dollars in grid improvements needed to keep their electricity reliable and affordable and enable them and the U.S. in general to remain competitive in the 21st century.  And the best case is an engaged and savvy consumer who works in partnership with their utility to manage their costs, address their values related to energy, and who enjoys the services and programs the utility has to offer. 

Wednesday, May 22, 2013

Talking to consumers about energy

By Patty Durand, Executive Director, Smart Grid Consumer Collaborative

Many of us spend our days talking to others who inhabit the same professional sphere and sometimes struggle to explain to those outside our field just what’s so important about what we do.  The power industry, in particular, suffers from this phenomenon, which is in partly why the Smart Grid Consumer Collaborative was established – to help power utilities engage and communicate better with consumers.  And to help everyone talk to each other – technology vendors, consumer advocates, and consumers, about the changes taking place.

In the weeks ahead I’ll be working to take the issues associated with grid modernization – smart metering, dynamic pricing, utility capital investment, consumer choices around utility programs and home technologies – to a broader audience of laypersons. As approached this challenge I want to share my thinking around “how to talk to consumers.”

I welcome feedback from anyone with something practical to add to the following thoughts.

First, assume no specialized knowledge on the part of the consumer. Busy lives dominated by family needs, work and the pace of modern life often means that electricity is taken for granted. Flip a switch and it’s there. Our 20th century success in making electricity convenient, more or less reliable and affordable means that grabbing attention – just getting electricity to be properly valued – is a challenge. We’ve got to speak to consumers in terms they care about. In order to do that you have to ask questions or know something about them.

Even so, our research shows that nearly everyone cares about outages. For instance, it sometimes seems as if half of Americans know that when their power goes out they need to call the utility. The other half may not know this and can’t believe that’s the case when you point it out. Telling both sides about the outage detection abilities of smart meters might take different forms, but we might begin by asking whether they’ve been inconvenienced by an outage, and for how long.

Second, that brings us to “pain points.” If your audience is in a state along the Eastern Seaboard, ask how they were affected by Hurricane Sandy. Brace yourself! You might get a relieved “we were lucky, the outage only lasted a few hours.” But you might get an epic tale of woe from someone whose community lost power for a couple weeks. What, exactly, did they suffer through? Loss of life? Cold nights? Hot days? Spoiled food? Lack of information? Unable to get to work or back home? If a recent outage in a suburb of, say, Omaha, only cut power for an afternoon, did that impact the ability to charge a smartphone, make an appointment on time? Those pain points can frame your access to an engaging conversation.

Third, know your audience and, if necessary, ask questions to determine their knowledge. Then you can properly gauge the level of information they might find useful. I hear many people in the power industry who think they know what their consumers want or need, in terms of information or utility programs. But SGCC research, to cite one of my favorite examples, has often shown conventional wisdom to be flawed. Don’t assume you know your audience until you’ve actually studied them through surveys or polls, examined the research out there, or met with them via focus groups. If you don’t really know your audience/consumers there is a good chance your assumptions will be wrong.

Fourth, I think it’s good to connect the dots for people. Ask about and understand their pain points and ordinary, individual concerns about electricity’s reliability, affordability and so forth. But it’s always good to relate individual concerns to the large societal issues to provide context and sometimes that aha! moment. For instance, those smart meters they’ve vaguely heard about. Sure, they help the utility detect when power is out at their house. But do they know that advanced metering systems help utilities operate more efficiently and, therefore, with a lower environmental footprint?  That they will be empowered to manage their electricity budget and see their usage details if they want to?

Finally, right now, we know that a handful of motivations describe the predominant attitude of the broad swath of consumers. Again, a question or two will reveal whether a person is most concerned about saving money, preserving the environment, eager to adopt new technology or just wanting simplicity. That helps us understand how to craft relevant, intriguing and impactful messages that can engage and empower consumers as their utilities and even third parties offer them new programs and technologies.

Just a few thoughts. Let me know yours. 

Monday, May 13, 2013

SGCC’s new pricing fact sheet: serving both sides of the meter

By Patty Durand, Executive Director, SGCC

As many of you know, the Smart Grid Consumer Collaborative’s members and staff work hard to serve “both sides of the meter.” That is, the SGCC is helping power utilities engage their customers in new and dynamic ways, while providing consumers with information to understand how they can interact with the new landscape of a digital electrical grid.

The predominant model of monopoly utilities serving captive customers underlies a societal compact in which the consumer enjoys safe, reliable, affordable power. This social compact includes financial and environmental constraints on their utility’s ability to deliver that service.

For example, as utilities strive to meet peak power demands, particularly on hot summer afternoons, they can now offer customers ways to help without the utility investing money in inefficient, peak-only power plants. How? By encouraging consumers to enroll in dynamic pricing plans, which provide customers with incentives to use energy wisely and efficiently as well as minimizing their power demands at the peak of the day.

To aid both utilities and their customers in this evolving relationship, the SGCC has now made available its new power pricing fact sheet,
“Become a Smart Power Consumer.” This is the fifth in our consumer education series that also produced fact sheets on myth-busting, data privacy, consumer benefits and radio frequency-related science.

This new fact sheet on pricing conveys, in simple graphics and straightforward prose, how electricity is generated, transmitted and distributed and why the cost of doing so varies. Most of us are accustomed to paying a flat rate regardless of the timing or amount of electricity we use. This fact sheet helps everyone learn more sophisticated ways that our digital age allows for harnessing electricity in ways that save money, avoid waste, and enjoy the same comfort.

We are in a transitional phase in which re-examining that societal compact means closer cooperation between a utility and its customers. I’m confident that Americans who learned telephone pricing plans based on network capacity can shift to home energy pricing based on timing, quantity and cost. It’s no different.

Our new fact sheet is designed to help utilities explain to their customers the basic concepts of dynamic pricing, while providing those customers with the exact same information to help them make informed choices. The beauty of this approach is transparency, which promotes open dialogue and trust on both sides of the meter.

Please share the pricing fact sheet with colleagues, family and friends. Your utility may already offer several pricing plans and choices or will do so

Separately, I’ll be participating in a
U.S. Department of Energy workshop in Golden, Colo., on May 21, to help finalize the DOE’s Customer Engagement Guide. The DOE has asked the SGCC to own this document going forward. (Click on the link – we need more utilities to attend.) And I’ll deliver a keynote address at the Muni Smart Grid Summit on June 3 on “Successful Consumer Engagement Practices & Strategies for Utilities About to Deploy Smart Meters,” based on our recent report, “Smart Grid Customer Engagement Success Stories.”

I’d also like to call your attention to the pending launch of SGCC’s new, consumer-facing website, coming this summer. It will provide a destination for consumers who want to learn more about home energy use and grid modernization. We’re in the midst of designing its look and feel. The navigation should serve the public based on their motivations and needs. Looking to save money on your utility bill? We’ll provide best practices. Do you care about environmental sustainability or climate change? We’ll explain how a smarter grid addresses those issues. I am most excited about a portal for consumers to upload their own You Tube videos for testimonials on what they like about their utility’s programs or pricing plans or anything related to a smarter grid. We want to provide a place for consumers to see what others think who are excited about the positive aspects of grid modernization.

In short, the SGCC is on a roll. I look forward to sharing more news of our progress with you soon.

Friday, May 3, 2013

SGCC and DOE working to complete Customer Engagement Guide

By Patty Durand, Executive Director, SGCC

I’m delighted to announce that the U.S. Department of Energy is holding a final in-person workshop to complete its draft of the
Smart Grid Customer Engagement Guide, which should be finalized in the weeks that follow the May 21 meeting in Golden, Colo.

Please note that
registration for the workshop closes on May 14. The power industry, its customers (that’s all of us) and the nation will benefit from having the widest possible expert input into the document.

As the DOE notes: “The success of the smart grid will depend in part on consumers taking a more proactive role in managing their energy use. A best practices guide will provide utilities with successful approaches to engaging customers along with parameters and guidance for measuring the effectiveness of customer engagement programs, filling a real need of utilities and regulators alike.”

I’m urging smart grid stakeholders to send representatives to the workshop to share their real-world experiences to make the Engagement Guide as practical and useful as possible to the widest swath of utilities and their customers, here and, potentially, abroad. After all, the draft document is titled, “Voices of Experience.” Speak up and share your knowledge!

We at the SGCC are in full support of the initiative and the DOE has asked us to take ownership of the document once the Engagement Guide has been published. This is welcome recognition that we have earned a high degree of credibility in our work of three-plus years through our deep and diverse membership, published research and outreach to the power industry’s array of stakeholders. In 36+ months, the SGCC, driven by its members and staff, has become the premier organization linking those stakeholders in a common cause.

For all our members and supporters, you should be proud. This is a significant milestone in the SGCC’s mission “to be the trusted source representing consumers, advocates, utilities and technology providers in order to advance the adoption of a reliable, efficient and secure smart grid and ensure long-lasting sustainable benefits to consumers.”

It’s important to understand that the Engagement Guide has been developed by and for the power industry to help individual utilities to inform and engage their customers about home energy management in an era of grid modernization. The May 21 workshop will complete a process that’s been underway since 2011. The DOE has facilitated this effort for obvious reasons: the American people need to understand the changes in power delivery to their homes involving meters, pricing, reliability, privacy and other issues, and grid modernization’s connection to the nation’s security and economic health. 

Participants in the one-day workshop in Golden will receive the current draft of the Engagement Guide and be asked to assist by adding their real-world experience to craft the most useful document for their power industry peers. The workshop format will include small group discussions on specific sections of the guide followed by “report outs” to the larger group. I look forward to participating in the process and hope you’ll join me.

The goal is to release the guide at the
National Town Meeting on Demand Response and Smart Grid, July 9-11 in Washington, D.C. The SGCC will also introduce the Engagement Guide to its members at its annual members’ event in September, date to be announced.

Whether you’ve been directly involved or not, when you see the Engagement Guide, you’ll instantly recognize its value. It provides practical, how-to direction on organizing and implementing a utility-based customer outreach program that can be tailored to specific circumstances, based on solid research and real-world examples of successful practices.

Let me close by saying how excited I am that this much-needed resource for the power industry and its hundreds of millions of customers is close at hand. Please join us on May 21, if you can.

Monday, April 22, 2013

Busting Five Myths About the Consumer

By Patty Durand, executive director, SGCC

A myth, according to Merriam-Webster, is variously “a popular belief or tradition that has grown up around something or someone,” “an unfounded or false notion” and/or “a person or thing having only an imaginary or unverifiable existence.”

Obviously, the consumer is not a myth – we’re all living proof. But, for some reason, how the consumer perceives, thinks and acts in a given circumstance – such as considering the smart grid – has acquired mythic qualities.

One of the core missions of the Smart Grid Consumer Collaborative, of course, is to use bona fide research to understand how and why consumers actually think and act as they do. Over the past three years we’ve developed a lot of insights into consumer perceptions, motivations and behaviors and, thus, we’re in a position to bust the most common myths about the consumer.

Here are a few consumer myths, in no particular order, that are often repeated without supporting evidence. I’ve tried these out on conference audiences to gauge the reaction and see how deeply embedded these myths have become. The answer: very. That’s unfortunate.

Myth # 1: Consumers have all heard about “smart meters” and “smart grid” and they don’t like what they hear. The industry should drop those terms.

Busted! SGCC research shows that about half the American public has not heard those terms and have not made associated value judgments. Another 25% have heard of the terms but don’t know what they mean. Of the remaining 25% who say they have a basic or complete understanding, the vast majority like what they hear and support smart grid technology investments.

Myth # 2: Consumers aren’t interested in time-of-use (TOU) rates. They only want flat rates.

Busted! SGCC research clearly establishes significant consumer interest in dynamic rates such as TOU. Consumers who’ve participated in TOU pilots report a high rate of satisfaction with their experience.

Myth # 3:  Consumers don’t care about their energy consumption and management. The power industry should confine itself to distribution automation – i.e., grid modernization work that’s invisible to the consumer.

Busted! Our research shows the vast majority of consumers are interested in where their energy comes from, how it’s transmitted, used and managed, and want to know more.

Myth # 4: Consumers only care about grid modernization if it saves them money.

Busted! The surprising truth, revealed by SGCC research: the top reason consumers are interested in smart grid is its ability to integrate renewable energy. The second reason for smart grid interest is a more traditional concern: it facilitates fewer outages and faster restoration when outages occur.

Myth # 5: Consumers who have heard of “smart grid” have a mostly unfavorable view.

Busted! Actually the majority of consumers familiar with the term “smart grid” holds a favorable view. And research shows that consumer favorability grows when good information is presented on the intended benefits of grid modernization.

An often repeated myth is that consumers only spend five minutes a year thinking about electricity. This myth is used to foster the belief that utilities should do nothing to engage consumers because consumers just don’t care about electricity. That myth is a distortion of an Accenture study – the actual study said that consumers spend only five minutes a year interacting with their electric utility bill.  That is an unfortunate distortion of the truth of that Accenture study. People do care about energy and electricity regardless of how much time they spend thinking about their utility bill (which is usually difficult to read).

The source for all of these myths is SGCC’s Smart Grid Consumer Pulse & Segmentation Study. This study is a quantitative survey of over 4000 U.S. residential consumers and has a 95% confidence interval. I encourage you to go to our website and review it: (Simone insert link to Pulse 3 summary here).

We often love to pontificate on what we think we know. But let’s agree to spend equal time on the actual facts as revealed by careful studies. Next time you hear someone making pat statements about consumer behavior and the smart grid, ask politely for a source that supports it. It’s time to separate what we think we know from what we can say with authority because it is the result of bona fide research.