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.

Monday, April 15, 2013

United Kingdom all ears on consumer engagement

By Patty Durand, executive director, SGCC

I traveled to London last month with two SGCC members for meetings with stakeholders on the United Kingdom’s mandated rollout of smart meters in 2014-2019. The contrasts and similarities between the U.K. and the United States made for really interesting insights.

The U.K., like the U.S., has embarked on grid modernization, including educating and engaging consumers. Stakeholders in the U.K. would like to use best practices to meet the latter challenge. The stakeholders we met with – representing government, industry and consumers – expressed concern about the acceptance of smart meters and possible consumer backlash regarding privacy and health issues. Their anticipation of these issues and interest in addressing them prior to rollout was refreshing, considering the U.S.’s mixed record. I was pleased that the U.S. is out in front on smart grid consumer engagement and that another country was interested in what we had learned.

Contrasts were many. The U.K. government has mandated the installation of smart meters – without providing funding – for the efficiencies and consumer interaction with dynamic rates the technology enables. U.K. consumers navigate a competitive retail electricity market and choose their electricity provider.  These retail providers bear responsibility for consumer acceptance of the new meters.

Two big differences between the U.S. and U.K.: about 50% of residential electricity meters in the U.K. are installed inside the home, often in cramped, out of the way places, such as under stairwells. That will create a challenge as retail providers must make an appointment for the consumer to be home for the meter change-out.  

Also, U.K. consumers receive estimated monthly bills, which are “trued up” with actual readings only once every two years or sooner if the customer requests. With a digital meter, consumers will receive accurate electricity bills immediately upon installation of the digital meter

These differences seem large to me – in fact, at times seemed insurmountable. However, in terms of civic mindedness and attitudes towards government, British citizens may have a greater tolerance for and willingness to participate in government mandates than in the U.S. While they don’t have a choice – the meter rollout is a mandate, the fact is that mandates for a good reason are likely to be more acceptable.

The U.K. rollout, however, faces several challenges. The use of estimated bills and “invisible” meters appears to make consumer education almost more important here as the education gap is greater, though an end to estimated bills is considered as a smart meter benefit.  With estimated bills, however, the U.K. consumer rarely if ever encounters “bill shock” at month’s end as U.S. consumers sometimes do, and, currently, has little incentive to manage electricity use and assess the results. Indoor meters mean that one strong argument in the U.S. for meter safety – that the meters are mounted outside on a metal shield – is lacking in the U.K. It appeared that little consumer research has been done, though our meetings confirmed that such work is in planning.

One retailer,
E.on UK (8 million electricity and gas accounts), has begun offering smart meters on a voluntary basis as a competitive advantage, touting its service and choice in energy programs – but uptake has been slow. The cost of the new meters will be rolled into monthly electric bills over time.

Our delegation’s meetings with stakeholders in London established that there is strong interest in learning any applicable lessons and best practices we could offer. That was a heartening realization: despite the challenges we face and the uneven record of U.S. power stakeholders in educating and engaging consumers, we have conducted valuable research and can cite numerous, effective outreach programs.

My role included presenting our current
“Consumer Engagement Success Stories” report (detailed in past blogs and on the SGCC website) that documented four exemplary utility programs, the seven common steps they employed as best practices and our customer segmentation studies. Lisa Magnuson, senior director of marketing and brand programs at Silver Spring Networks, described the recent launch of by a coalition (including SSN and SGCC) to promote energy literacy. And Barbara Leary with Florida Power & Light, detailed how FPL has tackled the challenge with its Energy Smart Florida campaign.

I am proud and was pleased to offer the benefit of our work and experience here in the U.S. to our colleagues “across the pond.” But the sobering truth is that, while we’ve defined and, in some cases, met our own challenges, we have a ways to go, on both sides of the ocean. 

Monday, April 1, 2013

Smart Meters and the Fourth Amendment

By Patty Durand, executive director, SGCC

I attended GreenTech Media’s Networked Grid event on March 20-21, northwest of Los Angeles, where an incident occurred that may require the power industry’s attention. (Of course, the conference overall was informative and constructive.)

At an evening reception on March 19, I chatted with a woman who asked me about health and safety risks from smart meters and cited the Fourth Amendment in the Bill of Rights, which guards against unreasonable search and seizure.

I responded that smart meters are safe and not instruments of privacy invasion. I offered her
an SGCC fact sheet on the matter; she declined.

(The link above is to an SGCC smart grid FAQ. The SGCC also offers fact sheets on
consumer benefits, data privacy, smart meters and radio frequency emissions.)

The next day, I recognized this woman among a handful of protestors who apparently registered for the event as students and who proceeded to disrupt a panel on scaling intelligent distribution grids. The protestors shouted loudly about “bias,” “safety” and “forcing people out of their homes,” according to my notes. They were escorted from the room. Outside the venue, perhaps 30-40 people were involved in a related protest march. I had experienced related activity last October at GridWeek 2012, where a radio frequency emissions expert and a data privacy expert were prepared to answer questions from anyone, including the protestors.

At the risk of providing a platform for people who charge, without evidence, that smart meters are dangerous to human health or the instrument of Big Brother, I wonder whether the power industry is doing enough to counter these falsehoods. While I understand the desire to avoid undue controversy by raising the issue or by paying attention to people who seem impervious to factual information, research conducted by the SGCC would appear to underscore the alternative risks of remaining silent.

Our research shows that fully half the American public has never heard of “smart meters” or “smart grid.” In fact, the general public’s perceptions on these topics are a blank slate. The good news is that when people are informed about the implications of grid modernization for greater energy efficiency, reduced frequency and duration of outages and home energy management, they tend to be receptive and positive.

While many if not most utilities that are deploying smart meters or adding intelligence to their grids provide solid information on a Web site and/or make aggressive outreach efforts to educate  their customers, much of what reaches local, even national headlines are the wild claims of opponents.

In short, that blank slate is getting plastered with graffiti and my question is whether the power industry as a whole needs to step up its game in this regard and/or put forth national spokespeople who can provide solid, factual information to compete with the baseless negativity.

Certainly there are legitimate questions from decent people simply seeking reassurances that smart meters and smarter grids are safe and provide value. Data privacy and security are bona fide concerns, as are questions about who pays, why and what value can be expected as a result.

For its part, the SGCC has posted a
“Myth Busting” video on YouTube for industry stakeholders to use – it’s not just up to the utilities alone to inform the public. We’ll soon post a “Pricing Plan” fact sheet on the SGCC website to give stakeholders a sense of how to manage and benefit under a dynamic pricing offering. 

As the SGCC’s executive director, I’m taking this message far and wide this year. My next speaking engagement will be tomorrow at the Smart Grid Road Show on April 2-3 in Scottsdale, AZ, on the topic, “Understanding Consumer Awareness of Smart Grid.”

I welcome your thoughts on today’s thesis and how best to provide factual information to a public that remains largely unaware, but potentially susceptible to misinformation.