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, www.WhatIsSmartGrid.org, 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.