Monday, December 8, 2014

Engaging consumers: there is an app for that

By Patty Durand, SGCC Executive Director

The question about how to influence and motivate consumers takes on new meaning in the age of Smart Grid. We know that utility programs to reduce peak load and overall electricity use would greatly benefit by broader customer participation. So one fundamental question is: What motivates consumers to change their energy use behaviors to match the grid’s needs while benefiting all stakeholders? 

One concept is to make the engagement process fun, meaningful and informative. Thus the purpose of our recent SGCC Thought Leadership webinar, “Cool Things the Smart Grid Enables.” And that’s also the aim of U.S. Department of Energy’s app contest, “American Energy Data Challenge” – which is to make electricity use data meaningful to consumers so it inspires new behaviors and new engagement. In fact, two of our four webinar panelists have won recent U.S. DOE recognition for their work.

Here is a snapshot of the four innovations featured on our webinar:

Cole Herschkowitz, founder and CEO of Chai Energy, developed an app that uses smart meter data to show the homeowner how much money he/she spends on electrical appliances per month and how much each costs to run per hour. It provides energy efficiency tips to help the homeowner reduce costs on energy-intensive uses and sends alerts if an appliance has been left on. This is another permutation of information feedback, which is an established, effective tool for behavioral change. The app runs on a smartphone and is available 24/7 on a near-ubiquitous device. Chai currently is in pilot projects.

Ron Dembo, founder and CEO of
Zerofootprint, has garnered a U.S. DOE “Apps for Energy” award. Dembo sought a means to reward participants for changing behavior in a way that affects their entire lifestyle. Zerofootprint’s VELObill platform tracks a homeowner’s energy use in real time in the context of one’s own neighbors, community and/or peer groups. It rewards the creation of nega-watts with “Good coins,” which are designed to avoid the phenomenon of saving energy in one place only to overuse it elsewhere. Good coins can be used to lower one’s own bill or be donated to charity, with subsequent uses that promote the common good. Dembo wisely noted that there’s no single solution for consumer behavior change, nor will his app work on every consumer segment.

Holland Wood, founder and CEO of Ikehu, Inc., is another “Apps for Energy” winner. Wood observed that current flat rate energy pricing is divorced from energy costs and their fluctuations. Not only do intermittent renewable energy sources drive some price fluctuations but they also add grid integration and control costs. He created a DRIVE platform (Demand Response IncentiVE) that allows a utility to reward a customer in a real-time incentive program. When a utility needs customers to curtail or increase use in a given period, it sends an offer to the customer’s smartphone. If the customer is unable to act on the offer, the utility nonetheless provides a small reward for engagement. If the customer can act and subsequent data confirms that action, the reward is substantially higher. Ikehu’s app is in the pilot phase.

Tim Johnson is founder of EnergyMobile Studios, which is creating a series of apps including Gridwatch, Powercents and others. Gridwatch is an app for utilities and consumers that shows supply, demand, emissions, and the CO2 intensity of generation sources across the grid. Powercents – the top app in Canada – is designed for Ontario’s time-of-use rates and provides alerts about TOU increases so users can shift energy use and save money. These apps also try to broaden their appeal by becoming relevant to a consumer’s lifestyle by linking energy use with core beliefs and motivations.

One audience question for the webinar panelists provides my closing thoughts here. The question was: “What has the initial reaction among utilities been to your offering?” Panelists answered honestly – the utility’s job is to keep the lights on and it is a challenge to get them interested in these apps. They’re not as concerned with ‘cool things.’ It’s not an easy nut to crack.

Conversations with California utilities, for instance, are easier because they are under a mandate to save energy and lower peak demand. The challenge is to maintain a great user experience without their being too many requirements for an app.

Utilities are very interested in integrating a rewards system to engage and incentivize customers and they’re looking into how to make an app and its behavioral changes “sticky” – i.e., persistent, and not a one-time or pass through experience.

Also utilities express some sticker shock on the cost of applying apps and utilities have questioned who pays and how.

My own view is an optimistic one. The consumer-facing innovations we have all been discussing are being here now, being created. The early pattern suggests that start-ups and legacy institutions such as power utilities will need to partner on their continued creation and implementation. We know that utilities are involved in piloting these apps and early findings suggest that the apps indeed are engaging and useful. I would love to hear the utility side of this story on practical constraints and barriers to implementation so we can learn together, and maybe make the path towards consumer interest smoother and swifter.

Monday, November 3, 2014

Net metering, consumers and utilities: a second look, Part II

By Patty Durand, Executive Director, SGCC

My topic today is a continuation of my last blog post about net metering policies in a time of transition between current utility grids and business models, and the near future when transactive energy markets come into play.

Policies for industries in transition, as electricity is today, must address today’s realities yet take into account current trends that will shape tomorrow.

After reading the position paper issued last fall by the Regulatory Assistance Project (RAP), titled, "Designing Distributed Generation Tariffs Well: Fair Compensation in a Time of Transition," and discussions with thought leaders in the energy industry, I now think that demands for reforming net metering policies are premature. My view is that the total value of DER and net metering policies across all stakeholders, now and into the near future, requires a deeper and broader discussion.

The fundamental point made in the position paper quoted above can be captured by the old saying that one size doesn’t fit all. Too many factors affect the gamut of stakeholders to make any general statements about which stakeholder is benefiting and which is being burdened. It is incorrect to broadly say that net-metering is a cross-subsidy from wealthy home-owners to middle and lower classes. Costs and benefits change based on time, location, technology, policy and other factors.

Before we look at RAP’s specific recommendations, here is a quote from the paper which nicely summarizes a call for fairness and transparency for DER and net metering policies:

“There is tremendous uncertainty regarding how and when we will collectively learn how to take advantage of the tremendous opportunities that technology offers. In short, we are in a time of transition where we can see the two-way and multi-party transactive future but we still live with legacy infrastructure and legacy institutions…

“The regulator’s challenge in this time of transition is to support policies that use the legacy systems wisely while nurturing the evolution of the systems that will facilitate the transition to a far more efficient, environmentally benign, transactive electricity sector.”

RAP makes specific recommendations regarding net metering policies and I point the reader to page 51 in the paper. Its analysis points in the opposite direction of arguments that says net-metering policies are a cross-subsidy and eroding utility profits.  The analysis calls for avoiding fixed monthly charges (which are already rolling out across the US) to address/eliminate the cross-subsidy while supposedly creating fairness for customers to pay fixed costs for grid services and variable costs for quantity of electricity consumed.  Here is their argument against all that:

“Modifying retail rate designs to collect distribution costs in a fixed monthly customer charge is not a preferred path. Rate design of this type tends to penalize apartment dwellers and other urban residents, who typically impose lower distribution costs on the utility than the average customer.”

“Setting the tail block of an inclining block rate structure at the long run marginal cost is more equitable than increasing the fixed monthly charge because it does not discriminate against low income and low volume electricity consumers, it does not discriminate against urban and apartment dwelling consumers and it is consistent with valuing the avoided cost component of DG at the long run marginal cost.”

RAP makes three other points, among many, that I would like to mention in this context.
  1. Recognize that value is a two way street. Customer-side meter resources such as distributed generation, energy efficiency, demand response and storage are resources that produce value for the electric system. Likewise, the grid offers valuable services to DG customers … Therefore, customers, the utility and third-party participants in exchanges should all be fairly compensated for the services they provide each other with due consideration of the full range of benefits and costs associated with each service delivered.
  2. Remember that cross-subsidies may flow to or from distributed generation owners. Regulators should remain objective and allow for the possibility that the value provided to all customers by DG may be greater than the costs incurred to support the presence of distributed generation tariffs. Conversely, regulators should be open to the possibility that non-participating customers may be getting less value from distributed generation than they are paying to support those tariffs.
  3. Subsidies have acquired a pejorative cast in the net metering discussion. Yet infant-industry subsidies are a long tradition ... At some point an industry becomes mature, and should compete without subsidies, but regulators should be mindful that financial assistance to prove up promising new industries is a long-established practice.

I’ll end this blog by reiterating that fairness, transparency, objectivity and a methodology for assessing DER/DG’s costs and benefits among all stakeholders should prevail. That approach is likely to have diverse outcomes depending on local factors for utilities and their stakeholders. Let’s not jump to conclusions because one stakeholder has been first to start the discussion.

If you would like to widen the debate about this, please join us for our 5th annual Consumer Symposium in San Diego on February 2, 2015. We will have a full day of presentations, speakers and discussion on the changing utility business model, the consumer value proposition, and will be releasing our annual 2015 State of the Consumer research report. Register for the event now and take advantage of the Early Bird discount rate by clicking here.  

Monday, October 20, 2014

Net metering, consumers and utilities: a second look

By Patty Durand, Executive Director, SGCC

I’ve read a good deal of public discussion recently on net metering and the purportedly unfair costs it imposes on the host utility. I hear this position echoed in personal conversations with many industry participants. Perhaps you have as well.

The arguments posited by a variety of utility-leaning parties might be summarized as follows:

When a utility pays retail or near-retail prices for power injected onto the grid by customers with distributed energy resources (DER), that payment amounts to a “subsidy” for those customers or the energy service companies that lease the DER to them. The reason given: the customer’s payment exceeds the utility’s avoided energy cost.

The spread of DER cuts into the amount of energy sold by the utility, the argument goes, and that reduces utility revenue, while the cost of maintaining the grid for all remains the same. Thus, affluent customers who can afford DER – say, solar photovoltaic panels on their home – get a break (the “subsidy”) while less affluent customers shoulder a greater burden to keep the system running.

And if the customer in question, say, leases solar PV from an energy service company, then the so-called “subsidy” flows to that third party, which is an unintended consequence of flawed policy.

These arguments conclude that utilities are treated unfairly by net metering policies and remedies are needed, and swiftly.  

As far as I can tell, these arguments have produced a disturbingly homogenous response: most industry people I speak to appear to accept these arguments at face value. And, at face value, they make sense to me as well. But because the arguments put forth so far have been utility-centric, I’d like to make a few points on behalf of a more well-rounded, long-term view that reflects the interests of all stakeholders.

After all, this blog appears courtesy of the Smart Grid Consumer Collaborative. Consumers indeed have advocates at the public utility commissions, but they tend to be devoted to traditional consumer protections. Net metering is an issue that will morph as utility grids get smarter, more DER is implemented and utility business models shift to accommodate new realities. So “getting it right” may require mid-course adjustments as we move forward.

Yet my points aren’t necessarily consumer-centric. Rather, I’d like to call attention to points being made on behalf of a 360-degree devotion to fairness and transparency for all stakeholders, including utilities and their customers, regarding net metering issues.

The well-regarded Regulatory Assistance Project (RAP) issued a position paper last fall titled, “Designing Distributed Generation Tariffs Well: Fair Compensation in a Time of Transition.” I find that RAP’s dispassionate approach goes the extra mile to be fair to utilities – and all other stakeholders as well. The points RAP makes are that at times net-metering policies can be unfair, and at other times net metering’s value to the grid exceeds the cost.  Each case must be evaluated separately and best practices for evaluating services to the grid must be used.

RAP recognizes that customer’s role will expand as technology – for instance, DER, storage and controls that create transactive energy markets – further empowers customers at grid’s edge.

Here are two central statements in RAP’s paper that are critical to a discussion of net metering:

“There is tremendous uncertainty regarding how and when we will collectively learn how to take advantage of the tremendous opportunities that technology offers. In short, we are in a time of transition where we can see the two-way and multi-party transactive future but we still live with legacy infrastructure and legacy institutions…

“The regulator’s challenge in this time of transition is to support policies that use the legacy systems wisely while nurturing the evolution of the systems that will facilitate the transition to a far more efficient, environmentally benign, transactive electricity sector.”

In my view, these statements embody an objective approach to the subject. We’ll take a closer look at a few of RAP’s specific recommendations to regulators in my next blog.  

Monday, October 6, 2014

New Innovations in Consumer Engagement

By Patty Durand, Executive Director, SGCC

SGCC’s growing body of research has illuminated the attributes and motivations of the general consumer the power industry seeks to engage.  And you may have read my recent blog, “Entergy engages low-income customers,” in which Entergy’s determination to reach their low income consumers resulted in a stunning enrollment of 4,700 low income customers.

How did they do it? Entergy New Orleans, Inc. (ENO) worked with local community groups to expand its outreach and used every conceivable means to engage low-income customers. Enrollees could select high-touch, face-to-face training, medium-touch phone training or low-touch training by mail. Online tutorials and a dedicated call center were available throughout the project for customer support. The“SmartView” AMI pilot project engaged and empowered low
income consumers to use AMI technologies to better manage their energy use and reduce their energy bills.

So last week’s SGCC Peer Connect webinar for our members, “New Innovations in Consumer Engagement,” simply reminded me that other approaches – one regulatory, the other market based – also are being actively pursued.

Our two webinar guests included Kristin Ralff Douglas, senior consultant in the policy and planning division of the California Public Utilities Commission (CPUC), and Marie Bahl McKenna, senior vice president of sales and marketing at Tendril.

As Douglas pointed out at the outset, “opportunities” might have been a better webinar title than “innovations,” and that’s fair enough, given my point about Entergy’s work with low-income consumers. Engaging consumers is not only available with magical apps, expensive software and new hardware. It can also be people talking to people about wise energy use and the intersection between what’s good for the individual and advancing the common good.

Douglas also acknowledged that “technology is driving policy.” As consumers are empowered by technology such as more efficient solar panels at falling price points, the grid and how it operates is changing.  As we’ll see in my next blog, the regulatory framework for utilities, customers and other stakeholders must change to ensure that the value of every contribution is part of the new equation.  In fact, when you combine abundant sunshine and the increasingly attractive economics of distributed generation it’s not surprising that California keeps popping up in the conversation. Douglas devoted her webinar presentation to California’s Assembly Bill 327, which she characterized as “the key to increased customer engagement.”

According to Douglas, AB 327 is multi-faceted, with two parts directly related to consumer engagement. One is
Rate Redesign Rules (R1206013), the other is Distribution System Planning (R1408013).

Douglas mentioned that opportunities created by the proceedings includes the elimination of tiered pricing and the ability to implement time-of-use (TOU) rates. These rate redesign opportunities increase these likely outcomes: 

  • Increased marketing and outreach to educate customers,
  • More customers on TOU rates.
  • More customers paying attention to their bills.

When you increase consumer outreach and education, and when consumers are offered TOU rates that incentivize behavior changes, you produce greater levels of consumer engagement. The goal is that consumer engagement should benefit the individual as well as the common good through system efficiencies, lower carbon emissions and greater fairness and transparency.

Do utilities have to wrestle with consumer engagement solutions on their own? That’s where Tendril’s McKenna and her presentation fit into the bigger picture. Tendril’s premise is that data-driven, consumer engagement platforms like Tendril’s enable utilities to provide service options tailored to each customer’s preferences which enhances consumer engagement opportunities.

I liked what McKenna said when she mentioned that “engagement” is desirable, but not the holy grail. Timely, relevant value for the consumer is the ultimate goal. And that means “markets of one” and personalized services for every customer that companies such as Tendril can provide through a host utility by crunching energy use data from a customer’s interval meter. As McKenna noted, the “21st century customer” will expect valuable service options tailored to their individual needs.

Personally, I’d add that “engagement” is a step towards motivating new customer energy behaviors that have the potential to meet utility challenges such as peak loads and greater energy efficiency. And Tendril’s work clearly shows that crunching big data can contribute to tailored service options, new customer behaviors and the resolution of current grid limitations.

My takeaway? Utilities now have a deep and diverse toolkit to inform their consumer engagement efforts. From regulatory reform to technology innovation to simple elbow grease, the means are at hand. Let’s see them put to wider use. 

Wednesday, September 10, 2014

Entergy engages low-income customers

By Patty Durand, Executive Director, SGCC

We’ve all experienced hearing a meme – an idea, true or otherwise, that travels by word of mouth – repeated again and again, despite evidence to the contrary.

There are memes in the power industry too. Here’s one: low-income power customers are difficult to engage, that they won’t be able to benefit from actively managing their power use, and therefore, won’t or can’t save money from smart grid technology investments.

Today I bring you evidence that this notion is false. We’ve already seen evidence for positive engagement with low-income customers through the
PowerCentsDC program completed in 2010 as well as via the SGCC’s own research: we issued our Spotlight on Low Income Customers II this past April to our members.

But let’s look at what’s new. Earlier this year, the International Smart Grid Action Network (ISGAN) and the Global Smart Grid Federation (GSGF) announced that they had awarded their first-ever Award of Excellence – focused on consumer engagement and empowerment – to Entergy New Orleans, Inc. (ENO) for their “SmartView” advanced metering infrastructure (AMI) pilot project. ENO earned this distinction out of more than 40 nominations from 15 countries.

What set ENO’s project apart?  Its engagement and empowerment project focused on low-income customers. I was one of 12 international jurors for the competition and we were both startled and pleased at the success of this pilot. While ENO’s project was a pilot, it involved 4,700 customers – a substantial sample size.

ENO obtained the assistance of 18 community groups and contracted with seven of them to perform outreach and enroll low-income customers in the program. The utility used its customer care representatives, TV, radio, print and Web-based media, neighborhood events, bill inserts and direct mail to reach others. One creative aspect of this pilot that I have not seen elsewhere is that enrollees had a choice of how they wished to receive training in the pilot program. They could choice between high-touch face-to-face training, medium-touch phone training, or low-touch training by mail. Online tutorials and a dedicated call center were available throughout the project too.

The pilot included rebates and incentives for enrollment, as well as for peak load reduction and control. In one program, customers were provided with an in-home display, programmable thermostats and a Web portal to provide near-real time energy use information and the means to control it. In another program, the utility incentivized participation in traditional, direct load control of air conditioning units. Peak-time rebates were a key incentive and our research shows a high interest in them from all segments of consumers.

78 to 90 percent of program participants believed the program saved them money on their energy bills and actual data put that number between 58 and 67 percent.  Moreover 90 percent of the program’s participants expressed interest in participating on a permanent basis. Those are big big numbers for any customer segment, let alone the low-income segment that, as the meme has it, is difficult to reach and motivate.

In fact, ENO’s work was not particularly innovative, which is its strength and the source of my interest. ENO demonstrated that simple, straightforward programs can engage and empower low-income customers, who in this case were motivated to manage their energy use and were highly satisfied with the experience. And, a substantial majority saved money.

ENO’s effort is easily replicated by utilities across the country and, indeed, the world. This project took place in the 2010-2013 timeframe and was supported by the Smart Grid Investment Grant program under the American Recovery and Reinvestment Act of 2009.

It’s refreshing to see ENO’s success at a time when so many AMI projects have been completed, yet lack customer engagement processes that yield long-promised, direct customer benefits – particularly for the low-income customer segment, regardless of whether it’s the general population or the low income segment.

All this is taking place in a context in which utilities are embracing remote account connect/disconnect and prepaid services as the main function of their AMI program outreach rather than consumer empowerment; and consumer advocates continue to suggest that time-of-use rates and demand response programs put low-income customers at risk. Once again, those fears have been proven to be unfounded.  

So let’s put to rest the story about the difficulty of engaging low-income customers and learn from ENO: it is possible to reach them, engage them, and empower them to save money.  

Friday, August 1, 2014

Nothing new under the sun?

By Patty Durand, executive director, Smart Grid Consumer Collaborative

I confess I didn’t learn much new about consumer advocates’ perspective on smart grid technology investments in our Peer Connect webinar series, “Conversations with Consumer Advocates.”

Fully four years after consumer issues were publicly recognized as a critical industry concern in smart grid investments, it puzzles me that these advocates didn’t address the demand response conundrum at the heart of the matter: if consumer protections are reasonable and straightforward, and utilities need only a portion of their customer base to participate in dynamic pricing and related programs to defer wasteful investments in standby capacity to meet peak demand, why aren’t these solutions taking place?

I don’t lay the responsibility for the continuing impasse at the feet of either party, nor am I criticizing our respected panelists. Perhaps the culprit is inertia – the tendency to stay at rest or continue on a pre-existing trajectory unless impacted by an outside force. Perhaps that outside force will be regulators, who could facilitate accommodation between utilities and consumer advocates.

That’s speculation. But we may see this idea tested as the New York Public Service Commission (NYPSC) proceeds to reform its power market paradigm under NYPSC Chair Audrey Zibelman, founder and former CEO of Viridity Energy, Inc., a demand response aggregator. I’ve blogged about this exciting effort, known as “Reforming the Energy Vision,” or REV. (Read my first and second blogs here.)

I believe REV is the first state level proceeding that takes a consumer-centric approach which, among other things, is aimed at reducing or eliminating the $450 million New York spends annually on capital-inefficient, highly polluting, stand-by generation to meet peak demand on only a few days each year. This expensive stand-by generation is often ignored as a concern or relegated to second place by most consumer advocates. All three panelists on our webinar oppose an opt-out approach to time of use pricing programs for fear of harming the less educated or engaged consumer, wanting only an opt-in approach. I understand the desire not to harm low-income or less educated consumers. Yet the expensive waste that is known as load-factor, or stand-by generation needed for peak demand, is never mentioned as an equal concern. These are huge costs born by consumers and quite heavily impact the rate base.

The New York REV proceeding says that consumer participation in utility programs requires products, information and enabling technology. If programs are designed properly, the expectation is that many customers will choose to take an active role in managing their own energy use. An important feature is that customer segmentation will lead to more product and program options that spark consumer interest and will motivate. Confusion and a lack of information creates a disincentive to enroll in demand side management programs, the REV report finds.

Fast forward to our recent panel of consumer advocates, which included Paula Carmody, Maryland People’s Counsel, David Kolata, executive director of Illinois’ Citizens Utility Board, and Ty Slocum, director for energy issues at Public Citizen.

They, too, suggested that, in general, service options, information and enabling technology for consumers are missing from utility-sponsored smart grid programs and investments. They called for sound business plans that share financial and technological risks between consumers and utility shareholders. And they say that time-of-use and/or dynamic pricing programs should remain strictly voluntary and opt-in, rather than opt-out.

Carmody, the lead-off speaker on our panel, added other fundamental consumer concerns established in the regulated monopoly model that must be maintained as we move to a more market-based, smarter grid. The utility ability to remotely disconnect customers for non-payment must not be abused, billing dispute rules must remain in place, consumer education must be funded and its results measured and utilities held accountable for their investments, which means no guaranteed cost recovery until performance metrics are attained. Consumer data security and privacy, particularly around smart meters, has yet to be adequately addressed.

Kolata added that broad stakeholder input is needed to guide utilities embarking on grid modernization for the simple reason that regulated monopolies have little experience with the entrepreneurial aspect of a market-based power paradigm. To be engaged participants, consumers need to see opportunities to take action and get immediate benefits in return, he said.

Slocum said that despite the technology’s promise, too many consumers simply don’t have the consumption patterns or a large enough home to take advantage of the energy management opportunities presented by dynamic pricing. Now is the time to review lessons learned against the early promises made by utilities that smart meter investments would enable bill reductions through energy management actions by consumers, he said.
All three advocates suggested that peak time rebates represent an acceptable “carrot” to modify consumer behavior to benefit utility goals of peak load reduction, load shaping and capital deferral.

Some of these arguments tend to sound a little circular. If consumer advocates resist dynamic pricing except for peak time rebates, how can they complain that options for consumer action to save energy and money are missing? I hoped to hear more about successful compromises or lessons learned regarding how traditional consumer protections could go hand-in-hand with advanced, smart meter-enabled pricing programs.

The repeated mention of broad stakeholder involvement in the development of utility-initiated proposals for grid modernization have echoed for years, seemingly without a resulting shift in each stakeholder’s position. Perhaps New York’s REV effort will illustrate how such a logjam can be broken, to everyone’s benefit.

Wednesday, July 16, 2014

EPA 111(d) and SGCC research on American attitudes

By Patty Durand, Executive Director, SGCC

A new report titled Risky Business: The Economic Risks of Climate Change outlines projected economic consequences for the United States was released in June and it’s an eye-opener for several reasons. The headline alone told me two things. First, this was a balanced attempt to assess the issue and its impacts. Second, global warming is going to profoundly impact our future with deeply negative economic consequences. The report echoed President Obama’s May 6 findings released in the third National Climate Assessment and his action plan for dealing with greenhouse gas emissions. 

Let’s examine these elements in the continuing debate over EPA 111(d), then we’ll turn to our SGCC research to connect the dots.

As the New York Times covered in an article, “
Bipartisan Report Tallies High Toll on Economy From Global Warming”, the “unusual bipartisan alliance of political veterans said that the country and business leaders in particular must wake up to the enormous economic risk” of climate change. Further:

“More than a million homes and businesses along the nation’s coasts could flood repeatedly before ultimately being destroyed. Entire states in the Southeast and the Corn Belt may lose much of their agriculture as farming shifts northward in a warming world. Heat and humidity will probably grow so intense that spending time outside will become physically dangerous, throwing industries like construction and tourism into turmoil.”

The report, as previously noted, came on the heels of the current president’s own climate change assessment and action plan, which led to his executive order to the U.S. Environmental Protection Agency to enforce new rules on greenhouse gas emissions from power plants, also known as
EPA Rule 111(d). Last week, the U.S. Supreme Court ruled that the U.S. EPA’s 111(d) rules are largely constitutional and may proceed.

Much of the opposition to the president’s executive order and the U.S. EPA’s proposed rules for power plant emissions focused on dire forecasts for a resulting, explosive rise in electricity prices. However, in a recent National Public Radio article that addressed that point, “
Will EPA's New Emission Rules Boost Your Power Bill? It Depends,” NPR concluded that generalizations are inappropriate.

“As a general rule … consumers living in areas that draw power from coal-fired plants are likely to see the biggest increases in their bills. Then again, consumers in those states already pay less than the national average. The EPA estimates the cost of compliance at about $8 billion a year but points out those costs would be offset by improvements in public health and other benefits. But because states will have a lot of leeway in how they meet the new standards, much of what electricity will cost will be shaped by what state policymakers eventually decide.”

Another recent NPR article, “States Say Cutting Down On Carbon Was Easier Than Expected,” reported the widely known fact that a coalition of nine Northeast and mid-Atlantic states entered into a mutual cap-and-trade coalition in 2005 to cut emissions. The result?

“The nine states now in the program have reduced carbon pollution 40 percent,” the reporter found. “Their economies have grown. And as for electricity bills, they went up at first but then they went down.”

Thus, the wild suggestions that electricity bills will increase “85 percent” are simply false. And, as it turns out, the implication that Americans will not support improved air and water quality in exchange for modest increases in their bills is also false. 

When Americans speak for themselves, as they do in the surveys incorporated into SGCC research on related issues, they show a willingness to pay more on their electricity bills in exchange for environmental benefits. 

Specifically, in our “
Consumer Pulse and Segmentation Research Program – Wave 4
,” published last November, the majority of respondents said they are open to rate increases to expand their utility’s clean energy sources. More than six in ten would be willing to pay $2, $5, or $15 more per month, with support evenly distributed across those amounts. More than half of all respondents said they would be willing to pay an increased amount to support an expansion of their utility’s solar energy generation.

Ultimately, Americans recognize both the immediate human health benefits and the long-term climate implications of cutting greenhouse gas emissions, and the majority are willing to pay incrementally more for clean energy to address their concerns. That’s a fact. 

Tuesday, June 17, 2014

New York, consumers and SGCC research

By Patty Durand, Executive Director, SGCC

In my previous blog, “REVing up: a consumer-centric approach to energy,” I described the new tack taken by the New York Public Service Commission, as reflected in its April 24 report, “Reforming the Energy Vision.”

The “REV” report sets out the concepts and process for revamping New York’s distribution utilities and retail markets to boost reliability, resiliency and energy efficiency by supporting customer empowerment, demand response and clean, distributed generation in a comprehensive strategy. This effort is being led by NYPSC Chair Audrey Zibelman, founder and former CEO of Viridity Energy, Inc., a demand response aggregator.

Note the emphasis being placed on “customer empowerment” –the SGCC’s raison d’être. The good news for SGCC members and energy stakeholders interested in the consumer’s role in a new retail energy paradigm: New York’s direction will bring great attention to the role and importance of consumer engagement.

As the NYPSC process calls for public discussion of issues raised in the REV report, which includes consumer awareness, engagement and empowerment, I was pleased to be invited to speak at a May 22 symposium co-sponsored by the NYPSC and the Albany Law School. Other speakers at the symposium included Zibelman, Jon Wellinghoff, former chair of the Federal Energy Regulatory Commission (FERC), Patricia Hoffman, assistant secretary for the U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, and representatives from the Electric Power Research Institute, Rocky Mountain Institute, the Regulatory Assistance Project and several national laboratories.

The symposium was titled “An Energy Agenda for the Future” and I participated in a panel on “System Challenges & Customer Opportunities.” The panel was moderated by Lena Hansen of the Rocky Mountain Institute and included representatives from the Lawrence Berkeley National Laboratory, the Pacific Northwest National Laboratory and Electric Power Research Institute.

Each panelist had 10 minutes to introduce their work, so I presented SGCC research on the megatrends affecting energy consumers as well as our findings on customer segmentation and messaging. I made sure to mention that our research established that the more consumers know about smart grid and the service improvements and options it enables, the more they like it, and that customer engagement improves customer satisfaction. Much of the panel’s Q&A session focused on our SGCC findings which was fantastic.

For readers’ convenience, the SGCC research on these topics may be found in these resources:
After the panel, I was mobbed like a rock star. I couldn’t hand out my business cards fast enough. Once the symposium’s attendees – the usual stakeholders in the energy field – were awakened to the NYPSC’s grand vision, they quickly seized on the value of the SGCC’s findings. Personally, I felt great for all our efforts as an organization over the past few years. New York’s comprehensive vision of a consumer-centered retail energy market and the SGCC’s research on consumer engagement, education and empowerment fit well together and is super exciting to me.

Although many individual utilities have explored consumer-centric programs and business models and states like Texas (and New York) have de-regulated their retail markets and other states like California have promulgated policies to drive and manage grid modernization, I believe New York may be the first state to consider a policy framework that places the consumer at the center of the picture. Their work is leading edge and will help lead the changing the utility business model across the country if they succeed.

The process in New York calls for public discussion of all the issues in the docket, which will take time. Yet the REV docket also calls for “a target for a policy decision regarding the role of utilities before the end of 2014, followed by ratemaking reforms and utility-specific implementation plans.” That is a fast-track and will ensure that the needed discussions don’t cause the process to languish.

If New York can implement a plan that’s fair to utilities and to consumers, it will have resolved concerns over the much-debated “death spiral” scenario that envisions consumers increasingly meeting their home energy needs through solar photovoltaics and efficiency and thus relegating their utility to mere backup status and an unsustainable business model. The specter of high monthly access or infrastructure fees will recede – a concern that I share with many consumer and efficiency advocates that monthly fees will reduce incentives to conserve energy.

All eyes should be on New York’s effort as it tackles the first steps in this ambitious undertaking. I urge you to read the REV plan. The vision is broad. The steps appear do-able. If it succeeds, the consumer and their wants, needs and values will finally drive the market.    

Monday, June 2, 2014

REVing up: a consumer-centric approach to energy – Part 1

By Patty Durand, Executive Director, SGCC

I’d like to share my thoughts on what I think is going to be the biggest energy-related story this year: 

New York State is embarking on a process to create a consumer-centric approach to energy provisioning that will include consumer participation in the market and encourage load management opportunities such as demand response and distributed generation.

The plan would bring massive, systemic efficiencies to the market, including the reduction or elimination of capital-inefficient, stand-by generation that costs the state’s residents $450 million annually to meet peak demand on only a few days each year.

This effort appears to be the first state-level approach to energy that goes well beyond smart grid to not only engage and empower consumers, but make them a significant market force. The plan is based on a docket titled “Reforming the Energy Vision,” or REV, released in April and written by its public service commission staff, led by chair Audrey Zibelman, founder and former CEO of Viridity Energy, Inc. (The link on Zibelman’s name takes you to a YouTube video of her talk, “The Utility Industry of the Future,” at New York University in March.)

Here’s a bit of history to place the REV effort in context.

In the wake of the devastation caused by Hurricane Sandy in 2012, New York’s Gov. Cuomo appointed Zibelman to the NY Public Service Commission in June 2013 and she was named to chair the commission in September 2013. In April 2014, the PSC staff released the REV report, which sets out both policy goals regarding the retail energy market, distribution networks and consumers and a process to achieve those goals.

The response has been overwhelmingly positive, as the NYPSC appears poised to break the regulatory logjam on policies that would keep pace with technology innovation and consumer needs.

The REV report describes the State’s desire to create a platform that will serve as a place for market based, sustainable products and services that drive increasingly efficient, clean, reliable, and consumer-oriented energy industry in which energy efficiency and other distributed resources will serve as a primary tool for meeting demand.

The REV report also outlines their plans that markets and tariffs will empower customers to reduce and optimize their energy usage and electric bills, and that will stimulate innovation and new products. These are truly exciting goals because the process is intended to result in increased customer opportunities to engage in the electricity industry.

This is additionally exciting to me because while there have been individual utilities and vendors that show leadership in addressing the need for greater consumer products & services in energy, state-level policies have been slow to react.

So let’s delve into the REV report to see how the plan addresses consumers:

1.       In the section on customer participation, the report recognizes that “a strategy for engaging customers should have three main components: products, information, and enabling technology.” The report adds: “If these elements are developed properly, many customers will choose to take an active role in managing their own energy use.”

2.       The report notes that customer segmentation should be employed to offer a diverse products and services attractive to different types of customers. “In order to animate markets, the factors that motivate customers in different segments must be identified,” the report notes.

3.       “Confusion and a lack of information regarding the factors that impact a customer’s overall energy options are commonly reported as barriers for increased demand side management,” the report finds. “Many customers do not understand the various elements of their bill, which leads to confusion and frustration regarding how and to what extent they can control their costs by managing consumption.”

4.       Thus, consumer awareness, access to data and options for products and services will lead to greater participation in demand response programs as well as utilization of distributed generation, according to the REV report.

Clearly, Zibelman’s NYPSC and its new direction align well with the SGCC’s efforts and our research. And that brings us full-circle to events subsequent to the REV report’s release.

The NYPSC’s REV process calls for public discussion of issues raised in its report and less than 30 days after its release, the NYPSC and the Albany Law School co-sponsored a May 22 symposium on “An Energy Agenda for the Future,” which held three panels to provide context for the NYPSC effort as well as to begin the process of finding answers to barriers to progress. Those panels were titled “The Global and National Picture,” “System Challenges & Customer Opportunities” and “Visions and Models for the 21st Century.”

I participated in the panel on “System Challenges & Customer Opportunities” and presented SGCC research on a number of topics. The good news is that the audience was excited to see our research and learn more. I’ll detail my experience in my next blog. Please return to read that blog, as it places SGCC and its work squarely in the NYPSC’s spotlight and, thus, at the forefront of positive change.  

Thursday, April 24, 2014

The Green Button value proposition in action

By Patty Durand, Executive Director, SGCC

Last month we held our fourth SGCC webinar of the year on “Green Button One Year Later,” and I would like to call attention to the encouraging news we presented.  If you are a member you can access it here

One of our two panelists, Chris Irwin, smart grid standards and interoperability coordinator for the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability, provided impressive numbers on the uptake of the Green Button program. The program’s initial phase, Download My Data, was launched in January 2012 and allowed consumers to obtain their energy use data from their utility, something never previously possible. And yet by the next month six utilities representing seven million customers had adopted the program. Then in October 2012, the DOE launched Connect My Data, which enabled consumers to allow a third party to receive direct access to their energy data in order to provide analytics and value-added insights on that usage. Just over a year later, by December 2013, 48 utilities representing 42 million customers had adopted the two programs. That is fantastic!

But, what do we know about actual uptake by real consumers?  Our second panelist, Karen Lefkowitz, vice president for business transformation at Pepco Holdings, Inc., said that her utility has seen a steady increase in uptake, though participants remain a relatively small percentage of its overall customer base. Five hundred customers signed up for Green Button downloads in Q1 2013 and by Q4 that number had reached 3,000. Lefkowitz noted that these are early adopters who also influence family, friends and neighbors. In other words, Pepco has planted a seed. Pepco is following up with a similar program for commercial customers to drive investments in energy efficiency and participation in demand response and peak load management programs.

Because Pepco, which operates in Delaware, Maryland, New Jersey and Washington, D.C., does not own generation and all four service areas incentivize energy efficiency to meet their goals, Pepco is in a “sweet spot” to empower its customers via the Green Button program, Lefkowitz said.

She added that Pepco encourages the development of third-party apps, which brings in another important point. It is the apps that make practical sense of Green Button-enabled data and will translate that data into insights and actionable intelligence for consumers to realize value from the program.

The Green Button page on SGCC’s consumer website, What Is Smart Grid?, has good information for app developers on how to write apps for Green Button and it provides tools and the means for self-testing those apps. While the DOE has run app contests called Apps for Energy to encourage innovation in this space, the competition is closed. The submissions show an impressive array of creativity and consumer empowerment. See the six winners and all the submissions here.

And that brings me to my final point. During our webinar Lefkowitz was asked about practical impacts from the Green Button program. Throughout the history of the power industry, she said, consumers have received a monthly bill after the fact, without a clear connection between their actions and their bill. Now, with Green Button data and, presumably, a handy app or two, Pepco customers will be empowered to determine their energy-related behavior based on data. Whether that leads them to use more or less energy or use it at different times is less relevant than the fundamental connection between energy use data and subsequent behavior, Lefkowitz said.

In my view, that is a solid foundation for consumer engagement. We continue to research consumer engagement and empowerment and, now, the Green Button and related apps are making it happen. 

I hope if you are a utility you will join Pepco and others by offering energy data to your consumer base, and I hope soon we all will access an app that is supported with energy data from our own households. That sounds like the future, but it’s here now.

Thursday, March 20, 2014

Google and Comcast deals: just business, or harbingers for the power industry?

By Patty Durand, Executive Director, SGCC

Two recent news items caught my eye and they set me to weighing whether they are true harbingers of things to come or just run-of-the-mill business news. And, if they are harbingers for the power industry, who needs to pay attention?

I’m referring to Google's purchase of Nest Labs, Inc., and its "Learning Thermostat," announced in January, closed in February, for $3.2 billion; and the news that Comcast is likely to enter the retail power sales market in Pennsylvania also announced in January. While these are two very different sorts of business deals they have common threads in that they are disruptive forces in the electric power industry.

First, Google. The company is so large, so pervasive and so deeply instituted into global life that everything it does is significant. The power industry took notice and utilities were not uniformly ecstatic when it offered Google PowerMeter software for home energy management in 2009. Utility cooperation was lacking, data privacy issues arose and perhaps it required too much attention by consumers. Google dropped the effort in 2011 and Katie Fehrenbacher wrote a good piece for GigaOm on why it didn’t fly.

Now comes Nest - as you know, Nest combines a smart thermostat with smoke and CO2 alarms so it offers the double value proposition of energy management and savings, and now also safety. Next offers Google a gadget-based relationship with a growing number of households and utilities do not need to be involved. Wired ran a good piece on what the deal does for Google – essentially, it bought in hardware design talent (Apple’s former iPod designer, Tony Fadell, leads Nest) and it brought a jump-start on the rapidly advancing business of the connected home where technology invisibly does the work of energy management.

What if consumer engagement and energy management are as simple as selling each household a thermostat that's smart and gets smarter with use? What if consumer education and participation in utility programs can be finessed by an app and cool-looking disc on your wall? What if the heavy lifting utilities are doing to win their customers' hearts and minds can be upended by these devices or, in time, a product line iteration that becomes as versatile as an iPhone within a year or two?

That's a lot of "what ifs," but not unimaginable. What are the implications for utilities? Without being critical of the power industry, and acknowledging that utilities have made great strides in consumer engagement in a very short time, I'd simply observe that no utility has the brand, heft, reach, savvy, technical know-how and ability to grab your attention that Google clearly wields. And really, few other corporations of any type have the brand recognition and reach of Google.

Thus the news only underscores the notion that utility strategy must look forward on an increasingly compressed timetable. Digital technologies are developing so rapidly that it would be difficult to overstate their likely impacts on power companies. This also underscores that utilities might need to be open to strategic partnerships with software and hardware companies and swiftly define what those partnerships should look like. In fact, it's possible to conceive that the success of an in-home smart energy management device could propel the success of utilities’ energy efficiency and demand response programs.

The other news item that caught my eye was that Comcast, the nation's largest Internet and cable provider, is exploring adding electricity sales to its TV, Internet and phone bundle, initially in Pennsylvania markets. Katherine Tweed wrote a piece in GreenTechGrid that provides background and, not incidentally, mentions the Google/Nest deal. The GreenTechGrid article carries a chart by the firm DEFG that reflects the states with retail electricity markets in the U.S. I count roughly a dozen. Pennsylvania has had a retail market for some time but the state’s public utilities commission is determined to accelerate it.

Again, faced with an aggressive, nationwide company like Comcast with nearly ubiquitous brand power, utilities must think swiftly about what their business model should look like in the next decade. With two deals like these coming in just the first months of 2014 it is probably safe to wonder what other equally eye-opening news is around the corner. It's an exciting time.

Wednesday, March 5, 2014

Muni utilities leveraging AMI ‘lessons learned’

By Patty Durand, Executive Director, SGCC

If you missed last week’s webinar on “AMI for Municipal Utilities,” I offer here a few of my own observations on the discussion we hosted. Of course feel free to listen to the archive here.

Data presented by the webinar moderator, SGCC’s Assistant Director K.C. Boyce, revealed that cooperative utilities originally (also known as EMCs, or coops) led the adoption of advanced metering infrastructure (AMI) including smart meters. Investor-owned utilities largely followed suit. And now municipal utilities are adopting AMI in greater numbers as they grasp the lessons learned by the coops and IOUs that went before them.

When asked about their AMI-related activities
in a live poll, 42 percent of our webinar participants said they had no current plans, 32 percent said they had plans underway, 16 percent had a pilot in progress and about 10 percent said that their AMI business case had been approved. Thus about 60 percent were actively pursuing AMI and its myriad potential benefits. In 2010, less than 5 percent were at this stage. That is an astounding rate of growth.

Developing a positive AMI business case
has always been fundamental to adoption, and rightly so. However, as with many smart grid-related investments, a broader view of consumer-oriented and future-oriented benefits is relevant. In this regard you may wish to review “SGCC Environmental and Economic Benefits” that we published last November. That research does a good job of documenting how a business case is made in the broadest possible sense, with the importance of consumer engagement well documented.

During our
AMI for Munis webinar, Erik Krause, supervisor for enterprise performance at the Sacramento Municipal Utility District (SMUD), described SMUD’s approach to customer engagement around AMI and smart grid. In contrast, Kent Massey, corporate technical consultant for the Electric Power Board (EPB) of Chattanooga, focused on community- and economic-oriented benefits. Both topics reflect certain advantages of the muni business model in which customers are also “shareholders”, and service to a well-defined community allows consideration of broader benefits.

Krause described SMUD’s drivers and objectives for AMI, then focused on customer engagement. Initially, SMUD sought to reduce operating costs and gain a positive return on its investment for AMI. But it recognized that AMI could provide more than revenue assurance through increased operational efficiencies and improved outage restoration. AMI represented a technology building block that enables SMUD to offer advanced services such as energy efficiency, demand response and dynamic pricing programs – all of which offers customers service options and mutually beneficial outcomes.

SMUD understood the value of effectively communicating current and future benefits before an AMI system was selected and implemented. So the utility performed “acceptance testing” of information regarding smart meters, SMUD’s customer service and its intended AMI-related messaging. For both residential and commercial customers, the core AMI message focused on its contribution to “improved service” and “more control over electric bills.”

SMUD communicated similarly with its own employees, as well as the gamut of external stakeholders, including community groups, elected officials and media. The utility explained, and it listened. The process helped reshape the staff’s knowledge and outlook, Krause said. When implementation began, SMUD communicated in five languages before, during and after smart meter installations. It trained customer service representatives and assigned some to handle “escalation” calls. Some employees served as community ambassadors. SMUD monitored social media to track and resolve issues as they occurred. Its board meetings offered the public an opportunity to comment. And it strove for transparency on challenges as well as successes.

Lessons learned, Krause said, included early development of a community-based engagement plan, the involvement of both internal and external stakeholders and the value of managing expectations. Not everyone will be happy with change, he noted.

Massey, in turn, said that EPB and the city of Chattanooga had aligned on a big picture driver for AMI by asking this question: what capabilities could it offer to a future-oriented approach to local economic development? Smart grid was seen by community leaders as a sound basis for attracting new businesses to the area to improve its economic vitality and answer that question.

Though EPB’s AMI drivers included the typical business case priorities, smart grid in general and AMI in particular were also viewed as a platform for innovation. EPB might expand its role in the community by, for instance, offering high-speed broadband to homes and businesses. And its decision to implement a city-wide fiber optic network for AMI data enabled that goal.

Thus EPB is more than just a municipal utility; it’s becoming a technology company, Massey said. That transition works well for Chattanooga and for EPB. In fact, Massey observed, “smart grid” is an elastic concept that awaits definition by each individual, municipal utility and its community, depending on local priorities.

Food for thought! Exciting times!