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.