Monday, February 29, 2016

2016 State of the Consumer Report Webinar Highlights

This past week Nathan Shannon, SGCC’s Deputy Director, and Joe Paladino, Senior Advisor at the U.S. Department of Energy, came together to present the findings of the 2016 State of the Consumer report on an SGCC Research Brief webinar. Together, Shannon and Paladino articulated the Six Key Themes that define today’s smart energy consumer.

Shannon explained that this sixth edition of the State of the Consumer report builds off of the findings of more than 5,000 consumer surveys as well as the U.S. Department of Energy’s Smart Grid Consumer Behavior Studies in an effort to better inform stakeholders as to how consumers are engaging with grid modernization efforts. While Shannon and Paladino took a deep dive into all Six of the Key Theme, I will highlight three of them below.

Kicking off the discussion, Shannon extrapolated upon Theme One of the report, Consumers Are Seeing the Benefits of Smart Grid. Prefacing the conversation, Shannon explained that while the relative awareness of the terms “smart meter’ and “smart grid” still remains low, consumers are actually seeing the benefits of the modern grid. Through SGCC’s Consumer Value Proposition–which found that consumers see cost savings, environmental benefits, and reliability improvements as the three strongest benefits of an advanced grid–Shannon explained that more than 90% of consumers are actualizing these benefits without fully comprehending the totality of the smart grid. Additionally, Shannon explained that based on SGCC’s Wave 5 Consumer Pulse research, consumers’ perception of utility performance has improved in recent years across almost every category. Summing up Theme One, Shannon blatantly stated that “regardless of their awareness for the “smart grid,” stakeholders are communicating to us that they are seeing the benefits of the modern grid.”

Transitioning to Theme Three, Paladino explained that Utilities Need to Show How They Are Acting in Consumers’ Best Interests to Increase Trust. Narrowing in on a single case study to help explain the theme, Paladino highlighted Sacramento Municipal Utility District’s (SMUD) Energy Department funded Consumer Behavior Study. Explaining how simple things such as singular word choice can work to sway a consumer’s mind, Paladino explained that SMUD diligently worked to tweak their advertisements. Words such as “choice” and “savings” resonated better with consumers than “critical” or “emergency,” which lead to overarching changes in the way that SMUD spoke about their programs, increasing customer participation and satisfaction. Paladino also explained that typical utility jargon resonates well with engineers and scientists, but falls on deaf ears for consumers, making the case for precise and consumer centric wording in all communications materials.

Jumping ahead to Theme Five, Paladino & Shannon took the stage together to explain that Consumer and Industry Experience Indicate a Path Forward for Smart Grid-Enabled Pricing Programs. Paladino explained that time varying rates represent an opportunity for energy providers to better correlate the demand for electricity with the price of electricity, but only recently–since the implementation of smart meters–have we had the opportunity to address consumer concerns as they relate to these rates. From there, Shannon explained that SGCC research has shown that consumers are willing to participate in time varying rate plans, primarily when the rate plan limits their financial risk. Shannon further illustrated this point by explaining that average peak demand reductions for customers on a Critical Peak Pricing plan are almost twice as high as those for customers on a Critical Peak Rebate plan.

After explaining all Six of the Key Themes, Shannon, Paladino, and SGCC’s Research Coordinator, Bridget Meckley, came together to take questions from the audience. Here are the best few:

Q: Was there a lot of “push back” from customers in the opt-out studies that you talked about being successful for the Energy Department Consumer Behavior Studies? 

A: Paladino: No, what we really saw was that energy provider who utilized all of their resources to explain the benefits of TOU pricing to their customers were extremely successful. What it came down to was the quantity of resources (finances) a utility used to communicate with their customers throughout the rollout. 

Q: Why do you think the adoption of smart energy technologies is low among SGCC’s Green Champions Consumer Segment? (Related to Theme 1)

A: Meckley: Many green champions choose to reduce energy usage through their specific actions such as turning off their lights, regulating their HVAC, etc.  As many of these consumers already have an understanding of the principles of conservation, they may be less reliant upon new technologies to improve their energy efficiency. This puts an emphasis on the need to communicate better with those cognizant of their energy usage and explain that their energy providers (and the new technologies they are offering) are actually there to help them meet their core values. 

Q: How does messaging strategy differ for opt-out vs. opt-in programs? 

A: Paladino: It takes a lot of effort to get somebody to volunteer (opt-in) for a new program, while an opt-out program utilizes fewer of an energy provider’s marketing, advertising, and outreach resources, translating to a financial savings. Blatantly put, it’s more cost effective to run an opt-out marketing campaign than an opt-in. 

As this was just a snapshot of the webinar, to learn more about the Six Key Themes identified in the 2016 State of the Consumer report, I encourage you to download the executive summary (or the full report for SGCC members), and watch the recording of the webinar to hear the full discussion at length.