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Selling the Smart Grid - The Pitch

Two utilities win customer support for dynamic pricing and demand response.

Fortnightly Magazine - April 2008

were able to choose the temperature settings and also received instructions on how to change or override the settings, if necessary.

Fred Lynk, PSE&G’s manager of demand-side marketing, says the company worked hard to ensure customers not only understood how to take advantage of the pricing plan, but how and when they would be alerted to the critical peak days. Educational packets customized by segment included pricing-plan information, thermostat programming guides, and other information and tips. PSE&G created a pilot website to allow participants to view energy usage, compare savings to the standard residential rate, access energy saving information, and pay bills on-line.

“We had to dedicate full-time marketing resources,” Lynk says. “You can’t add this responsibility to someone else’s job.” The company dedicated three full-time employees to the program, including the project manager; a marketing person who designed the customer offer and administrated the program on a day-to-day basis; and a billing analyst who created customer bills and dealt with billing issues. The team’s efforts were supplemented by other utility employees on a part-time basis.

Over the two-year period PSE&G regularly sent reminders that explained how to monitor and shift energy patterns; how to access energy-use data on the company’s website; and booklets with ways to save energy other than cutting back on air conditioning. The reminders were important to the program’s success, says Susanna Chiu, director of utility marketing for PSE&G.

“You have to educate, educate, and educate again. You can’t just send something out once and forget about it. You have to remind customers to cut back and do it over and over again,” Chiu explains. “Cutting back on air conditioning is important, but we also kept reminding them to do the laundry at different times and to turn off lights and appliances not in use.”

Not surprisingly, customers using the smart thermostats reduced their peak-period electrical demand by an impressive 47 percent on summer-peak days. But those notified the day before reduced demand by a still-impressive 20 percent. Overall, program participants reduced their total summer energy use by nearly 4 percent, and most customers saw lower energy bills ranging from $65 to $100 annually.

Most important—at least from a marketing standpoint—is that the pilot proved to be a hit with participants. In follow-up surveys, most said they would recommend the program to a friend or relative and they believed the environment would benefit from programs similar to myPower.

“We learned a great deal about customer satisfaction,” Chui says. “Customers responded to the opportunity to conserve and shift load when power was in peak demand. And from a technology standpoint, we also learned what it takes to operate a system like this.”

In late 2007, PSE&G took the next step in building a smart grid by announcing plans to deploy and test four different advanced metering infrastructure technologies at 32,000 residential, commercial and industrial customer sites. Like myPower, the program will allow customers to monitor energy use, conserve energy and lower their costs during periods of peak demand. The company hopes the New Jersey Board of Public Utilities will