(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Bringing Customers On Board
Realizing the benefits of smart meters.
The voice of the customer—often passive, but always powerful—has been part of energy providers’ strategic planning and program implementation initiatives for years. Whether through new rate- plan pilot programs, focus groups, or boards of directors representation, customers have expressed their concerns rationally and emotionally about commodity-price fluctuations, rising commodity prices, relative lack of control over consumption, and demand for renewable energy coupled with less reliance upon petroleum-based fuel sources.
Advanced metering infrastructure (AMI) and smart metering hold the promise of tangible cost, quality, and service improvements, but to realize those benefits, the customer will need to accept a new role by not just speaking out, but engaging with the utility and taking positive action. End users will have to move beyond passive input and take an active role in defining requirements for new and improved services, influencing operational improvements, and participating actively in programs and services that lead to improvements—all of which requires a change in long-established patterns of behavior.
Utility companies have been under pressure to address energy efficiency through AMI and smart-grid technologies. The implications of this shift create new mandates for utilities: to conduct strategic planning in an environment marked by patchwork legislation and non-integrated regulatory policy, to manage declining resource skill sets to address the demands of changing demand profiles, and to evaluate investment challenges for power portfolio diversification.
Rate cases submitted to public utility commissions often focus on operational improvements, but that focus typically is on low-hanging fruit related to reductions in infrastructure and overhead costs associated with manual meter reading and outage-management service operations. Some rate cases go a step further and suggest that technology improvements will add value through detailed data analysis that supports optimized grid control and improved load management, or through reduced commodity pricing for customers using demand-response programs.
The ideals and objectives are solid. It is timely and appropriate to advance them to improve customer service, utility cost structures, and the future viability of today’s utilities. Utilities must continue to drive operational improvements to meet regulatory, customer-initiated, and competitive challenges.
But action is required on both sides of the equation. The customer has a role to play, and utilities must educate the customer about new rate programs and the steps both sides must take to realize the benefits. Utilities should provide business intelligence portals to facilitate customer analysis. In fact, the utility has an obligation to make consumption information available to facilitate customer decision making and to drive customer interest, adoption, and behavior. On the other hand, customers must learn how to use these new tools, interpret data, participate in energy conservation and load-shifting activities, and understand the value that AMI brings.
Simply stated, utilities must re-engineer the customer’s perception of the utility relationship—in effect, re-engineering the customers themselves. The smart-grid value proposition cannot be achieved by the utility alone,