(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.
and customer-led functional and technical requirements. Although some vendors are moving more quickly than others, some early solutions only address partial functionality. Although these companies devote substantial resources to the development of future release schedules and roadmaps, utilities need to balance investments and schedules by considering the effect of waiting for standard integration offerings against the pros and cons associated with custom development approaches.
Given the complex nature of system implementations and the broad effects they can have on company operations and customer experiences, many utilities should consider the value of allowing technology and process changes to settle and prove themselves before moving forward with implementation of demand-response programs and additional technologies such as home-area networks and load-control devices. Taking smaller, focused steps toward full transformation and building upon early successes can yield better results than implementing a larger number of designed solutions that ultimately may not work in an integrated fashion. Unless it works flawlessly, an all-at-once approach actually may substantiate customer fears and fuel negative customer perceptions of the program. Additionally, the utility may experience increased, yet avoidable, costs due to unproven integration and execution issues.
The utility should make the transition for the customer as simple and effective as possible. If something isn’t easy, people often take the approach that it isn’t worth the effort to learn and participate. This is exactly the kind of reaction that should be avoided—otherwise the utility and the customer will not be able to realize the purported benefits that AMI and smart-metering programs are designed to achieve.
Seven demand-side program-management design points should be considered as part of any implementation. Each will have an impact on the level of customer adoption.
• Rate design : Rates will become more complicated and customer inquiries likely will increase. Effective communication programs and scripted scenarios for customer-service representatives should help customers understand the objectives, format, and design of rate programs. Rate structures like peak- time rebate that provide incentives for participation through reduced commodity charges during demand-response events and discounts for smart-device installations can motivate customer participation. Penalties for non-participation should be reflected in higher energy charges, not as fees for not installing load-control devices or device overrides.
• Communications: The frequency of updates and selected communication mediums must be clearly planned for. Value propositions must be clearly understood. Pricing structures must be easily comprehended. Demand-response events need to be easily communicated and executed.
• Enrollment: Although three primary options for program enrollment exist (mandatory enrollment, opt-in enrollment, and baseline enrollment with opt-out participation), only mandatory enrollment or baseline enrollment with opt-out capability provides the largest pool of candidates to participate in demand-response programs. Opt-in programs require the utility either to take a passive position of customer education with reliance upon customer inquiry and action, or to enact a formal sales campaign to identify prospective candidates, contact them, and recommend enrollment and participation. This approach likely will cost more and take more time.
• Benefit quantification and general support : Customers need reinforcement of the benefits to continue in these programs. Real-time consumption and