Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to...
Integrated demand offerings could be the next generation of energy management.
the ability to reduce energy usage, so the online survey asked respondents two questions to determine the IDO impact with and without an alignment in pricing (see Figures 4 and 5) . About 50 percent of the respondents felt an IDO under current pricing scenarios would bring savings between 5 and 15 percent. Probably this reflects the ability to tailor the IDO to meet a customer’s specific situation and the ability to leverage cross program benefits through integration more effectively then if the programs were offered separately. However, the poll respondents believed the amount of savings would increase dramatically when an IDO is aligned with peak pricing. Slightly more than 35 percent of the respondents said they expected a reduction of 15 percent or greater. Industry interviews confirmed this gap, with industry leaders indicating that to achieve the maximum results from an IDO it needs to be aligned with appropriate pricing options. They indicated that alignment also must occur between the technology offered and the pricing option to assure the technology can take advantage of the pricing structure—an alignment that isn’t occurring today. Instead, EE, DR and DE programs usually are designed and offered independent from pricing and tariff designs. Aligning pricing, offering and technology builds upon the ability to address specific customer needs, providing greater savings potential over standardized programs. Pricing coupled with alignment of the technology solution offered likely will benefit customers more.
Energy savings doesn’t exist without program participation. Achieving a high level of participation will be critical to achieving the energy savings the industry will need in the future. To assess how customers might respond to an IDO, poll respondents were asked to provide one word or phrase that describes an IDO, as a means of indicating the first impression a customer might have of IDOs. Some of the most frequently mentioned responses were: “comprehensive,” “convenient,” “cost savings,” “ease of access,” “ease of use” and “one-stop shopping.” All of these are positive impressions that would encourage customer participation. These responses are consistent with the findings of other customer research conducted by EcoAlign, a strategic marketing agency. (See, for example, the results of EcoPinion survey reports, available online at www.ecoalign.com.)
The survey also asked participants to define one or two words that were the drivers for creating an IDO. The most frequently cited driver was “energy cost.” This was followed by “carbon” or “climate change,” and “regulation” or “legislation.” This shows the importance of both noticeable cost savings and policy issues in moving IDOs forward, and aligning these with customer expectations.
Technology and AMI/smart grid were mentioned as enablers rather than drivers for an IDO. This view was supported by industry interviews. Industry experts felt that technological advances in demand management were being pulled by rapidly changing energy demand-management needs, rather than driving new solutions. Responses suggest technology eventually will catch up with the changing demands. This view might now be changing since Google, Microsoft and GE have entered the market and plan to offer significant new products and services. Their success or failure