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Bringing Customers On Board, part II

The entire utility-consumer relationship must be reengineered.

Fortnightly Magazine - August 2010

of economic growth isn’t sustainable, nor is its energy demands or pollution levels. China is diligently focused on multiple alternative and green energy projects, even while topping the list of global GHG emitters. 1

U.S.-regulated utilities also face pressures, including renewable portfolio standards, energy conservation regulation, and general business pressures to improve operations and customer satisfaction.

It should also be recognized that many regional and local electrical grid improvement projects are focused on technology solutions in addition to or, in some cases, in lieu of AMI solutions. While AMI is considered a building-block platform and infrastructure to implement many advanced functions and capabilities for utility operations, AMI is a primary conduit that involves the end consumers and relies upon customer participation to realize AMI business-case benefits.

Representative smart-grid projects focused on enhancing the reliability of the U.S. national electric grid that don’t necessarily rely upon direct customer involvement include:

• Expanded transmission systems to accommodate remote, variable generation sources;

• Distributed energy storage;

• Super-conducting high-voltage direct current power transmission;

• Advanced SCADA technologies;

• High data-rate synchrophasors;

• High-capacity fault circuit interrupters; and

• Installation of private data networks along utility rights-of-way.

Other sample projects that focus on non-AMI technology solutions that do involve the end consumer to a greater degree include:

• Integration of distributed generation, including solar and wind;

• PHEV integration; and

• Traditional load control.

Yet utilities still observe significant challenges related to customer adoption. A paradigm shift might be required to provide more effective strategies and approaches to engage customers.

Radical Change Management

Many utilities have accepted that real change is required and, as a result, they’ve developed a variety of customer outreach and education programs to expand the customer relationship. This is demonstrated by the attention the subject is getting in webcasts, presentations, and other public media. Some utilities are undertaking novel efforts to engage customers using, for example, incentive programs ( i.e., a point system) whereby consumers can earn points towards rewards that fit their lifestyle. Naysayers may claim that direct cash rebates or monthly bill reductions should have the same overall effect. Unfortunately, this assumption assumes a one-size-fits-all approach will be effective for all utilities and customers, which might not be true. Although it can be difficult to determine the most effective incentive mechanism (or mechanisms), such radical deviations from common approaches are welcomed and should be applauded.

Equally important is the vernacular that utilities employ to communicate with consumers—many consumers have positive associations with energy efficiency, cleantech and green energy, but also find terms like “demand response” and “critical-peak pricing” ambiguous, confusing, and sometimes even alarming. And according to a recent industry survey: 2 “Though more than two-thirds (of consumers) say they know how to optimize electricity use, only one-third know of programs to do so.” Only knowledge drives action. Utilities are aware of a broad range of issues affecting customer adoption rates for DR, conservation and efficiency initiatives (see “Customer-Adoption Checklist”) .

Yet, many utilities seem to expect significant and positive results without changing the way they approach the customer