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Bringing Customers On Board, part II

The entire utility-consumer relationship must be reengineered.

Fortnightly Magazine - August 2010

(CPP) and peak-time rebate (PTR), as well as traditional direct load-control programs; in-home displays (IHD) and Web portals to support potential real-time pricing and consumption presentment; Web portals or home-area network gateways to support consumer business intelligence; and programmable communicating thermostats (PCT) or other smart devices and appliances to support DR programs.

Without these initial steps, the AMI business case is weakened. Expensive assets aren’t offset by realized savings and a capable grid is not as smart as it could be.

Building a smart grid means creating a smart customer, and that implies two basic requirements: First, more timely and more accurate pricing information, including both historical and real-time consumption data; and second, better decision making by customers—which won’t come about until they understand the implications of their actions (and inactions) both individually and in concert with other similarly motivated customers.

The utility has an obligation to make consumption information available to facilitate customer decision making and to drive customer interest, adoption, and required behaviours. But customers also must learn how to use new energy management tools, interpret data, participate in energy conservation and load-shaping and -shifting activities, and understand the value that AMI can bring. Without this customer education and engagement, the envisioned end-state benefits will be impossible to achieve.

In the case of AMI and smart metering, educating the customer isn’t simply about letting them know a new meter will become part of their premise; it doesn’t only take the form of a bill insert with attractive graphics; it shouldn’t include only an email or letter that explains new functionality that is available on a Web site. Consumers need to understand how energy is procured, what they pay for each month ( i.e., beyond commodity charges), what regulators are requiring of utilities, and, perhaps, personalized attention inasmuch as possible, to bring them on board.

Action is required on both sides of the equation—the customer has a role to play and utilities must help to transition consumers from passive purchasers to informed decision makers. The entire relationship between the utility and its customer base must be reengineered. The industry’s goal should be this: not only a smart utility, but also smart consumers.

The drivers for change aren’t likely to diminish much from the perspective of the utility and regulatory agencies. Fuel costs will continue to rise; the recent pullbacks in commodity prices probably reflect current regional and global economic contractions. Yet worldwide energy demand continues rising, especially outside North America and Europe. While the economic downturn provided somewhat of a reprieve to the issues associated with increasing demand, this likely is only a temporary phenomenon and the long-term need to reduce demand remains a reality.

China is Asia’s largest oil producer and second-largest importer of oil, while also tripling its coal consumption and becoming a net importer of coal. China is building the equivalent of one 1,200-MW coal-fired plant per week. Although the focus on China here is mainly to highlight the effect of increased demand on fuel costs, it should be noted that China has acknowledged that its pace