Time-varying rates is an effective way to satisfy customer demands.
Chris King is Global Chief Regulatory Officer, Siemens Smart Grid. Bonnie Datta is Senior Consultant, Regulatory Affairs, Siemens Smart Grid.
The electricity industry is in a new, disruptive age, one where, per McKinsey, "the former passivity of customers has been superseded by a desire to fulfill their own talents and express their own ideas, feelings, and thoughts."1 The modern consumer has choice in almost all aspects of daily life - start with the humble morning coffee that can be ordered in tall, short, skinny, decaf, flavored, iced, spiced, or as macchiato or frappuchino. The average American supermarket in 2013 carried 43,844 items!
In contrast, the average electric utility offers one residential rate - though many utilities are now starting to leverage their smart meter investments and offer time-varying rates (TVR). We have found the most successful residential programs to be those that enroll customers via an opt-in approach.
Driven primarily by innovation in technology and changing societal values, choice has extended to areas that in the past had few or none. Think smartphones, social media or the rise of the new sharing economy. The Internet has made customer choice as simple and as powerful as the click.