Oversell Me Not

Making the grid smart will require upgrading the system that now delivers our electricity from generating sources to our homes. New smart meters have captured the public’s imagination. These devices are designed to enable two-way communication between utilities and their customers’ loads—once utility systems and in-home appliances catch up with these capabilities—so that dryers, dishwashers and even electric cars can be programmed to respond to changing supplies and prices.

However, these meters more recently have drawn public fire, as rollout plans from coast to coast have become the focus of protest from consumer groups and public utility commissions (PUCs). Northern California’s Pacific Gas & Electric (PG&E) began ramping up a $2.2 billion introduction of the devices in 2007 in the Bakersfield area, and by fall 2009, the company had racked up more than 600 high-bill complaints. This summer, Baltimore Gas & Electric (BGE) faced unexpected PUC opposition to a rate hike requested in advance of its planned smart meter introduction. Instead, the company will have to submit its bill to the PUC, post-installation, for rate-based reimbursement consideration.

One possible reason for the meters’ change in fortunes could be the result of oversell, as news media and, possibly, overenthusiastic utility representatives have extolled features and capabilities that don’t yet exist. For example, in many cases, homeowners with the new meters don’t yet have in-home monitors to help them make real-time and time-of-day energy-use decisions. And appliances that can instantly respond to changing rate signals have not hit the market.

“One of the key things is managing expectations,” said Katherine Hamilton, president of the Washington, D.C.-based Gridwise Alliance, a coalition of utilities and manufacturers that promote overall smart grid technologies. “Really, the meter itself helps the utility operate more efficiently. We need to be very careful about saying that putting a meter on the wall is going to save energy.”

As Hamilton noted, utilities will be the primary beneficiaries of these initial installations. Stacey Wood, a principal with Houston-based consultants the Structure Group, agreed, saying the new meters enable utilities to turn service on and off remotely and can provide troubleshooting data to help reduce downtime. Wood was the lead author of a report commissioned by the California PUC investigating the PG&E rollout problems.

Structure Group researchers discovered PG&E’s new meters weren’t the cause of suddenly higher electricity bills. In fact, the units they sampled passed all accuracy tests. Instead, several factors combined to force customer costs up at the same time their new meters were being installed.

One major factor completely within the utility’s control was the company’s move to implement a rate hike as meters were rolled out. A concurrent heat wave magnified the impact of the rate hike, as customers cranked up air conditioners to stay cool. None of this was adequately communicated to consumers, who, understandably, blamed the new equipment as the reason for rising monthly bills.

In Maryland, BGE wanted to use a “tracker” surcharge on customer bills to recover its new-meter expenses as the meters were being installed. The state’s utility commissioners decided the devices didn’t provide enough immediate benefit for consumers to warrant such special treatment. Instead, the burden will be on the utility to prove the meters’ worth to the PUC after the installation is complete. There was a particular urgency to this case because a large percentage of the financing is coming from government stimulus funding that carries a strict use-it-or-lose-it deadline.

Wise utilities will take note of both the California and Maryland lessons by communicating earlier with customers about current and future meter capabilities and rate programs and with state PUCs about tangible benefits ratepayers will realize once the meters are in place.

“Early customer engagement and education is certainly a lesson that can be learned,” Wood said. “Customer communication should include education on what changes can be expected from having a smart meter. The issue that will cripple a rollout is when there are multiple factors being rolled out that confuse the basic reason for the smart meters.”

Hamilton said utilities need to be aware that the meters represent more to consumers than just another piece of high-tech electronics hanging on their wall. The meter is a customer’s touchpoint with the utility, and the current one-way flow of information symbolizes how we have interacted with the utility for more than a century. As improved technology turns this interaction into more of a conversation, utilities will need to find a way to improve their interpersonal communications skills.

“It’s a totally different way of interacting with consumers,” Hamilton said. “The relationship has been, at best, neutral. Now it’s going to become more active. It’s not going to be neutral [anymore], and utilities don’t want it to change to negative.”

ROSS is a freelance writer located in Brewster, Mass. He can be reached at chuck@chuck-ross.com.

About the Author

Chuck Ross

Freelance Writer
Chuck Ross is a freelance writer and editor who has covered building and energy technologies for a range of industry publications and websites for more than 25 years. He specializes in building and energy technologies, along with electric-utility bus...

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