Grid Week Continued – The Right Balance
- Oct 21, 2010
- Tim Saffell
While I was at the conference, I tried to check my e-mail from my iPhone. Unfortunately, my e-mail wasn’t downloading which is all too common. It usually happens when I am in a crowded area (like the convention center) with many people also accessing wireless devices (iPhones and iPads everywhere). It dawned on me how different the utilities industry really is from other industries. Can you imagine if during peak usage periods, I just may not have power? Can you imagine becoming used to it (similar to me with my iPhone)? Of course not! To solve my communications problem, I can switch to another phone or to another carrier like Verizon, Sprint, or T-Mobile. However, in many states, you can’t choose your power provider and certainly can’t pick the distribution provider. That makes the decisions to make major investments like Smart Grid very difficult for everyone involved. How much investment is enough? Adrian Tuck, the CEO of Tendril, made a great analogy. He is customer of Xcel Energy who recently implemented a new block rate structure. The first few hundred kWh are charged at one rate, while each kWh above that threshold is charged at a higher rate. Mr. Tuck made the analogy to his Apple iPad that is served by AT&T. He said that as he approaches his monthly limit on data usage, the iPad gives him a warning letting him know he has reached his limit. Unfortunately for Mr. Tuck, when he asked if Xcel would give him the same warning, he was told that no such mechanism existed. His point was that utilities often try to incent certain behaviors and/or charge based upon actual market conditions, but in most cases they don’t provide the necessary tools or make it easy for consumers to make informed decisions.   Finding ways to keep consumers informed and educated, without a graduate degree in physics or electrical engineering, is a challenge utilities must embrace and look outside of its industry for valuable lessons.   Seth Kiner, from Southern California Edison, mentioned that SCE had hired Ideo (the world famous design firm) to help identify the ideal customer experience of the future.
A few consumer advocates from the audience voiced concerns that all rate-payers were being asked to pay for upgrades that may only benefit middle to high income consumers. The concern was that an in-home display that costs a few hundred dollars may provide a high-income consumer to change their behavior by shutting off their pool pump or changing the temperature in a zone within their house and save on their power bill during peak times. However, the low-income consumer may already be running the bare minimum and therefore not able to reap any savings, while still paying for the in-home displays. Most utilities, as part of their pilots, are trying to address low-income users separately. While the jury is out on what will be found, I do believe that useful information will be developed. In the grand scheme of things, I still believe these pilots will benefit even low-income consumers. One panelist, Sandra Longcrier from Oklahoma Gas and Electric, described her company’s goal of avoiding adding additional fossil fuel generation until at least 2020. Assuming OG&E can achieve that goal, all consumers will benefit financially from the deferred investment in a new plant. Furthermore, everyone partakes in the soft benefits like reduced emissions, etc. While I don’t want to undermine the importance of utilities low-income consumers and the impacts to them of utility smart grid investments, but I do think its short-sighted to make decisions with only low-income consumers in mind. I believe that regulators and utilities can (and have) strike reasonable compromises to address both.
With regard to consumer devices for conservation or smart power usage, the industry is in its infancy. Most of the pilots are being conducted using in-home displays (IHDs) or programmable communicating thermostats (PCTs). In many cases, these devices are fairly rudimentary. At best, they provide a current (real-time) price for power, total usage for the month, and maybe an estimated dollar amount for the month. I believe that these devices are not even close to what we will see in the future. However, we can’t jump directly to the future. Just like the iPhone wasn’t the first cell phone invented, the IHDs and PCTs won’t be the future of the devices. However, these devices are critical to the industries evolution. They provide the information (behaviors, customer feedback) that utilities and vendors can use to create the next generation device. Given a few generations and I think we will be looking at something as transformational to our industry as the iPhone was to the cell phone.   Generally, I think the group at Grid Week was optimistic that smart grid investments today, would lead to innovative products and services in the future.
A common problem noted by the panelists, and many within the industry, is the use of the term Smart Grid. Each party has a different definition and each utility’s smart grid project has different scope. That causes confusion in the marketplace. One panelist suggested the industry needs to take a completely different approach to marketing Smart Grid.  Why is the marketing all about the technology (smart meters, etc.)? Sure that may be some of the equipment being rolled out, but why should a consumer care? How does the consumer benefit? How do you create an emotional response to Smart Grid?  Similar to how polar bears are now associated with global warming, how do you relate the Smart Grid enhancements to something anyone can relate to? What should be the icon and/or tag line that any consumer can understand and relate to? That is a big undertaking and one where the industry should consolidate their efforts towards identifying it.
One thing I didn’t hear any panelists discuss is how utilities market themselves. Most utilities still market themselves as a power provider. With smart grid investments, the industry is evolving. Microgrids, distributed generation, power storage and renewable energy are all factors that will impact utilities in the future. At some point, utilities will begin to market solutions, not electrons. They will market themselves as the companies that provide customers with comfort (lights, A/C, heat). Customers don’t care if they get that comfort from a distribution line hooked to their meter, solar powers, a battery in their attic, or from the batteries in their EV that had charged the previous night. They just care that when the flip the light switch, the light comes on.  I think the marketing message will evolve as the technology becomes cheaper and more prevalent in the industry.
That’s all for now. I am headed to Verizon to take advantage of my freedom to choose a new cellular carrier…