Wednesday, December 29, 2010

Post # 55 -- Smart Meter Privacy Remains a Major Concern

IDC Energy Insights, a Massachusetts-based research and consulting firm, has released a new study – Utility CIOs: Living in a Smart Grid World – presenting results from a survey of "North American utility executive IT leaders." While generally focussed on the role of IT specialists in their companies' smart grid initiatives, the study (summarized here) shows that privacy fears remain in the hearts of many utility customers.

Indeed, according to the survey, privacy has emerged as the number one concern related to data security and management, with data governance as an emerging concern. As utilities implement new initiatives such as smart metering, data volumes are expected to increase significantly. While management and integration of this data are themselves priorities, IDC's respondents overwhelmingly reported data privacy as the key element of IT strategic plans for security. In particular, the study found that customers have a great deal of concern about how their data is being used and distributed.

Beyond the issue of privacy, IDC finds that most utilities have an strategic plan for information technology that takes smart grid into account. However, and surprisingly, one third of the utilities surveyed stated that their IT departments are not involved in developing business cases for new initiatives such as renewable generation, energy efficiency, smarter distribution grids, and smart metering. In fact, in the case of 13% of utilities, IT does not become involved until the project is well under way.

On wonder whether this lack of upfront engagement by utilities with their IT professionals -- which in a curious way mirrors many utilities' lack of upfront engagement with their customers on smart grid issues -- is the cause of at least some of the difficulties utilities have encountered when trying to convince their customers (and regulators) of the benefits of smart meters and other smart technologies.

Saturday, December 18, 2010

Post # 54: A California Smart Meter "Opt-Out"?

In one of the latest examples of consumer-driven push back against smart meters in California (see, for example, here and here), California Assembly member Jared Huffman (D-Marin County) last week introduced a legislation (Bill AB 37) that would enable consumer to decline the smart meter installation.

According to Mr. Huffman’s statement on the proposed legislation, Bill AB 37 directs the California Public Utilities Commission to provide an “opt-out” alternative for customers who do not wish to have a smart meter installed – and to require that utilities make this option available using “wired technology that provides equivalent smart grid reliability and efficiency.”

The opt-out “alternative,” however, is not defined in the bill. Rather, AB 37 directs that by January I, 2012, the CPUC must identify alternative options for customers that decline smart meter installation and “ensure that these options are made available to customers.”

The bill also directs that utilities disclose the timing, magnitude, frequency and duration of radio frequency (RF) emissions. Finally, AB 37 directs that the CPUC temporarily suspend smart meter deployment until this opt-out alternative is in place.

In his statement, Mr. Huffman says his bill “is about giving consumers reasonable choices. Whether or not you believe RF exposures from Smartmeters are harmful, it’s only fair that consumers who are concerned about health effects be given complete technical information and the choice of another technology for devices that are installed at their homes.”

The prospects for this bill are not certain – Assembly Member Huffman represents one of localities where resistance to smart meters has been most vocal, and it is unclear how much overall support AB 37 will have in the California legislature.

Moreover, by tying the “opt-out” provision to some undefined “equivalent” alternative, this bill demonstrates the potential conflict between consumer “empowerment” and efforts to achieve energy efficiency. As one commentator has noted, “[t]he bill may offer some sense of control for consumers over how their utility information is gathered, but it could also change the effectiveness of an integrated smart grid if chunks of consumers choose not to participate.”

Of course, and this appears true of most smart meter debates in the United States, consumers generally become part of the serious debate only against the backdrop of ongoing utility smart meter installation. When the history of smart grid development is written, I expect that the record will demonstrate that utilities should have engaged their customers on these issues prior to smart meter roll outs.

Thursday, December 9, 2010

Post # 53 - New Perspective Down Under

I have previously discussed the on-again/off-again smart meter roll outs in Australia, where there has been some strong consumer push-back, particularly in the state of Victoria (see here and here). A new report now indicates that the Australian utility industry is concerned that the opposition to smart meters is standing in the way of smart grid development down under -- and now recognizes that consumer empowerment will be a key factor.

This is borne out by the 2010 Australian Smart Grid Study recently released by the Asia-Pacific division of Logica, the UK-based international IT and management consultancy firm. Logica surveyed thirteen of Australia's major electricity generation, transmission and distribution companies, each of whom provided one or more interviewees. The study provides a view
of industry strategies and the status of individual programs, and is well worth a read by anyone interested in Australian smart grid development.

But I want to focus here on a key report finding: according to the survey, the "Smart Grid will not happen without consumer involvement." The report goes on:
There has been an increased awareness [among the surveyed companies] of the importance of the customer in the development of the Smart Grid. This represents a significant change from last year, when Smart Grid pilots and thinking tended to be more technologically oriented and focused on the grid.
Logica concludes that much of this new attitude is directly attributable to the consumer revolt in Victoria and the negative press it created nationwide. As a result, according to the survey, companies are now trying to involve customers in the process, and distributors in particular "are closely aligning consumers with their Smart Grid planning." Logica concludes that "a significant portion of the Smart Grid benefits will ultimately be driven by consumers."

Of course, the smart grid jury remains out -- in Australia and everywhere else. But the Logica report is one more example that smart grid proponents, and industry groups in particular, are waking up to the key role consumers will play in any successful smart grid implementation.

Sunday, December 5, 2010

Post # 52 - Another Mixed Consumer Report Card for Smart Meters

Last week, the market research and consulting firm Pike Research announced the results of a survey focusing on consumer knowledge and acceptance of utility smart meter initiatives. The results – which Pike says are based on “a nationally representative sample of more than 1,000 U.S. adults” – have both encouraging and discouraging aspects. In particularly, the survey suggests that consumer knowledge of smart meter issues generally increases acceptance.

On the positive side, Pike reports that that among respondents who said they were “extremely familiar” with smart meters, 67% stated that they had an “extremely” or “very” favorable opinion on the devices.

On the negative side, smart meters were the least popular of the four consumer smart grid concepts covered by the survey. Smart meters received a "favorability/interest" rating of only 29% . Other more popular concepts were home energy management (47%), smart appliances (44%), and demand response services (33%).

At the same time, and likely related to the results, 56% of survey respondents described themselves as “not very” or “not at all” familiar with smart meters. Increased consumer access to electricity usage information was identified as an important benefit by 52% of respondents, making this the most frequent benefit cited. Improved reliability of electricity service was second, with 46% of consumers identifying this benefit as important to them. The most popular reason for an unfavorable opinion about smart meters, chosen by 59% of respondents, focused on concerns that the devices would increase electricity bills.

Pike Research's summary of it survey can be found here. These results seem consistent with other consumer surveys discussed in this blog, see here, here and here. Once again, increased consumer education appears the key to smart meter acceptance. And not just education – consumers must see convincing evidence that can realistically expect to benefit financial from smart meters. It's not clear anyone has really made that case in a satisfactory way.