Tuesday, August 23, 2011

Post # 79 - New York PSC Smart Grid Policy Statement Highlights the Need for Consumer "Engagement"

Last week, the New York State Public Service Commission issued its “Smart Grid Policy Statement," intended to establish regulatory policies and guidelines for utilities to following regarding the development of smart electric grid systems and associated efforts to modernize the electric grid. The NYPSC hopes that its guidelines will “creat[e] the conditions that will allow optimal technology solutions to flourish.” The policy statement also emphasizes the importance of consumer acceptance.

The NYPSC guidelines themselves, which include customer acceptance but of course cover a much broader area, provide as follows:
* In the short term, utilities are to pursue established and reliable technologies that can provide a relatively certain return on investment. In the longer term, the billions of dollars the federal government has provided for smart grid projects nationwide will generate a significant base of knowledge and experience which, along with further development of smart grid standards, will help identify those technologies that are most effective and efficient.

* Smart grid technologies will utilize a hybrid of both public and private networks. Utilities and communication providers should work together to ensure appropriate use of commercial facilities, and to limit utility capital investments in dedicated communications infrastructure.

* Utilities must provide basic information on smart grid to customers who are largely unaware of this technology. Utilities further must provide a thoughtful and comprehensive customer education plan before commencing with implementation of technologies that require extensive customer engagement.

* Smart grid projects must be able to show demonstrable benefits in excess of costs.

* For most smart grid projects, rate recovery will be addressed through traditional means. The Commission will consider risk-sharing mechanisms for novel or unproven technology.

* Utilities can start to develop smart grid plans and projects using the existing industry standards as building blocks.

* Utilities must develop the capability to build and maintain cyber security standards. Utilities will bear the responsibility to ensure that cost-effective protection and preparedness measures are employed to deter, detect, and respond to cyber attacks, and to mitigate and recover from their effects.

* Utilities and third-party providers must protect customer privacy when projects involve the collection and use of customer data.

With specific reference to customer education and “engagement,” the NYPSC policy statement notes that “a large number of customers do not know how the smart grid works.” Thus, the PSC concludes, one benefit of early customer education may be “to refocus the public dialogue about smart grid, which seems to be centered on smart meters. Some customer concerns may be alleviated if they understand that the smart grid is not just about meters.” The PSC calls on utilities to make customers more aware of the steps they have already taken to develop the smart grid in their transmission and distribution networks.
Before commencing with large customer-centered smart grid programs, utilities must lay the groundwork with comprehensive customer education programs. Such educational efforts can increase acceptance, improve utilization, and ease implementation issues, as well as allowing utilities an opportunity to learn more about the services their customers want and are likely to utilize.

The NYPSC adds that customers participating in such programs need to understand their roles and responsibilities, as well as the role of the utility and any third parties. “An important aspect of smart metering is its ability to enable active participation by customers, but customers must be equipped with the knowledge required to participate in a meaningful way.” Customers will need to be actively supported in getting the right information to make informed decisions on their participation, and in acquiring the necessary knowledge and skills to take advantage of smart meter-enabled programs.

The Policy Statement notes customer education programs must also deal candidly with the rate consequences of smart grid capital investments. The PSC believes that if implemented properly, the smart grid can mitigate cost increases, as well as offer customers more reliable and more environmentally responsible service. “[B]ut customers are wary of further rate increases and will have to be educated to have reasonable expectations regarding the potential of smart grid to lower electric bills.”
Ultimately, the PSC holds, the success of demand response depends on convincing people to change how and when they use electricity:
Clear, concise, and relevant information in advance of a project involving new customer tools, information or interfaces is required to ease customer concerns and improve adoption. Influencing customer behavior requires that utilities and third party providers explain and demonstrate to customers the benefits of a proposed smart grid program.

Thus, the statement concludes, “if a smart grid technology relies on customer involvement in order to provide all or some of the anticipated benefits, any utility proposal to deploy such technology must include a plan for how customers will be engaged and should include an analysis on the expected level of customer participation.”

Wednesday, August 10, 2011

Post # 78 - New Study Has Good and Bad News Regarding Consumers' Attitudes to the Smart Grid

A new study by Market Strategies International, a market research and consulting firm involved with communications, energy and technology issues, finds what it calls good and bad news when it comes to consumer awareness and support of smart grid technologies. In its release announcing the study's results, Market Strategies:
The good news is that a large majority of Americans -- after we give them basic information about smart grid and smart meters -- say it's a priority issue and strongly support the implementation of these technologies by utilities. The bad news is that 72 percent of consumers overall admit they know little about the technologies. Less than a quarter of respondents say they fully understand the concept.

These findings are from the first wave of Market Strategies' on-going 2011 E2 (Energy + Environment) Study. Conducted twice a year, the national survey is designed to gain an understanding of Americans' attitudes and opinions about energy and energy-related issues. The latest version represents the “tenth wave” of this on-going study. A total of 989 interviews were completed May 19 through June 2, 2011 with consumers nationwide. Respondents were recruited via an online panel to reflect key characteristics of the US population. The data were weighted by age, gender, and census region to match the demographics of the US population. (Market Strategies cautions that “due to its opt-in nature, an online panel does not yield a random probability sample of the target population. As such, it is not possible to compute a margin of error or to statistically quantify the accuracy of projections.”).

The updated study finds the level of Americans' smart grid/meter awareness hasn't increased noticeably during the past several years, despite the steady flow of information appearing in media and other outlets. On the other hand, while “general awareness still lags,” Market Strategies believes that “the ready endorsement so many consumers give smart grid/meter -- once it's explained -- speaks volumes about the viability and strong appeal of the technologies and their associated benefits.” Moreover, Market Strategies believes that “it’s important to note that four of the five consumer segments in the energy market support the idea of utilities working quickly towards implementing smart grid/meter technologies." Further, the study finds that “nearly unanimous support for smart grid/meter coming from most of the market's various segments. . . .”

The overall study apparently is not publicly available, beyond what Market Strategies put in its release. Nonetheless, the findings certainly are consistant with with the conclusions of many other studies:
consumer education -- and, more importantly, consumers' belief they will significantly benefit -- will be essential to the ultimate success (or failure) of smart grid development.