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Utilities try to get smarter about selling smart grid

Having seen the backlash around smart meters, utility executives say that for the smart grid to work, consumers need better tools to control their home energy.

WASHINGTON--It's probably not news to their customers, but utility company executives are now realizing that they're not great at marketing.

For years, the smart grid has been touted by policymakers, tech companies, and utilities as a way to make the grid more reliable, efficient, and cleaner. But for the most part, surveys show that consumers are still struggling to understand how a digital grid and two-way smart meters matter to them.

Having seen the backlash from smart meter installations in California, utilities are now acutely aware of how important it is to convey the benefits of new grid technologies, according to executives at the Kema Utility of the Future conference here on Thursday.


In many discussions, speakers said consumers need to come along for the years-long ride of adding new technology to the grid. To get consumers involved, utilities need to shift from treating them like a monolithic block of ratepayers to customers they want to retain.

"The relationship with homeowners is just beginning," Michael Morris, the CEO of utility AEP, said during a panel discussion. "There is no sex appeal to (playing) around with an electricity meter as there is streaming a baseball game on their iPhone or iPad, so we need to be a bit respectful of what that relationship is."

Utility customers in the U.S. expect reliable service and power when needed. But going forward, consumers will want better ways to manage and reduce their energy use for economic reasons, said Duke Energy CEO Jim Rogers.

Although electricity prices have dropped significantly in the past two years because of the recession, the pressure on prices is upward given the worldwide demand on energy resources and growing electricity use in general. Helping consumers manage those price increases with efficiency measures is in the interest of utilities, too, since customers will feel more in control, Rogers said.

But just installing smart meters without a good informational and marketing campaign is a mistake, particularly if it's seen as taking choice away from consumers, he said.

"To make smart meters work, you have to follow up quickly with an audit and provide a suite of products that provide some benefit and make clear this isn't a 'Mother knows best' world. You can choose," Rogers said. "That reduces the chance of blowback."

Not about technology
Many of the features promised by smart-grid advocates can be done with existing technologies, but they do require participation from customers, as well as customer education. So rather than rush headlong into the smart grid, some companies are treading lightly and slowing.

Michigan utility Consumers Energy this month will roll out two programs geared at cutting back electricity usage in homes and in both cases, it's using relatively old technology to get it done.

"The intent is not to figure out if the technology works, it's more about the customer marketing message," said Stephen Hirsch, the manager of demand response programs at Consumers Energy. "The biggest barrier was the suspicion on the part of the customer as to why we are doing this. There seems to be a problem with the consumer understanding our business model."

A model of the smart grid, where energy flows in two directions and consumers have more control. EPRI

In one demand-response program in the Grand Rapids area, the utility will reduce load on the grid during about 10 hot summer days a year by remotely controlling consumers' air conditioners. A signal sent over the utility's existing network will shift central air conditioners from running at 100 percent to 50 percent for four hours in the afternoon, which will result in a one- or two-degree temperature increase, Hirsh explained.

In exchange for shedding load during a time of stress on the grid, the customer gets a rebate. The benefit for the utility is that it does not have to purchase expensive electricity, which is often made with polluting "peaking plants," or have to build new transmission lines to meet peak demand. Cutting the utility's energy accrues to the consumer as it lowers its operating costs, Hirsh said.

Most consumers say they are willing to use a smart device, such as a smart meter, appliance, or thermostat, if it will help them better manage their energy, according to a recent poll by General Electric. And the combined impact of thousands of efficiency events can mean avoiding the construction of new power plants and power lines.

But for these products and programs to work, it has to be simple and easy to use for customers, and there need to be variable pricing that reflects the cost of energy on the wholesale market.

"We've got to make it simple so that it's programmable and you just set it once," said Terry Boston, the CEO of grid operator PJM. "We have to see how well the customer can interface with the grid and how their use patterns can impact the grid."

Finding what works
Emerging smart-grid technologies pave the way for people to have more control over their energy, letting a person, for example, use a smart phone to monitor electricity or turn on the air conditioning just before getting home.

How quickly the utility providers can adapt their businesses to deliver that sort of capability is a big question, said David O'Brien, the commissioner of the Vermont Department of Public Service.

"For a 100 years, utilities have been responsible for running the grid on our behalf. I've seen reticence to go into this very dynamic environment where customers are making thousands of choice on how to use electricity based on information," O'Brien said.

New technologies, such as smart meters, home energy dashboards, or microgrids with community storage, are also expensive and can be difficult to get regulators to sign off on. Baltimore Gas & Electric was shocked this week when the Maryland regulators rejected a smart-grid investment proposal because it did not demonstrate enough benefit.

In the meantime, utilities are experimenting with smart-grid programs, which received a boost from billions of dollar in stimulus spending. Beyond what the technology can do, utilities are eager to see how consumers react to a life where using energy means more than writing a check for a monthly bill.

Municipal utility Chattanooga Electric Power plans to let consumers view their electricity usage on a TV using IPTV, said David Wade, the executive vice president and chief operating officer.

"One of challenges is to understand how to implement software to provide options to customers where they don't have to sacrifice comfort and convenience and help them manage energy costs," he said.