Since 2004, around 50 million meters have been rolled out in the US, costing US$13 billion. While benefits for the operational side of the utility business were highlighted, value for the customer was somewhat neglected.
As a result, inflated expectations surrounding the smart meter quickly turned to disillusionment. Consumers were concerned about their privacy and technology failures (even though they were isolated). Utilities quickly realised that they had to highlight the value that customers can enjoy from the installations. This is according to Neel Gulhar, former Director of Strategy and Product Marketing, Baltimore Gas Electric (BGE), who co-presented in our recent webinar, Don’t Leave Your Customers Behind – Learn how to Unlock Smart Meter Value for Consumers.
Quantifying customer benefits
BGE, already in its second phase of smart meter installations, came up against a number of challenges:
State regulator skepticism of the smart grid proposal
High peak usage
BGE overcame these challenges by doing the following:
Demonstrating clear customer benefits to get regulatory buy-in
Delivering valuable tools to consumers
Using smart meters to drive substantial energy and peak savings
Says Gulhar, “We wanted to take a different approach to smart meter installations. We wanted to quantify the customer benefits from the very beginning so that our business case to the regulators stated our intentions clearly.”
BGE’s aim was to achieve savings set by the regulators and they aimed to achieve this by following these steps:
Produce home energy reports to build trust and value with customers. The idea was to show customers exactly what smart meters can do for them. For instance, they can compare consumption levels with their neighbours, and receive a personalized usage breakdown with a simple analysis to provide even more insight.
Customers found value in this data. They also received high bill alerts, and were given access to rate analysis tools to help them lower or manage their consumption levels more effectively. Consumers were offered low cost digital tools during key moments. It was discovered that the contact made during these key moments helped to reduce calls to call centres. Also, customers began to use on-line data to manage their consumption more effectively.
Drive large scale load management. Programmes were created to help the utility manage demand with no device in place.
BGE rolled out a peak day notification programme with an opt-out design. Communication around energy consumption was segment-targeted, personalised and multi-channeled. By providing personalised information and tips on how to save energy, consumers remain engaged as the data had value.
A multi-channel communication system was put in place according to various segments of the consumer base. BGE was able to achieve a 5% reduction in consumption through this event and this was achieved with no home devices and no price incentives either, explains Gulhar. The programme was carried out with Opower, a software-as-a-service company that provides cloud-based software to the utility industry.
Realising the value of the smart grid
By harnessing the smart meter’s benefits effectively, BGE could quantify customers’ savings. Meter data pointed to US$2.5 billion of lifetime benefits for consumers. Effective consumer engagement saw a 15% increase in customer sentiment and a 5% peak load reduction. In response, Maryland regulators approved BGE’s revised smart grid proposal.
The energy savings is being driven mainly through the various customer programmes such as :
Dynamic pricing programme (49%)
Residential energy efficiency (21%)
Gulhar explains that while BGE has the benefit of the capacity market (that is, taking the load reduction during hot summer days and selling that into the market, then monetizing this and giving it back to customers as rebates), it was not used. Rather, customers were given behavioural triggers instead of being offered incentives. For instance, BGE advised consumers what their neighbours were saving due to peak load reduction programmes.
Gulhar adds that behavioural demand response works best if you target consumer segments correctly. Incentives can provide a small boost but they are not always necessary. We wrote about the potential of customer behaviour in our article, Customer Behaviour (not incentives) Can Shave Peak Demand.
When asked about in-home displays, Gulhar believes that there are better ways to reach customers. He explains that they generally provide limited value. He points out that, on average, within 60 days many customers pack these devices away.
It seems that the “old fashioned” communication channels such as email, sms and post work most effectively when it comes to reaching the customer effectively.
Gulhar says that BGE continues to work alongside Opower to improve its customer service experiences, thereby strengthening its customer relationships. He points to a very relevant quote by Chris Johns, president of PG&E: “We thought we were undertaking an infrastructure project but it turned out to be a customer project.”