I’ve spent the last few days at the Utility Analytics Week conference in Atlanta, where energy companies come together to discuss what they can do with the data they’re beginning to collect from smart meters. Despite the range of interesting and useful things that are possible, the majority of speakers converged on one application – reducing the level of energy theft. Specifically that seemed to mean stopping people stealing electricity to grow marijuana. A speaker from the Canadian supplier BC Hydro even went as far as saying that detecting marijuana growers was the main reason they’d decided to install smart meters.
The reason marijuana growers bypass their meters is that it traditionally takes quite a lot of power to run the growing lights for a loft-full of cannabis plants. Apparently 1,000W agricultural lights are needed for a set of fifteen to twenty plants. And now that the Canadian utilities are cracking down on energy thieves, the illicit trade is moving to the US. Which really got the US utility representatives hot under the collar. There’s nothing that riles a Southern utility manager as much as the knowledge that those pesky Canadians are turning his kids into reefer smoking zombies.
Hence the amount of effort being poured into revenue protection data analytics in an attempt to differentiate a closet pot grower from a faulty transformer. However, I think that by concentrating on theft, the utilities are missing an opportunity.
In his keynote speech to open the conference, Tom Fanning, Chairman, President and CEO of Southern Company, talked about his feeling of responsibility to the 48% of Southern’s customers in Georgia who had a family income of less than $40,000 per year. He felt that they had a right to use more energy. In his words “To improve human existence let’s use more energy where we should”. That’s not in line with the usual energy efficiency mantra of a well paid utility executive, but it’s a caring social message. The only problem is that these are probably the demographic who are stealing most of his energy.
A speaker from eMeter – the energy analytics arm of Siemens, spelled out the problem in more detail. eMeter reckoned that around 1% of the US population is stealing electricity. That equates to around 1.2 million households fiddling their meters, and he reckoned that it costs US utilities between 1 and 5% of their annual profits, which represents a loss of between $6 and $10 billion. (I know those numbers aren’t consistent, which is a bit worrying in a data analytics presentation, but I’m just restating what I heard.) Faced with these losses, speaker after speaker explained the clever monitoring techniques they were developing so that they could identify and prosecute the energy thieves.
This isn’t new. In a similar conference in Melbourne last year I heard an Australian utility executive expound the same story, before smugly reporting that as soon as they identified cannabis growers, they promptly informed the local police. In his next breath he effortlessly segued into espousing how his particular utility was really embracing the concept of customer engagement.
So there’s a lot of alignment on the approach of identify and crucify, which seems to be a pretty long-standing approach to consumer engagement. But I think that utilities may be missing a trick, whereby they could reduce theft and increase their customer engagement levels.
It’s perfectly true that traditional horticultural lamps eat up lots of power. But horticultural lighting has improved. Companies like Philips now make LED bulbs that use a fraction of the energy the traditional ones. They’re being widely used by growers from Holland to Kenya for crops as diverse as tomatoes and chrysanthemums. With each new generation of bulbs, they’re also getting more efficient and cheaper. So instead of prosecuting cannabis growers when they detect them, utilities ought to consider offering them free or subsidised LED growing lights. As most of these plants are grown indoors, they could also provide timers and a Time-of-Use tariff that provides peak growing illumination during off-peak hours, helping with their demand response.
Today, by prosecuting growers they potentially lose all of their future revenue. This new approach would help engage with communities, and reduce the cost of lighting to an affordable level so that growers no longer feel the need to steal energy. As a result, the utility would increase its income. It’s a real win-win solution.
I can see that a few CEOs might be worried about whether they’re encouraging an illegal act, but I’d remind them of an important precedent. There’s no reason they shouldn’t apply the same logic that’s been rolled out by the NRA for the last fifty years. It’s not a crime to supply someone with a rifle or a lightbulb – it’s their responsibility to use it responsibly. What utilities need to do is to reform the National Electric Light Association (it did exist, and it included the major US power generators), appoint a high profile chairman (that should be easy – almost all actors like being in the spotlight, whilst only a subset like shooting people), and repeat the freedoms laid out in the Second Amendment. If the Fabulous Furry Freak Brothers’ T-shirt wearing portion of Tom Fanning’s 48% want the right to bare arms whilst cultivating their green-leaved friends, then that’s all already enshrined in the constitution.
There is a serious point to all of this, which is that if utilities are going to engage with their customers they have got to change their mindset. I was appalled that BC Hydro made that statement about Smart Metering being all about detecting theft. At a conference earlier this year I listened to an executive from one of the Californian utilities say that “the best thing about smart metering data was it gave them more evidence to blame the customer”. What these people need to understand is that customer engagement is about supporting, not reporting. In this instance, future revenue is surely a far more effective business model than prosecution.
I’m not expecting utilities to forgive energy thieves, but they do need to start thinking differently if they ever want to change public perception and move from their current position of almost universal consumer hatred to the love that’s promoted by this particular section of the population which they’re currently committed to persecuting. Without that change, the business transformation that smart metering and data analytics can bring will be lost, and the billions of dollars poured into deploying smart meters will be thrown away.