Consumers, Utilities, and The Smart Grid

Some reports have the SGCC being formed to “sell consumers on the smart grid”. That description comes across as a bit troubling. The stated goals of the Collaborative are more reassuring:

The group was formed in part because of the backlash to smart meter implementations in California and Texas, and in part because of research that shows that consumers are for the most part unaware of what the Smart Grid is all about.

For example, a recent Harris poll reported that 68% of respondents had never heard the term “Smart Grid”, while 63% had not heard the term “Smart Meter”. Moreover, the majority then associated Smart Grid with increasing electricity costs.

But the reason that consumers have not heard the term Smart Grid is that Smart Grid is a utility term focused on utility goals – not a consumer term focused on consumer needs. And that is the fundamental source of confusion. Even smart meters are intended for utility, not direct (albeit indirect) consumer benefit. And that is probably OK; as long as we recognize this fact, we can avoid unreasonable expectations. 

Utilities are focused on increasing reliability and managing peak demand, goals which benefit consumers in the end. But consumers are focused on their personal energy use and cost. They do not understand utility-speak – and too often do not trust utility motivations. The flap in Bakersfield over perceived bill increases as a result of the introduction of smart meters is but one example of this. Most high-bill calls to utilities start with consumer perception that something is wrong with their meter – which is very rarely the case. (Utilities are required to test meter accuracy on a continual basis). I can’t tell you how many times I hear from people who find out what I do that they don’t trust their utility, which they perceive as being out to gouge them.    Or I hear that they do not want to share “their data” with the utility. This mistrust is generally unfair, and efforts should be made to overcome it. But is it is not clear that a focus on the smart grid specifically is the right way to go about that.

Utilities and consumers simply talk past each other.  The use by the utility industry of the term HAN, or home area network, to refer to home energy management is yet one more example.   To the average consumer, a Home Area Network is something that connects their computers and printers, and has nothing to do with their utility. 

I am reminded of a client group meeting at my last company where we had just introduced an online consumer-oriented utility bill intended to look nothing like a standard utility bill, with a companion paper version for selected customers. The project manager for our beta test client, himself new to the utility industry, got up to explain why his company was piloting this product. He began by asking if anyone in the room had ever looked at a utility bill as a consumer might. He then read from his bill, starting with the first line item, Customer Charge, to which he commented: “So you charge me for being a customer?” By the third line item he had everyone in the room in hysterics; for the first time they got it – they were not speaking the customers’ language. The pilot test was extremely well-received by the customers of that forward-thinking utility – but their regulators never let them introduce the paper version of this consumer-focused bill.

Not only is it not surprising that consumers don’t know the term Smart Grid, there is no reason that they should. The Smart Grid is not intended for them. They will be connected to the Smart Grid, of course, and there are things that can be done on the “other side of the meter” in their homes that can provide direct benefit. But until utilities start speaking in consumer language, don’t expect consumers to get it.  There need to be business models in place to deliver energy management services that consumers will want to have. It is not at all clear that such services should – or even can – be delivered by utilities.

And that's just fine.