ELECTRICITY:

Utilities learning to mind the gap between smart meters, consumers

Correction appended.

The "smart meter" is no panda.

Just as the bamboo-munching bears put a cute face on the campaign for endangered species, the digital devices known as smart meters have been hailed by experts as the interface to educating consumers about their electricity use as the nation aims to overhaul its grid and energy use.

But the smart meter has not been the cuddly and beneficial device smart-grid enthusiasts promised, or need, to win public interest.

And recent lawsuits and complaints about smart meters being responsible for higher electricity bills in early-mover programs in California and Texas have exposed a major problem in experts' assumptions about the meters: Having energy usage information is not the same as understanding it or being able to act upon it.

If a consumer did not understand how weather, fuel prices or inefficient water heaters affected their electricity before the new meter was installed, they won't understand after it is installed either without additional educational efforts. And any changes that occur in their bill will be blamed on the tangible, newfangled element in the equation: the smart meter.

"The value of the smart meter is not immediately recognizable by the consumer, and that's a problem," said Eric Dresselhuys, executive vice president and chief marketing officer for Silver Spring Networks. Silver Spring is one of the leading providers of the software and hardware platform that connects smart meters and other equipment to utilities.

Silver Spring and other companies working in the smart-grid industry are quickly coalescing to address this gap in consumers' understanding of electricity use and the smart meter. Silver Spring, General Electric Co., the GridWise Alliance, Best Buy Co. Inc., the National Renewable Energy Laboratory and several other companies unveiled the SmartGrid Consumer Collaborative last month. The collaborative's mission is to research consumers' concerns and develop a message to engage the consumer to understand the benefits of the smart grid.

The companies are hoping to quickly stymie a growing belief among consumers that smart meters are just another way for utilities to make money.

"We have a lot to do to begin informing consumers and a lot to do to market differently with consumers," Bob Gilligan, vice president of GE's Transmission and Distribution Business, said in an interview before the coalition was announced. "I think it's really not out there yet for most consumers; there is a lot more to be done."

"The smart grid is not smart until the consumer is actually engaged," added Katherine Hamilton, president of the GridWise Alliance.

But Ralph Izzo, chairman and CEO of New Jersey's Public Service Enterprise Group, said better marketing may not be the answer to addressing the gap in consumer understanding of electricity use or changing consumer behavior.

"I think we tend to overstate the contribution that sophisticated technology can and should make," Izzo said.

"I feel like just shouting, 'Stop. Apply some common sense,'" he said. "Before we start championing multibillion-dollar investments in smart grids that control set-back temperatures on refrigerators because there is or isn't going to be a Super Bowl ... we need to get folks to caulk around their windows," he said.

Advanced technology and smart meters should be available to gadget-hungry consumers who will engage with the technology, Izzo said. But at the same time, regulators should enable utilities to do more basic weatherization and other energy saving measures.

Mutiny on the bounty

Recent lawsuits filed by customers against PG&E Corp. in Bakersfield, Calif., and Oncor in Dallas, Texas, accusing the meters of inflating electricity bills have introduced a considerable chill among the industry in the past few months.

The suits and other complaints involve some of the biggest players in the smart-grid and smart-meter space -- including Silver Spring, Landis+Gyr and IBM Corp. -- and could have significant implications on how quickly utilities and state regulators move forward with meter installation programs.

The utilities and companies involved say there is no problem with the meters or the data communication. Instead, unusual weather and other circumstances have caused users' bills to increase.

But the companies acknowledge PG&E, Oncor and the industry probably did not adequately communicate and educate their customers about what the smart meter would and would not do. Promises and reality could cause significant issues down the road if better communication about the smart grid is not developed, Malcolm Unsworth, president and CEO of Itron Inc. said at the EnergyBiz Leadership Forum last month. Itron is a leading manufacturer of meters.

"The hype must be replaced by smart strategy and results," Unsworth said.

GE's Gilligan agrees. "I think we have to be careful not to set too high an expectation in the near term in terms of differences they will see," he said. "I think we need them to see why there is need a for change. ... We have to keep building the message we are positioning for a 21st century America."

The "why" is key, according to Nancy Brockway, principal of NBrockway & Associates, a utility and electricity consultant. The industry and regulators must change their message and "spinach" attitude regarding smart meters, she told the National Electricity Delivery Forum in February.

"The problem that I see from the consumer perspective is we are not sure if the consumer wants it, and we don't know if consumers want to pay for it," she said. "One thing that will turn off the ability to get from here to there is the 'eat your spinach' mentality -- it's good for you, it will be good for you ... so eat your spinach."

"The more these enormous costs are shoved down these people's throats, the more they may turn on this thing that they might like," Brockway said.

Plugging consumers into the equation

The firms behind the SmartGrid Consumer Collaborative want to change that mentality by reaching out to consumers and attempting to understand them better through research.

"We can't get buy-in until we educate," said John McDonald, general manager of marketing for GE's digital energy business, during a teleconference announcing the collaborative.

Guido Bartels, general manager of energy and utilities at IBM, said the education must reach beyond the technology to the "foundational layer" of electricity in society. "Not everyone realizes how fundamental electricity is" to the economy, Bartels said.

The simple problem of consumer ignorance about electricity and the solutions needed to address it has been underestimated by many companies, Bartels said. "One of the things IBM is learning, is that these are complex projects; they need careful planning ... and some of these [meter] roll-outs lacked that."

The collaborative is not the only effort moving forward on the issue. The Federal Energy Regulatory Commission is also working on a national plan to develop an educational campaign on energy use as part of efforts to promote "demand response" -- a voluntary decrease in energy use at peak use times -- activity usually enabled in part by a smart meter (Greenwire, Nov. 5, 2009).

Dan Delurey, executive director for the Demand Response and Smart Grid Coalition, said the two efforts could work in collaboration, especially on consumer research.

"We need it all," Delurey said. "There is a lot of suffering going on right now from substance having gotten out ahead of communications."

PSEG's Izzo said stepping back and slowing down a bit on the massive roll out of smart meters could be beneficial for everyone. Focusing on straightforward changes such as weatherization and lighting would likely do a lot more toward benefiting and informing consumers about the electricity use of various appliances and drafty houses than devices that "you have to ping 14 places around the planet to control," he said.

To be fair, Izzo said, sophisticated, programmable technology was very beneficial for customers willing to participate in PSEG pilot projects.

"But the attraction to most customers is low, and penetration rates are very, very low," Izzo said. "That resulted in many of our regulators saying, 'Wait a minute, so we are going to do this ubiquitous change out in technology for all customers and then watch only a handful of customers take advantage of that? That doesn't make a lot of sense.'"

Instead PSEG is taking a two-pronged approach that targets customers interested in smart meter and other high-tech devices but does the simple "low tech" fixes of insulation and light bulb switching -- for which New Jersey regulators have allowed the utility to earn some revenue -- with the majority of other customers.

"If I would have to say what one area would have the greatest impact right now it would be the low-tech, bread-and-butter programs," Izzo said.

Correction: A previous version of the story incorrectly associated Itron Inc. with lawsuits against PG&E Corp. and Oncor. Itron is not a party to either lawsuit.

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.