An Inside Look at the Smart Grid in the U.S Customer Performance Group Thailand ERC Staff Workshop March 1,

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1 An Inside Look at the Smart Grid in the U.S Customer Performance Group Thailand ERC Staff Workshop March 1,

2 About CPG Consulting, Research, and Design Services Guide Management and Marketing Strategy Launch Innovations Improve Performance of Customers and Employees Scientific Instruments Publishing Behavioral Health Smart Meter Systems 2

3 My Presentation Today 1. What s In It For Me? The customer s view of the smart grid The utility s view of the smart grid Regulator s (society s) view of the smart grid 2. Case Studies San Diego Gas and Electric (San Diego, CA) ComEd (Chicago, IL) NV Energy (Las Vegas, NV) Duquesne Light (Pittsburgh, PA) 3

4 Smart Grid - 10,000-foot View Illustrations courtesy of NV Energy 4

5 Smart Grid 100-foot View Illustrations courtesy of NV Energy 5

6 Two Smart Grid Roads to Travel Social Technical 6 Credit: Szczel Credit: mmahaffie

7 Value Creation Along the Social Road Society Enhance Efficiency Defeat Peak Shift Use Utility Safe Reliable Earn Revenue Reduce Costs Customer Green Frugal Convenient Technocentric 7

8 Explaining Smart Metering to Customers + = 8

9 Two Key Questions Customer s Have 9

10 Aligning Customer Needs Illustration courtesy of ComEd 10

11 Explaining Benefits to Customers Illustration courtesy of SDG&E 11

12 The Value of Feedback If you think feedback isn t important, just count the number of times you use a mirror each day. 12

13 What if Cars Didn t Have Speedometers? Illustration courtesy of NV Energy 13

14 Worry and Surprise Nearly 50% of calls to a U.S. utility s call center are about billing or payment issues. No Speedometer No Daily/Hourly Electricity Usage Information Drivers are worried and surprised about a speeding ticket. Customers are worried and surprised about their electricity bills. 14

15 A Speedometer for Home or Business Reduces Surprise and Worry Smart meters record usage in 15 minute increments. Information can be displayed online or through special in home devices. Bills can be calculated daily. Alerts can be sent when bills pass a threshold. 15

16 Consumer Confidence 1. Accuracy 2. Security 3. Privacy 4. Health/Safety 5. Value Illustrations courtesy of NV Energy 16

17 What s in it for the Utility? 1. Reducing the cost to serve Better reliability and outage management Reducing manual meter reading and truck rolls for connect/disconnect Revenue collection and theft prevention Transitioning customers to greater self service 2. Favorable regulatory treatment Happy, satisfied customers influence cost recovery 3. Achieving regulatory goals associated with Energy Efficiency and Demand Response Collection of regulatory incentives Avoidance of regulatory fines 4. Competitive threats and opportunities Retail electric suppliers Distributed generation Public interest funds tied to energy efficiency and demand response 5. New service and revenue opportunities Products, services, and programs Electric vehicles Outsourcing of core services (call center, field service) 17

18 Regulators Must Be Sure to Plant Some Grass Credit: Kake Pugh 18

19 Good Policy Example: Green Button 19

20 My Presentation Today 1. What s In It For Me? The customer s view of the smart grid The utility s view of the smart grid Regulator s view of the smart grid 2. Case Studies San Diego Gas and Electric (San Diego, CA) ComEd (Chicago, IL) NV Energy (Las Vegas, NV) Duquesne Light (Pittsburgh, PA) 20

21 U.S. Smart Meters: Planned, Proposed, and Deployed = Case Studies Discussed in Presentation Source: IEE,

22 San Diego Gas & Electric (SDG&E) SDG&E Smart Meter Project 1.4MM electric meters and 900k gas modules $650MM project cost deployment (complete) Smart meter charge on customer bills Business Case Drivers Operational efficiency Automated meter reading Remote connect/disconnect Outage detection Nearly 50% of benefits from customer demand response 110 MW Residential (1.3MM customers) 114 MW Commercial (100K customers) 22

23 Smart Meter Program Broadly Recognized 23

24 ComEd Smart Meter Project Serves 3.8MM electric meters 120,000 meter pilot in Full deployment in $2.6 billion project cost $1.3BB smart grid; $1.3BB smart metering $2.8 billion benefits over 20 years Smart meter charge on customer bills ComEd Business Case Drivers The virtual elimination of manual meter reading More accurate electric bills Fewer service visits and fewer calls to the electric utility s Customer Call Center An enhanced ability to efficiently disconnect and reconnect electric service, which minimizes collection costs The improved detection of electricity theft Faster, more efficient sign up of new customers 24

25 ComEd Customer Applications Pilot 25

26 A Customer-Centered Design Source: Customer experience design for the ComEd Customer Applications Pilot (2010) 26

27 NV Energy Smart Metering Project NVEnergize Serves 1.3MM electric meters and 150k gas modules $303MM project cost SGIG funding $139MM Operational annual benefits $35MM No smart meter charge Business Case Drivers Automated meter reading Remote connect/disconnect Outage detection DOE grant Ancillary Drivers Demand response platform Home area network (HAN) platform 27

28 Key Customer Benefits 28

29 Duquesne Light Duquesne Light Smart Meter Project 600k electric meters $262MM project cost Deploy meters Smart meter charge on customer bills Business Case Drivers Automated Meter Reading (AMR) installed in late 1990 s Smart meters are a regulatory requirement Act 129 Provide consumers hourly usage data Enable TOU and dynamic pricing programs Support automated control of electricity consumption Competitive strategy Pennsylvania is a competitive market for retail electric supply. 29

30 Summary 1. Value creation involves customer, utility, and regulators (society). 2. Customer benefits will initially start out as transactional benefits but evolve into convenience, choice, and control benefits. 3. Consumer confidence is critical for consumer acceptance 4. Business cases are based primarily on operational efficiency but can also rely partially on demand response from both commercial and residential customers. 5. Regulators need to plant some grass to facilitate innovation and experimentation. 30

31 CPG s Thinking and Approaches 31

32 Additional Reading Honebein, P.C. and Cammarano, R.F. (2011). The Agony and the Ecstasy of CRM in a Smart Grid World Database Marketing and Customer Strategy Management, 18(4), Honebein, P.C., Cammarano, R.F, and Boice, C. (2011). Building a Social Roadmap for the Smart Grid. The Electricity Journal, 24(4), Honebein, P.C. and Cammarano, R.F. (2011). The Five Qualities of Effective Smart Grid Customer Education. Metering International, March(1), Honebein, P.C. (2010). We Got a New Digital Meter. Our Usage Went Up 123%. Our Bill Went Up 65%. The Electricity Journal, 23(2), Honebein, P.C. & Cammarano, R.F. (2009). Balancing Act: The Impact of Rational and Emotional Designs on Memorable Customer Experiences. In A. Lindgreen et al (Eds.), Memorable Customer Experiences. Surrey, UK: Gower. Honebein, P.C., Cammarano, R.F., and Donnelly, K. (2009). Will Smart Meters Ripen or Rot? Five First Principles for Embracing Customers as Co Creators of Value. The Electricity Journal, 22(5), Honebein, P.C. (2009). The New Energy Interface. Interactions, 16(5), Honebein, P. C. and Cammarano, R.F. (2008), Crafting a Persuasive Smart Meter Customer Experience. Metering International, January(1), Honebein, P.C. & Cammarano, R.F. (2005). Creating Do It Yourself Customers. Natorp, OH: Texere. Honebein, P.C. (1997). Strategies for Effective Customer Education. Chicago: NTC Books 32

33 About Peter C. Honebein Dr. Peter C. Honebein is an internationally recognized expert on smart grid customer experience and is co founder of the Customer Performance Group, a management and marketing strategy consulting firm. He is also an adjunct professor at the University of Nevada, Reno and Indiana University, where he teaches graduate and undergraduate classes in marketing, customer experience design, human performance technology, and instructional design. As a designer and consultant, Dr. Honebein applies his vast knowledge of design, marketing, product development, and performance technology to solve novel problems related to human performance. He has created, marketed, and licensed commercial products, designed the system that tracked the cleanup of the Exxon Valdez oil spill, and consulted on the design, strategy, and launch of numerous innovations, products, and services, including the system that sequenced the human genome and smart metering systems for utilities such as SDG&E, ComEd, NV Energy, and Duquesne Light. Dr. Honebein is the author of the books Creating Do It Yourself Customers and Strategies for Effective Customer Education, as well as numerous articles in such multidisciplinary publications as The Electricity Journal, Metering International, Database Marketing & Customer Strategy Management, Marketing Management, Educational Technology, and Interactions. He has also presented on topics related to the customer side of smart metering systems at numerous industry conferences. Customer Performance Group peter@honebein.com 33