11 th October The Commission for Energy Regulation The Exchange Belgard Square North Tallaght Dublin 24
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1 11 th October 2013 The Commission for Energy Regulation The Exchange Belgard Square North Tallaght Dublin 24 Opower Comments on the CER National Smart Metering Programme, Presentation of Energy Usage Information (Smart Billing, Mandated In Home Display, and Customer Web Interface) Consultation Paper Opower, Inc. ( Opower ), a behavioural energy efficiency and smart grid software company, appreciates the opportunity to submit comments on the Presentation of Energy Usage Information component of the National Smart Metering Programme (NSMP). This response provides views on the consultation paper published 6 September, 2013 (CER/13/164) regarding the presentation of energy information through Smart Billing, Mandated In Home Displays, and Customer Web Interface(s). Opower partners with over 85 utility energy providers across seven countries including E.ON and EDF and in the European Union to deliver energy savings to residential households. Opower motivates customers to use less energy and save money on their monthly bills by providing them with better information about their energy use, including normative comparisons and personalized energy-saving advice. Using consumption data, Opower s analytics engines can deliver rich insights to customers illustrating their energy usage trends and targeted ways to save with these insights offered through multiple channels such as web, , SMS, paper, etc. Having supported numerous smart meter deployments, and having provided public input on smart meter rollout consultations around the globe, Opower very much appreciates the end-to-end consideration that the Irish Commission for Energy Regulation (CER) has put into designing a comprehensive smart meter rollout plan. Opower is delighted to have the opportunity to provide input in the presentation of energy information through Smart Billing, Mandated In Home Displays, and Customer Web Interface(s) and looks forward to commenting on future consultations. 1
2 Opower s Response to Consultation Questions Summary of Comments Opower s comments on the Presentation of Energy Usage Information broadly fall into several categories. 1) Insights, not pure data, motivate consumers to change energy usage behaviour 2) Suppliers might retain the option to deliver smart billing information via a separate mailing event from the bill mailing itself (subject to cost-effectiveness of separate mailing events) 3) The CER might define targeting categories for hints and tips in billing information in order to effectively provide targeted advice for reducing consumption to consumers 4) Opower would strongly encourage the CER to define minimum specifications for benchmark comparisons under the smart billing requirement and mandate normative comparisons 5) Opower calls on the CER to reconsider mandatory rollout of In-Home Displays (IHDs), as there is no substantive evidence that these devices are cost-effective over the long term These comments are explained in detail in the sections below. The list of substantive questions posed in Appendix A of the consultation presents a comprehensive opportunity for parties to provide detailed comment on the consultation paper. Some of these issues are beyond Opower s remit. With this in mind, Opower intends to provide some of its input in narrative form and some of its input targeted to selected questions listed in Appendix A. Cross-Cutting Note: Providing Insights, Not Simply Information, Drives Changes in Consumer Behaviour. The CER notes that this consultation intends to seek views regarding the presentation of energy information through Smart Billing, Mandated In Home Displays, and Customer Web Interface(s). The CER expresses throughout Sections 1 and 2 that this component of the NSMP intends to ensure that consumers are provided with information in order to drive engagement and to give them the tools they need to manage their energy usage. Indeed, the definition of Smart Billing in Section
3 specifically references providing information in order to achieve the goals of changing consumer behaviour and driving energy efficiency: Section Smart Billing Definition: Smart Billing is defined as the presentation of accompanying information detailing energy usage [It] aims to show the impact of changes in Consumer behaviour and encourage energy efficiency This is reiterated in Section 3 defining the requirements for each of the three primary channels for delivering such information: Section 3.1 Basis for Requirements Introduction: [The provision of] customer information is likely to promote more energy efficient behaviour through making Customers more aware of how much energy they are using. With the above goals of changing consumer behaviour and driving energy efficiency in mind, Opower notes that across all delivery channels it is important to focus on the presentation of energy insights rather than simply the presentation of information. The presentation of pure customer information for example, raw statistics about monthly energy usage, tariff rates, total energy costs, etc by itself is unlikely to promote changes in consumer behaviour or adoption of energy efficient habits. Indeed, without interpretation of such data, consumers are not able to utilize data to determine actionable means to reduce their consumption. Rather than present pure information to consumers, one must present insights to help consumers understand their usage in ways that provide actionable means of adjusting behaviours. The presentation of normative usage comparisons, hints and tips on ways to improve energy efficiency, and other key insights provide consumers with the understanding of their energy usage they need to become empowered, allowing them to take control of their usage and reduce consumption. Smart Billing: Consider Separating Bills and Billing Information Section 3.4 begins to introduce the requirements for how information will be delivered through each of the three main communication channels under consideration in the consultation. Of particular note, Section focuses on the requirements of the Smart Billing component. This section notes a distinction between bills (which carry the obligation to settle the due amount) and billing information (which do not, and are for information purposes only). 3
4 This distinction is indeed an important one. Separating the event of receiving the bill itself from the event of receiving Smart Billing information creates a helpful division that allows consumers to experience a positive touchpoint around their energy usage. The value of this separation can be seen given the nature of emotions that are associated with these two events. The receipt of a bill requiring payment is neutral experience at best, and often a negative one. It tends to evoke negative emotions associated with sacrificing to pay a debt. However, the receipt of Smart Billing information that provides actionable information on ways to both take control of one s energy usage and save money is likely a positive experience. Given that the information is intended to enhance an individual s control and provide them with financial benefit, this often evokes positive, empowering emotions. With this in mind, providing the Smart Billing information via a separate event will maximize the empowerment factor associated with that provision, enhancing customers motivation to engage in energy saving behaviours. Opower recommends that suppliers be permitted the option to fulfil their mandate to provide Smart Billing information to consumers via an entirely separate event from the mailing of the bill itself. This option would permit them to deliver such information in a separate paper mailing event or a separate electronic mailing event entirely, not simply a separate piece of paper included in the billing envelope. Opower notes however that the CER and suppliers should take the cost-effectiveness of such efforts into account. It may or may not be cost-effective to provide Smart Billing information via a separate mailing event, depending on the particular circumstances. Thus in order to provide optionality, the CER might simply allow such information to be delivered via a separate mailing event at the discretion of the supplier, rather than directly mandate a particular format. This option to separate the provision of smart billing information and bills themselves into separate events should be explicitly reflected throughout the consultation. In particular, Sections and 4.3.1: Section Overview of the Requirements the CER is Minded to Include, Smart Billing: An additional requirement might be added noting the following: o Suppliers may provide the information required under the Smart Billing mandate either in the same mailing event as the delivery of the consumer s bill, or in an entirely separate mailing event not associated with the delivery of the bill. This decisions is made at the discretion of the supplier. 4
5 Response to Question 2a re SBR01: Energy Statement Arrangements and Communication Method SBR01: Energy Statement Arrangements and Communication Method The Proposed Statement of Requirement might be adapted to read as follows: o The accompanying information on energy usage linked to the bill may be part of the billing document or contained in a separate document. This separate document may, at the discretion of the supplier, be provided in a separate mailing event entirely from the mailing event associated with the bill. Smart Billing: Hints and Tips Should be Targeted to Individual Household Contexts Response to Question 2a re SBR05: Hints and Tips Section SBR05: Hints and Tips requires that the Smart Billing information include tips that could related to energy efficiency. Opower agrees that providing hints and tips on ways to reduce or shift energy consumption and energy expenditure are critical to empowering consumers to take action to save energy. Opower s more than 250 client-years of deployments have shown that when such tips are targeted to a particular household s context, they are effective at delivering enhanced energy savings. With this in mind, Opower notes that the CER might introduce minimum specifications regarding the level at which Hints and Tips included in Smart Billing information should be targeted to a particular household context. Such minimum specifications might define particular targeting categories to be used when differentiating what types of hints and tips customers receive. Among others, potential targeting categories might include: Dwelling type Ownership status (eg. occupant is owner vs. renter) Number of household members Heating type (eg. fuel type) Heating mechanism Cooling mechanism (where applicable) Other household characteristics (fireplaces, pools, etc.) It is important to note that these potential targeting categories are intended to be only individual suggestions. They might be used together or separately, and are not 5
6 representative of an exhaustive list of targeting categories. Importantly, the inclusion of a given targeting category should be dependent upon widespread availability of household-specific data within that category. For example, if reliable data on heating mechanisms is not available for an adequate number of Irish households to permit effective, scaled targeting of tips that are influenced by a household s heating mechanism, that category should not be included in the targeting specifications. Furthermore, Opower agrees with the CER that tailoring of hints and tips can be a differentiator for energy suppliers. With that in mind, any minimum specifications the CER creates should remain general enough that suppliers can utilize hints and tips to differentiate their offering, while also providing enough minimum guidance to ensure that tips include a base level of targeting such that they effectively promote energy efficiency savings by consumers. Smart Billing: Consider Defining Minimum Specifications for Benchmarked Comparisons and Requiring Suppliers to Provide them under the Smart Billing Mandate Section SBR07: Benchmarked Comparisons notes that the CER are minded to review whether benchmarked comparison information should be made available to consumers in or with bills. Such a requirement would provide consumers with a comparative normalised or aggregated benchmark for a group of Customers in the same usage class. Opower agrees with the statement in the Evaluation of the Requirement sub-section that the success of benchmarking comparisons is indeed highly dependent on carrying out comparisons well. Providing normative comparisons that benchmark a consumer s energy usage against a set of similar homes can result in energy savings of between % per year. Opower disagrees however with the notion discussed in this sub-section that benchmarking comparisons are a subjective exercise. To date, Opower has more than 250-client years of experience providing normative comparisons to the consumers of over 85 utility clients in 7 countries. Opower utilizes household-specific data in order to effectively segment customers into statistically equivalent groups of like households and has to date processed data from more than 50 million households. Using these segmented groupings, Opower is able to deliver benchmark comparisons to individual households that show where a consumer s energy usage ranks within a group of around similar households. 6
7 This method of providing normative comparisons has resulted in more than 3 TWh of savings to date: enough to take the county of Dublin s electricity usage off the map for a year, and still have nearly 1 TWh of savings left to apply somewhere else. Opower believes that, based on its extensive experience in regulatory environments around the world, a regulation may be defined that allows for consumer categories that are tight enough to ensure effective comparisons that drive energy savings while are general enough to permit innovation within the market. Response to Question 7a First, with this in mind Opower supports the CER s proposal discussed in the subsection on Requirement Proposition to introduce minimum standards and guidelines for benchmark comparisons. Opower would welcome the opportunity to provide the CER with suggestions for developing minimum standards for benchmark comparisons specific to the Irish market at a date in the near future once the CER begins a process to define such standards. Opower would strongly encourage expedient development of minimum standards in order to facilitate delivery of a Smart Billing tool that is extremely effective at driving consumer empowerment, as well as changing consumer behaviour to promote energy efficiency. Second, Opower notes as above regarding the provision of bills and Smart Billing information in separate mailing events that any mandate to make benchmark comparisons available to consumers should provide the supplier with the option to deliver such information in a separate mailing event from the bill mailing. Per the notes above, this allows for the consumer to receive a positive touchpoint regarding their energy usage. This develops positive emotions around their energy consumption, empowering them to take actions to improve energy efficiency. In-Home Displays: Opower Calls on the CER to Reconsider Mandatory Rollout of IHDs, as there is Insufficient Evidence that these Devices are Cost-Effective over the Long Term The CER July 2012 Decision Paper mandates the use of In-Home Displays (IHDs) as part of the Irish Smart Meter Rollout, and this consultation seeks extensive input into the specifics of how IHDs will be mandated and implemented. Opower notes that robust evidence on cost-effectiveness is important to support a nation-wide IHD mandate, as households will ultimately bear the cost of these devices. In order to justify the upfront investment in IHDs, parties should consider the 7
8 long-run savings benefits that they deliver in order to effectively evaluate whether such measures are cost-effective. Ireland s Customer Behaviour Trials performed an analysis of the savings rates from both energy usage statements and IHDs. The trials used experimental design and expost measurement to evaluate the impact of energy usage statements and in-home displays on electricity consumption in 5,000 residential households, and a separate trial that evaluated gas consumption in 2,000 households. With 90% confidence, the electricity trials resulted in 2.6% savings in the first six 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Figure: Results from Ireland electric IHD trials Billing only First 6 months Billing + IHDs Last 6 months months and 2.8% savings in the last six months when households were exposed to energy usage statements only. When electricity monitors were included, households saved 4.0% in the first six months and 2.4% in the last six months. These results provide evidence that savings from IHDs may decay over time. 1 The gas trials resulted in % savings when households were exposed to energy usage statements in isolation. When households received IHDs as well as energy usage statements, savings were %. 2 These results suggest that IHDs may not provide additional energy savings to other energy feedback mechanisms particularly those that educate customers by providing context and information regarding energy usage. In combination with the widespread inconsistency of results from other IHD trials, this conflicting evidence indicates that there is insufficient evidence to conclude there is a negligible effect of education on IHD users. 1 CER, 16 May 2011, Electricity Smart Metering Customer Behaviour Trials (CBT) Findings Report, p. 69, available here: 2 CER, 11 October 2011, Gas Smart Metering Customer Behaviour Trials (CBT) Findings Report, p. 46, available here: 8
9 While CER notes in this consultation that the IHD is the only information channel than can provide instant feedback to the consumer in their homes (Section Mandated In Home Display (MIHD) ), and that such feedback can promote a high frequency of interaction for a low level of effort and time required, Opower would like to point to its own and others extensive experience to show that the real driver to ensure behaviour change is not instant feedback but the provision of actionable insights, that can be easily pushed to the consumer and accessed when and where the consumer needs them. In this sense, the functions performed by an IHD can be performed better and more cost-effectively through other means (e.g. paper, mobile phone, web, ). Opower agrees with CER that showing cumulative usage information, and presenting information showing usage for previous periods helps engage consumers, but argues that, as in the previous case, this information can be provided more efficiently and cost-effectively through a combination of other media. With this in mind, Opower urges CER to reconsider the IHD mandate and opt for a more flexible framework, where a variety of approaches can be implemented. For example, CER could consider the approach adopted by the UK, whereby the IHD is not mandated but offered to the consumer. 3 3 See: Smart Metering Implementation Programme, First Annual Progress Report on the Roll-out of Smart Meters, page 8, available here: 9
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