Consumer Questions Regarding the “Smart Grid”:

1

Consumer Questions Regarding the “Smart Grid”:

• Which technology components can be cost effectively

deployed to help residential customers save money

and reduce electricity use

• What are the best means to promote conservation and

change consumption patterns (in California)

PANC Seminar, May 4, 2009

The Smart Grid or the Smart Consumer?

2

The Punch Line:

Some smart grid components are valuable, but

spending billions to send price signals to

residential customers may not be the best way

to address residential energy use.



3

Is the Smart Grid a Wise Choice for Consumers?

• What are the goals of the SG?

• How does the smart grid achieve these goals?

• Is it the most effective and efficient way to

achieve these goals?



4

What is the Smart Grid?

• Transmission-level equipment

• Substation and distribution equipment

• Mass market interval meters and communications

• In-home display and automation on customer side of meter

AMI component of most interest to consumer advocates



5

Common Goals of the residential meter component of SG:

• Change in residential energy use

– DR (load shifting) through price signals [and automation?]

– Energy use reduction through consumer awareness of energy prices [and

automation?]

• System benefits

– Meter reading cost savings

– Reliability and outage detection benefits

– Integration of renewables through utility control of load



6

Less Common Goals of the residential component of SG:

• Cost allocation – price discrimination by load shape

• Operational ‘services’ - prepayment plans, automatic shutoff

• Promoting retail choice through access to meter data

• Another communications gateway to the customer

• Capital additions to rate base in restructured market



7



8

Consumer concerns:

• The “less common” goals all raise significant

consumer protection and equity issues! Are

they the real drivers of AMI??

• Does dynamic pricing solve cross-subsidies or

create inequities?



9

Residential energy use – the competing perspectives

• Perspective 1: Seeing the actual time-varying price of electricity

best way to raise consumer awareness and change electric

consumption habits. Spend money on meters and two-way

communications to achieve environmental goals.

• Perspective 2: Consumer awareness and consumption habits

best influenced by public education and other policies. Use

money for efficiency and renewables.



10

• The truth lies in between. Consumers respond

to price signals but also to appeals to civic

duty.

• Consumer advocates want to maximize return

for ratepayer dollar and use cheaper methods

when available.



11

Change in residential energy use: the SG hype

• Large reduction in total residential energy use due to change in

consumer behavior when exposed to price signal feedback

• Will result in the fully automated home that self-responds to price

signals based on customer choices

• Large residential demand response (load shifting) due to price

• Results in reduction in emissions



12

DR and residential energy use: One thing we should know

• Load shifting on ‘critical days’ does little or nothing to reduce GHG or toxic

emissions

– Too few hours to matter (6 hours * 15 days = 90 hours)

– Actual emissions change depends on generation resource mix between peakers,

intermediate and baseload plants

• In California little net impact (gas on margin), though load shifting due to ‘critical

prices’ on ‘critical days’ may slightly reduce toxic emissions during summer

afternoons

• Only sustained total reduction in energy use reduce net GHG emissions



13

Change in residential energy use: Other things we know

• Limited demand elasticities of 0.05-0.3

• Reductions of 5-15% based on peak prices multiples higher than

average price (ie. 100% to 500% of off-peak price)

• Higher DR due to automation

• Consumer response to education, public appeals and feedback

• Not clear DR technology relevant for EE in residential market



14

Change in residential energy use: what are we talking about

• Variable speed equipment – refrigerator, air conditioner, pool

pump

• Discretionary appliance load – dishwasher, dryer, washing

machine, pool pumps

• Efficiency choices – lights, consumer electronics

• Synergies between DR and EE much lower for residential market

(for example, no dimmable ballasts, no EMS, complicated HVAC)



15

Other Policy Methods of Influencing Consumer Behavior

• PR, PSAs and continuing message from high level officials

• ISO emergency PSAs

• ‘Competition/Shaming’ policies (i.e. SMUD)

• Long-term education (recycling bins)

• School education

• On-bill financing



16

Dynamic Pricing

• Pro – see real cost, change behavior, eliminate

subsidy

• Con – cost to implement, relative benefit

compared to inverted tiers, TOU, averaging rates

a valid goal for rate design



17

The Art of Interpretation: PG&E’s SmartRate - Viewpoint 1

• 7.5% opt-in, including 56% CARE customers

• Average load reduction 11% CARE, 22% non-CARE

• Incremental price of 60 cents/kWh

A resounding success. Lots of DR and great

participation.



18

The Art of Interpretation: PG&E’s SmartRate - Viewpoint 2

• Bill protection and $50 gift for early sign-up.

• 23% increased use. 2.5% missing values. 80% notification.

• Air conditioner saturation: 92% non-CARE, 71% CARE

• Rate differentials between 4:1 and 12:1.

Why did 92.5% turn down free money? Very low elasticity. What

will happen to the non-AC population? Is a 16% reduction worth

the cost, bill impacts, and other impacts of 8760 data points?



19



Brief Anatomy of a Greenwash Campaign

20

Anatomy of a Greenwash Campaign

1995-97 Direct Access Working Group (DAWG) discussions regarding

competitive universal meter deployment

D.97-05-039 Competitive metering

2002 California Consumer Empowerment Association (eMeter, ABBG, Echelon,

Siemens) files PTM to force universal meter deployment by IOUs

Sep. 2003 Peevey ACR proposes analysis framework for AMI

July 2004 Peevey ACR ordering the filing of AMI proposals by December



21

Anatomy of a Greenwash Campaign? Demand Response and Advanced Metering Coalition (Cellnet,

Comverge, Echelon, eMeter, EnerNOC, Itron, Hunt, etc.)

2004 Creation of the U.S. Demand Response Coordinating Committee

(utilities!)

2005 Lots of national meetings about smart metering and demand response

2008 DRAM changes names to Demand Response and Smart Grid Coalition

? Smart Grid = Green Grid



22

Thank you for listening!

Feel free to contact us.

Marcel Hawiger, Staff Attorney

The Utility Reform Network

711 Van Ness Avenue, Suite 350

San Francisco, CA 94102

415-929-8876 [email protected]



mailto:[email protected]

Documents

Consumer Questions Regarding the “Smart Grid”: