Turning Smart Meter Customer Strategy on its Head

This is the third in a series of posts about smart meter issues.  The first Life with My PG&E Smart Meter after one Year was followed by Is the Worst Yet to Come for Smart Meters? This post offers a different view on how utilities could engage customers in the REAL ISSUES smart meters can help address without inciting a smart meter riot.

Utilities have gone about rolling out smart meters like—well—utilities.  To a utility the system is the solution and the smart meter was a way to make the system more cost effective and efficient—for the utility.  Utilities save money by reducing meter reading costs and they gain operating efficiency by getting smarter about how customers are using energy and when so they can adapt their operations to fit demand.

The mistake PG&E and other utilities have made is taking customers for granted and trying to pass off both the cost and hassles of smart meters as a benefit to consumers.  Smart meters are green.  Green is good for you.  Get used to it!

From a customer perspective smart meters seemed like a cramdown! The truth is there is very little real customer benefit in smart meter installation to date. Utilities are spending millions of our dollars to chase millions more in Federal stimulus dollars to buy and install smart meters so they could implement energy policies and programs mandated, aided and abetted by state regulators and politicians eager to pursue their own political agenda.

Federal and state regulations have made the smart grid implementation worse for customers by reducing the time utilities had to plan the rollout and get it executed in order to qualify for the stimulus money or meet the state timelines for compliance.  Customers, frankly, are an afterthought for the government and a problem the utilities had to face on their own.

As consumers, ratepayers and voters we were caught in the middle. We support policies that protect our environment, restrict pollution and polluters, and encourage the use of clean, renewable energy—we do!  We have tolerated higher energy prices to help pay for these policies and we rejected ballot measures that would have repealed these policies thus endorsing the overall strategy of environmental leadership.

We get it!  We like it!  We do!

But—we feel like we are being set up, taken for granted by our utilities and sold out by our politicians and regulators—and smart meters are the tool they are going to use to stick it to us!

The California Public Utilities Commission told us that it was just a coincidence that the installation of smart meters in Bakersfield California happened at the same time our utility bills spiked because the weather was hot, we turned on our A/C and used more energy, and thus pushed ourselves into higher rate tiers on a new, higher rate schedules that punish more energy use to encourage demand response.

This really ticked us off—-and it scares us about our future!

We had not realized the insidious creeping implications of the sum of these policy changes until they hit the fan in Bakersfield!  Instead of building the new energy supply our growing state requires, regulators and politicians have ordered our utilities to impose rates that are as progressive as our taxes so the more we use, the more we pay—and pay—and pay.  All we heard them talking about in press releases was the low base rate for small users along the foggy coast assumed to be poor so the rates were lower than cost while those of us who lived on the warm side of the hills—or worse in Bakersfield and the Central Valley or the desert where it gets hot in the summer were subjected to tiered rates that the environmental advocates said were discourage us from wasting energy by using our A/C in the summer “too much”.

The Bakersfield Effect was more than just being surprised by spiking utility bills in the summer just when our new smart meters were installed.  The Bakersfield Effect was when we WOKE UP and realized that big brother in Sacramento and Washington was using our utility to control our lifestyle and change our sinful, wasteful ways, as they perceive them, to conform to a more politically correct way of doing business their way!

We realize smart meters are not the problem, but resisting smart metering is our best defense against over-reaching by our regulators and politicians—and going after our utility waving our high utility bills is a heck of lot easier target for our wrath in between elections.

It didn’t have to be this way—and it’s not too late for our utility to change its strategy, but our utilities have a choice to make—-will they be on the customers’ side of the solution or not?  Business as usual is going to be a bad place for any utility to be in the future.

So how do utilities turn smart meter lemons into lemonade customers like?

Utilities must offer customers choices and show them options that meet their needs.  Utilities must share customer values and act accordingly.  Utilities must stand in between customers and government and be an advocate for customer interests in the public interest. In truth, we all want the same thing—reliable, clean energy that is affordable and produced responsibly to meet our needs and protect our environment.

What should Pete Darbee do?

Pete Darbee, CEO of PG&E has not asked my opinion about what he should do to change PG&E’s smart meter customer strategy that is keeping him up at night.  But I would recommend the following changes to better align customer interests with PG&E’s interests:

OFFER CUSTOMER CHOICES TO CONTROL THEIR ENERGY BILLS. Our biggest fear is being unable to control our volatile energy bills and utilities can address that fear with options that put us in control including:

1.       PROMOTE LEVEL BILLING PLANS AS INSURANCE AGAINST RATE SPIKES.  This already exists at every utility so market it as an “insurance” against rate spikes.  Offer it on EVERY BILL where the customer is not already enrolled telling them what their level bill would be compared to the actual bill.  Check the box and it’s done and you can pay the lower of the amounts for that bill.  This forces customers to own their own responsibility for a bill spike and gives them a safety net. Level billing plans are every customer’s friend and making them popular and widely used is the customer’s best way to mitigate the dynamic pricing volatility to come.

2.       OFFER A PREPAY OPTION.  Centrica and other utilities in Europe have used prepay plans for many years and customers like them.  Under a prepay plan customers can use a credit card or depository account set up to pay their utility bill—or any part of it.  This allows smaller payments made more frequently for those cash short rather than facing one large bill each month.  This isn’t the right choice for everyone but it will work for some and is ideal for rental properties, cabins and occasional use buildings.

3.       SIMPLIFY TIERED RATES.  Tiered pricing plans are subject to conflicts and have unfairly penalized customers in the desert, central valley and warm side of the hills in California while the coastal and cool side of the hills benefited from lower baseline tiered rates and cooler temperatures.  PG&E has taken steps to compress its tiered rate structure combining tiers 4 and 5 but it should do more.  By modestly raising the baseline rate to spread the overhead costs more equitably and adjusting baseline levels on the warm side of the hills to better reflect historic averages the tiered rate system would be more equitable.

4.       PEAK DAY ALERTS.  PG&E says it plans to do this and it makes perfect sense.  Send text messages and email alerts to the day before an expected peak day event.  Every bill a customer receives should include an option to sign up for this service and doing so online should be simple and easy.  Publicize it well on peak days on TV and radio just like spare the air days are done and you have a customer service strategy success story.

5.       PEAK DAY PRICING PROTECTION PLAN.  PG&E offers an A/C control option paying customers a one-time $25 payment to the customer to permit the utility to attach a switch on your A/C to cycle it off if needed on peak load days to better manage load.  Participation is poor because the offer sounds to customers like a bribe to give up control over their home A/C.  Instead, PG&E should market this plan as a peak day protection plan, drop the $25 bribe and offer it as optional “insurance” against bill spikes.  Customers would even PAY FOR THIS SERVICE as an option if marketed well.  Think of it the same way you insure your kid’s cell phone from being lost, stolen or dunked in the pool when he forgets to take it out of his pocket.  $7 per month is a cheap insurance fee to avoid ugly cell phone replacement surprises.  For those not on level billing plans such insurance would also be seen as a good option.

Face it, if customers had all these options in Bakersfield and chose not to use them it would be much harder to feel sympathy for them when they showed up waving their utility bills.  And signing up those who were surprised would be public relations coups for PG&E making the utility seem responsive to customers who got THEMSELVES into trouble.

PS: What did my smart meter have to do with any of this?

NOTHING!  That’s the point—there is no reason to complain about your smart meter since your bill problem is one you caused yourself by not exercising any of the options available to you.