Consumers must value energy efficiency

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Ensuring that consumers are "on board" -- that they understand the benefits of renewable energy and energy efficiency -- will be a critical component in building a modernized U.S. smart grid.

Utilities have always relied on customers for business.  But as companies look to improve the grid, they are going to need to go the extra step to convince customers that the effort and costs of these improvements are worthwhile to their wallets and lifestyle.

"Consumers need to understand and believe that there is a value in what you are proposing for them," said Paula Carmody, a consumer regulatory advocate for the state of Maryland.  

Carmody voiced her opinions as part of a panel discussion held during the 2012 National Electricity Forum in Washington, DC, where the overriding theme was a need for utilities to communicate more effectively with customers about the value in upgrading the grid. Carmody echoed the belief of utility companies that customers are reluctant or indifferent when it comes to engaging with what's happening behind the scenes.

"Most residential customers don't want to know about how the system works. They don't want to know about the complications," she said.

But as much as consumers might not want to immerse themselves into the details of the electric grid, their participation is crucial to the future of the industry. Without customer involvement, utilities will struggle to achieve necessary reductions in energy use. Getting customers become active in their energy usage requires introducing new ways for them to save money. But developing these energy-efficiency methods costs money, especially such methods meant for consumer purchase, such as solar panels or electric vehicles.

In many ways, encouraging customers to ramp up energy-efficiency practices seems like a catch-22 for utilities. The bottom line, however, is price.

"It's really about dollars at the end of the day," said Steve Swinson, President and CEO of Houston-based Thermal Energy Corporation. "If you can [produce energy] more efficiency, then you are going to be more economical and that's where people are going to go."

Understanding the importance that consumers place on affordability shouldn't be difficult, according to Carmody. Simply put, she defined it as the ability of consumers to pay their bills on an on-going basis.

"In a more general sense, you can have a perception from people that bills are becoming unaffordable if there are rate shocks -- if they see dramatic increases that happen very quickly over time," she said. "As you get down into lower income levels, those numbers rise dramatically."

The panelists pointed to federal and state assistance initiatives that are helping subsidize electricity rates for customers who need it. But more work still needs to be done, such as implementing demand response and energy storage technologies. 

Lorie Wigle, a general manager of eco-technology at Intel, suggested that the most popular technologies likely don't exist yet.

"Sometimes [customers] don't know what they want because we haven't invented it yet," she said.

Intel is looking toward analytics as a way to drive energy efficiency. "If we just make the data open and the systems open, we can foster tremendous innovation," Wigle added.

In conclusion, Carmody noted that, whatever utilities come up with, it must be diverse enough to cater to a variety of income levels, and consumer personalities, which vary both geographically and demographically.

"We need to have a portfolio of choices."

This is the second article in a four-part series examing perspectives on the 21st century electricity industry. Read part one.