Grid Analytics: Smart for Utilities, Smart for Customers

By Gary Paul, Ernst & Young LLP

Customers in California have been struggling with questions of whether smart meters are mandatory, safe and, more importantly, why they should have to bear the cost. In response, the California Public Utilities Commission is reviewing a proposal that allows customers the choice of keeping their analog meter for a fee. This comes just weeks after residents in Boulder, Colo., voted for the city to terminate its smart grid contract and establish its own municipal utility.

Utilities can learn from these recent controversies. In California, customers have privacy and data accuracy concerns, as well as health concerns centered on radiation from smart meters.

Ernst & Young LLP found these same concerns when it recently surveyed the heads of households in 13 countries about their understanding of smart technology and their appetite for smart-enabled services. “The Rise of the Smart Customer” research found:

• Customers are optimistic about controlling energy and saving money with smart meters, but have concerns about privacy and financial benefits.
• Customers around the world have a neutral to poor relationship with energy suppliers. Many complained of poor customer service and issues with understanding their bill, which is a challenge for utilities pursuing smart projects.
• Customers acknowledge that electricity suppliers are dependable, but they believe utilities provide lower customer service compared to other home service industries.
• Customers are reluctant to purchase additional services from energy suppliers and want a credible brand before investing in smart services. 

Taking a cue from California and Colorado, negative perceptions may continue to stall energy providers’ efforts to move forward with new smart products and services.

Customers in California and around the world want to know how utilities are using usage data, and more importantly how the data will save them money and energy. Some of the coming changes require explanation.

Better planning and customer communications are essential. Some Ernst & Young clients are taking advantage of customer and grid operational data analytics to identify potential operational issues and drive performance improvements and customer satisfaction initiatives.

These insights will help utilities invest wisely in areas with the highest return-on-investment, as well as win over consumers before crucial deployments.

Italy has installed smart meters in more than 85 percent of its residences and saved up to $750 million per year for its largest utility. Italian consumers rave about lower energy bills due to interactive usage monitoring. Utilities have installed 4.3 million smart meters in Ontario homes and introduced time-of-use tariffs to help even out demand.

Customers should know the entire story. They need information that will link smart grid technologies to matters they care about, such as managing outages, reducing the need to build new power plants and cutting costs.

While California may be charging its residents, it has adopted strict limits on how information from smart meters can be disclosed—a lead that other states are now following.

The industry is expected to spend more than $200 billion on smart grid projects by 2015. It is essential that utilities engage customers now so they too are smart about smart technology’s benefits.

Gary Paul is a principal in Ernst & Young LLP’s Advisory Services Power & Utilities practice. (The views expressed herein are those of the author and not necessarily those of Ernst & Young LLP.)