By Jon T. Brock, President, Desert Sky Group, LLC
April 16, 2010
The smart grid is becoming an implementation reality. Last week the U.S. Department of Energy announced $100 million towards workforce education for the implementation and operating of what electric utilities call the “smart grid.” That money is for the workforce per se and not the end consumer. Recent issues involving consumers highlight the need for educating the end consumer on what this “smart grid” is and what it will do for them.
I recently had the good fortune to interview a smart grid luminary and utility customer service practitioner, Charles Dickerson, Vice President of Customer Care for Pepco Holdings, Inc. (PHI) on issues related to the smart grid, differences by global geography, and ideas on how to improve a smart grid implementation for success. Charles will be joining myself and three other industry luminaries at the Smart Grid Road Show to be held May 11-12, 2010 in Cincinnati, Ohio (http://www.smartgridroadshow.com) to discuss in more detail smart grid experiences and future looks. For now, I trust you enjoy this interview with Charles.
JB: Please share with our readers the background of Pepco and the PHI organization and the role it plays in the smart grid.
CD: PHI is comprised of three electric and one gas distribution companies along with two unregulated affiliates, and I'm going to spend a vast majority of time in this conversation talking about the regulated companies. The regulated companies are: Pepco (that serves the electric needs all of Washington D.C., and large areas of Prince George’s and Montgomery counties in MD) Delmarva Power and Light (that serves large areas in Delaware and ten counties along the eastern shore and northern part of MD) and Atlantic City Electric (that serves Atlantic City, NJ and the southern surrounding counties).
JB: My next question is what geographies do you play in globally? I'm assuming you've just told us where you operate.
CD: We are a mid-Atlantic electric and gas utility.
JB: Ok, and if you had to take your areas that you participate in terms of smart grid, let me read these to you. Do you play in the policy, generation, transmission, distribution, and the consumer?
CD: Distribution, transmission, and the consumer.
JB: Generation was sold off years ago. Correct?
CD: You are correct; our generation was sold off years ago in the regulated businesses. As you know, we have a transmission project called the Mid Atlantic Power Pathway Project (MAPP) under consideration which we think is vital to help alleviate congestion and help increase transmission reliability within the region. More so with the distribution and the customer side, we plan on installing close to 440,000 smart meters in Northern Maryland and Delaware and another 220,000 smart meters in the District of Columbia. We received approval for stimulus funding for Pepco from the DOE for our Washington, DC and Pepco Maryland SMART GRID projects. In addition to the physical meters installations, we are making the necessary system changes to accommodate the information coming in from those meters to help us better assist customers and realize a more discrete view of the electric system. We are also installing a number of distribution devices such as Automatic Sectionalizing Re-closures (ASRs) and capacitor controllers to name a few technologies that are designed to help reduce the number of customers who experience outages as a result of a fault and reduce the duration of outages for customers how experience outages.
JB: I understand that your background is customer service there, so from your perspective what are your main objectives of the smart grid?
CD: I'm glad you asked that because this is where my passion lies. For the past two minutes in my last answer, I was talking about technology which I firmly believe the entire smart grid initiative is not as much about, as it is about the ‘people’ – customers and those who directly interact with them. I think many of us in our industry, and this is an area where we can do ourselves a favor by reevaluating our own perspectives, focus too much on the devices and not enough on the end game – changing customers’ behavior. We have to remember that the technologies and devices are means to an end, and I think the end game is to be able to empower customers with the information they need to make more informed choices about how much energy they want to use and when they want to use it. So it's more about changing customer behavior than about installing devices.
JB: That is an interesting answer Charles. Do you think that we may have over emphasized technology to a certain extent?
CD: I think so. I think the industry is comprised of a lot of engineers, technology people, and accountants and we tend to think in those terms. We tend to think of wires and pipes and accounting so that things can be installed and accounted for correctly. None of those things are bad in and of themselves; however, at the risk of over stating it, even if we installed every single meter correctly, received regulatory approval for every single rate we wanted, even if the back office systems worked perfectly, if the customers do not change their behavior, I'm not certain that I could conclude that the SMART GRID would be successful. So, at the end of the day, customers are concerned about price. They are concerned about the price they pay for electricity, and this is probably more of an issue today for customers because as the price of energy rises, energy costs becomes a larger percentage of what they have available to spend. So they need tools to help them make decisions and then they need to know they can make better decisions. One of the things that the smart grid would allow customers and utilities to do is more closely match the cost of energy that the customers sees with the true cost of energy when they are using it. With more discreet usage and costs information customers would know, for instance whether it's costing them three times as much to wash their clothes at 09:00 am than it would at 9 o'clock at night. I believe that if customers knew the cost difference that they would wait to wash clothing during the less expensive times. I'm just using those numbers and those times to make the point.
JB: You may have answered my next question. What do you believe we are doing wrong in rolling out a smart grid?
CD: I don't think I answered it. Wrong is not the word I would use. I do believe however that we are not placing enough emphasis on the behavioral aspect and the people aspect of SMART GRID. Let me take this a step further. One of the other things that I've been saying a lot is that the whole education piece around the smart grid is a “conversation not a commercial.” Its going to take time to get people to understand the concepts associated with energy usage and its going to take time for those of us in the industry to change our vernacular to language our customers change relate to. I just had an interesting conversation yesterday with a group of consultants who (like many) were comparing the electric utility industry to the telecommunications industry. People typically try to use the TC industry as an analog and say that TC customers get time of use (day / evening calling pricing) plans. I believe that is true; however, the concept of minute is something we’ve been made to be aware of from our early childhood. How many times have our parents said to us, ‘give me a minute’ or ‘wait a minute’? So when you tell people if you use more minutes, it costs more on your phone, they can relate. If you transfer it to a term like kilowatt or kilowatt hour or even a more complicated term rate demand, then you try to get people to understand what that means, you have a harder hurdle to overcome, a harder challenge. The concept of a kilowatt demand or kilowatt-hour is not something that many customers readily grasp. So, it is incumbent of us to translate these electrical industry terms, via repeated and patient conversations and not just commercials, into a lexicon that our customers can understand. Try to explain that through a series of television and radio ads alone aren’t going to do it. What's going to have to happen is that we're going to have to focus more on one-on-one dialogues with people. Customers need more patient dialogues to get them to understand what these terms mean, how they impact them in their usage, and what they can do with that knowledge to manage themselves financially.
JB: That is interesting. Do you think that is a global phenomenon or are you speaking about a United States phenomenon?
CD: I can not imagine this will not apply globally, but my perspective is based upon the United States.
JB: So, education will be ultimately the key.
CD: Education not advertising. They are two totally different things. We're going to have to advertise to get people aware that the technology and rates will be available to them, but once they are aware, they are going to call our call centers and text and email our contact centers and they are going want to talk and chat and they are going to want to get in social inner circles to find out what does it mean and how is it going to benefit them. And just to tell them that we gave them meters, isn't going to do it. They are going to have to know what consumption means, how prices are tied to usage, and how best to shift their usage so they can mitigate prices and ultimately pay less for energy.
JB: I want to thank you for your time Charles. That concludes all the questions I have right now. I am looking forward to the panel at the Smart Grid Road Show in Cincinnati in early May where we will address more of these issues in detail.
Jon Brock is President of utility and energy advisor Desert Sky Group, LLC. He can be reached at jbrock@desertskygroup.com
