The Smart Grid Dictionary defines energy efficiency as technologies, applications, and services that reduce the consumption of energy without impacting operations or behaviors.  It is that lack of change to behaviors or operations that sets energy efficiency (EE) apart from energy conservation.  EE produces negawatts – and treating it as that “penny earned” has been promoting welcome innovations in technologies and policies that financial and environmental benefits for consumers.

First, improved EE in products means lower total costs of ownership or TCOs for residential and business consumers.  The California Energy Commission recently adopted EE standards for battery chargers, which are vampire loads in just about every home and business.  Those chargers are often plugged in and drawing power even when they are not fulfilling their purpose of charging up a smart phone, mini-vac, or powered toothbrush.  In California alone, a cringe-worthy 5.3 gigawatthours of electricity is spent on chargers, mostly in the form of waste heat.  The standards, which take effect between 2013 – 2017, will require that manufacturers produce chargers that stop drawing power once the device battery is topped off.  That will lower consumers’ electricity bills and reduce the need to invest in additional generation capacity to support these vampire loads.  And that in turn helps keep electricity rates from rising.  California EE standards are reckoned to have saved its state residents over $36 billion since 1977.  That’s a lot of pennies earned.

Second, purposefully designing EE into products will reduce the amount of energy expended for any device’s operations – whether they are always tethered to the grid or reliant on battery power.  Researchers at the University of Michigan have a new technology called Energy-Minimizing Idle Listening that has reduced energy use in mobile devices by 44% in proof of concept testing.  By putting mobile devices into a “subconscious mode’, the device’s normal idle listening state consumes less energy, extending battery charges and reducing electricity consumption.   Another interesting technology trend first articulated by Jonathan Koomey of Stanford University and known as Koomey’s Law states that the amount of computing power per joule doubles every 1.6 years.  (A joule is a measure of energy, whereas a watt is a measure of the rate of energy consumption.)  Essentially, a fixed amount of computing power gets twice as energy efficient just under every two years, which has tremendous implications for our proliferation of electricity-guzzling data centers that support our growing use of cloud-based applications and digital storage.  IEEE’s local Silicon Valley Chapter of the Solid State Circuits Society is sponsoring a course about the fundamentals of low-power design, which portends opportunities for designers of computing devices, who have long understood the need to build in as much EE design as possible, to share their expertise with developers of consumer electronics.  These developments will ultimately reduce the costs of operation for many popular devices.

Third, thinking about energy efficiency as a penny earned enables policy-makers to support decoupling for electric utilities.  The Smart Grid Dictionary defines decoupling as a regulatory and market strategy that allows utilities to invest in and profit from efficiency-based capacity by assuring them a return that is equivalent to sales of electricity.  It means that utilities are not penalized for encouraging their customers to use less electricity.  Today, 30 states do not have pending or established decoupling policies in place for electricity and/or gas, and they should.  Consumers would like utilities to help them reduce their energy bills, but without decoupling, why would utilities negatively impact their revenues?  Understanding the full value of decoupling translates into political will to modify utility business models.  Why do regulators and legislators in these 30 states ignore the opportunities to save money for their citizens?     

Whether we’re looking at improving product designs or market mechanisms to encourage energy efficiency as that “penny earned”, the financial and environmental benefits for consumers are compelling.  Ben Franklin would approve.   

There’s no single answer to the climate change mess we’re in, but Smart Grid advances will be primary contributors to the most effective reductions in CO2 emissions.  Here are two incremental efforts that can reduce our use of fossil fuels and improve the odds of avoiding the severest impacts of climate change.

Energy efficiency.  Residential and commercial buildings account for 40% of energy consumed in the USA, according to the Department of Energy.  Fossil fuels account for 77% of that energy expended to heat, cool, illuminate and operate those buildings.  Innovative retrofit solutions for building envelopes (windows, walls, and ceilings) can reduce energy consumption, emissions, and energy bills.   But energy efficiency innovations also extend into product designs and operations.  For instance, the USA wisely instituted energy efficiency standards for refrigerators back in 1978, and since then, even as these appliances have increased in size and features, their electricity consumption has decreased by more than two thirds.  The most recent round of refrigerator standards instituted in August of this year will trim another 25% of energy use by 2014.  Similar expectations should be applied to every appliance and electronics component that reside in our homes and office buildings.

Electric vehicles (EVs).   This is truly disruptive in terms of technology, policies, services and even business models, and it couldn’t happen at a more opportune time.  Electrification of personal transportation delivers beneficial impacts that range from environmental to economic to national security.  There’s a good report from the Electrification Coalition that details the numerous benefits that we can enjoy through transitioning to EVs.   This report recommends replacing traditional vehicle fleets to EVs as the first incremental step in that transition.  EVs reduce petroleum products consumption, which accounts for 94% of our transportation needs today.   A transition to EVs would eliminate a $1 billion per day transfer of wealth from the USA to countries that don’t like us.   

While these disruptions are most welcome to securing our energy security and refocusing investment within our borders, the Smart Grid offers strategic new uses of EVs beyond mere transportation.  The most disruptive impact of all is that the energy stored in EVs can potentially be harnessed to modify electricity consumption patterns.  EVs that are plugged into the grid during times of peak electricity use could be tapped to intelligently discharge just enough energy for utilities to ride-out those timeframes without building additional generation facilities or purchasing power at its most expensive price.   Transitioning to EV-based transport will require upgrades to our electric infrastructure, which are needed anyway to support integration of renewables and distributed small to large scale generation.  It will also require new software applications to manage EVs as mobile, temporary, and distributed energy sources.    There are enormous opportunities for entrepreneurs to create innovations in technologies and services to manage what is commonly known as the V2G (vehicle to grid) connection.  Even utilities and their regulatory agencies, typically cautious adopters of innovation, may develop EV business models that continue the focus on delivery of safe, reliable, and cost-effective electricity.  

The UN conference in Durban may not produce the game-changing agreements that we’d like to see, but in the USA we can challenge ourselves to be the leaders in the most dramatic reductions in carbon emissions through innovations in Smart Grid technologies, policies, and services.   

But what exactly is a smart building?  Is a residential building smart if it has a home energy management system?  Is a commercial building smart if it has been retrofitted with energy efficient windows and better insulation?  Is it a net-zero building – meaning a building that is so energy-efficient that its electricity needs can be supplied with onsite renewables generation.  The definition of a smart building is more difficult to define than the Smart Grid itself.  For the Smart Grid, the simplest definition is the bidirectional flow of information and electricity.  But the definition of smart buildings is more complex and complicated.   It is complex because buildings have different occupant uses and energy use patterns.  It is complicated because building energy use is contingent not only on the amount of intelligence inside the four walls (lighting controls, occupancy sensors, etc.), but on the intelligence of the design, materials, and construction of the four walls too.  In other words, its energy efficiency.

For starters, let’s consider that a smart building has some ability to recognize its internal and external environments and take actions, with or without occupant intervention, to reduce energy use based on these environmental variables.  The most common variables include internal building temperatures and outside temperatures, and the amount of natural daylight or time of day/night.  Heating, ventilation, air conditioning (HVAC) and lighting are typically the two biggest energy uses in both commercial and residential buildings – and directly influenced by weather and time.  Home energy management systems (HEMS) offer monitoring and control of selected devices for residential buildings, and like energy-efficient lighting, are gaining a toehold in new and retrofit markets as more homeowners adopt solutions to reduce overall energy bills.  Commercial buildings have a longer timeline of energy management experience, and there are new entrants with relatively sophisticated offerings to help existing and new building stock manage lighting, plug loads, small data center, and HVAC expenditures. 

The effectiveness of these actions, however, is greatly influenced by the building envelope –comprised of roof, walls and windows.  The most impressive energy management system has limited benefit in a building with single pane windows, inadequate insulation, and inefficient incandescent lighting – extreme energy inefficiency.  One strategy to address this challenge is the Energy Savings and Industrial Competitiveness Act of 2011 introduced in May by Senators Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio).   It creates a national energy efficiency strategy that “can make our economy more competitive, start addressing our nation’s energy challenges, and create private-sector jobs today.”    That last benefit is especially welcome news for the US economy.  This bipartisan bill would move the USA forward to the goal of a unified energy policy, something that is sorely needed for energy, economic, and environmental security. 

Sadly, the same Congress that can propose this type of farsighted policy is also capable of producing H.R. 2417, the BULB Act, which wants to repeal energy efficiency standards for light bulbs.  Trotting out the same tired old arguments (kills jobs, increases costs) that have been used about seat belts, emissions controls, fire safety standards and so on, Rep. Joe Barton (R-Texas, infamous for his apology to BP for the trouble the federal government put them through for a massive oil spill), ignores facts in favor of fiction, and ignores the arguments of lighting manufacturers in favor of a couple of talking heads.

Smart buildings require intelligent management systems plus energy efficiency standards.  Smart buildings are an important part of the overall Smart Grid because they help reduce electricity requirements especially during peak demand timeframes.  Let’s hope that we get smart policies that move us forward to energy, economic, and environmental security, and not more insecurity as formulated in the BULB Act. 

Games are identified as one of the biggest trends for social media and mobile devices.  Gamification is called the next big thing for marketing.  Both have exciting implications for behavior change in the health care sector.  So will social games and gamification play a significant role in changing consumption behaviors for electricity, gas, and water?  Yes.  Gamification incorporates various game mechanisms like achievements, points, status, and behavioral momentum into existing communication channels to engage and educate target audiences.  It’s a great tool for utilities and Smart Grid vendors to use with residential consumers to communicate complex concepts around energy efficiency, demand response, integration of distributed generation and new pricing programs.

Social gaming differs in several key aspects.  First, it is based in social network infrastructures like Facebook.  Second, it requires interaction with other players in a competition built around an application specifically designed for play.  There are additional distinctions, but this explanation sets the stage for why utilities should infuse gamification into their existing websites to build knowledge and support for Smart Grid initiatives such as smart meter deployments, introduction of Time of Use (TOU) pricing, or enrollment in demand response (DR) programs.  Smart Grid vendors should build games into their solutions that allow for communication of achievements (such as “hey look at the score I received on my energy behavior knowledge) to interactive programs that deliver status or rewards to players and winners.

Here’s one example of how games could expedite enrollment in a DR program.  A utility is building a communications outreach plan to the residential consumer base to build enrollment in a new DR program.  As the project team reviews the multiple channels available for outreach (such as contact centers, printed billing inserts, websites, Facebook pages, and community interaction tactics) they acknowledge that the program is difficult to explain and therefore negatively impact their ultimate enrollment success.  Some team members read that games have often been used to educate and motivate desired actions.  They note that the utility website would be a natural location to add game mechanics to teach consumers about the individual, community, and societal benefits of DR participation.  Rewarding “players” through a series of simple games for achievement can motivate them to actively seek information and recruit more players when rewarded for that.  Players earn points for participation based on the game objectives. End result – consumers become promoters of the DR program, and peer-based recommendations for participation in the DR program causes enrollment to surge.

The gamification project doesn’t stop there. Consider how its influences can be extended to positively impact local businesses in the utility footprint.  The utility project team realizes that any point rewards need to be redeemed somewhere, and sees that they can dramatically expand the scope of the educational outreach (and deliver some additional community benefits) by working out agreements with local businesses that are willing to redeem game points towards the purchase of approved merchandise or services.  Services could include energy efficiency upgrades, HVAC maintenance and other actions that deliver long-term benefits to utilities in reduced energy use.  Merchandise can include energy-efficient appliances and light bulbs, EV charging stations, or solar panels.  These “redemption centers” are listed on the utility website, and those commercial establishments that are participating in any other utility energy efficiency or curtailment programs are highlighted to recognize their good energy behaviors, and extend the teachable moments to consumers and other businesses.  Local merchants enjoy the increased sales activity, local governments applaud the boosts to local business, and the utility has achieved many more benefits than mere load reductions.

Gamification presents very intriguing possibilities for utilities and Smart Grid vendors, and should be incorporated into ongoing Smart Grid projects that are visible and disruptive to consumers.  I’ll talk about innovative outreach that includes gamification in a webinar on June 21.  Join us to learn more about leveraging all channels of communication to educate, engage, and enlighten consumers.

But when it comes to consumers, this link in the electricity value chain is lacking in knowledge about the benefits that the Smart Grid delivers.  This knowledge gap has profound implications for utilities.  A recent study from EcoAlign shows that consumer awareness has the potential to go a long way in reducing energy consumption and reducing energy bills (with a concomitant reduction in CO2 emissions).  In fact, the EcoAlign study reveals that a stunning 87% of the respondents would like utilities to suggest ways to reduce their bills.  This is the opportunity and the challenge for utilities.

Utilities can play a distinctly new role with their commercial, industrial, and most especially residential consumers.   Utilities can take on the role of “trusted advisors” with consumers to educate and enlighten them on products, services, and simple behavior changes that reduce energy consumption without impact to lifestyles, comfort, or health.  Trusted advisors can build interactions or engagement with consumers and move beyond the traditional delivery of electrons.  Why is this important?  Historically, the lifetime value of a consumer used to mean that utilities supplied electricity, gas, and/or water, and consumers reliably purchased it, at steadily growing rates of consumption year over year.  However, with consumers expecting utilities to suggest ways to reduce their bills, which means reducing their consumption, lifetime value would be a diminishing number.  That’s not exactly a thriving business model or one that excites a lot of investors.

Utilities that become trusted advisors will have a portfolio of different services beyond the safe and reliable delivery of electricity.  These new services go well beyond the rollout of Demand Response (DR) programs to residential consumers.  New services may include Home Energy Management Systems (HEMS), home health or wellness, or water management services.  Services like these offer intriguing possibilities for utilities to increase the lifetime value of consumers.   And even services that utilities are more accustomed to offering, such as energy efficiency and DR, benefit from utilities taking a more active educational role with consumers.

A 2010 report from the Department of Energy’s Lawrence Berkeley National Lab titled “Coordination of Energy Efficiency and Demand Response” studied opportunities for utilities to offer both energy efficiency and demand response programs as a powerful combination to reduce overall and peak demand.  The conclusion was that the payoffs are substantial, but since these are complicated topics, program participation will require consumer education.  Utilities structured to operate as trusted advisors can provide that education, and will be the organizations that thrive in the future Smart Grid.  Otherwise, utilities may simply deliver electricity, gas, or water and watch other businesses sell services to help consumers manage consumption and other home and business-based activities.

Utilities will have to reorient their operations to take on the trusted advisor role.  Part of the transition includes a thorough communications strategy for internal and external constituencies.  This will be one of the discussion topics in an upcoming webinar on June 21 titled How to Deliver Communications and Education about Smart Grid Benefits to Utility Customers.  Join us to learn more about Smart Grid transformations.

Can the Smart Grid solve climate change?  No, but it can reduce the amounts of emissions that we will continue to pump into the atmosphere.    Here are 6 examples of how the Smart Grid will reduce emissions:

1.  Smart Grid technologies enable integration of clean, renewable sources of energy into the electrical grid.  Sources like solar, wind, hydro, and geothermal, once deployed, have the additional benefits of using zero to low energy requirements to aid in the extraction or harvesting of these energy sources.  Contrast that to the energy costs to extract, refine, and transport coal or oil, and the emissions equation for renewables looks even better.
2. Smart Grid technologies make the electricity supply chain more energy-efficient.  Superconducting materials will reduce losses incurred in transmitting electricity great distances.  Distribution automation can further reduce energy waste by better matching supply to demand.  At the consumption link of the chain, there are many Smart Grid technologies that improve electricity use in commercial, industrial, and residential buildings.  Since the cleanest energy is the negawatt, any technologies that reduce the electricity load have a beneficial cumulative effect that can result in avoidance of new generation facilities.  Continuous commissioning is a combination of hardware, software, and services that use sophisticated sensors and actuators to maintain buildings at their best energy performance levels while maintaining occupant comfort.  Technology innovations go beyond the building envelopes and into the actual designs of appliances and consumer electronics to do more with less energy.
3. Integrating generation into the distribution grid eliminates losses from long-distance transmission and puts the users much closer to the generation sources.  CHP (combined heat and power) solutions convert what is typically waste heat from generation into useful heat, reducing the need to expend more energy.  Using backup generation sources (aka BUGS) can also reduce the need for building additional peak power plants, although many BUGS units are diesel and would benefit from replacement to cleaner energy sources like natural gas. 
4. Electrification of transportation, particularly personal vehicles, will reduce our reliance on oil, which has tremendous energy costs in its extraction, transportation, and refinement – and then there are the environmental costs.   Additionally, leveraging the energy stored within electric vehicles (EVs) can reduce the need for peaker plants during times of high demand.
5. Energy storage time shifts generation, so electricity can be stored until it is needed.  Energy storage technologies also increase the integration of small to large scale renewables into the grid.  A significant amount of global R&D activity is focused on developing the most effective energy storage technologies.
6. Energy management solutions for residential and commercial and industrial (C&I) applications build awareness of consumption, and a multitude of studies demonstrate that awareness can result in reductions of energy use from 5% to 20%.  The cumulative effects of everyone throttling back on electricity are reflected in less need for additional power generation from any source.  There are a number of solutions in the marketplace today, with the most interesting ones based on open source platforms and standards.     

The Smart Grid won’t cure our planet’s climate ills, but it will certainly lessen the severity of them if we continue to aggressively invest, innovate, and adopt the myriad technologies that reduce our need for energy derived from the dirtiest carbon-emitting sources like coal and oil. 

The relationship of electricity and water is particularly intertwined – it takes electricity to move and treat water, and water is quite often used to make electricity.  For instance, the state of California moves a great deal of water from the northern part of the state to the south.  Transporting one acre-foot of water – the typical amount consumed by two families of four in a year – requires 3000 kWh per year.  One acre-foot of water (the amount of water covering 1 acre to a depth of 1 foot) equals 326,000 gallons and weighs 2.7 million pounds.  The California Energy Commission (CEC) figures that 20% of the state’s electricity and 30% of its natural gas consumption are dedicated to water transport or treatment.  A five minute faucet flow uses approximately the same energy as letting an incandescent 60-watt light bulb burn for 14 hours. 

There is a great deal of attention given to the aging electrical grid infrastructure, and with good reason.  The current electrical grid has reduced reliability and transmission losses that cost the economy dearly.  We need to fund massive investment in the water infrastructure for similar reasons.  The water systems in many cities and municipalities in the USA are characterized by aging water pipes that leak and are at risk for full collapse.  The waste of potable water through this unreliable infrastructure cannot be sustained for much longer – especially in high growth regions where current water resources are not sufficient for continued consumption rates. 

The water infrastructure needs basic upgrading to stop the leaks, but it also needs sophisticated sensors to track and measure water use.  Just like we use smart meters to provide much more detailed and instantaneous information about electricity use, we need better feedback mechanisms that communicate and analyze water use.  Information leads to awareness and knowledge, and efficient use And that’s the crux of another problem.  We can add clean renewable sources of electricity to the grid in the form of solar, wind, and geothermal production to accommodate growing populations.  We can’t make more water – we can only use and reuse the water that is on the planet.

According to the Environmental Protection Agency’s WaterSense site, reducing water use has definite positive impacts on the environment and economy.  Intelligent use of water lets us reduce the need for investments in new infrastructure and reduces the strain on the current, aging infrastructure.  We talk about energy efficiency as the low hanging fruit in Smart Grid discussions, and we need to view water efficiency in the same light, and add intelligent devices and more communications capabilities to optimize this infrastructure as we are already doing for the electrical Smart Grid.

What’s wrong with this picture? If you are a utility that gets revenues based on the volume of sales of electricity, then energy efficiency programs that reduce volume translate into reduced revenues. Imagine if a fast food restaurant encouraged you to NOT supersize your meal – although it would be good for American waistlines, it would be bad for the restaurant and its investors.

Utilities that operate in this model face a real dilemma therefore in offering and aggressively promoting effective energy efficiency programs. Here’s where a regulatory concept called “decoupling” helps. It is a ratemaking mechanism that removes the barriers to energy efficiency programs. It eliminates the link between electricity sales and utility profits. The regulatory body guarantees a revenue return through rates that are typically calculated on a per-customer basis, and periodically reviewed to see if the pre-determined revenue requirement is met.

What does decoupling and support of energy efficiency programs mean for utilities and investors? Decoupling provides stability in revenue expectations, reducing risks for investors. According to a recent report released by Ceres, utilities that engage in energy efficiency programs also reduce their risk exposure to fluctuating energy prices.  Utilities that support diversification and distribution of generation assets take risk reduction a step further.  Utilities that engage in energy efficiency and diversification and distribution of generation are more likely to attract low-cost capital, enabling better returns for investors.

What does decoupling and participation in energy efficiency programs mean for consumers?  It means increased and improved opportunities to reduce utility bills.  Depending on the state, the programs can cover replacement of selected appliances with energy-efficient models or rebates on certain building remodeling projects.   Federal tax credits may also come into play and add even more financial benefits for consumers. 

What does decoupling and energy efficiency mean for the environment?  It means reduced carbon emissions reflecting reduced electricity consumption.  And because decoupling also removes a barrier to localized generation – the prosumer model – decoupling facilitates broad integration of renewable energy sources into the grid.

What does this have to do with the Smart Grid?  The Smart Grid is more than an overlay of ground-breaking technologies, it is based on smart policies that provide incentives to consumers and utilities to optimize generation, transmission, distribution, and consumption of electricity.   

For more information, the Regulatory Assistance Project has good presentations that explain decoupling and its benefits to consumers, utilities, and our environment.  

Take a look at where Smart Grid investment funds are based.  Of course, the Federal government’s American Recovery and Reinvestment Act (ARRA) stimulus fund kickstart of $3.4B beat all other sources of money.  But from a venture capital perspective, the top 3 US geographic sources of funding in 2009 were

• Silicon Valley (Northern California) – $1.2B
• Southern California  - $329.5M
• New England – $283.7M

Much of this investment is going to a category called energy efficiency (EE) rather than alternative energy technology.  There are several reasons for this, and the primary reasons are that EE plays have lower funding requirements than alternative energy investments which are capital-intensive, can be brought to market faster than many other Smart Grid technologies, and have a comfort level with many venture capitalists who can relate EE research, development, and deployment (RD&D) to familiar ICT (Information and Communications Technology) RD&D. 

 Silicon Valley has tremendous intellectual expertise in a number of areas that can and should make significant contributions to advancing Smart Grid solutions.  The centers of expertise include

• Software for any application
• Security and encryption
• Semiconductors, processors, and chipsets
• Game design
• Communications and networks

There are more Smart Grid-related conferences, seminars, and webinars here that expose workers from all backgrounds to the challenges and opportunities in this business sector. What I call the region’s innovation infrastructure encourages interesting fusions of different areas of expertise.  Workforce mobility and mindset supports innovation with a near constant circulation of resources in companies that expose employees to new technologies, business models, and problem-solving approaches.   There is an expectation of sharing knowledge and synthesizing data into new insights.  Silicon Valley also has a number of incubators – organizations and business plan competitions that encourage and support the growth of great ideas into viable companies.  The concentration of world-class colleges and universities in this region further enhances this concentration of intellectual capital.   

The big challenge is how to engage Silicon Valley and utilities together into a full-throttled drive to create the optimal Smart Grid solutions that will reduce energy costs for consumers and utilities, reduce greenhouse gas emissions, and build national energy security.  I recently read an article that examined the reasons for Ford Motor Company’s success in revamping its business operations.  Mark Fields, EVP and Americas President was quoted as saying, “These high-tech companies work at a very different clock speed than us, a much faster clock speed.  We had to jump in.  We had to learn.  We started thinking like a software company.”   

Can utilities learn to move at faster speeds?  Can Silicon Valley cultures learn to work with utilities and respect their regulatory and operational environments?  For example, utilities need to test all new solutions to ensure that they won’t “break the grid”.  Telecom companies have been doing this for years, too, and the lengthy and repetitive investigations not only test the solution, but the patience and financial resources of the solution vendors.  Here’s one area where a little process and model innovation should be welcomed by both utilities and Smart Grid vendors to drive down costs of doing business and accelerate introduction of solutions. 

The stakes are high, and it’s not a given that the Smart Grid will be built in the most intelligent and cost-effective ways, but the good news is that the great innovation engine called  Silicon Valley is going to be a real player in this game.

Exceptional Mission.  Employees in the land-line phone company had an obligation to deliver dial tone – even when the lights went out, and they had their own banks of batteries for back-up power so people could call to report electricity outages.  Failure was not an option.  And telecom resources were ignored and taken for granted– until you picked up a phone and didn’t have dial tone.  This same sense of mission is expressed by utility resources too – no one thinks about electricity until an outage, and electric utilities have an obligation to deliver power regardless of circumstances.  Utility resources have done an excellent job managing today’s electrical grid.   I sometimes see and hear bewilderment, frustration, and defensiveness in utility resources when talking about the traditional grid and the changes the Smart Grid will bring.  Lesson #1 – Change is not a criticism of past performance.  Be excited that electricity is something that will no longer be taken for granted.     

Monopoly Skills.  In 1980 you had no choice for local phone service except Ma Bell.  Phone company practices, policies, and processes were heavily influenced by state Public Utility Commissions and the Federal Communications Commission (FCC).  The price of monopoly is regulation, and utilities are very good at interacting with regulators.  Another price of monopoly is the lack of utility skills in working in any other type of market.  Phone company resources had a steep learning curve to build knowledge about how to effectively communicate with customers and how to successfully introduce and manage a growing deluge of new technologies and services to customers while satisfying regulatory requirements.  It will be a painful climb for some utilities, but it can be accomplished faster and at less cost to ratepayers by learning from telecom industry experiences.  Lesson #2 – Hire outside talent to build corporate readiness for a transitioning marketplace.  Develop and deploy corporate-wide change management plans that address concerns of existing employees.

I’ll continue my observations about similarities next week after attending the ITExpo East Smart Grid Summit.

Let’s give a standing ovation to the Department of Energy.   The DOE’s new energy efficiency enforcement is producing positive results.  The DOE entered into a Consent Decree with Haier America, about a parts defect that caused certain freezers to consume more energy than reported to consumers.  The Consent Decree obligates Haier to notify affected consumers, repair defective units, add one year to warranties, and contribute $150,000 to the U.S. Treasury.  The manufacturer cooperated with the DOE investigation, and I hope that other manufacturers will do likewise, just like I hope that the Consumer Electronics Association (CEA) takes some notes in case it contemplates fighting California Energy Commission energy efficiency standards again.  

The DOE had a huge response to its call for efficiency certification documentation – 600,000 residential appliances in 15 different product categories from 160 manufacturers submitted their data so far. The DOE will review compliance with minimum energy efficiency standards, and those products found lacking will be required to deliver the energy and cost savings required by law.