Modernizing the grid into a Smart Grid means that we’ll have bidirectional flows of electricity AND information.  (For a complete definition of the Smart Grid, see the Smart Grid Dictionary.)  Some of that information includes data communicated by smart meters about electricity consumption in homes and businesses.  Much of this behavioral data is new because it is readily available in a granular form.  Electric meters that can’t communicate this information still collect it, but it is typically read on a monthly basis as a difference in kilowatthours (kWh) from the past month’s reading to the present reading.  Other data is new because advances in wireless sensor technologies can give a cost-effective “voice” to previously uncommunicative devices like refrigerators, hot water heaters, and heating and air conditioning equipment.  We may also see new data made available from upgraded meters for gas and water too.

How this data is used has very interesting implications for consumers. Imagine a dishwasher manufacturer sending a text or email reminder to you to clean filters – all based on data from sensors that indicated this task had been forgotten for a while.  Perhaps kWh data collected by a utility is analyzed by a third party to determine energy efficiency program recommendations for your home or business.  These could be helpful services that save us money and time, but we need to have clearly given permission for data to be used in these ways.  We also need to understand the “chain of custody” – including who has access to that data, why they have access to that data, and how they protect that data.  And the biggest challenge of all is to develop awareness about the value that electricity consumption data – behavioral data about us – can have to us and other entities.

In 2007 the USA enacted the Energy Independence and Security Act (EISA 2007), and it has an outsized role in fashioning key Smart Grid policies, including energy data privacy.  As part of the act, the National Institute of Standards and Technology (NIST) was mandated to develop recommendations for cyber security standards.  NIST formed the Smart Grid Interoperability Panel, (SGIP), which in turn begat the Cyber-Security Working Group (CSWG) to focus on the recommendations for cyber security standards.  An important subset of these cyber security recommendations covers data privacy, and I led a team of dedicated volunteers drawn from the CSWG privacy subgroup that recently completed a draft of recommendations for utilities and regulators.   The recommendations are based on examination of a select number of use cases that cover the electricity supply chain – generation, transmission, distribution, and consumption.  Our draft recommendations were mapped to ten generally accepted privacy principles published by the American Institute of Certified Public Accountants (AICPA) that are in use across a number of business sectors.  The principles are available in this downloadable document.  The entire CSWG privacy group will review the draft recommendations and their feedback will be incorporated into a final set of recommendations that will be publically available. 

These recommendations were written with utilities in mind, but the content will be useful to many businesses in the Smart Grid sector that offer hardware, software and services that have any contact with personal or behavioral data.  The recommendations will help educate utilities, regulators, and vendors to build safeguards that protect data privacy into products, services, policies, and procedures.   The information will also be helpful to encourage discussion about data privacy guidelines for the Internet of Things.  And ultimately, these ongoing activities and recommendations help protect consumers dealing with an increasingly data-rich world. 

According to CASAGRAS  – an EU Framework 7 project for the Coordination and Support Action for Global RFID-related Activities and Standardization – the IoT is one of the pillars supporting the future networked society and structured on a foundation of future network infrastructure.  The IoT exists in nascent forms today – primarily islands of applications that relate to objects being identified and included in networked systems.  Some industrial processes could fall into this view, as well as smart buildings that have IP addressable devices down to the lighting fixtures.

The Smart Grid is a specialized example of the IoT, in which small to large networks connect devices and use embedded intelligence in the forms of sensing and control to deliver and manage electricity, minimizing or eliminating the need for human interactions to achieve those same objectives.  The Internet of Things has been viewed as a “metaphor for the universality of communication processes, for the integration of any kind of digital data and content, for the unique identification of real or virtual objects and for architectures that provide the ‘communicative glue’ among these components”, according to CASAGRAS.  But from a Smart Grid perspective, it’s easier to think of it as nested and overlapping networks.  A Home Area Network (HAN) is nested in a Neighborhood Area Network (NAN), a NAN is nested in a Field Area Network (FAN), and that FAN is part of the distribution grid of a utility.   

Utilities are rapidly investing in wireless and wired communications technologies and services to build out their Smart Grid projects.  Spending as a proportion of overall telecom budgets could double over the next five years, growing from 28% of telecom spending in 2011 to half (50%) of all telecom spending in 2016, according to research conducted by the Utilities Telecom Council (UTC)  this year.

While smart meter rollouts constitute a significant portion of utility investments in the USA, they are also investing in IEDs – intelligent electronic devices.  IEDs enable local and/or remote sensing and control of substation equipment at what is typically a machine to machine (M2M) level, and this is a primary reason why Smart Grids fit so well into IoT concepts.  The typical mid-sized utility in the USA has between 2000 to 5000 devices online today to provide SCADA communications, condition-based monitoring, and polling for event-specific data in their substations.  The proliferation of IEDs is one of the most interesting Smart Grid stories too – because embedding communications and intelligence in the distribution network offers new opportunities to utilities to monitor and manage their power networks, and thus improve overall reliability (decreased outages) at the least operational costs (fewer expensive remedial repairs).  

Although Smart Grids and the Internet of Things have a significant portion of activity that is M2M, all of these networks will require human interactions at different times, and those interactions will be based on data distilled into information and insights powered by advanced analytics solutions that are only now being deployed by utilities.  Next week’s blog will focus on how these networks can be managed to meet objectives that are set by the network owners. 

But there is value in the new amounts of heretofore non-existent data from the grid edge that will be available as more Smart Grid technologies rollout into consumer residences and businesses.  There are killer apps in the analysis of energy use data, and data analytics solution providers with experience in business sectors like wireless and consumer retail have interesting ideas about the real values of consumption data.  The ideas documented here are based on conversations with Bob Becklund of PreClarity, co-founder of a data analytics solution firm working in these areas.  Keep in mind that there are still unsettled areas about energy consumption data and privacy, and it will take time to sort out consumer options to permit use of data by utilities or other entities.   But consumers, utilities, and service providers will find significant value in consumption data – particularly as it relates to behavior and lifestyle.

Utilities get smarter about consumers

Utilities could sift through consumer energy use data and perform correlations with demographic data such as zip code, housing and income data to develop profiles of highest value targets for demand response or energy efficiency programs.  Demand response (DR) programs reduce peak demand (electricity used when it is most expensive).   Analysis and simulations of DR program designs and consumer responses can help utilities save money in avoided costs of additional expensive generation, and participating consumers happily save money in programs that fit their lifestyles. 

Utilities could also take energy use data from residential consumers and correlate it with use of social media and preferred consumer interaction channels, and create new education outreach and marketing campaigns aimed at different populations.   One meter may reflect multiple consumers in a household, and each will have preferences for communication channels.  New campaigns could be launched via Facebook or Google + that are targeted to specific demographics for significantly less cost and time than the “one message fits all” practices found in billing inserts. 

Utilities are gradually moving to new pricing plans based on time of use (TOU) or sources of power (clean versus dirty). This is similar to the evolution of pricing within other markets such as the wireless and airline industries.  As pricing has grown more complex, these industries have demonstrated needs for information, insight, and visibility to “what-if” scenarios to support  business decisions, ensure regulatory compliance, and enhance consumer relationships.   Utilities will have similar needs for tools to help them manage a variety of pricing plans and programs and assist consumers in selecting the plans that make the most sense for them.  

Drivers get smarter about EV roaming

EVs have some strong similarities to mobile phones – consumers tend to take them everywhere.  In the early days of mobile phones, it did not take much distance to move from your zone and incur expensive roaming charges.  Could the same history repeat itself with EV charging plans?   Perhaps not, but roaming and charging at pay stations could create billing complexities for consumers, energy service providers, and utilities.  Data analytics expertise can assist in bringing transparency to all the charging data and the business rules behind roaming EV billing, as well as assist in trip planning or identifying the best charging locations.

Consumers get smarter about energy consumption data

Energy consumption data is all about behavior, and therefore needs privacy protections.  However, that being said, there are situations where consumers may find value in giving permission to utilities, energy service providers, or other third parties to access and analyze their energy consumption data.  For instance, appliance warranties in the future may look very different.   Instead of phoning up a repair shop once the refrigerator has died, a consumer may choose a warranty option that allows the manufacturer to monitor the refrigerator’s use of electricity, and analyze that data to predict and schedule maintenance calls that become proactive rather than reactive. 

Consumers may appreciate services that analyze energy use and break it down by appliance or device – similar to how credit card companies report spending patterns into dining, air travel, and other categories.  Seeing categories helps consumers plan budgets, and similar reports of appliance consumption could help accelerate retirement of inefficient, older appliances for more energy-efficient ones.   

We’re just at the beginning of a brave new world of energy consumption data and no, it’s not overkill.  Data analytics can turn this data into usable information.   Leveraging expertise and experiences of solution providers from related business sectors will expedite the discovery and deployment of these new killer apps for the Smart Grid.

• meter accuracy – smart meters are have been perceived to create falsely high bills 
• environmental health concerns about radio frequencies (RF) 
• control – who decides how energy consumption data is used and technology choices

The first two areas of concerns were addressed in my previous blog. 

The subject of control and smart meters reflects societal challenges about management of systems complexity, privacy, and technology choices.  For example, control is one of the reasons given for why backyard organic gardening is increasing in popularity.  Food production today is complex and far removed from our visibility or control, but we can regain a modicum of both by growing our own food.  Taken to its extreme, we could all be like Mark Zuckerberg and only eat meat from animals we’ve personally killed.   Isn’t it ironic that this act of control is coming from someone whose company makes it so difficult for Facebook users to control their privacy settings?     

An increasingly complex, interdependent, technology-driven and globally interconnected world can leave us wondering what is actually within our control.  Smart meters are a visible part of a very complex electrical system that is invisible to most people.  Utilities created electrical grids that go without notice until they don’t work.  Many consumers don’t know if their electricity comes from clean or dirty sources nor its true costs, all of which can vary over the course of the day.  So when utilities say that smart meters deliver benefits of improved performance, reduced costs, and increased information for consumers, it needs to be offered in the context of the greater Smart Grid vision and objectives.  Without it, consumers can develop suspicions that they aren’t being told everything – and without the complete vision – they are right.

One smart meter concern speculates that these devices are spies on our home activities and result in loss of privacy control within our four walls.  Yes, smart meters gather and transmit energy consumption data to a utility.  Smart or dumb, electric meters measure consumption but don’t distinguish between watts used by a dryer, dishwasher or TV.  A smart or dumb meter measures the amount of electricity being used, not how it is being used, who is using it, or why it is used.  A smart meter simply delivers that data wirelessly or via power line carrier (PLC) back to the utility at a scheduled interval.  There is a significant amount of activity in the USA focused on ensuring that utilities have guidelines about use, storage, and sharing of that information, and strong privacy protections are inherent to these activities.  As long as proper energy data privacy guidelines are enacted (as states like California are doing), consumers maintain control over their data and their privacy.

Utilities are businesses that function as regulated monopolies, and the absence of choice in who provides electricity may translate into a sense of a lack of control for many consumers.  A lack of control contributes to a lack of trust – monopoly status leaves utilities with weak incentives to create relationships with consumers that build trust, although they should focus serious attention on their consumer relationships.  Consumers who do not trust utilities, or feel they have no selection control in service providers may be suspicious of the technology decisions made by utilities.  Therefore, something as visible and disruptive as a smart meter, which is affixed to a dwelling wall triggers controversy that doesn’t exist for selection of pole top or padmount transformers widely deployed throughout the USA. 

And that’s the crux of smart meter concerns – they are visible symbol of a complex, technology-driven system that is not understood by consumers. Smart meters are also disruptive – they portend changes to billing plans, utility relationships, and consumer relationships with electricity. 

That is why it is vitally important for consumers to be educated about the bigger picture of Smart Grid benefits and the strong supporting role played by smart meters. They don’t just offer timely information about energy usage.  They will enable consumers to use new micro generation and storage technologies and leverage these assets with utilities.  Smart meters will help avoid investment in new generation plants and concomitant rate increases.  Smart meters will help us reduce reliance on energy sources that emit CO2. 

When it comes to the electrical grid, the contributions that smart meters play in delivering the full benefits of the Smart Grid are complex and not easily broken down into sound bites.  But knowledge is power, and understanding the real concerns about smart meters will help utilities create and deliver the best communications to secure trust and support for smart meters and the big Smart Grid picture.

Why? Smart meters allow consumers to actively participate in their consumption of electricity. Participation means knowledge to make informed decisions about how and when to use appliances that consume large electricity loads. Participation also means opportunities to enroll in programs where consumers can voluntarily reduce their electricity consumption in exchange for better electricity rates or avoid electricity use at its most expensive times. These forms of participation mean that utilities can avoid investment in expensive generation facilities to handle peak loads – often answered with natural gas turbines. Although natural gas is cleaner than coal, it is by no means a clean form of energy because it still emits CO2. And any utility investments in peak power ultimately are paid by consumers. Therefore, smart meters deliver benefits to individuals and communities in addition to utilities.

The first category of concern is easiest to address. Utilities have demonstrated through side by side comparisons that smart meters are more accurate than the electromechanical meters they replaced. Once people have the facts about the accuracy of smart meters, and utilities have streamlined and consumer-friendly processes in place to address billing questions and/or set up comparison tests, these concerns are abated.

Environmental health concerns deserve serious attention. And to give it due consideration requires a mini-tutorial about electromagnetic (EM) energy and spectrum, including RF spectrum for wireless communications. The EM energy spectrum essentially consists of frequencies and wavelengths, and any EM frequency multiplied by its wavelength equals the speed of light. The EM spectrum is a continuum of frequencies for electricity, AM and FM radio, TV broadcast signals, microwave communications and cooking, infrared, the light waves human eyes detect, those bad UV rays that cause sunburn, and x-ray and gamma rays. The EM spectrum is both visible and invisible to us. And invisibility is a major topic in this discussion.

Wireless communications play largely invisible roles in our daily lives. Wireless communications are commonly used in grocery stores and hospitals; remotely lock/unlock cars; track inventory through RFID tags on items in retail businesses; deliver traffic light signal controls; attract people to coffee shops in search of free WiFi access; open our garage doors; give us workout feedback through wireless heart monitors; rescue us with avalanche beacons; and give us convenient communications capabilities via mobile phones and wireless networks in homes and businesses. Wireless in-vehicle communications, called telematics, are expected to be in place in almost 50% of new cars by 2017. We may not be the antenna a signal is seeking, but we marinate in frequencies.

People express concern about sensitivities to various EM frequencies. People like me who sunburn easily – well, we get the sensitivity argument, and take steps to mitigate risks by limiting exposure to the sun’s UVA and UVB rays. The World Health Organization (WHO) has research and reports about EM and health, and the American Cancer Society issued a statement about it.  The Federal Communications Commission (FCC), and the Food and Drug Administration (FDA) have also issued statements regarding RF impacts.  Without credible, scientifically-reviewed studies that can identify a direct cause and effect to human health for frequencies that range from 50-60 Hz (electricity transmission frequency) to mobile devices, the common consensus is that anyone concerned about risks of EM in general and RF in particular should take steps to reduce exposure.  That is difficult in the modern world.  For example, I can detect 15 wireless LANs in my suburban home office in Silicon Valley.

Aside from humans, other environmental health concerns focus on effects of RF frequencies on species such as bees.  I like bees and am very concerned about the stresses that bees face in doing their irreplaceable job in pollinating food crops.  There’s no scientific consensus about RF impacts to bees, and some studies point to other factors like viruses or loss of habitat as more likely to contribute to their declining numbers.  Personally, I’d like to find a frequency that kills mosquitoes. 

Given the sheer abundance of wireless devices communicating around us in the environment, why are smart meters singled out as the culprit of RF environmental sensitivities?  People are more likely to blame something that is visible – like a smart meter on an exterior wall – than the invisibility of other wireless devices and applications.  We fear what we don’t understand, and history is filled with scapegoats.  Additionally, if we don’t understand how we benefit from smart meters, then the risks, however, small, don’t seem worth it.  Do people really debate the risks of RF exposure before buying a Wii system?  Probably not, because they believe the benefits of entertainment outweigh risks.     

Utilities can do a better job providing basic information about EM spectrum, RF applications, and smart meter frequencies, especially the total amount of daily time that meters are actually transmitting or receiving data.  When consumers understand that smart meters communicate for less than 5 combined minutes in a 24 hour period and compare that to the amount of daily time spent playing Wii games, shopping in a grocery store, or chatting on a mobile phone, it could change perspectives.  This information needs to be organized into user-friendly information, not a collection of website links that force consumers to hunt for answers.  It also needs to be delivered in training to frontline resources that interact with consumers such as customer services representatives and workers in the field.  Utilities also need to communicate the benefits of smart meters at individual and community levels and share their visions of how smart meters will enhance consumer experiences.    

The control concerns about smart meters will be addressed in my next blog. 

I surveyed several US-based utility websites to see how they answered a basic website query for smart meters.  In my role play as a consumer seeking information about smart meters, my most basic question was “what’s in it for me”, also known as WIIFM.  This is a basic lesson taught in Marketing 101 – always tell the consumer what benefits they receive from a new product or service.  Lesson two is to make sure it happens early and often. 

My survey revealed that while smart meter information is presented on each website, it requires some effort to find the WIIFM information and sometimes fails to connect a benefit to a feature.  There are some interesting approaches that include the use of social media as new channels to deliver information, but these lack consistent messaging content.  Communications plans that deliver consistent, multi-layered, multi-channel messaging are necessary to address consumer questions about the value that smart meters have for individuals and communities.   None of the sites in my survey included any gamification elements – although these could have been embedded in pages that require a customer login. 

Here are some survey results.

Utility 1:  The first two search results were useless. The third search result reported on their smart meter deployment and identified two changes consumers would see – remote reading and connect/disconnect capabilities.  The WIIFM benefits were missing, and although they may be obvious to those of us in the business, we can’t assume that consumers will fill in those blanks.    

The fourth result directed me to the FAQ page for Smart Grid topics.   If I wasn’t already in search fatigue, I could find several questions and answers about smart meters, starting with the basic question:  What is a smart meter?  The answer to my WIIFM question was disappointing.  Here’s what I would learn:  “A smart meter – or digital meter – is just one part of a smart grid system. But the device is important in delivering nearly real-time information to our customers. With a digital meter on your home and supporting energy management programs, you can find out – at any time during the month – how much energy you’ve used from the previous day(s).”

This is not a compelling reason for a consumer.  I’ve been told I have a capability to learn how much energy I’ve used the previous day.  But there’s no connection to a consumer benefit here- such as being able to take actions that help me reduce my energy usage, and therefore my energy bills.      

Utility 2: My search results started with a page on how to read smart electric meters.  This page has a box on the right hand side of the page titled Smart Meter, and led to a new page that had a clear feature/benefit statement, “understand energy use to make money-saving and environmentally-friendly changes.”  Clicking on other areas of that page provided information on why smart meters are important in terms of delivering, individual, community, and global benefit perspectives.  The messaging about making choices to save money on energy bills was well-reinforced throughout the text, and ubiquity is important.

The fourth option down in the text box was titled Benefits.  Here I learned that not only would I save energy and money, I’d gain privacy through the elimination of meter reading, find outage sources quickly, and reduce the need for power plants.  The best statement I saw was embedded in a fact sheet linked to that benefits page.  It stated that a smart meter will let you know exactly when you use energy and what it costs.  Had the statement continued on with “and this information helps you make smart decisions to reduce energy use and your bills”, it would have been a fantastic benefits statement. 

These are five takeaways for utility marketing departments:

1. Consumers expect the Smart Grid to help them save money – connect the dots via multi-layered messaging to show how smart meters achieve that.
2. Cut the words – consumers are busy people and shouldn’t have to wade through lots of text.
3. Prominently position the benefits statements up front.
4. Test your website search results and make sure the pages you want to appear first will appear first.
5. Think about how social media channels and gamification techniques can deliver benefits messages about smart meters.

Could a Smart Grid mitigate the effects of a similar disaster in this country?  The answer depends on the extent of damage and the recovery options.  Here in earthquake country, a seismic event of similar magnitude could damage generation, transmission and distribution (T&D) infrastructure.  A similar tsunami would also damage or destroy any grid infrastructure in its path.  Other regions of the USA may not fear the combination of earthquakes plus tsunamis, but could experience catastrophic events, including malicious cyber attacks that disable power plants and T&D network infrastructure for weeks or months at a time. 

Regardless of where you live, a glaring vulnerability of our current grid configuration is that we are all dependent on a relatively few centralized sources of generation.  Smart Grid technologies enable a very different network configuration that integrates distributed energy resources (DER) that include power generation and energy storage solutions.  DER options include microgrids that have their own generation assets (fossil fuel and renewables-based) and can disconnect from the larger grid; community aggregations of local renewable energy assets for local use; premise-based generation in the form of solar or wind; and a variety of short to long duration energy storage options.  DER deployments put power close to users and add much needed resiliency to the grid.  It spreads the risk of destruction or disability across a greater number of generation assets and eliminates transmission challenges.  Instead of one to many impacts seen in centralized generation configurations, a grid that integrates DER minimizes the number of users who have disruptions of power. 

 Smart Grid technologies like smart meters, coupled with Home Energy Management System (HEMS) solutions, can also help consumers participate in reducing their electricity consumption during periods of stress on the grid.  Aggregating voluntary reductions through Demand Response programs, Smart Grid technologies could help avoid or reduce the need for rolling blackouts like those planned in Japan. 

Smart Grid-enabled technologies won’t prevent catastrophic events, but they give us new resiliency options to mitigate the risks and reduce the impacts of disasters on the electrical grid.  Technology alone can’t fulfill these roles without new policies from regulators that encourage DER deployments and innovative thinking from utilities to embrace rather than resist these changes.  It would indeed be a sad worst case scenario if we have these solutions but fail to implement them. 

The Smart Grid business sector is facing the same skepticism about many initiatives ranging from large-scale renewable energy grid integration projects to smart meter rollouts.  The nay-sayers point to costs of new renewable energy sources versus existing fossil fuel-based sources.  Critics of smart meters focus on the incorrectly installed or inaccurate meters as reason enough to stop deployments.  Yes, utilities must ensure that every customer has an accurate meter, but should car manufacturers who routinely recall percentages of their fleets every year be barred from continuing to produce cars? 

Changes are coming that will (r)evolutionize our relationship with electricity, and some of them are happening with less fanfare.  Perhaps the lack of a spotlight aids in their progress.  For instance, feed-in tariffs (FiTs) are adopted in some states and under consideration in others.  FiTs require utilities to purchase electricity from individual producers of different renewable energy sources at set prices.  There are a couple of variations of  FiTs, but their benefits are generally the same.  First, FiTs ensure that renewable and locally-sourced energy will be added to the grid.  Second, FiTs eliminate costly one-off contracts between utilities and customers – simplifying the producer/retailer relationship for the benefit to both parties.  The term for this is TLC – transparency, longevity, and certainty in this generator/purchaser relationship.  What does this mean for Joe and Jane Ratepayer?  It means consumers purchase locally-generated power, setting the stage for a vastly different grid that has many points of distributed generation instead of reliance on far-flung centralized power sources.  That means improved grid reliability, reduced greenhouse gas (GHG) emissions, and avoided investments in transmission facilities, which often cost $1million/mile to construct.  And that all means more bang for your buck. 

Another change that is frequently in the news is the continued momentum of electric vehicles (EVs).  From the recent initial public offering (IPO) of Tesla stock to the announcements of planned electrification of more existing car models, there is growing interest in EVs and their role in the Smart Grid.   There’s even an acronym for one of these roles – V2G or vehicle to grid, the practice of using stored energy in EVs as dynamic sources of energy capable of discharging electricity back to the grid.  The coming changes apply to new business models and policies too.  For instance, a recent study from Zpryme cites activity from the state of Delaware that mandated something similar to FiTs for EVs.  Their V2G policy requires utilities to buy back energy from EV owners at the same price that those owners would pay to charge their EV batteries.  This means that an EV can make money for its owner.

It’s hard to oppose a change that makes you money, but it illustrates the challenges for utilities, industry associations, policy makers, and vendors face in educating taxpayers, ratepayers, and consumers about Smart Grid changes that have immediate impacts, but may not have immediate benefits.  The education can occur, and should occur, but it will require concerted efforts by all Smart Grid players to ensure that the changes on the horizon are enthusiastically supported by taxpayers, ratepayers and consumers.

Was this evidence of a smart meter backlash or a simple demonstration of that adage that familiarity breeds contempt?    Only detailed surveys will determine that, but it is clear that PG&E needs different advisors in the executive suite and a fresh approach to interacting with customers. 

So, community choice is safe in California, and this is excellent Smart Grid news for two reasons – but there’s a real warning in the poll results too.  (Community choice lets cities, counties, or neighborhood entities purchase and/or generate electricity for residential and business use within their boundaries.  Community choice means local control over energy resources, more renewable sources of energy, plus a lower overall cost of electricity.) 

First the good news.  Community choice should accelerate the integration of sources of renewable energy into the grid.  As the environmental devastation grows from oil spills (even on land – see the Red Butte Creek spill in Utah), it is becoming apparent to even the most oblivious that this is one fossil fuel that we would be well-served to render obsolete.  For instance, communities can band together to create solar gardens and aggressively convert rooftops to solar power to generate local clean and renewable power for their electric vehicles.  

A second benefit is that distributed generation improves our grid security.  Complete reliance on centralized energy generation puts all eggs in one basket.  If you believe the reports about hackers infiltrating the computer networks that control the electrical grid, or even if you only believe a fraction of them, there’s serious reason to be alarmed and deploy solutions that improve the stability and reliability of the electrical grid.  A grid studded with microgrids and CCA-controlled energy sources is a smarter grid, less likely to be completely disabled and able to recover faster from natural disasters or acts of criminality and terrorism.     

However, there is a real worry in the Proposition 16 results.  It is clear that PG&E customers don’t trust PG&E.  This does not bode well for future PG&E efforts to educate their customers about TOU (Time of Use) rates and other measures to reduce electricity needs at peak time periods to save money and reduce carbon emissions.  Enlightening consumers about their energy use and encouraging participation in smart energy programs is a process of complex messaging, and it requires a relationship of trust.  PG&E doesn’t have that now, and the big question is – can they earn consumer trust to be effective in their future Smart Grid solution rollouts?  If they fail in that endeavor, we all lose. 

First they created a public relations disaster with their smart meter rollout, which now has its own term called “the Bakersfield effect”.  PG&E investment in a sensible communications plan and budget could have prevented this problem.  The impacts of the Bakersfield effect are widespread.  Smart meter rollouts in other utilities are delayed or postponed, and each setback hinders realization of their Smart Grid objectives.

Second, PG&E filed a tariff proposal that would reduce their current 5 tier electricity pricing structure to 3 tiers.   Under the current structure, the more energy you use, the higher your rates.   This provides financial incentives for Californians with high bills to seek solutions like solar panels or energy efficiency investments or simple energy conservation behaviors.  The proposed flattening of this program rewards electricity guzzlers at the expense of energy-conscious consumers.  It is akin to asking drivers of gas-sipping cars to subsidize the gas for Hummers.  Solar companies are already on record stating that this tariff change, if approved by the California Public Utilities Commission, would remove financial incentives for many homeowners to add solar generation and thereby defeat two key Smart Grid objectives – increased renewable energy and more active consumer participation. 

And finally, there’s Community Choice Aggregation and Proposition 16.  Community Choice Aggregation (CCA) is available in several states including California and is an interesting market model to accelerate the introduction of renewable energy into the grid and enable more consumer participation to reduce energy use.  The program details vary in each state, but all allow cities or counties to purchase and/or generate electricity for residential and business use within their boundaries. The local investor-owned utility (IOU) delivers electricity through its transmission and distribution network and continues meter reading, billing, and maintenance services.  The customers in the CCA footprint have the ability to opt-out of the CCA program, but why would they?  A CCA arrangement means local community control over energy resources, an increased reliance on renewables, plus a lower overall cost of electricity. 

For example, a local effort in Marin County projects that adoption of a CCA program for the county and its communities would result in:

• Annual average electricity cost savings of $6.8 million spread amongst it customers
• Increased renewable energy utilization to 51% by 2017 or sooner – double the renewable energy resources provided by PG&E in that timeframe
• Improved rate stability for local residents and businesses because a CCA is responsive to its local customers, not to remote shareholders

Prop 16, misleadingly titled the Taxpayer’s Right to Choose Act, is sponsored and funded by PG&E, which is committing up to $35M to the June 8 campaign.   PG&E would like to kill CCA to protect their monopoly powers.   While this effort pleases Goldman Sachs and other Wall Street investors, it has negative impacts for the Smart Grid and us.   First, discouraging community-sourced generation reduces the resiliency of the Smart Grid.  Communities that have their own sources of electricity could contribute electricity or reduce energy consumption during grid disturbances and thus help PG&E continue uninterrupted electricity service to all ratepayers.  Second, it casts a pall on the number of new market models, products, and services that can be introduced, which is one of the seven characteristics of the Smart Grid identified by the Department of Energy (DOE) to accelerate deployment of solutions that improve our energy security and reduce greenhouse gases.  Third, community-based programs that promote energy efficiency and responsive energy reduction programs have unique, localized value propositions to lower community energy costs that could not be matched by a monolithic entity like PG&E.   See this link for more information.

These PG&E actions, if allowed to go forward, are serious obstacles to the deployment of Smart Grid technologies and services, and in turn hinder the ability of this nation to improve our energy security, reduce greenhouse gas emissions, and reduce energy costs for consumers.  Satisfying Wall Street should not (again) be a financial, environmental, and national security cost to American taxpayers, ratepayers, and consumers.