Navigant Research Blog

Prepaid Metering: Another Power Shift?

— June 15, 2012

The National Consumer Law Center (NCLC), whose tagline is “Advancing Fairness in the Marketplace for All,” is opposed to prepaid utility service, which my colleague Marianne Hedin has written about here previously.  The NCLC asserts in its recently released report, “Prepaid Utility Service: Rethinking Prepaid Utility Service: Customers at Risk,” that prepaid utility service programs are putting low- and moderate-income households’ health and safety at risk, and that the associated costs are regressive.  Yet, a recent report from EcoAlign, an energy and environment marketing agency that surveyed 900 customers, found high satisfaction responses from consumers on prepay programs for cost containment, convenience, and control over energy consumption.  This is not without some apprehension though; these same consumers also raised concerns about fear of service disconnection, higher rates, and the fees associated with prepay.

If the EcoAlign survey is on target and consumer and NCLC issues can be mitigated, utilities have an opportunity to integrate their AMI/AMR systems with their meter and billing servers to reduce delinquent payments, reduce collection costs and effort, and hopefully improve customer satisfaction.  By now, though, industry watchers know the lessons learned from the intense backlash experienced against smart meters in Texas and California: relatively few numbers of upset customers can successfully channel their dissatisfaction into a widespread social media campaign that can have significant consequences for utilities.  Utilities have been denunciated, protested against, and subjected to negative headlines over smart meters, and, unable to circumvent the firestorm, have seen resulting changes in regulatory policies and been compelled to modify programs and deployment plans.

In 1962, President John F. Kennedy made a speech that included what would later come to be called The Consumer Bill of Rights.  He said that there are four basic rights: the Right to Safety, the Right to be Informed, the Right to Choose, and the Right to be Heard.  Backlash against the utility industry is an expression of these deeply held rights.  However, for many customers, choosing their electricity provider is not an option.  This phenomenon is likely the reason that, when customers are dissatisfied with costs and service offerings, they don’t begrudgingly switch providers, but entrench to get their concerns publicly aired and addressed by higher authorities.  Because of this, consumer advocacy organizations, like the NCLC, play a heightened role in consumer protection.

The NCLC is asking utilities to acknowledge that their programs could have negative consequences on economically challenged families, and dispense with transaction fees, drive down the costs for those who prepay, and work to reduce risks related to health and safety concerns when offering these programs.  Utilities have the option to leverage the advantages that consumers might see in a prepay offering, including the ability to budget around their consumption of energy.  There are challenges, however, and utilities that are implementing or considering these programs, especially in combination with sophisticated smart meter capabilities, are wise to develop a model that focuses on reasonable rates and fair treatment of prepay customers.


Utilities Get Smart with Smart Meter Data

— June 1, 2012

The Edison Foundation announced in May, 2012 that as many as one in three households in the United States now have smart meters. Yet, utilities stand to know even less than they did before about some of their operations once they deploy an advanced metering infrastructure.  That is, if they don’t find a way to turn smart meter data into actionable information.  With electro-mechanical meter reading, meter readers do more for the utility than just read consumption values off of the meters; they also look for signs of meter tampering and fraud, and inspect the meters and utility assets for their condition.  Without these eyes in the field, utilities may experience problems identifying theft and knowing when other field assets may be in need of repair.  Smart grid data analytics can help address these problems, but given the volume and velocity of the incoming data, utilities must first define the business challenges they are trying to overcome.  Getting and storing the data is not the issue; making sense of it is.

In a field whose practitioners are said to be “reading the electronic tea leaves,“ many vendors focus on technology solutions to solve the smart grid big data problems.  And perhaps rightly so, as in the discipline of data analytics, issues like data quality, usefulness of the algorithms, scalability, and performance are key factors to deployment success.  However, in choosing the right solution, successful utilities consider not only their most pressing issues like meter-to-cash operations, demand response and customer service, but also how to leverage their smart grid to introduce operational efficiencies, such as voltage optimization and asset protection.

Figuring out how to do this effectively requires defining the business problems where a data analytics solution can deliver a promising return on investment (ROI).  Not all solutions will.

Smart grid data analytics (stand by for a Pike Research update of this report in 2012) is part of the process towards achieving a fully optimized utility in a modernized electricity delivery framework.  The optimized utility has learned how to leverage data analytics for meter operations, grid optimization, asset control, and renewables integration for the benefit of both the utility and the consumer who desires to save money or use energy more efficiently.  Vendors may offer a variety of strategies towards achieving these goals, including managed services and applications, enterprise applications, platforms, and visualization tools.  It’s likely that not one solution will fit all and a flexible approach – achieved through partnerships and open systems – will be the most powerful.

As smart meters and other grid sensors make their way at a rapid pace into the field, a strategic, business-focused, viewpoint from utility stakeholders will go a long way toward ensuring solid decisions that support the evolutionary nature of the smart grid and all the information that can be gleaned from it.


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