Understanding of electric utility customers? – surprisingly little, EPRI reports


Palo Alto, CA, U.S.A. — (METERING.COM) — November 30, 2012 – Despite over 10 years of pilots and experiments, surprisingly little of what we need to know about customers and alternative program offerings has been affirmatively and credibly established, according to a new report from the Electric Power Research Institute (EPRI).

The report, Understanding Electric Utility Customers – Summary Report: What We Know and What We Need to Know, is aimed at addressing fundamental questions related to how customers use and value electricity, specifically their response to dynamic pricing, feedback and control technology.

The report is based on a systematic review of large field trials that have been completed in the past decade or so. Seven pricing (or pricing plus enabling technology) and six feedback studies were selected out of an initial sample of more than 70 studies.

In order to evaluate the programs, values were assigned to each of three effects – participation (who and how many customers are likely to sign up for a program), performance (% changes in load to relative prices, types of feedback, and/or control technology), and persistence (how long customers remain in the program, and how their response varies over time).

Most of the studies are rated at level 3 overall, which is defined as “Key behavioral effects need to be quantified,” with “rigorously designed field trials to quantify fundamental cause and effect relationships.”

Among the findings for behavioral programs are that most in the U.S. are done on a voluntary basis. Some of the dynamic pricing studies reviewed made some attempt to correlate participation with customer demographic and premise information, but none have demonstrated that there is any significant relationship between observable customer information and the decision to participate. Thus future field trials should focus more resources and design attention on identifying what drives different customers to participate in dynamic pricing programs.

Trials are also needed to better understand the response of residential customers to various rate structures. While we have fairly good understanding of how customers respond to time-of-use, understanding of the average short term response to the more time differentiated structures like variable peak pricing (VPP) and real time pricing (RTP) is only rudimentary, and only slightly better for critical peak pricing (CPP) and peak time rebate (PTR).

Among the findings from the feedback trials are that most research to date has focused on enhanced billing and monthly or quarterly consumption reports, and real time premise level feedback. Appliance level real time feedback is generally still only at the demonstration level. Also, as with pricing, there are more studies that assess the impacts of feedback programs than there are studies that assess the willingness of people to participate in them.

If utilities are uncertain about, and therefore skeptical of, the impacts of pricing structure, feedback, and control technology, it is not surprising that customers do not seem to be highly inclined to participate in such offerings, or to respond to mandatory interventions when they are enrolled, the report says. It may be that the intellectual and pragmatic enthusiasm advocated for these interventions is not shared by consumers and their stakeholders, including regulators. Or, there may be customer demand, but only at prices or under conditions that are not tenable for suppliers to offer.

This impasse is likely to persist until we devise and adopt insightful and verifiable behavioral models and credibly quantify their characteristics through field research, the report continues. If utilities continue to go it alone, responding to local and limited interests, it may be a decade or more before we realize resolution. Rigorously designed research implemented in a cooperative and collaborative way could bring about resolution much sooner.