2012 state of the consumer report - smart grid consumer collaborative

2012 State of the Consumer Report Smart Grid Consumer CollaborativeJanuary 23, 2012

© 2012 Smart Grid Consumer Collaborative. All rights reserved.

2 © 2012 Smart Grid Consumer Collaborative. All Rights Reserved.

Mission Statement

Accenture Smart Grid Services

ACEEE – American Council for an Energy Efficient Economy

Aclara Technologies

AEP – American Electric Power

Arizona Public Service

Alliance to Save Energy

Avista

BG&E – Baltimore Gas & Electric Co

Bonneville Power Administration (BPA)

California Public Utility Commission

Centerpoint Energy

Cisco

CNT Energy

Colorado Public Utilities Commission

Consumers Energy

Control4

Council for Adult & Experiential Learning (CAEL)

DRSG Coalition

DTE Energy

Duke Energy

Efficiency 2.0

Ember

Energy Hub

Enmax

EDF – Environmental Defense Fund

EPRI

FPL – Florida Power & Light

Future of Privacy Forum

Galvin Electricity Initiative

Georgia Institute of Technology

GE Energy

Google

GREEN DMV

Greenlining Institute

GridWise Alliance

IBM

iControl Networks

Illinois Citizens Utility Board

Itron

KCPL – Kansas City Power & Light

Landis+Gyr

Lawrence Berkeley National Laboratory

Magnolia/Best Buy

Market Strategies International

Michigan Public Service Commission

NETL SG Implementation Strategy Group

NIST – National Institute of Standards & Technology

North Carolina Dept of Commerce – Energy Office

NRDC

NREL

Office of the Ohio Consumers’ Counsel

Office of Peoples’ Counsel – DC

OGE Oklahoma Gas & Electric

OPOWER

Ohio Partners for Affordable Energy

Oracle

Pacific Northwest National Laboratory

Peak Load Management Association

PG&E (Pacific Gas and Electric Co.)

Pepco Holdings, Inc.

Progress Energy

PSC

SCE – Southern California Edison

Sempra Utilities

Silver Spring Networks

Southeast Energy Efficiency Alliance

Southern Company

Southwest Research Institute

Stoel Rives

Tech America

Tendril

Texas Office of Public Utility Counsel

United Illuminating Company

UCAN – Utility Consumers’ Action Network

Vermont Electric Power Company

Vermont Institute for Energy & Environment

Smart Grid Consumer Collaborative — Membership

The Smart Grid Consumer Collaborative is a 501c3 nonprofit organization chartered to be the trusted source representing consumers, advocates, utilities, and technology providers in order to advance the adoption of a reliable, efficient and secure smart grid and ensure long-lasting benefits to consumers.


Acknowledgements

Research committee membersChair: Naomi Manley-Casimir, Accenture

Michael Bates, IBM

Brad Berson, American Electric Power

Elliot Boardman, Peak Load Management Alliance

Don Cortez, IBM

Michael Dary, Accenture

Rebecca Devens, Illinois Citizens Utility Board

Keith Dodrill, DOE

John Duffy, SCE

Patty Durand, SGCC

Stephen Endebrock, Florida Power & Light

Ben Foster, ACEEE

Andy Frank, Efficiency 2.0

Deena Frankel, VELCO

David Fruend, Progress Energy

Phil Gooch, Kansas City Power & Light

Greg Guthridge, Accenture

Gale Horst, EPRi

Geri Hunter, Michigan Public Service Commission

Ken Kassakhian, Colorado Public Utilities Commission

Rameet Kohli, GE Energy

Jack Lloyd, Market Strategies International

Anne McKibbin, CNT Energy

Letha McLaren, iControl Networks

Dave McWethy, Consumers Energy

Joe Miller, NETL

Marita Mirzatuny, Environmental Defense Fund

Dave Mobley, IBM

Ivonne Moody, SGCC

Lauren Navarro, Environmental Defense Fund

Paul Pietsch, DRSG

Jules Polenetsky, Future of Privacy Forum

Jennifer Robinson, EPRi

Anthony Rodriguez, Office of the Ohio Consumers’ Counsel

Theresa Schmidt, Consumers Energy

Jenny Cross Senff, DRSG

John Stevenson, Stoel Rives

Chris Thomas, Illinois Citizens Utility Board

DeMika Thomas-Hill, SGCC

Jonathan Thompson, GE Energy

Garren Watkins, Tendril Inc.

The mission of the Smart Grid Consumer Collaborative is to support a modernized smart grid that ensures long-lasting sustainable benefits to consumers. By sharing and disseminating insights and knowledge about consumer needs and how best to communicate with stakeholders, we help advance the adoption and acceptance of Smart Grid. The 2012 State of the Consumer Report provides a perspective on the residential electricity consumer in the United States.

This report is an analysis of the three foundational pieces of SGCC consumer research which was delivered in 2011 and summarizes highlights and key findings across all three. Our members were critical to the work that we chose to do and the high quality delivery of this research. SGCC membership demonstrates that collectively we are making great strides in partnering to better understand, educate and engage consumers as they journey from smart grid awareness to program adoption.

The SGCC would like to thank the many companies and organi-zations who formulated insights from the research findings, and provided feedback on layout, content and theme iterations.

Only by continuing to collaborate on consumer issues will we be able to fully realize the promise of Smart Grid. If you are not a member, we invite you to join us as we continue to listen, collaborate, and educate going forward.

— SGCC Research Committee

www.smartgridcc.org


Table of Contents

Introduction ............................................................................................................................................page 5

Methods and Study Overview ................................................................................................................page 6

Executive Summary ................................................................................................................................page 7

Themes

Theme 1: Consumers Need Smart Grid and Smart Meter Education ...........................................page 8

Theme 2: Awareness and Knowledge Favor Support For Smart Grid Implementation ..............page 11

Theme 3: Many Smart Grid and Smart Meter Benefits Resonate with Consumers .....................page 12

Theme 4: Simple And Clear Messages Spur Smart Grid Program Enrollment ............................page 14

Theme 5: Free and Timely Usage Data Creates Interest In Smart Grid Programs ......................page 16

Theme 6: Segmentation Is The Key To Message Optimization And Efficient Engagement ........page 18

Theme 7: Journey from Awareness to Adoption Requires Transformation of Core Service Model ..........................................................................................................page 24

Conclusions and Implications ................................................................................................................page 26

Bibliography ............................................................................................................................................page 27


This 2012 State of the Consumer Report summarizes the lessons learned from three foundational pieces of research conducted by Smart Grid Consumer Collaborative in 2011 and indentifies seven prominent themes derived from the findings. The report provides a consolidated view of key learnings and data supporting each theme with the goal of inspiring further discussions on the following questions:

1. What are the set of best practices that research reveals help drive program enrollment and consumer acceptance?

2. What is consumers’ awareness of smart grid and smart meters, their favorability toward the technology and their interest in smart grid/meter-enabled programs?

3. What are the five consumer segments that represent the U.S. electric residential market and how do their distinct attitudes, values and motivations influence their willingness to participate

in energy management programs?

Introduction: The 2012 State of the Consumer Report


Methods and Study Overviews

Consumer Pulse Tracking Study Nationally representative telephone survey of U.S. residential electric customers undertaken to establish a baseline of consumer awareness, understanding and persuasiveness of key positive messages, and interest in smart grid/meter-enabled programs, including a favorability index. Wave 1 of the study was fielded in September and wave 2 in November. Presented quarterly, this study tracks changes in these metrics over time as utilities transition from an ‘install and repair’ service model toward proactive consumer-centric models.

Consumer Segmentation Study Conducted as part of the Consumer Pulse Tracking Study with the objective of generating a broadly-applicable framework of consumer segments. It identifies five distinct segments of residential electric consumers in the United States and helps clarify the ways in which different consumer characteristics, attitudes, and values influence smart grid interest and engagement.

Excellence in Consumer EngagementQualitative analysis of real-world customer engagement strategies that drive consumer Smart Grid awareness, understanding,acceptance, and behavioral change. Focused on the latest generation of AMI (advanced metering infrastructure) deployments, pricing programs, and active energy efficiency programs of 21 organizations (20 U.S. utilities and 1 non-profit), the result is a documented set of best practices for successful consumer engagement and program enrollment in the electric utility space.


Theme 1: Consumers Need Smart Grid and Smart Meter Education

Overall consumer awareness and knowledge of smart grid remains low in 2011. Best practices reveal that customer education should start before AMI deployment using a staged messaging strategy, leveraging internal education and community outreach to promote awareness and acceptance. Page 8

Theme 2: Awareness and Knowledge Favor Support for Smart Grid Implementation

Knowledge about what smart grid is and how it would work leads to greater favorability and support for smart grid implementation. Page 11

Theme 3: Many Smart Grid and Smart Meter Benefits Resonate with Consumers

Utilities have promoted a wide array of smart grid benefits, including more energy control/management, reduced environ-mental impact, and saving money. These benefits can be woven together to successfully increase public support. Page 12

Theme 4: Simple and Clear Messages Spur Smart Grid Program Enrollment

Elements of successful smart grid and smart meter messages that increase smart grid program enrollment include a simple promise to resolve consumers unmet need or desire, and product features/attributes that give credibility to the promise. Page 14

Theme 5: Free and Timely Usage Data Creates Interest In Smart Grid Programs

Interest in participating in smart grid programs is higher when consumers are given timely access to their energy usage data using channel(s) easy for engagement. Direct and continuous feedback has been shown to be more successful in triggering behavioral changes in energy usage by reinforcing consumers’ reason-to-believe in the benefit(s) of the Smart Grid/Smart Meter program. Page 16

Theme 6: Segmentation Is The Key To Message Optimization and Efficient Engagement

One size fits all approach to marketing and communication strategies may not be as successful at strengthening demand for smart grid and smart meter technology as targeted approaches that take into account dimensions like consumer attitudes, values, behaviors, motivations, technology adoption and communication preferences. Page 18

Theme 7: Journey from Awareness to Adoption Requires Transformation of Core Service Model

Tasked with acting more like marketing and sales organizations as they launch smart grid programs, utilities will have to transform their service model from one that focuses primarily on the reliable delivery of electricity to one that also focuses on customer needs and engagement. Page 24

Executive Summary


Theme

Consumers Need Smart Grid and Smart Meter Education

Bottom Line: Overall consumer awareness and knowledge of smart grid and smart meters remains low, which is not surprising given the status of electricity as a low-involvement, commodity product. To increase awareness, education should start before deployment using a staged messaging strategy, leveraging internal education and community outreach.

C O N S O L I D AT I O N O F F I N D I N G S :

Awareness Is Low

SGCC Consumer Pulse and Market Segmentation research confirms that only a small group of consumers have more than elementary knowledge of what smart grid and smart meters are, how they would work, and how they would affect homes and businesses.

• Specifically, wave 2 findings show that about 26% and 33% of consumers have basic or complete understanding of smart grid and smart meters, respectively.

•Women, African Americans, and those with low education have less awareness relative to total consumers.

As utilities continue rolling out smart grid and smart meters across their service areas, future waves of the Consumer Pulse and Market Segmentation study will track changes in consumer awareness and knowledge.

1

Source: SGCC Consumer Pulse Research – wave 2 Base: Total Consumers, n= W1, 1,234; W2, 1,003

Wave 1 Wave 2

Wave 1 Wave 2

51% 51% 48% 46%

24% 21% 23% 20%

16% 18% 18% 21% 7% 8% 9% 12%

Current Level of Smart Grid and Smart Meter Awareness

Fairly Complete

Basic

Heard the term

Not heard that term

Smart Grid Smart Meter

23% Basic/CompleteUnderstanding

26% 27% 33%

17%

31%

14%

30%

Wave 2

Wave 1

Smart Meter Installed In Home

Source: SGCC Consumer Pulse Research – wave 2 Base: Total Consumers, n= W1, 1,234; W2, 1,003

Yes

No

Source: SGCC Consumer Pulse Research – wave 2 Base: Total Consumers, n=1,003 Arrows indicate a significantly higher or lower value compared to Total consumers

26%

38%

16%

27%

23%

17%

43%

18%

25%

31%

28%

29%

38%

40%

Total Wave 2

Male

Female

White

AfricanAmerican

Hispanic

Other

High School or Less

Some College

College or Post Graduate

<$30K

$30K-$50K

$50K-$100K

$100K+

33%

42%

23%

33%

32%

21%

47%

24%

33%

36%

28%

29%

38%

40%

Smart Meter Smart Grid

Current Level of Knowledge By Demographics


•When asked about any specific improvements or problems that would result from the introduction of smart grid or smart meters, between 19% to 20% of consumers reported “don’t know” and 10% to 13% cited that “they need more information.”

• “Saving energy” and “saving money” were the two most frequently desired improvements from the smart grid or smart meters. Benefits from improvements in operational capabilities, such as accuracy of bills and improved reliability, were mentioned much less often.

• “Bills will go up,” “loss of control,” “costs to implement,” and “accuracy concerns” were the most frequently mentioned top-of-mind problems and concerns that would result from the introduction of smart grid or smart meters.

Consumers need more information before they can form opinions

Saving energy

Saving money

Need more information/education

Improved ability to manage usage

Improved accuracy of electric bills

Elimination of meter reading

Other

None

Don’t know

Desired Smart Grid/Smart Meter stifeneB/stnemevorpmI

Base: Among those who have heard of smart meter, n=604 Source: SGCC Consumer Pulse – Wave 1 , 2011

Need more information/ education

Bills will go up

Loss of control

Cost to implement

Accuracy concern

Other

None

Don’t know

reteM tramS/dirG tramSConcerns/Issues

Base: Among those who have heard of smart meter, n=604 Source: SGCC Consumer Pulse – Wave 1 , 2011


Education Should Start Before Deployment

Best practices noted in the Excellence in Consumer Engagement research used staged messaging strategies to educate customers throughout the deployment process. Analyses of utilities communication plans revealed that successful customer education starts before smart meter deployment. Noted examples of local outreach, used early to build awareness (60 to 90 days from the planned installation), included local leaders, politicians and/or the media.

Yet, a few utilities, like Southern California Edison (SCE), hosted or sponsored educational forums and community events. Local outreach was typically followed by direct mail notices or automated calls to notify customers of the installation 21 to 7 days prior. On the day of, meter installers knocked on doors and/or left door hangers after completion. Staged approaches manage customer expectations effectively by providing the right information about the what, when, and how of smart meters at the right time during AMI deployment.

Leverage Internal Messaging and Education To Improve Satisfaction

To improve customer service and expedite complaint resolution, some utilities developed internal education programs as extensions of outreach efforts.

• For example, CenterPoint created an “employee ambassador” program equipping them to act as Smart Grid resources and advocates in their community, and 18% of CenterPoint’s employees have become ambassadors to date.

• San Diego Gas & Electric (SDG&E) created a specialized customer service team to resolve complaints one-on-one.

•With employees on the same page, Austin Energy was able to deal with customer problems more quickly and proactively. For example, Austin’s meter installers notified customer service personnel if they noticed that a meter being replaced was running slow and the customer was likely to have higher bills after their meter replacement.

Educate Through Community Based Outreach

Due to their existing relationship with customers and their credibility, trusted local organizations, community-based organizations (CBOs) and consumer advocates were able to effectively promote smart grid awareness and activities.

• Portland General Electric (PGE) partnered with community organizations that reached out to non-English speakers, low-income customers, and multi-dwelling building residents.

• SDG&E provided CBO’s with materials to distribute and noted that CBOs are better equipped at educating hard to reach consumer segments.


Theme


Models of the hierarchy of effects illustrate that consumer knowl-edge from external sources drive product and brand preferences for both low and high involvement products. Awareness triggered by an initial external stimuli, such as advertising message or “word of mouth,” opens the door for consumers to process more information and develop specific knowledge. This knowledge is used as basis to form a liking (or disliking).

• SGCC Consumer Pulse and Market Segmentation research validates that smart grid and smart meter awareness increases favorability. Support for smart grid implementation is higher among consumers who have basic or complete knowledge as well as those who report having a smart meter.

• Women and African-Americans are less favorable toward the technology as a function of lower awareness.

Favorability index as shown in the table below creates a single summary metric tracking the spread of smart grid awareness and favorability over time. The index is the cross-product of consumers’ current level of knowledge about the smart grid and consumers favorability towards the smart grid. Tracking the favorability index over time will show how Smart Grid awareness is growing and whether favorability is trending positively or negatively.

Bottom Line: Knowledge about what smart grid and smart meters are and how they would work leads to greater favorability and support for their implementation.

2

Base: Among those who have heard of smart grid, n=604 Source: SGCC Consumer Pulse – Wave 1 , 2011 Direction of arrow indicates significantly higher or lower value compared to Total

troppuS latoT )01 – 6 %(Smart Grid/Meter Implementation

Has Smart Meter?

Age

lacitiloPAffiliation

68%

71%

70%

64%

80%

59%

63%

80%

62%

Total

18-34

35-54

55+

Democrat

Republican

Independent

Yes

No

The Smart Grid Favorability Index Total Gender Ethnicity

Male Female White African

American Hispanic Awareness 47% 57% 37% 49% 40% 39%

Favorability 52% 55% 47% 53% 45% 59%

Favorability Index 24 31 17 26 18 23

Base: Among those who have heard of smart grid, n=604 Source: SGCC Consumer Pulse – Wave 1 , 2011

11%

30%

28%

24%

40%

38%

15%

26%

26%

31%

46%

45% Fairly complete understanding

( A )

Have basic understanding

(B)

Heard the term, but don’t know much

(C)

C C

C C C C

Source: SGCC Consumer Pulse – Wave 1 , 2011 Letters indicate a significantly higher value compared to the corresponding level of understanding

Smart Grid /Smart Meter Favorability By Level Of Understanding

Somewhat

Favorable (6-8) Very

Favorable (9-10)

SMART GRID SMART METER

Awareness and Knowledge Favor Support For Smart Grid Implementation


Theme


Cost savings has been the most broadly applicable and successful message for promoting Smart Grid and Smart Meter programs by utilities, as validated in the SGCC Consumer Pulse and Market Segmentation Research, and the Excellence in Consumer Engagement.

• “Helping consumers save money” and “help improve energy efficiency” are two key top-of-mind reasons for implementing smart grid and smart meter, with these two benefits strongly associated.

Many Smart Grid and Smart Meter Benefits Resonate with Consumers

Bottom Line: Smart grid and smart meter program messages have been promoted using a wide array of benefits, including more energy control/management, reduced environmental impact, and saving money. These benefits can be woven together to successfully increase public support.

3• Message highlighting that the smart grid and smart meters

will “help me save money by using energy more efficiently” garnered 80% support for their implementation.

• However, consumers want the smart grid to offer more than just savings. Messages promoting reliable power, timely restoration and avoiding energy waste were also as effective as saving money (80% Somewhat/Strongly Increase Support) at increasing consumer support for the implementation of smart grid and smart meters.

Reason to Implement Smart Grid/Smart Meter Technology

To help consumers save money

To help improve energy efficiency

To help meet demand for electricity

To reduce outages

Remotely read/no meter readers

Accurate readings/bills

To help reduce greenhouse gas emissions

To increase reliability To give people more control over how much

electricity they use Other

None

Don’t know Base: Total Consumers, n=1,200 Source: SGCC Consumer Pulse – Wave 1 , 2011

Messaging For Smart Grid and Smart Meter Support

Slightly Increase Strongly Increase

Base: Total Consumers, n=1,200 Source: SGCC Consumer Pulse – Wave 1 , 2011

Smart grid and smart meters will …Help me save money by using energy more efficiently

Deliver more reliable electric service /more timely power restoration by helping my utility avoid power outages and

manage any outages that do occur more effectively

Help people avoid wasting energy

Help protect the environment

Support a more independent and secure energy future for America, reducing the need for foreign sources of energy

Give me more control of my home energy use, helping me make smarter energy decisions

Give me more choices, allowing me to sign up for a range of rate and billing programs, that offer more flexibility in

how I’m billed for electricity usage and more control over my energy costs


Many Smart Grid Benefits Are Important To Consumers

• Findings from Consumer Pulse and Market Segmentation wave 2 research confirm that many smart grid/meter benefits resonate with consumers.

• Consumers were asked to rate smart grid/meter benefit statements in terms of whether or not it is important enough to justify a total extra cost of $3–$4 on their monthly electric bill. A wide variety of benefits were perceived as important by the majority of consumers, but not enough to justify paying more.

• Top two scoring smart grid and smart meter benefits, in terms of importance, were eliminating the need for meter reading and estimated bills (59% importance) and delivering power quality (59% importance).

• Based on this evidence, there may be little reason to focus on a single “save money” benefit. Weaving a number of benefits together may be the strongest approach in telling the smart grid story and building mass support for implementation.

• However, when asked to justify what benefit they would be willing to pay for, reducing green house emissions by making it easier to connect renewable energy sources to the grid was the greatest value add of the smart grid. Highest proportion of consumers (30%) reported that this benefit was important enough to pay $3–$4 on their monthly electric bill.

• While the benefits of environmental stewardship are appealing overall, they may be more relevant to certain consumer segments based on their attitudes, values, habits and practices toward energy and efficiency (for segment details, please refer to slides 18–23).

Base: Total Consumers, n=1,003 Source: SGCC Consumer Pulse – Wave 2 , 2011

Smart Grid/Smart Meter Benefits

toN tnatropmI

Important, but will not pay more

Important, and will pay more

20%

18%

17%

17%

16%

14%

19%

59%

59%

58%

56%

56%

57%

50%

20%

22%

24%

26%

27%

28%

30% Reduces greenhouse gas emissions by

making it easier to connect renewable energy sources to the electricity grid.

Senses problems and reroutes power automatically. This prevents some outages

and reduces the length of those that do occur.

Make it easier for utilities to offer new kinds of rate plans to help customers

manage energy usage and cost.

Helps meet growing demand for electricity while limiting the need to invest in

new power plants.

Help consumers save money by providing near real time energy usage information and the ability to manage electricity use.

Delivers the power “quality” necessary to run our increasingly digital homes—power with fewer sags, spikes, and interruptions.

Eliminate the need for meter reading—instead, usage information is transmitted directly to the

utility for timely, accurate billing. There is never a need to send an estimated bill to the customer.


Theme


Communicate Relevant Benefits Simply

Utilities have greater success at enrolling customers in their smart meter-enabled programs if they use simple language and words to promote benefits instead of sounding like engineers. Whether promoting economic benefits or non-economic benefits, messages should address “what’s in it for the target customer,” appealing to them in terms of why it is important or how it satisfies their needs.

Best practices noted in the Excellence in Consumer Engagement research reveal the effectiveness of using clear, simple language to promote complex programs, featuring a concise tagline like “Save Money, Save Energy” to facilitate customer engagement and program enrollment.

• For example, to promote its “Budget Assistant” online portal, SCE broke dense messages into pieces which included: 1) a two-second tagline, 2) a brief “elevator pitch”, and 3) a detailed fact sheet. This strategy was successful at enrolling 50,000 customers in the program’s first 6 months.

Simple and Clear Messages Spur Smart Grid Program Enrollment

Bottom Line: Elements of successful smart grid and smart meter messages that increase smart grid program enrollment include a simple promise to resolve consumers unmet need or desire, and product features/attributes that give credibility to the promise.

“Empowering you with smarter energy choices” — AEP Ohio

“The free energy offer that pays you now and later” — Duke Energy

“You’re in control now — slash your electric bill” — Oncor

“Get more control over your monthly electricity bills, and help the environment, with ComEd Residential Real-Time Pricing program.”

— ComEd

“Save Money and Energy with MyMeter” — Wright-Hennepin CEA

4


Spur Action and Engagement With Purpose and Urgency

Acquisition incentives and behavioral triggers are often effective techniques for driving consumer engagement and enrollment in smart meter-enabled programs.

Several utilities noted in the Excellence in Consumer Engagement study reported using time-sensitive offers to give customers an immediate reward for enrolling in programs.

• For example, Connexus uses $10 gift card limited-time offers to promote its Direct Load Control Program (DLC), which has 28% participation.

• Reliant raffled 1,000 in-home displays to low-income households.

Feedback Encourages Behavioral Change

Behavioral triggers that encourage long-term changes in energy usage include energy savings competitions, home energy reports, and/or comparative energy reports.

• For example, Wright-Hennepin with The Climate & Energy Project used competitions to generate excitement and spur participants to reduce energy usage, with participants reducing their usage by up to 58%.

• Others, like Duke Energy, provided customers with comparative energy reports, leading to 84% of participants changing thermostat settings and 51% taking other energy-saving measures they would not have taken without their comparative energy report.

The more detailed the feedback and energy usage information provided in comparative and home energy reports is, the more it can help nudge consumers toward reducing their energy usage.


Theme

Free and Timely Usage Data Creates Interest in Smart Grid Programs


Free access to usage information and timely price signals encourage consumer engagement and behavioral changes in the way consumers use electricity, as validated in the SGCC Consumer Pulse and Market Segmentation research.

Consumers report greater interest in participating in Smart Meter Data Energy Management and Critical Peak Pricing than the Time-of-use (TOU) rate plan.

Channels For Engagement

The findings also reveal that consumers would prefer an in-home device to monitor their energy usage over a website, but only if the device is free. If an in-home device is offered for $100, only 33% would prefer it over the free website.

Bottom Line: Interest in participating in smart grid programs is higher when consumers are given timely access to their energy usage data using channel(s) easy for engagement. Direct and continuous feedback has been shown to be more successful in triggering behavioral changes in energy usage as well as reinforcing consumers’ reason-to-believe in the benefit(s) of the smart grid/smart meter program.

5

Definitely Would

Probably Would

TOU Rate PlanCritical Peak Plan

Smart Meter DataEnergy Management

Likelihood To Participate In Programs Based On Smart Grid Technology

Base: Total Consumers, n=1,200 Source: SGCC Consumer Pulse – Wave 1, 2011 Arrows indicate a significant increase or decrease between programs Note: Likelihood of program participation is not discounted by actual enrollment

67% 62% latoT 49%

Free In–Home Device eerF

Website

tnemeganaM ygrenEPreferred Monitoring Options

$100 In–Home Device

eerFWebsite

Source: SGCC Consumer Pulse Research – wave 1 Base: Total Consumers, n=1,200


Operating in different ways to meet the needs of the residential customer, utilities are starting to encourage engagement by using consumers’ preferred channels to receive their energy usage information. Some customers may find it useful to receive a text message on their telephone, some may prefer to login to a website, and others may prefer in-home devices. Customers always prefer to be given a choice in how they could receive their usage infor-mation and select the channel(s) easiest for them to engage.

Wave 2 findings from the Consumer Pulse and Market Segmentation research reveal that the majority of smart meter owners prefer that utilities use direct mail to communicate with them about energy management, followed by the use of email and bill inserts.

However, when it comes to communicating day-to-day electricity usage, their top three preferred channels for engagement are email, automated phone call, or online at a secure website.

Base: Consumers With Smart Meters, n=174 Source: SGCC Consumer Pulse – Wave 2 , December 2011

Direct mail

Email

Bill insert

Television Advertisement

Your Utility’s Website

Newspaper Advertisement

A Phone call

Internet (Other Than the Website)

Magazines

Radio Advertisement

Smartphone App

Social Media

Product and Service Providers

Text Message

Religious/Community Org.

Some Other Way

Don’t Know

Refused

Smart Meter Owners’ Preferred Channels Of Communication About Energy Management

Email

Automated Phone Call

Online, at a Secure Website

Text message

Direct Mail

Smartphone App

Bill Insert

Other

Don’t Know

Refused

How Should Utilities Communicate Day–To–Day Electricity Usage?

Base: Consumers With Smart Meters, n=174 Source: SGCC Consumer Pulse – Wave 2 , December 2011


Theme

Bottom Line: Everyone uses electricity, but the one size fits all approach to marketing and communication strategies may not be as successful at strengthening demand for smart grid and smart meter technology as targeted approaches that take into account dimensions like attitudes, values, behaviors, motivations, technology adoption, and communication preferences.

Segmentation Is The Key to Message Optimization and Efficient Engagement


By taking customer segments into account, utilities can enhance the performance of smart grid advocacy efforts, products, programs, and engagement strategies. Very few utilities noted in the SGCC Excellence in Consumer Engagement research used segmentation to shape their messaging of smart grid programs. Those that have typically segment customers based on demographic profiles, such as the square footage of home, credit history and average monthly bill amount.

Attitudinal segmentation, which clusters customers into groups based on differences and/or similarities in how they think, perceive, decide and act on energy, have been largely unused. However, a few utilities are starting to employ attitudinal segmentation to improve outreach and deliver targeted messages beyond “saving money.”

• Sacramento Muni. Utility District (SMUD) employs an attitudinal, 8-segment framework which sorts customers into “young families”, “money minded strivers”, “green echoes”, “uninvolved achievers”, “senior savers”, “green boomers”, “boomers, buyers, and browsers”, and “big toys, big spenders.”

• SRP incorporated attitudinal segmentation into its outreach efforts for its highly successfully TOU pricing program, creating up to six targeted direct mail messages each month which promote different benefits (e.g., environmental benefits, user control, etc.).

According to the SGCC Consumer Pulse and Market Segmentation Study, residential U.S. electric consumers fall into five distinct segments that influence their willingness to participate in energy management programs.

• Concerned Greens (31%) are most protective of the environment and supportive of smart grid initiatives. They are highly likely to participate in energy management programs. Viewed as early adopters.

• Young America (23%) doesn’t know much about smart grid, but is interested in learning about its potential for environmental benefits and cost savings.

• Easy Street (20%) consumers have the highest income of any segment, but are reluctant to change their personal behaviors.

• DIY & Save (16%) consumers are frugal and have a do-it-yourself (DIY) lifestyle. Their biggest concern is providing for their family, not global environmental issues.

• Traditionals (11%) tend to be older, set in their ways and do not see the need for energy reform. Fact sheets and education regarding smart meter accuracy, health, and privacy could perhaps offset concerns with the technology.

6


C O N S U M E R S E G M E N T:

Concerned GreensKey Characteristics

• 31% of population

•Highest levels of education

•High income — 23% above $100K

•Moderate/liberal politics

•Higher concentrations in Northeast and West regions

•Middle-aged (65% are between 25–54 years of age)

•More women than men

•Largely White, 14% Hispanic

Distinctive Attitudes and Behaviors

•Most concerned and active regarding environmental issues

•High smart grid knowledge, favorability and support

•Most likely to participate in smart grid programs

•Eager to buy new products and technologies

•Want to save energy for the future of our children and grandchildren and for the environmental benefits; not as concerned about saving money

S G C C M E M B E R O P P O R T U N I T I E S :

Segment is receptive to environmental concerns and tries to protect the environment through their own actions.

This segment is the most naturally inclined toward participating in energy efficiency and smart grid programs.

They like new technology, and have the resources to make investments in better energy management.



Young AmericaKey Characteristics

•23% of population

•Youngest and most ethnically diverse segment

•Lowest levels of education and income

•Least likely to have kids under 18 at home

•Likely to live in apartments/condos/mobile homes

•Concentrated in the South and Midwest regions


•Highest level of concern regarding environmental issues

•Think energy efficiency is important, but lack knowledge of how it works and feel they may have already done all they can to save energy

•Say they have low likelihood to participate in smart grid programs, but they are interested in using information from a smart meter for energy management

•They say the most important reasons to save energy are saving money and for the future of our children and grandchildren


The primary focus in communication with this segment should be education.

They are concerned about environmental issues and face financial constraints — let them know how Smart Grid products and programs can help address both.

May be considered a longer term developmental opportunity, as they mature and become more likely to be homeowners.



Easy Street customers are unlikely to exhibit a high level of engagement with energy management. Simplicity and ease-of-use are keys to acceptance.

Messaging should emphasize environmental benefits and stewardship for future generations.

It will be a challenge to motivate them to change; they are satisfied with their current energy consumption habits and expenditures.


Easy StreetKey Characteristics


•High levels of education

•Highest income of any segment — 28% above $100K

•Middle aged, moderate-liberal politics

•Fairly diverse: 15% Hispanic, 13% African American

•Concentrated in the South and Midwest regions


•Low levels of interest in smart grid programs or using smart meter information for energy management

•Moderately concerned about the environment at a global level, but not interested in making individual-level environmental efforts

•Believe global warming is real and the government should do more to promote energy efficiency and alternative fuel sources

•Low likelihood to try to minimize impact on the environment through daily actions

•Believe the most important reason to save energy is for the environmental benefits, followed by “for children and grandchildren,” then saving money



DIY & SaveKey Characteristics


•Middle-income

•Families; 20% have three or more children at home

•Diverse range of ages from 25–65+

•Largely White, 12% Hispanic

•Average levels of education

•Conservative politics


•High levels of interest in smart grid programs, especially TOU pricing, primarily for the financial benefits

•Believe the most important reason to save energy is to save money

•High percentage of homeowners, and 84% agree they like to “do it themselves” to save money

•Low level of environmental interest and involvement

•Not motivated to minimize impact on the environment through daily actions

•Most likely segment to say “Religion guides the way I live”


Product and program design and messaging should emphasize saving money and de-emphasize environmental benefits.

There are opportunities to market products and programs that leverage their DIY interest and experience.

Consider outreach through religious affiliations and communities.



TraditionalsKey Characteristics


•Predominantly older (25% are age 65+)

•The most politically conservative and religious segment

•Higher concentrations in the West and South regions

•Relatively low levels of education

•Average income

•More men than women

•Mostly white


•Least favorable segment toward smart grid programs

•Lowest interest in monitoring energy usage

•Least engaged in environmental issues

•Prefer comfort and saving time and effort over saving energy

•Feel their financial situation compared to a year ago is worse


Segment is probably not a high priority initial target for smart grid programs.

Program/product design and promotion for this segment should emphasize immediate money savings and de-emphasize environmental considerations.

Messaging may also communicate that energy efficiency can contribute to having a comfortable home.


Theme


Leverage Existing Touch Points for Smart Grid Promotion

As utilities widen the scope of their offerings across their territories, they should integrate smart grid programs into day-to-day business operations, making them accessible across all customer touch points. As noted in the SGCC Excellence in Consumer Engagement research, existing customer touch points provide strong opportunities to increase smart grid awareness and enrollment. At these points, energy is already front of mind, lowering the time, effort and cost of engagement. For example, when customers call to connect their service or call about a high bill or deferment, customer service has been used effectively for program enrollment.

•APS and SRP use these call-in opportunities to help them achieve leading program participation rates of 50% and 22%, respectively.

•Austin Energy promotes direct load control program (DLC) through their call center which has 22% participation.

•SCE refers customers to “Budget Assistant” online portal using their call center, which is transitioning from its focus on dealing with service calls efficiently to fulfilling a sales function as well.

Journey from Awareness to Adoption Requires Transformation of Core Service Model

Other existing touch points, such as bill inserts, energy reports, social media, third-party referrals and websites, can also be cultivated to become productive marketing channels.

•For example, Connexus found that customers receiving Home Energy reports are 15% more likely to enroll in Smart Grid programs than other customers. Reflecting on the educational value of the reports and their power to engage customers, Connexus plans to use the “tips” section of the report as a referral channel in the future.

•SCE donates $5 to schools when parents participate in their Home Energy Efficiency Survey.

Utility channels can transition from a service to a sales model by effectively leveraging their existing touch points. As customers gain awareness with smart meters and their familiarity with the benefits grow, utilities can use new channels to drive enrollments, such as comparative energy report, internal and/or third-party referrals.

7

Bottom Line: Tasked with acting more like marketing and sales organizations as they launch smart grid programs, utilities will have to transform their service model from one that focuses primarily on the reliable delivery of electricity to one that also focuses on customer needs and engagement.


As utilities expand their promotions and offerings, traditional economic marketing metrics (cost of acquisition, churn, etc.) will need to be tracked and benchmarked in order to assess their net-benefits and value. For example, Connexus found that fewer than 2% of their customers opted out of their Home Energy report program. Customers achieved a 2.07% reduction in energy use, averaging about $20 to $30 of annual savings per test group customer. The drop in energy use also cut Connexus’ wholesale costs of purchasing energy. Connexus concluded that Home Energy Reports turned out to be their second or third most cost-effective program.

In summary, a deeper understanding of customers’ attitudes and behaviors is needed to maximize the value of smart grid and smart meter-enabled programs. Segmentation affords utilities an opportunity to begin tailoring their smart grid offerings and promotions to target customer needs. As customers gain greater awareness and experience with the technology, their appreciation for its benefits will grow. This opens the door to new opportunities for utilities to partner with customers and deepen their engagement.

Match Program Offerings To Customer Needs

The more information utilities have about their customers and their demands for service, the better they can meet their particular energy needs. Segmentation can help ease the transition from a service to a sales model. By better understanding consumer segments’ attitudes and values, utilities can design smart grid-enabled products and services that satisfy a target’s unique needs. It can also help utilities better understand each segment’s priority of values and create promotional communications that appeal to them.

Customers’ needs will evolve as they become more familiar with smart meters. Their service related questions may shift from, “why is my bill so high” to “how can I make my home more energy efficient” or “how can I save?” This affords utilities the opportunity to expand and cross-promote demand side management programs and services.

•AEP Ohio cross-promotes DLC program to TOU pilot customers enrolling ~20% of eligible customers.

•SDG&E emphasizes the importance of call center representatives in identifying programs that suit customers’ needs as their number of Smart Grid programs increases.

“Energy needs are different for everyone which is why SRP offers different price plans so you can choose the plan that fits your lifestyle.”

— Salt River Project


Conclusions and Implications

Continued low awareness of smart grid and smart meters offers an opportunity for utilities to partner with customers.

Although most consumers who know about smart grid tend to support it, too few understand the technology and its potential benefits. There is no single strong entity taking the lead to tell the smart grid story and no “crisis” to create urgency in deployment. This presents an opportunity for utility companies to educate and partner with consumers in a new ways and become an advocate for their energy needs.

Utilities should do more to communicate and engage customers to create support for Smart Grid Implementation.

Consumers should not be considered the recipients of decisions; instead, they should be the recipients of a multitude of service options with benefits they want. Best practices outlined in the SGCC Excellence in Consumer Engagement research provide concrete and real-world examples to help utilities drive consumer smart grid awareness, understanding, acceptance, and behavioral change.

Focus beyond saving money in promoting smart grid and smart meter benefits.

Our Smart Grid Consumer Pulse and Market Segmentation study identifies a number of messages that appeal and resonate with consumers across different segments or groupings. Without segmentation, saving money will resonate with most. However, with segmentation there is little reason to focus on a single theme. Instead, weaving a number of benefits together seems like the strongest approach to telling the smart grid story and building support for its implementation.

Timely usage data is desired across multiple channels can be used to encourage behavioral changes.

There is a strong link between perceived timely access of usage data and the potential for energy savings, indicating that consumers could take immediate action to curb usage if given the right tools. Consumers report greater interest in participating in smart meter-enabled pricing programs when they are given near real-time access to their usage information. They want day-to-day electricity usage information from utilities using email, automated phone call, or online at a secure website. Research indicates consumers would prefer an in-home device to monitor their energy usage rather than a website, but only if the device is free.

Attitudinal segmentation can ease utilities transition from a service to a sales model.

Electric utility personnel can utilize market segmentation in a variety of ways from call center communications, marketing management, and new product design. SGCC segmentation research found that residential U.S. electric consumers fall into five distinct segments that influence their willingness to participate in energy management programs. By understanding these segments’ attitudes, values, behaviors, and motivations, utilities can change the relationship they have with customers and how they engage with them to successfully provide the most appealing smart grid-enabled products and services to the right segments.


Bibliography

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Awareness

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Favorability

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Benefits

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Simplicity

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Program Interest

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Transformations

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Consumer Pulse and Market

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findings. October 2011

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Consumer Pulse and Market

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findings. December 2011

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Excellence in Consumer Engagement.

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2012 state of the consumer report - smart grid consumer collaborative

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