Friday, September 03, 2010

Why Energy Bills Should Look Like Your Cell Phone Plan?

Telecom and smart grid alliances should team up with—or at least learn something from—the cell phone companies when it comes to billing.

Convergys’ Kit Hagen, director of utilities, thinks the Maryland and Baltimore Gas & Electric Company negotiation was a good moment for smart grids.

“There’s a lot of spin around smart meters, both positive and negative. People just don’t understand them,” he said.

To this end, Hagen thinks this shift looks like what the cable and telecommunication guys went through when they changed from an analog network of a few data points to digitization on the network.

Cell phone companies like AT&T and Sprint used to run on analog, but now they run in real time. The cell phone companies figured out how to bundle their services in terms of minutes. Utilities need to follow suit.

Lisa Alexander, principal of the Van Denburgh Consulting Group, said energy launches should bundle packages like cell phone plans -- and offer daytime, nighttime and weekend minutes.

In the cell phone industry, it’s all based on minutes. That’s certainly not how the cell phone industry calculates their bandwidth, Alexander said.

But they’ve figured out how to translate that currency in minutes. But when time of use (TOU) and critical peak pricing tariffs are introduced, will customers change their behavior?

And then of course, there is the other problem. Most utilities don’t have permission to implement time-of-use pricing. Any proposed pricing plans are thoroughly scrutinized for fairness, how they would impact customers and other issues. Whipping up a cell-phone-like billing system is like asking Fed Ex to start carrying freight with untested aircraft out of random airports. There are rules and circumstances far beyond the utilities' control.

The customers like seeing two bills through a trial period, so they aren’t worried about being overcharged.

The bundles need to be easy to understand, said Christine Hertzog, managing director of the Smart Grid Library. “If it doesn’t make sense to Joe and Jane Ratepayer, then they can’t identify what’s in it for them,” Hertzog said. How could the energy currency could play out? For instance, you get a certain number of minutes in electricity, plus you get certain devices that you could have in your office or building.

Whether this type of bundling would appeal to consumers is another question. CenterPoint, the large electricity distributor in Texas, conducted a smart grid test with powerline networking, a broadband standard that would have also allowed Centerpoint to sell internet services. After it learned that customers really didn’t want to get internet from them or didn’t care, the company dropped powerline and went with a less expensive mesh for its meters.

However, several Australian companies are bundling energy and telecom together. It's a work in progress. Consumer feedback, hopefully, will help provide an answer someday soon.

My friends at GreenTechMedia have nailed it on the head with this article. This is it. Move from Analog to Digital. From Proprietary Non-IP RF Mesh to Full-IP Broadband. Enable the emergence of converged retail service providers (phone, wireless, video, internet, energy, security, others). Provide customers with real-time services in a currency that they understand ($$$ or Time). And Australia is setting the bar. And who is driving the broadband smart grid trends there? Hmmmmm…… Oh, yeah……GRID NET.

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