Tuesday, April 12, 2011

The Customer Smart Meter Opt Out Tornado

What happens if customers don't want the changes that a smart grid brings?

We're on our way to finding out, as smart meter initiatives are increasingly challenged in regulatory venues. It's a familiar pattern begun in California, repeated in Maine, and now in a small town in Ohio, that goes something like this: 1) a small group of consumers challenges smart meters on health concerns with regulatory filings that must be addressed; 2) as the proceeding progresses, an additional challenge is raised about the economic costs and benefits of smart meters and more consumers get on board; 3) public resistance becomes more organized and gains steam; 4) with subsequent news cycles, customer interest shifts from health concerns (difficult to prove) to economic benefits and the issue of choice and fairness; 5) regulators devise a solution to quell unrest and balance stakeholder interests; 6) customers are allowed to opt out of smart meter changes; or 7) customers keep their analog meters; or 8) customers exercise their right of independent choice in one way or another; and 9) the end result ranges from an unraveling of the benefit equation of the AMI program to a scaled down program to lost federal grant money.

This tornado of opposition to change poses a grave risk to current smart grid plans, as it becomes a wet blanket for those who had high hopes for smart grid starting with AMI, as detailed in this article detailing the situation in Maine.

The actual cost may not be known for years, said the senior counsel for the Public Advocate's Office. If the PUC approves an opt-out plan, rates will likely have to be adjusted in the future, said Eric Bryant, when the financial impact is fully known.

Bryant restated his skepticism about the smart meter program, questioning whether the technology will work as CMP expects. He also said he doubts that many customers will be able to change their power use patterns enough to benefit from the time-of-use rates that CMP envisions.

But performance questions will likely take a back seat, for now, to the issue of whether some customers can decline the smart meters, and under what conditions.

That seems like a good compromise for Elisa Boxer-Cook of Scarborough, a lead organizer of smart-meter opponents.

"I'm hopeful it will be something fair to everyone," she said after the committee's votes.

Finding a reasonable compromise that gives residents a choice also reflects the desire of Gov. Paul LePage, said Ken Fletcher, who directs the state's energy office.

Among the many challenges posed by this growing trend is the inadvertent role that uninformed customers can play in the shaping of a utility's strategy. When a utility spends insufficient time building public support for its long-term strategic plans, as hindsight reveals to be the case at PG&E and CMP, it runs the risk of incurring significant costs to manage the untenable situation of a vocal minority exerting their rights and raising costs for all or the even greater risk of having a worthwhile strategic project shelved because its benefits were outweighed by unnecessary additional costs.

The bottom line? My conclusion is that utilities still have loads of potential for smart grid, they just have to spend more time on planning and more resources to educate their consumer base, to bring them along so that they understand the costs and benefits of smart grid much better. A variety of other successful projects have shown that this formula works, and that customers will support a program if they understand how they benefit from it.

It reminds me of the old Fram oil filter commercial extolling the virtues of thinking ahead and taking preemptive action: "You can pay me now, or you can pay me later."

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