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Consumer issues in 'grid modernization'

An acquaintance recently told me she'd like to talk with consumer advocates to see where the gaps are between their positions and her findings on consumers' positive  responses to dynamic pricing programs.

Point being, there must be gaps that, once identified, can be bridged. And bridges can be crossed to achieve progress on grid modernization.

In fact, an endeavor of  this kind has been underway for the past ten months, as a series of four meetings between investor-owned utilities (IOUs), consumer advocates and state regulators took place in Atlanta (November 2010), Phoenix (March 2011), New Orleans (April 2011) and Baltimore (May 2011). This effort was made under the aegis of the Critical Consumer Issues Forum (CCIF), an idea sponsored by the Edison Electric Institute (EEI), the trade association that represents IOUs.

The result, "Grid Modernization Issues with a Focus on Consumers," is a matter-of-fact presentation of five areas in which these sometimes disparate interests found a degree of consensus through those meetings. The report was presented earlier this week at GridWeek in Washington, D.C.

"We hope this report provides value to each of the three groups," CCIF Executive Director Katrina McMurrian told me. "Here are some areas of consensus and areas that need follow-up. It shows outsiders that these three groups do talk and that they can find areas of consensus."

You should know the CCIF effort was funded by EEI. Whether that sponsorship affected the outcome is for you to decide. I'd argue that it reflected that utilities badly need consensus with consumers and regulators to achieve their business objectives. To a degree, whether and how utilities achieve their business objectives affects the rest of us. So, fair enough.

I'd also say that the process may be more important than the specific outcome. Much of what you'll read in this report, composed mostly of bulleted statements, will be familiar to you from the past year of industry discussions. It would be enlightening to know whether the "consensus" holds up in the state-level arenas to which participants returned after this exercise.

First, because it's a vastly shorter list, here are a few areas for which no consensus was reached: opt-in versus opt-out for dynamic pricing programs, liability with respect to third party access to consumer energy usage data, consumer concerns with possible health effects of smart meters and preservation of federal funding for grid modernization.

The big issue here, to me, is opt-in versus opt-out. The heritage of how opt-out has been used with consumers is not encouraging. Often that option is buried in the fine print. If the company solicited you to opt-in, it would put that proposition at the top in large, bold print to ensure you saw it.

That said, I understand from my acquaintance, cited above, that opt-in might get you 10 percent to perhaps 20 percent participation, while opt-out garners closer to 80 percent. So I understand the obvious attraction of opt-out for those who'd like to achieve high participation in, say, a dynamic pricing program. But utilities, regulators and consumer advocates will have to weigh the merits of potentially high participation that may mask a lack of fully informed choice. I'd like to hear from consumer advocates or state regulators on how they see this issue.

The areas of consensus touched on:

  • The term "grid modernization" over "smart grid"
  • Benefits, costs and risks of grid modernization
  • Consumer protection
  • Privacy and security
  • Consumer education and communication
  • Federal/state relations

The first item may be underestimated in importance but long overdue. I have used the two terms interchangeably, but when you write online, "smart grid" gets more than 1,000 times the traffic that "grid modernization" does. It'll take some work to reverse that exponential disadvantage for the more descriptive term.

Readers, you'll have to call up the report, which contains four pages packed with bulleted statements. Look them over and let me know your thoughts. My impression is that consensus can produce bland statements that may allow widely disparate interpretations by the various groups. This could not have been an easy process to translate into consensus statements.

I'd be very interested to know what our readers think: was this an exercise in singing "Kumbaya" or is this document a blueprint for engagement by stakeholders?

Phil Carson
Intelligent Utility Daily



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