EPRI on customers: what we know, what we don't
A few weeks back, the Electric Power Research Institute (EPRI) issued "Understanding Electric Utility Customers—Summary Report: What We Know and What We Need to Know."
One simple statement and the rest of this column is digression: there's a lot we don't know about how customers use electricity, what affects their behavior and how to scale up programs that will attract widespread participation. And utilities haven't exactly knocked themselves out trying to find out what we don't know.
The abstract clarifies that the report focused on "how customers use and value electricity," but the EPRI study is a literature review of actual customer behavior in pilots and programs that assessed behavior in relation to pricing, (energy use) feedback and control technologies. And it's technical in nature. If you're not conversant with energy economics, behavioral studies and their lingo, statistics and concepts such as "own price elasticity" or "elasticity of substitution" or "readiness scoring," it's going to require sweat equity to read it and "get it."
If you have such a background, or the time to wade through the report, your efforts will be rewarded.
If, however, this column's headline led you to believe the EPRI report might be about attitudes and perceptions, I can at least steer you to some of my past ravings on those topics in "Customers will listen, if utilities talk: But will utilities listen if customers talk?," "The Customer: `Waiting for Godot?'" and "Do Regulated Monopolies Still Have to Compete?"
The EPRI report is, in fact, based on practicalities, even though the science and quantitative and qualitative assessment of that science is the purview of specialists. Because one of the essential drivers of the need to understand actual customer behavior is that that understanding could lead to improved energy efficiency measures by utilities.
An EPRI team looked at field trials of the past decade among residential, commercial and industrial end-use customers as they worked with pricing, energy use feedback and control technologies.
The report notes that most participants in such programs are volunteers, thus it's important to understand who those participants are; why they volunteer appears to remain an unknown. (Though, off the top of my head, the quest to save money or achieve environmental benefits must loom large.) The EPRI study attempted to discern how volunteer participants behave in such programs and whether their behaviors persist over time. The EPRI team also wanted to discern the hurdles to scaling such programs, should they prove effective for the utility and its participants.
For the purposes of this column, I'll merely quote a few of the authors' concluding remarks to offer a little flavor of the report and establish a level of urgency, which is revealed in the last paragraph of the report (and of this column).
"The readiness scorecards suggest that there is much to do to verify the impacts of behavioral programs. This outlook is apparently widely held, if not often expressed, by entities that provide customers with electric service.
"Electricity providers have not embraced behavioral approaches, despite research first launched nearly 40 years ago to quantify the potential impacts and associated benefits. The recent resurgence of pilots, many implemented explicitly to resolve uncertainties about price effects (in many cases to help justify AMI investments), has elevated public dialogue about the need for and benefits of pricing electricity to reflect the marginal, not average, cost of supply..
"While there is near universal concurrence that we should be pricing electricity differently, there is a shortfall of definitive and committed action to make that come about."
The conclusion continued, in part:
"As is the case with new pricing structures, an ever-increasing body of field research has done little to spur utilities to embrace feedback as a means for meeting energy efficiency goals, engaging customers, or both ...
"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. It seems that customers do not want what utilities do not want 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. If utilities continue to go it alone, responding to local and limited interests, it may be a decade or more before we realize resolution and have available actionable interventions. Rigorously designed research implemented in a cooperative and collaborative way could bring about resolution much sooner, in time to influence forthcoming decisions about investments to meet future electricity demand."
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