PG&E shares customer engagement lessons
- Posted on September 4, 2012
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Pacific Gas & Electric (PG&E), once the poster boy for smart meter rollout snafus, is touting its approach in engaging business and residential customers over variable pricing programs.
In the case of business customers, PG&E must apply dynamic pricing to its small- and medium-sized business customers by November, under a mandate by the California Public Utilities Commission (CPUC) to align electricity prices with costs, improve reliability of the grid and manage environmental impacts associated with peak use.
(Note that the CPUC calls it "dynamic pricing." PG&E calls it "time-varying pricing." Perhaps we'd better soon explore the semantics that apply here.)
In the case of residential customers, PG&E is seeking to expand a voluntary, opt-in program for critical peak pricing that has enjoyed high satisfaction from 60,000 customers so far.
In both cases, however, PG&E's challenge is customer outreach, according to Jonathan Marshall, chief, external communications for PG&E.
"Our experience should provide many lessons for the industry when it comes to preparing customers for either voluntary or mandatory time-varying pricing programs, profiting from our difficult experience with the SmartMeterT rollout," Marshall wrote in an email before we spoke recently.
Let's look first at what PG&E must do with more than 200,000 small- and medium-sized business customers and agricultural customers. Rates will increase during weekday afternoons when electric demand is higher, typically May through October from noon to 6 p.m. In return, those customers will pay lower rates at all other times.
The program being implemented by November follows on the heels of mandatory dynamic pricing for large commercial and industrial customers instituted in 2010 and large agricultural customers in 2011.
While the schedule seems at first blush pretty draconian, in my view, the price differentials do not. But with peak, partial-peak and off-peak rates in summer and partial-peak and off-peak rates in winter, PG&E has its outreach work cut out for it.
For example, current flat rates are $0.21 kWh in summer and $0.15 kWh in winter with the TOU rates in summer for peak (noon to 6 p.m., M-F) at $0.22 kWh, partial-peak (8:30 a.m. to noon, 6 p.m. to 9:30 p.m.) at $0.21 kWh and off-peak (9:30 p.m. to 8:30 a.m.) at $0.19 kWh. Winter rates are $0.15 kWh for partial-peak (8:30 a.m. to 9:30 p.m., M-F) and $0.14 kWh for off-peak (9:30 p.m.to 8:30 a.m.).
You can weigh for yourself whether any of the following "energy reduction tips and practices that business customers can use to get started on lowering their electricity use during peak times" might be automated:
- Turn off all non-essential lighting, signage, window displays and office equipment.
- Turn off decorative features, such as fountains, ambient audio, and video displays.
- Pre-cool work areas before afternoon peak rates kick in, then adjust thermostats upward during the peak period.
- Unplug battery chargers and use only pre-charged equipment during peak periods.
- Adjust employee schedules and shifts so that maximum production and energy use occur during periods when rates are lower.
The CPUC also mandated one year's worth of interval meter data before mandatory TOU pricing kicked in, to give customers enough information to grasp the changes and adjust to them. PG&E's study of small- and medium-sized businesses found "good news."
The findings: greater than 50 percent of the business customer class would have no adverse annual bill impacts, even without behavioral changes. Two percent would see an average $8 per month increase in their bill. These findings informed the outreach plan, Chesler said.
"The message has to be right for many segments," Chesler said.
PG&E found that "creating a benefit" around TOU pricing was difficult. Instead, the general customer perception was "rates are going up." The utility had to confront the "What's the impact on me?" question head-on. So PG&E created a rate comparison tool that could demonstrate the impact or lack thereof. It sent custom rate comparisons by mail twice during the data-gathering year. The utility made person-to-person contact with more than 60,000 customers, including the 23,000 likely to be most impacted. Meetings with influential community groups were arranged, including civic groups, government entities, media. And digital media was used to get the message across that rates would go to TOU starting in November 2012 on a staggered basis.
Results? PG&E saw a six-point jump in awareness of the program through July, prior to implementation of the TOU rates-and an eight point increase for those who will be most affected. That had to be positive, given those customers' time demands.
"This customer segment has a lot on its mind," Chesler said. "Small- and medium-sized businesses have no time outside their own business."
"Our purpose was to lead customers to tools to empower them to understand the impacts of the new rates so they can act and manage their energy costs," Chesler said. "It's about understanding options and taking advantage of various programs that can help in tough economic times."
Among the offerings to this class of customer: energy audits, rebates on more efficient appliances and equipment and rate analysis tools to determine strategies for managing energy use on TOU rates.
I'd have to say that for many of us, handling residential energy use is a no-brainer. For PG&E's small- and medium-sized business customers, the TOU rate schedule might seem like just another hassle with the utility's name on it. The proof will be in the pudding - that is, will this customer class achieve the 16 megawatts reduction in peak demand that PG&E has targeted? (Its large commercial/industrial customers, on TOU rates for years, have shaved 138 MW off the peak.)
Stay tuned. And we'll bring you more on PG&E's efforts on its voluntary SmartRate program for residential customers shortly.
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