Reshaping Utility/Consumer Relationships

MEC

October 5, 2010

Pinehurst, NC

Penni McLean-Conner

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Agenda

1.1. Game ChangersGame Changers

2.2. NSTAR Pilot – Poor Man’s AMINSTAR Pilot – Poor Man’s AMI

3.3. Learnings To DateLearnings To Date

4.4. Going Forward ImplicationsGoing Forward Implications

Customer expectations are evolving, and framed by media experience

Consumer Development

Media World Utility World

Passive Happy with 3 channels (1970’s)

Passive receipt of power

ActiveBroader choices – 100’s of channels

Consumer interest in more choices – DG, energy management,

ParticipatoryConsumer determines content – netflix

Dynamic value-based pricing of power and interactive services

Consumer Motivation for Smart Grid

Conserve EnergySave Money

Help The Environment

Reality is that this motivates only a small customer segment*

*”Plugging into the Consumer”. IBM Global Business Services, 2007

Smart Grid Tolerators – 25% Smart Grid Enthusiasts – 18%

• Young and old• Lower use of technology• Lower income

• Younger• High use of technology• Higher Income

Smart Grid Resistors – 21% Smart Grid Truth Seekers – 37%

• Older• Middle income

• Younger• Lower use of technology• Lower income

Technology Appeal High

High

Low

Smart Grid

Appeal

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Agenda

1.1. Game ChangersGame Changers

2.2. NSTAR Pilot – Poor Man’s AMINSTAR Pilot – Poor Man’s AMI

3.3. Learnings To DateLearnings To Date

4.4. Going Forward ImplicationsGoing Forward Implications

Massachusetts's Smart Grid Pilot Project Objectives

• Cover at least 0.25% of customers• Integrated two way communications • Smart meters• Real time measurements and communications• Embedded Automated Load Management• Remote monitoring & operation of distribution

system• Time of Use or Hourly Pricing• Rate treatment of Incremental Program Costs• Minimum 5 % load reduction (Peak and Average)

Massachusetts Utilities Are Piloting Several Smart Grid Approaches

NSTAR Pilot• $1,481 per point• Optional (3190 customers)• Leverages existing

infrastructure• Does not provide

additional AMI benefits (i.e. automatic shut-offs)

National Grid Pilot• $3,796 per point• Negative opt out (15,000

customers)• Mesh communications

infrastructure• AMI benefits

broadband

NSTAR Approach – Poor Man’s AMI

Uses installed AMR meter infrastructure

Uses Customer’s broadband

NSTAR Back Office

MDM

Billing

CIS

Data Collection, Verification

NSTAR Smart Grid Billing Options

Period

Illustrative Supplier Charges($/kWh)

Total Electricity

Price($/kWh)

Ratio to be Applied to

Basic Service rate

Critical Peak $1.35 $1.42 10.62

On-peak $0.28 $0.35 2.23

Off-peak $0.08 $0.15 0.60

•Time of Use – 3 Periods, peak, off-peak and critical peak

•Rebate Option – Requires central air; $5.00 rebate

In-Home Technologies Associated with the Pilot

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All Participant Groups Load Control

In Home

Display

Access to Web Portal

Internet Gateway / HAN

Programmable Thermostat

•Zigbee device

•Real-time power demand

•Billing period electricity consumption & cost

•Price of electricity

•View and manage household energy consumption online

•Receive messages from NSTAR Electric

•Analyze historical usage patterns

•Home Area Network (HAN) to enable two-way communication between the customer and NSTAR

•Up to 4 programmable set points per day

•Controllable over the Internet via the Web Portal

•Critical Event management and control

NSTAR Target Market for Pilot

NSTAR Electric900K

Newton, Hopkinton40,365

A/C30KNon A/C

735 2,135

Pilot2,870

• Need 2% enrollment for non A/C customers • Need 7%enrollment for A/C customers

NSTAR’s Marketing Approach

Digital campaignE-Bill/email/

online outreach

Objectives

• Secure sufficient pilot participants

• Complete non-participant and participant research

• Traditional marketing techniques

• Appeal to mainstream audiences

• Test/monitor receptivity

Phase I: General Marketing Campaign -Newton/Hopkinton

Phase II: Targeted Marketing

• Community Newspapers• Media Placements• Bill Messaging• Direct Mail• Telemarketing

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Agenda

1.1. Game ChangersGame Changers

2.2. NSTAR Pilot – Poor Man’s AMINSTAR Pilot – Poor Man’s AMI

3.3. Learnings To DateLearnings To Date

4.4. Going Forward ImplicationsGoing Forward Implications

Employee Pilot/Soft Launch Preliminary Findings

Employee Pilot• Information Only, interesting

but challenging to sustain interest long term

Soft Launch• Initial response strong/email

campaign• Challenging to convert to

enrollment • Technology/thermostats

installations haven’t proceeded as smoothly as possible

5,603 Emails Sent

527 Enrolled

392 Accepted

248 Sign Agreements

159 successfully

installed

Soft Launch Results

Only 41% of those

accepted had equipment installed.

Reasons for Degradation in Customer Counts

• Never responded to the customer agreement after initially enrolling

• Difficulty scheduling summer installations

• Opted not to enroll after reading the customer agreement

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Agenda

1.1. Game ChangersGame Changers

2.2. NSTAR Pilot – Poor Man’s AMINSTAR Pilot – Poor Man’s AMI

3.3. Learnings To DateLearnings To Date

4.4. Going Forward ImplicationsGoing Forward Implications

Smart Grid Invites New Product And Service Offerings

• Pricing structures • Monitoring and control services• Notification services• Outage management services (distr.

Smart grid)• Distributed generation services

On the Horizon – Processes, Functions, Technology

• Linkage to smart grid (HAN) technology• Linkage to customer billing• Customized customer messaging• Supports comparison to other customers• Community challenges• Transparency with usage• Linkage to behavioral based programs

The Questions Remain

Will consumers sustain behavioral changes?

Will consumers adopt in large numbers?