Customer Education Is Key To Successful Smart Utility Initiatives

on July 30, 2015 at 10:00 AM

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With utility service providers increasingly joining the smart systems movement, it has become clear that continued progress greatly depends upon customer buy-in, either through rate cases or the customers’ own installation of smart devices at the home. Creative education efforts can place customers in a partnership role with utilities and can help users understand the smart grid’s complexity.

“It is critical to convey a deeper understanding of the systems that make next-generation devices a more efficient option,” said Fred Ellermeier, Managing Director for Black & Veatch’s Smart Integrated Infrastructure service line. “It will help place value on their implementation.”

Just as important as developing agile network technologies is the education of a customer base. “But those customers are still wrestling with, and skeptically questioning, what it means to live in a smart cityor draw power from a smart grid,” Ellermeier said.

Customers have seen imageries in the media of perfectly timed traffic lights, advanced interactive video surveillance and other technological advances. These communications have tried to sculpt a shared understanding of how a fully connected grid efficiently moves utilities, traffic and data along their way.

“Yet customer confusion persists, and some utilities are reluctant to push ahead with investments,” Ellermeier said. “The term ‘smart ______’ has become a buzz phrase that means different things to different utility sectors.”

Different Paths to Smarter Devices

According to the 2015 Black & Veatch Strategic Directions: Smart Utility report, most utilities have an accepted understanding of smart systems even if their eventual deployment takes different paths. Water utilities, for instance, are deploying advanced metering infrastructure (AMI) and distribution sensors to reduce meter-reading costs, identify leaks and increase resiliency.

Power providers employ centralized locations to remotely adjust devices, along with two-way communication that sends information between a customer’s meter and the utility. Intelligent devices, deployed along the utility’s systems or inside a customer’s home, gather consumption information in real time and give operators actionable data that can lead to behavioral change.

Skeptical Customers Must Be Educated

Smart utility rollouts have been plagued by skepticism at the customer level, largely because they are misunderstood, according to Kevin Cornish, Executive Consultant in Black & Veatch’s management consulting business.

“The past year has seen utilities struggle to convince residents of the required cost of smart grid updates and the steps customers can take at home – often with the help of utility-provided devices – to enable their own smarter choices,” Cornish said.

The Strategic Directions report found nearly 58 percent of utilities, cities and organizations had not announced a smart utility or smart city initiative. Perceptions that smart initiatives were not applicable to organizational missions and a lack of education and information about “smart” improvements were among the top contributors to the utilities’ holding patterns.

“Many utilities understand the benefits of smart grid investments but are struggling with how to communicate their vision,” Cornish said. “In some cases, they may simply prefer to let larger institutions make the first moves and demonstrate their effectiveness.”

But evidence is mounting that automation and other smart device deployments are reaping significant cost savings and efficiencies, he said. “We believe utilities have a unique opportunity to revisit their strategic missions. They can recommit to new, efficient ways of delivering services.”

At the same time, utilities can reinforce their bond with customers by educating them about how the changes can save money and potentially reduce greenhouse gas emissions through smarter consumption.

“A plan that communicates how the utility and its customer base are invested in each other will go far toward incentivizing residents to act as partners,” Cornish said.

A Study in Customer Engagement

Recently, a Midwestern utility made customer education a major plank in its effort to recover the costs of a smart systems upgrade, which was expected to add a small amount to the average customer’s monthly bill in exchange for savings that were projected to eventually be double the cost of the upgrade. Focus groups revealed to the utility that customers knew little about how smart grid technologies would affect them or how their own changes at home could help lower costs.

Ellermeier said the utility crafted an education platform that included, among other actions, sending teams of smart grid advocates into the community to educate customers. Such strategies could be especially valuable for at-risk demographics that may not easily understand the benefits or may fear that a high technology solution could expose their private data.

“We believe it will be crucial for utilities pondering an investment in smart solutions to develop a comprehensive plan that is tailored to a community’s needs,” Ellermeier said. “In addition, that plan must include an aggressive customer education component to instill trust and preempt suspicions about the utility’s motives.”

Published originally on Black & Veatch Solutions.