Electric Energy T&D - Index

Electric Energy T&D - EEMag May June 2008 - Index

An Emerging Utility Agenda
Few utilities will find themselves able to
ignore calls for their significant participation
in the quest to slow climate change gains.
Most will face increasing mandates to make
major changes in fundamental relationships
with customers.
In the last century, the utility mission
focused on reliable universal service at
just and reasonable rates. In this century,
the mission is changing to accommodate
products, services, and pricing that result in
significantly lower energy use.
Few utilities—if any—will choose to gamble
on the possibility that new scientific and
technological discoveries will remove the
conservation burden from their shoulders.
Search for Leadership
For the most part, neither regulators nor
customers are clear about the best path to
dramatically lower greenhouse gas emissions.
They seek utility experience and help in
evaluating and implementing programs to alter
historic electricity consumption patterns.
Help is clearly needed. Anyone who has
tried to stop smoking or keep a New Year’s
resolution to lose 10 pounds knows that
behavioral change requires an initial catalyst,
a plan of action, and continued positive
reinforcement. Without all three, efforts to
change will almost always fail.
We already, of course, have the catalyst: the
threat of climate change. Few consumers,
however, can readily define the correlation
between reducing personal energy
consumption and slowing global warming.
Fewer still have access to the positive
reinforcements that will make behavioral
changes permanent.
The Role for Billing
What is most clear to utilities from experience
is that half-hearted “education” programs
have little if any permanent effect on
electricity consumption. To make a difference,
utilities must weave the conservation mission
into fundamental business processes. And
utilities’ most fundamental customer-related
process is billing.
The utility billing system or customer
information system (CIS) can, in fact, play
a key role in providing customers with a
clear picture of the relationship between
consumption and climate. It can offer
options. It can help customers turn behavioral
alternatives into habits.
Not every CIS, however, is capable of playing
this role. In most cases, the customized
legacy systems of the 1980s and 90s are
far too inflexible even to begin to address
conservation and efficiency programs in
a meaningful way. Some of the lower-end
vendor-produced billing systems are little
better. Meeting emerging conservation and
efficiency demands requires a robust and
flexible CIS that changes readily, without
customization or programmer assistance.
Evaluating Your CIS
To help customers maximize opportunities
and motivation to reduce energy-related
greenhouse gas production, your CIS should
be able to handle:
Multiple sources of supply so that
customers can choose to purchase
“green” electricity in whatever amounts
they choose.
Rates that vary frequently. Some studies
suggest that varying flat rates monthly
rather than annually1 •
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or semi-annually can
substantially reduce peak demand. You
can readily explore this option if your CIS
permits rate changes without programmer
intervention; ideally, rate changes can be
“plugged in” via configurable tables that
do not require extensive testing before
the rates take effect. One of the most
limiting aspects of a legacy CIS is ratechange
inflexibility. Systems that require
months to develop and test rates are
simply untenable in an environment that
increasingly requires utilities to help and
encourage customers to conserve.
8 I May-June 2008 Issue
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Penalty rates. No one wants to force a
neighbor into an asthma attack because
the cost of running air filters becomes
too high. But electric utilities will
increasingly need to reexamine their longstanding
practice of lower prices for highvolume
consumers. As environmental
concerns rise, a growing segment of the
public may begin to advocate penalties
on consumption deemed careless or
excessive.
Submetering. Both studies and common
sense show consumers use less when they
must personally pay for water and fuel.
Single bills for apartment houses and
condominiums encourage waste. Your CIS
should not limit your ability to address
customers individually.
Time-of-use pricing, which encourages
customers to shift optional electricity
use to off-peak hours. Time-of-use
pricing maximizes use of base generation
that, by definition, is always “on” and
therefore always producing the same
amount of greenhouse gases whether
or not the resulting electricity is used.
When customers make better use of base
electricity, they almost always rely less
on peak generation—generation that can
be readily ratcheted back in response to
lower demand. For utilities that rely on
fossil fuels for peak generation, the result
is almost invariably fewer total greenhouse
gas emissions.
Historic usage graphs. The CIS should be
able to develop and insert these onto bills
so that customers can track their progress
over time in reducing consumption. Graphs
should cover a minimum of 13 months.
Even more useful for reinforcing longterm
efforts is a CIS that can document
two years of consumption and calculate
averages that identify each customer’s
trend line.
“Carbon footprint” analysis. The CIS
should be able to show customers
graphically the relationships between
greenhouse gas emissions, their personal
choice of supply, and, if appropriate, their
time of use. 3
1 For instance, in “The Short-Run Effects of Time-Varying Prices in Competitive Electricity Markets,” (University of California Energy Institute, CSEM WP-143R), Stephen
P. Holland and Erin T. Mansur suggest that could be realized through setting flat rates monthly rather than annually. “Monthly flat rate adjustment has many of the same
effects as RTP adoption, captures more of the deadweight loss than time of use (TOU) rates, and requires no new metering technology,” they find.
That is, segmenting consumption into three or four time “buckets,” like peak, shoulder, off-peak, and weekend rates. Time-of-use pricing requires time-of-use meters
that report separate consumption totals for each “bucket.”
3 Note, however, that, this analysis can lead to inappropriate customer behavior at utilities that use coal for base generation and natural gas for peaks. Customers
switching from peak to off-peak consumption would, in this case, believe they were generating more greenhouse gases by using off-peak electricity. The CIS must be able
to accommodate an adjustment so that customers do not attempt to lower their emissions profiles by switching consumption to peak hours.