Dynamic Pricing: Residential Consumer Perspectives

1. Dynamic Pricing:Residential Consumer Perspectives A presentation to the Restructuring Roundtable by Nancy Brockway October 28, 2011

2. Claimed benefits of dynamic pricing • Correct (deaveraged) price signals will incent customers to use electricity at less expensive times • More timely and complete feedback will enable customers to monitor and control/lower usage • Results should be lower peak demand and lower energy usage • Lower system costs, lower bills for participants, lower emissions SMI - A Consumer Perspective Restructuring Roundtable

3. State of evidence for response • Numerous pilots • Significant residential peak reductions ON AVERAGE • More with “set it and forget it” controls • BUT • Little/no information about persistence • Little information about distribution of response • No study reflects cost of metering and infrastructure • Some troublesome indications on winners/losers • Little data on health/safety impacts of response • Mixed support for feedback benefits • No consistent findings of energy efficiency SMI - A Consumer Perspective Restructuring Roundtable

4. CONSUMER GROUPS’ POSITION 1. Smart meter proposals must be cost-effective, and utilities must share the risks associated with the new technologies and the benefits used to justify the investment. 2. Time-of-use or dynamic pricing must not be mandatory; consumers should be allowed to opt-in to additional dynamic pricing options. 3. Regulators should assess alternatives to smart meters to reach the same load management goals, particularly direct load control programs. 4. Smart meter investments should not result in reduced levels of consumer protections, especially relating to the implementation of remote disconnection, and traditional billing and dispute rights should be retained. 5. Privacy and cyber-security concerns must be addressed prior to a smart meter rollout. 6. Utilities and other policymakers should include comprehensive consumer education and bill protection programs in any evaluation or implementation of smart meter proposals. 7. Investments in Smart Grid need to be verifiable and transparent and the utilities need to be held accountable for the costs they want customer to pay and the benefits they promise to deliver. Costs should be reasonable and prudent. www.nasuca.org/archive/White%20Paper-Final.pdf SMI - A Consumer Perspective Restructuring Roundtable

5. Major Consumer Group Fear • Customers, especially elders and low-income, cannot cut back safely at critical peaks and will pay higher prices. • Health or safety need for the power • Don’t have discretionary use on peak • Fearful of the spike in prices • Confused by dynamic pricing • Lack sophistication/technology for “set & forget” SMI - A Consumer Perspective Restructuring Roundtable

6. CA SPP Mean Annual % Change in Billsby Usage and Income (Without AMI Costs)Source – Herter, Figure 5 SMI - A Consumer Perspective Restructuring Roundtable

7. A paradox? • If • AMI costs low enough and • DR value high enough, • Then • Low usage customers might do better with default or even mandatory RTP/CPP • Assuming we know they are high load factor. • But • Consumer groups don’t believe these claims, AND SMI - A Consumer Perspective Restructuring Roundtable

8. Qu’ils mangent de la brioche? SMI - A Consumer Perspective Restructuring Roundtable

9. Another paradox? • In Bakersfield, low-income rate customers took optional CPP at higher rates than others. • Although less central air and other big DR opportunities… • One impact is lower system benefit than planned. SMI - A Consumer Perspective Restructuring Roundtable

10. Mandatory CPP dead for now, anyhow • Like many things some folks think are great, impetus killed by a mess in California. • Might be revived upon proof of concept. • But industry has created doubters & naysayers • So likely to take a long time. • Anyway, we do need the data on persistence. • And PTR/CPR might be good way to segue. SMI - A Consumer Perspective Restructuring Roundtable

11. MA AMI PILOTS • Three different models • Only NGRID’s may look at low-use customers? • NSTAR’s doesn’t need smart meter, but does require high-speed hookup? • Fitchburg – only for central A/C • Statewide evaluation collaborative to optimize value of data • WMECo in reserve to study things not captured SMI - A Consumer Perspective Restructuring Roundtable