Reshaping Utility/ Consumer Relationships

1. Reshaping Utility/Consumer Relationships Penni McLean-Conner MEC October 5, 2010 Pinehurst, NC

2. Agenda 1. 2. 3. 4. Game Changers NSTAR Pilot – Poor Man’s AMI Learnings To Date Going Forward Implications 2

3. Customer expectations are evolving, and framed by media experience

4. Consumer Motivation for Smart Grid Conserve Energy Save Money Help The Environment

5. Reality is that this motivates only a small customer segment* High Smart Grid Appeal Low Technology Appeal High *”Plugging into the Consumer”. IBM Global Business Services, 2007

6. Agenda 1. 2. 3. 4. Game Changers NSTAR Pilot – Poor Man’s AMI Learnings To Date Going Forward Implications 6

7. 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)

8. 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 Massachusetts Utilities Are Piloting Several Smart Grid Approaches

9. broadband NSTAR Approach – Poor Man’s AMI Uses installed AMR meter infrastructure Uses Customer’s broadband NSTAR Back Office MDM Data Collection, Verification Billing CIS

10. NSTAR Smart Grid Billing Options • Time of Use – 3 Periods, peak, off-peak and critical peak • Rebate Option – Requires central air; $5.00 rebate

11. In-Home Technologies Associated with the Pilot 11

12. NSTAR Target Market for Pilot NSTAR Electric900K Newton, Hopkinton40,365 Pilot2,870 A/C30K Non A/C 735 2,135 • Need 7%enrollment for A/C customers • Need 2% enrollment for non A/C customers

13. NSTAR’s Marketing Approach Phase I: General Marketing Campaign -Newton/Hopkinton • Community Newspapers • Media Placements • Bill Messaging • Direct Mail • Telemarketing • Traditional marketing techniques • Appeal to mainstream audiences • Test/monitor receptivity Phase II: Targeted Marketing Digital campaign E-Bill/email/online outreach • Objectives • Secure sufficient pilot participants • Complete non-participant and participant research

14. Agenda 1. 2. 3. 4. Game Changers NSTAR Pilot – Poor Man’s AMI Learnings To Date Going Forward Implications 14

15. 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

16. Soft Launch Results 5,603 Emails Sent 527 Enrolled 392 Accepted Only 41% of those accepted had equipment installed. 248 Sign Agreements 159 successfully installed

17. 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

18. Agenda 1. 2. 3. 4. Game Changers NSTAR Pilot – Poor Man’s AMI Learnings To Date Going Forward Implications 18

19. 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

20. 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

21. The Questions Remain Will consumers sustain behavioral changes? Will consumers adopt in large numbers?