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Final Meeting of the Project “Energy efficiency policies: a worldwide panorama”

Under the guidance of the Energy Efficiency Policies & Technologies Knowledge Network 27-28 May 2013 WEC/CFE/ADEME

Case study on innovative smart billing for

household consumers

Christophe Dromacque

Outline

Main findings

Recommendations

Background

Main take aways from the case studies

Background

• Households are often perceived as a very difficult target group for energy efficiency programs due to their diversity and the fact that they often see energy as a low interest and low involvement product

• However:..

Households account for about 30% of the EU’s final electricity consumption and between 20% and 39% in the markets reviewed as part of this report

Globally, residential consumption is expected to increase steadily in the foreseeable future

Energy prices keep increasing much faster than inflation in many parts of the world

• Need to be addressed if environmental targets are to be met and for affordability reasons VaasaETT 3

In-house display

Ambient display

Web interface

Informative bill

Display, Electricity Smart Metering Customer Behaviour Trials, Ireland

The Energy Orb, PG&E

O’POWER

Different feedback channels

OG&E

Mobile application

OG&E

Summary of case studies

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1- Participants’ energy use compared with that of their neighbors

California: Sacramento Municipal Utilities

District (SMUD) Home Energy Reports

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2- Suggested actions participants can take in order to reduce usage

3- Shows participants the results of those actions over time

Visual representation of the different time bands and time-of-day rates

Republic of Ireland: Smart Metering

Customer Behaviour Trials

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Reminder of cost of running appliances at different times of day

Tips and advise how to benefit from ToU tariffs

Sweden: Interesting features -

E.On Sverige

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Breakdown of energy bills into its different components and who is responsible

Electricity Gas

Victoria (Austalia): Interesting features

- Origin Energy

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Average daily energy usage and associated GHG emissions

Electricity Gas

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Abu Dhabi (UAE): Case study – Newly

introduced electricity bill

Real cost of electricity before state subsidy

Main findings

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Finding 1

• Smart bills can be an efficient way to promote energy efficient

behaviors leading to reduction in energy consumption, bills and

increased customer satisfaction;

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Stimuli

Electricity

consumption

reduction

Monthly

Reports

(High Usage

Customers)

2.6%

Quarterly

Reports

(Low Usage

Customers)

1.5%

SMUD - Impact after 30 months (based on

35,000 customers between 2008-2010)

Source: Navigant Consulting 2011

Reduction in energy consumption

Do savings persist?

Source: Navigant Consulting 2011

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15 million homes receive similar reports designed by Opower in the US

and elsewhere (online or paper-based)

Awareness of energy consumption • 83% of customers remember receiving the reports • 73% read it thoroughly • 74% act upon it

Improvement in customer relationship • Level of overall customer satisfaction with utility is 6% for customers who receive the reports • customers exposed to this program are more likely to get involved in other utility offerings and programs

“Soft” benefits

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CER trials - Impact after 12 months (4,000 participants 2010 – 2011)

Reduction in energy consumption

Stimuli Impact

Bi-monthly bill with energy

usage statement

Electricity overall consumption

reduction: 1.1%;

Electricity peak consumption reduction:

6.9%

Gas overall consumption reduction:

2.2%

Monthly bill with energy usage

statement

Electricity overall consumption

reduction: 2.7%;

Electricity peak consumption reduction:

8.4%

Gas overall consumption reduction:

2.8%

Electricity includes

the impact of the

dynamic tariffs.

However, impact is

greater when

statement is sent

each month.

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Reduction in energy bills

Participants Impact

All

€19 - €26 or 3%-4% of a typical

annual electricity bill

€13 - €16 or 2%-3% of a typical

annual gas bill

Fuel poor Electricity € 22 - € 24 Due to reduction in consumption at peak time

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Awareness of energy consumption • 82% of participants made some change to the way they use electricity • 87% made changes to the way they use gas

Consumers satisfaction with usage statements • The electricity usage statements were rated as effective or very effective in helping to reduce usage by 79% of the participants •The electricity usage statements were rated as effective or very effective in helping to reduce usage by 54% of the participants

“Soft” benefits

Finding 2

• Smart bills can be a cost efficient way to save energy;

Opower-like programs such as the one reviewed in the Californian case study

costs an electric utility 7.48 USD per household per year or 2.5 cents per kWh

saved (1.6 and 6.4 ¢/kWh saved for other energy efficiency programs)

Finding 3

• Smart metering does not necessarily result in smart billing or any

other feedback programs without adequate regulation,

Sweden did not mandate smart meters but only monthly accurate billing. The goal was to address customer dissatisfaction with billing and switching errors. Thus, the legislation did not specify any minimum requirements for meters. Network companies responsible for implementing billing simply sought to comply to the regulation and improve their operations. The possibility to use smart meters to provide consumption feedback to households and as a building block for a smarter electricity grid was overlooked. The cost amounted to around €220 per customer, paid for by customer but no comprehensive feedback (or dynamic pricing) program that would allow them to benefit was launched by utilities. The smart meters would need to be upgraded to allow for such advanced programs.

Finding 4

• Feedback programs can increase the acceptance of dynamic tariffs

or smart meters rollouts;

In an attempt to shave peak demand, the Victorian Department of Environment and Primary Industries decided in 2007 to roll out smart meters and ToU tariffs to all customers by the end of 2013 but without IHDs as was planned at first. Following this decision, Victorian households and consumer associations started complaining about the inflated electricity bills to pay for the meters without being accompanied by any means to track and manage electricity consumption even though it was one of the main arguments to support the roll-out. In the face of the popular backlash that ensued, the Victorian government announced in March 2010 a moratorium on mandatory ToU tariffs (still in place) while the installation of smart meters across Victoria continues in accordance with legislative requirements. Without dynamic tariffs, the main objective to shave peak consumption will be negatively impacted.

Finding 5

• Although quality and insight are greatly improved by the data

granularity enabled by modern metering systems, effective smart

bills can also be implemented with traditional meter data;

Chilectra - Chile

Historical consumption over last 13 months

Energy saving tips and advice on the other side of the bill related to cooling, heating, cooking, lighting, etc

Al Ain Distribution

company – Abu Dhabi Benchmarking information on electricity usage

CPL Power – Hong

Kong Historical consumption over past 13 months

ESKOM – South Africa Consumption over past 12 months Maximum power demand over past 12 months

Finding 6

• The most advanced and arguably the best cases of smart bills are to

be found in countries with both enhancing technology and

supporting regulation.

Enabling and supporting policies - California

• Smart metering minimum requirements with hourly

reading and third party access;

• Billing rules in effect mandate smart billing;

• Utility revenue decoupling.

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Enabling and supporting policies - Ireland

• Smart metering requirements (half hourly reading, third party

access)

• Energy usage statements and IHDs to be rolled out to all

consumers and IHD)

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Conclusions

Policy recommendations

1. The specific design of the bills should be left to market forces to allow for innovation and creativity;

2. Some building blocks of smart billing have proven effective and should be made mandatory. These elements include: (i) normative energy use comparison, (ii) tips and advice as to how to reduce overall energy usage (iii) tips and advice as to how to benefit from dynamic tariffs if applicable), (iv) historical consumption data in order to track progress, (v) in case energy is subsidized real cost and real bill size should there be no State subsidy should be mentioned, (vi) indicate the different elements of the bill and who is responsible (retailer, DSO, State) and finally (vii) show pollutant emission associated with billed energy consumption;

3. We believe (in the same way the Energy Efficiency Directive) that accurate billing frequency should increase to possibly monthly;

4. Supporting regulation should ensure that feedback and education requirements be an integral part of any smart meter or dynamic pricing policy package to ensure that all consumers can benefit financially and otherwise.

What would 1.8% electricity consumption

reduction per year mean for the US alone?

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reducing residential electricity usage across the United States by 26,000

GWh;

reduce greenhouse gas emissions by 8.9 million metric tons of carbon

dioxide per year – equal to the emissions from three 500-MW coal-fired

power plants;

save households just over $3 billion dollars per year on their electric

bills.

Davis, M. (2011), "Behavior and Energy Savings. Evidence from a Series of Experimental Interventions“.

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Example of a standard bill

Finland (2013)

Will not

happen with my bill

THANK YOU

Christophe DROMACQUE

Head of Research

christophe.dromacque@vaasaett.com