Customer engagement has been the rallying cry of smart grid advocates for years. The problem, it turns out, is that customers are not one monolithic group of people.
Segmentation is just starting to be a word in the utility lexicon, and a recent survey from PwC helps fill the void for utilities that serve Midwesterners.
The report found that what Midwestern customers want from their utility and the smart grid is not the same as in other regions of the country, especially California. Money, in particular, is the most important driver.
The survey asked 900 utility customers in the Midwest about what was important to them when it came to their utility. A resounding 82 percent said saving money on their monthly electric bill was very important. That was followed by 64 percent of people who said it was very important to identify areas where they can reduce energy use. Another 32 percent said that was somewhat important. There were similar figures for those who said it was important for the electric company to resolve power outages more quickly.
For Midwest utilities, it should be comforting to find that reducing power outages and providing visibility into energy use are two of the most important things for their customers. However, the prospect of saving money is a more troublesome proposition.
Although people will have the ability to save money on their electricity bills if they have more information about how they’re using energy, over time, electricity rates will still go up. For the average person, it’s hard to sell the fact that they will just not spend as much as they might have without a smarter grid.
The survey from PwC found that customers are interested in more control and more services from utilities, but only for a nominal price increase. About half of customers surveyed would need between a 10 percent to 15 percent savings on their bill to change behavior. Thirty-six percent of consumers would need 20 percent savings or more to change their behavior.
When it comes to extra services, focus groups were split between categorizing extra services from a utility as a convenience and others didn’t trust the utility enough. Many felt that additional services should come with their regular bill.
Younger customers were willing to pay more for services, which could be a good place to start for utilities that are looking to segment their offerings. Fifty-four percent of people over 55 would be unwilling to pay anything for extra services; another 29 percent would spend up to 5 percent.
The 21- to 34-year-olds, however, were more willing to pay up to 10 percent more for other services, such as electric vehicle charging, leasing solar panels, lighting controls and energy efficiency retrofits. No matter what the age, the appetite to pay more than 15 percent extra was extremely low.
The survey highlighted that trust continues to be a barrier that utilities have to overcome, and that is not unique to the Midwest. When it comes to smart grid investment, utilities would be wise to invest in segmentation followed by providing free services first that could open the door to other paid services. The Green Button is a good example of a tool that businesses and residents can use to gain insight into their usage that could then be a gateway to value-added services.
“Utility companies have an opportunity to promote the smart grid to customers by emphasizing how it will enable them to take greater control of their energy usage,” the authors wrote. “Smart grid programs must be well designed, well communicated and 'sold' to customers and other stakeholders.”
Some utilities, like Reliant and Oklahoma Gas & Electric, have already starting segmenting business and residential customers into smaller subgroups. Still, the range between utilities can be mind-boggling. SAS, which provides data solutions to utilities worldwide, said that in one focus group, some utilities had as few as 10 customer segments, while others had upwards of 100.
For many vendors, helping utilities navigate the segmentation process will become not only a benefit but also a necessity to compete in the space.