During a panel at the Elster EnergyAxis User Conference, Kevin Howard, the lead meter technician for Black Hills Power, talked briefly about the utility’s time-of-use program, which has been in place for years. He then turned to his right and asked another engineer from a neighboring utility if they were going to implement TOU pricing anytime soon. “God, I hope not,” that engineer answered.

The exchange was between two engineers working on deploying meters and a mesh system across varying terrain, and not chief customer officers, but the knee-jerk response is a common sentiment amongst many utilities. Black Hills Power and a few others are rare in that they have had TOU programs since long before the two-way smart meter came into vogue. But even with millions of smart meters installed across the U.S., the issue of residential dynamic pricing is still confounding regulators and utilities alike. A recent webinar, "How to Win Acceptance of Dynamic Pricing: What Every Utility Needs to Know to Succeed,” hosted by Restructuring Today, had valuable insights from both regulators and industry insiders on how to transform utility thinking -- and systems -- to effectively move beyond a flat rate.

The panel began with two public service commission chairmen who had very different views of the topic. Orijakor Isiogu, Chairman of Michigan PSC, saw the future and it definitely involves homes on varying rates. Utilities must get it right, though. “Billing must be accurate,” he said. Meter data can help to ensure accurate billing. Furthermore, the bill and a well-designed website “must be written in plain English.” This reporter combs through many utility websites, and even the residential sections are often too busy and too technical. Simplifying the message is important. Train your call center staff. Also, don’t forget about low-income customers. Any changes shouldn’t hurt those who are most vulnerable to pricing shifts. But with voluntary programs and targeted education efforts, this shouldn’t be a problem.

Over in New York, the PSC’s Chairman Gary Brown seriously questioned whether dynamic pricing will really work without automated appliances and smart meters. The answer, Mr. Brown, is yes. Just take a look at Black Hills Power or Salt River Project, both of which have popular TOU programs without any bells and whistles, although both utilities are currently putting in smart meters.

Like his counterpart in Michigan, Brown also insisted that residential dynamic pricing programs should be voluntary. Yes, they should be, for two reasons. One, if you look to Canada, mandated TOU rates have lead to a watered-down version that doesn’t inflict any price pain, therefore people aren’t shifting load. The other reason is that people don’t like to be forced into doing anything. Programs can be much more effective if they’re optional, and customers can find out for themselves that they can actually save money with these types of rate structures. Furthermore, the Maryland PSC shut down BG&E’s proposal for mandatory TOU last year, and because of the hoopla surrounding their initially rejected proposal, it effectively killed this approach for any other utility that was considering a similar course of action. Voluntary TOU rates in homes won’t creep into New York state anytime soon, as Brown said that the state would move “cautiously,” meaning like molasses or not at all in regulatory-speak.

But that’s a mistake, according to Kurt Yeager, Executive Director of the nonprofit Galvin Electricity Initiative and former President and Chief Executive Officer of the Electric Power Research Institute. “This is not a transformation that will endanger utilities if it’s done properly,” he said.

And then, on a late afternoon webinar, the kind of event that usually has you listening on mute as you search for a good restaurant to try out that weekend, Yeager said something that almost made me fall out of my ergonomic office chair. “We must delight the customer through easy, enjoyable and fulfilling experiences,” he said. “It’s not just about pricing, it will be about the tools and capabilities that will be brought in.”

When is the last time your utility delighted you? If you work for a utility, when is the last time you sought to delight your customer? The answer to both queries is probably never. But it can be done, Yeager said. He echoed a sentiment made by Elster’s CEO Simon Beresford-Wylie recently that utilities need to ease the grip on their relationship with the customer and allow entrepreneurial companies to take some of that control. The tools and capabilities might not be in-home displays, but it could be a better designed website, better apps and better technologies that the customer could choose in a retail setting.

Although Yeager’s message was shocking, it is not entirely detached from what Michigan’s Isiogu had called for. Talk to people in language they can understand. Give them options they want -- which can also benefit the utility if done right. Cameron Brooks, Senior Director of Market Development and Policy Strategy for Tendril, took it a step further and advised utilities to meet customers where they are already engaged. “What they don’t want is another destination inside of the home,” he said, based on studies and trials Tendril has been involved with.

In-home displays are rampant in pilots, but Brooks said that’s not really what people want. Instead, as Isiogu called for, a well-designed website might be all that’s needed to begin. Some people will want to geek out on the latest smart thermostat, but that’s not what everyone will require.  A good rate structure that saves money but is extreme enough to compel people to shift load is also imperative. “We think regulators need to encourage partnerships in this ecosystem,” he said. “They need the right level of service to manage these rates.”

There was some debate about whether most utilities could improve customer service to the point of delighting them, or whether regulators would need a push from legislation to bring dynamic pricing and more partnerships into the utility space to encourage real energy efficiency and peak load reduction (which means lower profit for many utilities.)

But regulators in some states are coming on board and it’s up to the utilities to step to the plate. “Recent pilots show introduction of dynamic rates is not as scary as it sounds,” said Isiogu. “Smart meters and dynamic pricing are possible and are already happening.”