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Smart meters need smart systems, not a better user interface

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This article on CNET caught my eye this morning: Study: Smart meters need better user interface. I am always interested in smart meter stories as it has always struck me that this is a powerful way to reduce energy usage with all the long term benefits for consumers and producers this entails. I am often disappointed, however, as the smart meters are often discussed in the context of existing dumb systems.

What do I mean by this? Well, today the billing systems for the utilities are pretty dumb. Everyone gets the same price per unit of power and the power is simply totaled over a period so it can be billed. There’s no real decision here. But introduce a smart meter and power is being measured minute by minute, creating a richer picture of energy usage. In theory this richer picture will result in consumers changing behavior and utilities having more control of power consumption. But in practice it won’t, at least not while it remains attached to a dumb billing system.

This is because only a small percentage of people are altruistic – about 5% if I remember correctly. Everyone else needs some kind of reward. And a pretty immediate reward – we’re not good at waiting for the payoff. This means that although “Sixty-two percent of people said they would log onto an Internet site to check power consumption at least once a week” they are unlikely to do so, or to act on what they find, unless there is something in it for them in terms of reduced utility bills.

As Neil and I said in Smart (Enough) Systems, the use of smart meters forces a utility company to get serious about managing decisions, at least it does if they want to actually change anyone’s behavior:

If the company adopts “smart meters” that allow different pricing for electricity at different times of the day, its pricing decisions and customer segmentation decisions (for billing plans, for example) are good candidates for applying enterprise decision management. Pricing will go from simple and mechanical (with the old meters) to dynamic and complex. Working out pricing that incents off-peak usage profitably is hard and results in much more complicated pricing decisions.

Without a billing system that can do this, that can allow for different plans (that are themselves analytically derived so they are statistically valid) and potentially regular changes to pricing to drive desired behavior, smart meters will have little or no effect on actual usage. Now I know there are folks who say that the evidence is that people who get this data today do change their behavior. But the people making the effort to get this data today are those who are passionate about green causes and saving energy, not regular consumers.

In the article it is suggested that “utilities should explore partnerships with other industries well versed in introducing new products and services to consumers”. I would say they should explore partnerships with those used to developing different pricing models for different segments of a consumer base, used to using analytics to drive segmentation and used to developing flexible, configurable, decision-making systems.

BTW I wrote about this a little in a post called Mr Obama, smarten these systems.

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