Last week BC Hydro announced that it had selected Itron as the supplier of smart meters for the province, in a contract worth $270 million. This followed on an earlier announcement, in January, that Corix, a Vancouver company, had been selected to install 1.8 million smart meters and that Capgemini had been selected to provide project implementation and technology integration services. Installation of smart meters is a key step towards the development of a smart grid - simply put, the incorporation of digital monitoring and communications technologies into the existing electrical grid. As BC Hydro rightly points out on their website, implementation of a smart grid potentially offers enormous benefits, including:
- Two-way communications providing real-time information allows consumers to manage their own energy use and utilities to better balance generation and demand;
- Real time information from all points of the grid also allows better customer service in the event of power failures - if utilities can pinpoint the failure earlier, they can fix it quicker;
- Allows time-of-day electricity pricing, i.e. higher prices when demand is greatest, lower prices when demand is reduced, which can lead to reduced demand in peak periods and, ultimately, less need to build (expensive) generation facilities that sit idle for all but short periods of time;
- Permits a distributed and more adaptive network that increases the stability, security and reliability of the grid;
- Allows more distributed generation such as intermittent and small-scale renewables to be attached to the grid.
Overall, making the grid smarter should support more efficient use of electricity, reduce the generating capacity that has to be built, support development of renewables and reduce emissions associated with electricity generation.
What's not to like and why are smart meters so unpopular?
U.S. utilities installing smart meters in California, Colorado, Maine, Texas and elsewhere have faced a barrage of consumer complaints (not to mention Ontario - here and here). The biggest source of concern appears to be the perception that power bills have increased with installation of smart meters, although, social concerns relating to "big brother" monitoring or even controlling in-home electrical use have also emerged as have the usual concerns for increased exposure to electro-magnetic fields (EMF).
Part of the problem might be ignorance. GE published results of a 2010 survey in which it found 79% of Americans were unaware of the term smart grid and had no idea what it meant (GE did find that 80% of those who did understand the term - i.e. 16% of the total, not an overwhelming number - did believe that there would be benefits from introducing smart meters. Judging from the public reactions in the states where smart meters have been introduced I wonder if GE isn't kidding itself about even that low level of understanding.)
Another might be utility approaches to customer service, or lack thereof. Back in 2009, when the California revolt against smart meters first erupted, Katie Fehrenbacher, writing at Gigacom.com, had this to say:
"Smart grid technology and smart meters don’t represent new or risky or bleeding-edge technology. They use the same type of information technology — wireless networks, silicon, software — that controls our cell phones, computers and Internet, and that plays a massive role in the U.S. economy. It’s just being used in a new industry: electricity. Of course software can occasionally be glitchy, but so can a person manually driving by and reading home meters. As Grid Net CEO Ray Bell told audience members of the GreenBeat conference today “digital meters are rigorously tested, and highly accurate.”
The big issue is that utilities need to learn to communicate a lot better, and develop a much stronger relationship, with their customers, whether that’s through marketing, PR or customer outreach. As Seth Frader-Thompson, CEO of energy management startup EnergyHub said at the Dow Jones Energy Conference this week, utilities, with their regulatory markets, have a long history of looking at their customers as “rate payers,” or even “load”. There needs to be a sea change in the relationship between utilities and power consumers .... ultimately it’s the responsibility of the organization that’s leading the switch to the digital two-way system to keep the line of communication open."
With all of the information that is out there about managing change you would think the utilities would have perfected the art of introducing new technologies and growing electrical rates. Apparently not. So what does it take to successfully introduce smart meters (or any significant change for that matter)?
Arguably, John Kotter's Eight-Step Process of Creating Major Change is the best known framework for bringing about change in a corporate setting:
Modified from John P. Kotter, "Why Transformation Efforts Fail", Harvard Business Review (March-April, 1995):61.
It may be a bit too Corporate so I have been using a simpler diagram to explain what I think is need to bring about a change:
Whether you like a simple approach or a more complex one, the basics appear to be the same - communication and lots of it. And it wouldn't hurt to clearly describe the the benefits to the people that are going to be affected, in terms that are relevant for them, e.g. lower long term costs, greater reliability, faster repairs, etc. Making consumers aware of the change and what it will mean before it arrives on their doorstep wouldn't hurt either.
The Crown corporation, which enjoys an almost complete monopoly in B.C., is obviously aware of the consumers concerns that have arisen in other jurisdictions, as a BC Hydro customer I am not aware of any significant communications efforts beyond the project website. And this is in a province in which a previously popular Premier was forced into retirement over his failure to adequately engage voters before abruptly introducing a significant change in the province's sales tax regime - perhaps the first Canadian tax revolt in (recent) history.
Hopefully, BC Hydro will learn from that experience. It was awfully close to home.