Customers will respond to electricity pricing signals if usage information is clearly conveyed

Mobile phone habits are a pointer: To support this,
Harper-Slaboszewicz says customers are known to choose a cellular phone
plan based on their past history of using minutes in the evening and on
weekends, when there is typically no charge, compared with their usage
of minutes during the weekday, when there are typically charges that
kick in above a certain threshold. US cell phone customers are acutely
aware of when they go over their threshold and seem to prefer paying
extra each month to avoid additional usage charges than to pay a lower
fixed fee and sometimes pay for extra usage.

Electricity usage presents different challenges: We don’t just
use electricity for a certain amount of time. We also use different
amounts of electricity depending on what electric device is operating.
An electric dryer running for 40 minutes uses significantly more energy
than a computer for that same length of time.

Information flows are key: She adds: “It may be that customers
participating in price responsive demand response programs are more
interested in making sure they are saving money by being on the program
than in saving additional money. If that is so, then utilities need to
provide a flow of information that would over time build up enough
interest on the part of the customer to take some additional steps to
reduce usage when prices are relatively high.

So how is that informationpresented: “The savings in any one
month may not be enough to attract the attention of customers. If, for
example, customers save $5 per month by participating, this may be
equated to one trip to McDonald’s, and is more-or-less ho hum to the
customer. Annual savings of $60 may be of greater interest since $60 is
enough to make most people stop and take notice.”

Opportunities do exist for product differentiation: She argues
that the key is their energy bill. Customers are already favorably
inclined to receive relevant and useful information with their bill.
“Utilities have an opportunity to provide customized information based
on interval data to the customer on their bill in terms the customer
needs and understands: time and money. Energy bills can not possibly be
more confusing and complicated than cell phone bills.”

Reference: UtiliPoint’s daily IssueAlert – 8 February, 2006. What
Information would Customers Find Useful to Manage Their Energy Bill? By
Patti Harper-Slaboszewicz, director of AMR and Demand Response.

Erisk Net, 10/2/2006


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