Customer Service, Energy Efficiency, Executive Insight

A Winter’s Tale: Optimizing Demand Response With Comprehensive Customer-centric Software

Issue 1 and Volume 93.

Winter's Tale

by Joel Riciputi, Nexant

With winter’s higher heating and energy use, utility executives continue to assess new strategies to address peak demand. Beyond peak demand program design, executives increasingly are focusing on ongoing program management and customer engagement to achieve sustained program success.

Customer engagement has proved a critical success factor across both demand response and traditional demand-side management (DSM) or energy efficiency programs. Greater engagement means higher program participation rates and energy savings, not to mention higher customer satisfaction ratings, according to a Cleantech group report on the subject.

A new breed of comprehensive customer-centric software platforms promise to play an important role in helping utility executives ensure success with customers, as well as across all utility operations and programs. Equipped with the right software and strategy, utilities have a tremendous opportunity to manage these different types of programs to the benefit of their customers, especially during winter.

Reducing Energy Use, Boosting Customer Satisfaction

A Harris Poll found that 48 percent of U.S. consumers are interested in monitoring home electricity consumption and want more information on how to achieve energy savings. Other utility customer satisfaction surveys consistently have found that demand response can improve customers’ overall opinions of their utility.

An opportunity exists for utilities to elevate programs beyond helping customers save money and to create an additional level of trust and a deeper, more purposeful relationship. To do so, utilities must remember that demand response programs are personal in many ways. With these programs, utilities ask customers to change their lives from default mode to turning down the heat to turning off the lights. Few like to change behavior without (1) being nicely asked to do so; and (2) without a clear benefit. Software that can tie this all together to help create a purposeful, satisfying relationship is essential to demand response success.

Shifting Demand Response From Operations to Customers

Traditional demand response software systems support the operational side of demand response. But what about the customer? How can a utility weigh the operational side of demand response with the customer-centric side of customer engagement? What about the time of day, type of day, location and physical constraints related to the customer?

Unforeseen challenges quickly can develop with efforts to integrate these two disparate data sources. Data collected from the operational side typically provides no visibility to the program side. Communication hiccups quickly can develop, and customer satisfaction quickly can dissolve. Issues such as inadequate program element awareness, lack of advance event communication and inaccurate incentives paid against reductions made from baseline usage can undermine program success.

Embracing Customer-centric Software Platforms for Demand Response Programs

Utility demand response software faces a formidable task: It must be able to wed all aspects of operations with customer engagement. A customer-centric model insists that the solution considers customer mix, penetration of renewables, dramatic weather events, regulations and varying types and depth of other DSM programs, including energy efficiency, behavioral demand response and bill information.

The key, especially in supporting customer engagement and increasing satisfaction, is to ensure the software platform can take demand response programs from the start point of program design and support the customer experience all the way through to the final critical steps of engagement and customer satisfaction. A successful program will extract data insights and manage and create strategically significant, ongoing interactions that consistently connect with customers and set the stage for future programs and services. This is doubly important during the energy-intensive winter season.

Working with more than 200 utilities across a wide range of DSM and grid reliability initiatives, Nexant has found that comprehensive customer-centric software must address the following considerations to enable DR program success in the winter and beyond.

Triggering Real-time Communications

From operations to programs to customers, proactive and timely communications are critical to smooth deployments and customer acceptance. Studies consistently show that customers value communications. The better informed customers are, the more receptive and engaged they are in demand response programs, especially when communications are optimized around the following principles:

▪ Notifying customers about impending events. When system triggers are not in place and notifications don’t go out as needed or planned, frustration and confusion can set in and disrupt the customer’s experience. Perceptions of poor service can further compound when the utility call center is uninformed. Chaos quickly can ensue, translating into lost program participants and damaged customer confidence.
▪ Avoiding customer fatigue. Customers will be more engaged and far less likely to opt out of future event notifications as long as they aren’t asked to participate too frequently. To avoid this, the utility must maintain airtight accuracy on program participant data and tracking and carefully plan and manage automated event communications accordingly.
▪ Reporting results. Saving money on energy bills is a significant motivator, which drives customer satisfaction. By helping customers understand the value of changing their behavior, utilities can deepen engagement and connection to the program and raise the likelihood of greater program success.

Every touch point with the customer is an opportunity to extend engagement and build trust. Utility software platforms must consider numerous variables to optimize interactions, including the ideal frequency of customer contact, current levels of customer energy use and demand response program participation.

By taking a highly personalized and supportive approach, utilities can achieve sustained engagement and better program access.

Following up After the Demand Response Event

Creating a greater awareness of electricity usage and the immediate gratification of knowing how much customers saved from participating in a demand response event-that it did make a difference-is a critical customer touch point opportunity to boost satisfaction and program retention.

Accurate and timely settlements and incentive checks are important. Customers alienated when the payment process is drawn out, and payment accuracy, overpayments and double payments also can be areas of risk for the utility. Comprehensive software and a customer-centric business model can optimize these post-event considerations and help manage additional challenges that frequently arise, such as missing and low-quality meter data.

Ensuring Program Rules are not Violated

By design, the rules of engagement for demand response programs must be specific. Data triggers must be incorporated into the software system defaults for each specific demand response program. If the utility doesn’t carefully track who signed up for what-right down to the details of how often a customer agreed to be called within a specific period of time-a program quickly can trigger customer dissatisfaction and alienation.

Incorporating Related Technologies Customers Embrace

Consumers want more convenience. Increasingly they are using devices that learn their patterns and communicate with their home systems, such as HVAC, alarm and home entertainment systems, as well as smart thermostats that help them wake up to a warm home on a cold winter morning. Convenience is king, whether this means not having to get up from the couch at home or the capability to adjust systems from a wireless device. In turn, these smart thermostats, smart appliances and energy management systems are changing how customers understand and make decisions about energy consumption. For example, consumers have numerous choices of smart thermostats across a range of communication protocols. To capture as many of these customers as possible, utilities must be able to communicate through all of these devices via a single software platform with the flexibility to integrate across all protocols.

Conclusions

Demand response programs have undergone a dramatic transformation since their inception more than 40 years ago. The expanding range and types of demand response programs has elevated the importance of focusing on customer engagement and satisfaction to ensure overall program success. With winter upon us, the need for more responsive demand response programs is even more pronounced.

Utilities increasingly are recognizing the growing impact of DSM programs on customer satisfaction scores. Using spreadsheets to simply track data points and customer interactions is no longer sufficient. It’s time to elevate demand response out of operations to a larger part of the holistic customer strategy, as well.

Utilities no longer can stop at the starting line with simple program design. New comprehensive software platforms are vital to drive not only demand response program success but also to align demand response with strategic planning, grid operations and other DSM programs that drive better business results for utilities. By helping utilities manage operations from the customer to the control room, these new comprehensive software platforms can help achieve a more productive and sustainable energy future.


The Polar Vortex’s Demand Response Legacy

Winter's Tale

The 2013 polar vortex induced emergency demand response dispatches across the mid-Atlantic, Texas and other regions. PJM, the Electric Reliability Council of Texas and New York Independent System Operator set new winter peak records, and Texas dispatched winter demand response programs for the first time.

The polar vortex is a rare event, but it has led to renewed focus on winter demand response programs, with many ISOs’ planning changes that will enhance communications, improve operation coordination and boost regional collaboration. This new reality puts a renewed focus on demand response as an operational resource year-round. Comprehensive software remains critical to balance these myriad inputs and ensure utility programs work together to deliver superior results.

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