wg-1: customer engagement committee

NYSDPS

WG-1: Customer Engagement CommitteeNew York State Public Service Commission

July 10, 2014

https://www.google.com/url?q=http://www.dps.ny.gov/&sa=U&ei=5MN0U5nZCIidqAaJvILICg&ved=0CEgQ9QEwDQ&usg=AFQjCNFyLtQvTYWlMU5rOp47W1dqDH8cuA

07-10-2014 WG-1: Customer Engagement

Agenda

• Customer Engagement Committee (CEC) Overview

• Barriers to Customer Engagement: The Customer

• Barriers to Customer Engagement: The ESCO

• Effective Customer Engagement

• The Community Choice Aggregation Model

• Wrap-up


CEC Overview: Structure

CEC consisted of over 158 individuals from 90 organizations which were organized into the following groups:• Utilities• Energy Service Companies (ESCOs)• Government• Large Customers• Commercial Customers• Other


CEC Overview: Structure

Other included over 50 representatives with a myriad of interests including: • Aggregators• Behavioral science experts• Business advocates• Consumer advocates• Energy efficiency providers• Energy, demand response and smart grid trade associations• Environmental advocates• Non-profit research institutions• Real estate boards and companies• Solar providers• Technology providers.


CEC Overview: Objective

Identify barriers to participation by all customer groups in the new markets and opportunities created by the REV initiative, and to identify and recommend solutions where appropriate.


CEC Overview: Process

CEC convened seven conference calls

Identified barriers to customer engagement by affinity group which prompted more targeted discussions surrounding the importance of those barriers.

Topics covered included:• Time-of-Use rate structures• ESCO and Utility billing processes• Demand Response (DR) programs• Master-metered buildings• On-bill recovery


CEC Overview: Process

Staff identified a subset of targeted issues and met with individual parties to discuss topics such as data access, community/municipal choice aggregation, and customer segmentation and marketing.

The presentations identify certain barriers and possible approaches to enhance customer engagement. They do not reflect agreement or consensus of the parties and are not meant to reflect a comprehensive analysis of the benefits, costs, and concerns associated with the identified methods and approaches to customer engagement.


Agenda






• Wrap-up


Barriers to Customer Engagement: The Customer- Overview: DER Deployment Requires

Motivated Customers

• Industrial and many large commercial customers are motivated by intense external and internal competitive pressures to identify and evaluate economically feasible DER alternatives• Efficiency investments and practices• Behind the meter distributed generation

• Additional opportunities will be assessed if barriers are addressed• The challenge of motivating other customers


Barriers to Customer Engagement: The Customer- The Details Matter: Principles for Mitigating

Existing Barriers to DER Development

1. Offer products that customers want

2. Address basic pricing problems

3. Align rates with cost causation

4. Rates and value propositions matter


• Inadequate Customer Understanding/knowledge• Limited access to real time usage data• Not all utility meters are smart meters• Electric tariffs are complex, making the cost-benefit analysis for ECMs difficult• No direct way to access PSC-approved submetering technology

• Regulatory Barriers• Product Innovation: DR programs Require Flexibility• Cost of participating in DSPP and value-added products/services• Standby tariffs and capacity restrictions undermine large DG investment• Difficulty in accessing TOU rates statewide and existing rates may not provide

adequate value• Air emissions permitting for emergency generators participating in DR

• Equity and Fairness Considerations• Uniformity of Utility Business Rules• Low income social justice issues• Fair allocation of costs for AMI, new technologies, pilot programs• Inconsistent or short term funding of outreach, education and incentives inhibit

engagement

Barriers to Customer Engagement: The Customer


Barriers to Customer Engagement: The Customer- Barriers to Demand Response as DER

(Dispatchable or Not)

• Most existing DR programs focus on reliability, rather than on reducing peak loads and prices

• Energy, capacity and ancillary service performance metrics are defined to mimic generator performance criteria which may not accurately capture the value of DER

• Clear and stable rules are needed to encourage customer participation


Barriers to Customer Engagement: The Customer- Product Flexibility is Key to Addressing DR

Barriers

• Responsive Demand is not the same as Demand Response. Allow customers to optimize based on their own motivations in combination with market opportunities.

• Retail DR should be designed to align customer load and load shape potential with defined REV objectives (e.g., improve system load factor)


Agenda






• Wrap-up


Barriers to Customer Engagement: The ESCO- Key Barriers

• Absence of full smart meter deployment

• Lack of real-time access to data from meter (including from some existing interval meters)

• Real-time access to two-way functionality

• Limited billing options

• Other regulatory and rate-making issues


Barriers to Customer Engagement: The ESCO- Meter Functionality and Access to Data

Most DER works optimally with smart meters (with appropriate access to data and functionality)

• Traditional energy efficiency (EE) is an exception

Possible end-state solution: Full deployment• Not all stakeholders agree that 100% deployment is cost-justified• Material concerns regarding data privacy/confidentiality and possible health

impacts


Barriers to Customer Engagement: The ESCO- Meter Functionality and Access to Data

Near-term options build case for longer-term solutions

Maintain flexible approach early in REV effort

Possible near-term solutions:• “Voluntary” deployment• Third party deployment• Smart meter alternatives• Other in-home devices• Retail Demand Response Load Profiles• Identify possible “early wins” from data validation/EDI work streams• Giving customers key data can shape behavior even without full functionality


Barriers to Customer Engagement: The ESCO- Billing Optionality

Lack of comprehensive billing relationship with customer is a barrier to engagement

Possible solutions:• ESCO consolidated billing (though lots of debate on continuation of other

options)• More flexible, bill ready utility billing

• Multiple products and price plans


Barriers to Customer Engagement: The ESCO- Other Regulatory Issues

Net metering protocol limits ESCO ability to integrate DG into ESCO portfolio

Some rules limit ESCO-customer relationship• Inability to do an ‘apples-to-apples’ comparison• Need account number to switch suppliers

Customer inertia itself may be a barrier • Considerable differences of opinion on utility role in commodity supply


Barriers to Customer Engagement: The ESCO- Summary

Customer engagement will flow from proper market structure

Major barriers relate to directness of ESCO relationship with customers

ESCOs confident in ability to engage mass market if barriers materially resolved• Well-positioned to seamlessly integrate DER into customer-friendly offerings• ESCOs have powerful incentive to simplify behind-the-scenes complexity


Agenda






• Wrap-up


Effective Customer Engagement: Introduction

CEC sought to identify and address barriers to participation by all customer groups in the markets and new opportunities created by the REV initiative.

Goals include:• Barrier Identification• Discussion on Effective Customer Engagement Opportunities• Market Design Principles


Effective Customer Engagement- Classes of Customer Engagement

The customer engagement strategies discussed by the committee can be organized into four general classes:

1. General Education and Outreach2. Regulated Programs3. Customer Products and Services4. Incentives and Financing

Historically funded through approved program budgets, system benefit chargesREV has identified future funding as an open issue

“Best Practices” can be identified for traditional approaches; “Market Design” principles applicable to new approaches.


Effective Customer EngagementI. General Education and Outreach

General Education and Outreach strategies include:• General market information• Customer education about market changes• Education about system operations and impacts• Analogies from air quality campaigns and retail choice


Effective Customer EngagementII. Regulated Programs

Regulated Programs have included:• Demand-side management portfolios• Demand response and direct load control• Energy efficiency measures• e.g., utility programs, statewide education campaigns


Effective Customer EngagementIII. Customer Products and Services

Customer Products and Services represent:• “Market-based, sustainable products and services that drive a customer-

oriented industry”• A resource for education and customer engagement• Customer engagement and education funded by market participants through

operations• Requires successful “market animation”

Focus on “market design” (not “best practices”)


Effective Customer EngagementIV. Incentives and Funding

Incentives and Funding represent:• Another channel for customer engagement that supports and complements the

others• Particularly relevant within New York• e.g., rebates, incentives, grants, loans, on-bill recovery and other financing


I. Education• Outreach and Education• Focus Groups• Experiential (e.g., Sustainability Hub)

II. Regulated Programs

• DSM programs (including home energy reports)

• Direct Load Control• Third-Party Administration• Low-Income Programs• Hosted “Marketplace”

III. Market Products

• Community Aggregation• Demand Response Aggregation• Advanced Analytics• Device Control and Optimization• Energy Auditing and Specification

IV. Financing• On-Bill Financing• Direct Incentives• Loans & Leases (Green Bank)

Effective Customer Engagement- Examples of Customer Engagement


Effective Customer Engagement- Components of Customer Engagement

Staff Report notes, “A strategy for engaging customers should have three main components:

1. Products

2. Information

3. Enabling Technology

DSPP will “create markets, tariffs and operational systems”

Achieving “market animation” will require coordination between customer engagement strategies, markets, pricing, and platform technologies


Agenda






• Wrap-up


The Community Choice Aggregation Model- What is a CCA?

• CCA is one model for engaging customers

• A CCA is an optional buying group organized by a municipality to benefit electric customers

• A CCA would enter into electricity supply contracts for all customers who remain on default service within a given municipality

• Customers are automatically enrolled, unless they opt out

• Customers can participate in long-term fixed rates and greener power supply options


The Community Choice Aggregation Model- Benefits of Community Choice

• Choice – An alternative to utility default rates and other supplier pricing

• Control – Town sets its own energy goals, e.g., long term fixed rates, or a higher mix of renewable energy

• Stability – Town can seek long-term rates to avoid gas market volatility

• Financing – Have been run without additional staffing or burden on local budgets. Administration of the program should be outsourced to energy professionals

• No penalties for customers – Opt out anytime and go back to default or choose another ESCO

• Leverage – Larger buying group attracts attention


The Community Choice Aggregation Model- Benefits of Community Choice

• Pro-Customer – Contract terms and conditions are designed to protect customers.

• Public Oversight – Local officials hold ESCO and Consultant accountable

• Professional Expertise – Retaining qualified consultants ensures a smooth roll-out of program

• Green Power – Town can “green-up” entire supply portfolio, or offer “opt-in” green products to customers

• Public education and engagement - Decisions are made in public forums, providing transparency as well as opportunities for public education and participation. Opt-out notifications also provide an opportunity for public education.


The Community Choice Aggregation Model- Some Concerns

• PSC would need a policy change to allow for “opt-out” programs

• Program should be authorized by a local governing authority

• Safeguards must be put in place to maximize transparency and minimize the potential for unethical conduct by anyone involved in administering the program

• Local governments may currently lack the resources to administer the program and may need to hire or engage experts

• ESCOs are not prevented from marketing to customers who participate in a CCA

• ESCOs keep existing customers – CCA can’t take away customers and put them into an aggregation

• Although opt-out aggregation has historically attracted large ESCOs with hedging desks, smaller ESCOs are not precluded from participating in bidding process


The Community Choice Aggregation Model- Some ESCO Concerns

• Concerns about Government involvement in retail markets.

• CCA programs will pick certain winners through government intervention and may inhibit customer access by the remaining ESCOs.

• An ESCO participating in a government sponsored program will have the benefit of opt-out, while an ESCO participating in a private aggregation program will be subject to opt-in.

• Public aggregation has not been implemented in a jurisdiction like New York where the utility (default) rate changes each month in response to market costs.


The Community Choice Aggregation Model- Case Studies

Lowell, MA• Pop. 100,000• ESCO purchased RECs covering 100% of energy needs from Maine hydropower

resources• All-in price was 20% lower than default price

Lancaster, MA• Pop. 8,000• Non-profit ESCO purchased RECs from town-owned solar farm• Town uses revenue to pay down bond on solar farm

Marlborough, MA• Pop. 38,500 • Suspended CCA Program • Program suspended after utility rate fell beneath CCA fixed rate in 2012, due to

dramatic decline in natural gas prices in 2012


The Community Choice Aggregation Model- Road Map for Implementation: The Aggregation Plan

Purpose: Describe approach and demonstrate that plan meets all regulatory requirements.

Key elements:• Customer protection: Customers may opt-out at any time; no hidden fees• Price protection: Program will offer firm, fixed rate pricing• Flexibility: Decisions about term and price will be made only after bids are

received. Leadership is not locked into making a commitment• Strong customer education• Green option• Coordination with local energy efficiency initiatives• Local power sources• Billing: Customers will continue to receive one bill from utility


The Community Choice Aggregation Model- Road Map for Implementation: Roles and Responsibilities

Municipality Consultant Supplier Utility Authorize

aggregation Approve plan Approve and

execute supply contract

Approve opt-out notice and customer education

Oversee consulting team

Develop aggregation plan

Secure any required approvals

Manage supply procurement and negotiate supply contract

Develop and implement all forms related to customer education

Monitor performance of supplier

Send opt-out notice

Enroll customers via EDI

Supply electricity Provide customer

support

Bill customers Provide delivery

service


The Community Choice Aggregation Model- Road Map for Implementation: Three Action Points for Local Government

• Local governing authority passes resolution/referendum/ordinance

• RFP/Choose Consulting Firm

• Public Hearing on “Community Choice Power Supply Plan” documents


Agenda






• Wrap-up

wg-1: customer engagement committee

Documents