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New York State Public Service Commission. WG-1: Customer Engagement Committee. July 10, 2014. Agenda. Customer Engagement Committee (CEC) Overview Barriers to Customer Engagement: The Customer Barriers to Customer Engagement: The ESCO Effective Customer Engagement

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New york state public service commission

New York State Public Service Commission

WG-1: Customer Engagement Committee

July 10, 2014


Agenda

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 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 structure1

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

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 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 process1

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.


Agenda1

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


Barriers to customer engagement the customer overview der deployment requires motivated customers

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


Wg 1 customer engagement committee

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

  • Offer products that customers want

  • Address basic pricing problems

  • Align rates with cost causation

  • Rates and value propositions matter


Barriers to customer engagement the customer

Barriers to Customer Engagement: The Customer

  • 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 DSPPand 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 demand response as der dispatchable or not

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

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)


Agenda2

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


Barriers to customer engagement the esco key barriers

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

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 data1

    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

    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

    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

    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


    Agenda3

    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


    Effective customer engagement introduction

    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

    Effective Customer Engagement- Classes of Customer Engagement

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

    • General Education and Outreach

    • Regulated Programs

    • Customer Products and Services

    • Incentives and Financing

      Historically funded through approved program budgets, system benefit charges

      REV 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 engagement i general education and outreach

    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 engagement ii regulated programs

    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 engagement iii customer products and services

    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 engagement iv incentives and funding

    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


    Effective customer engagement examples of customer engagement

    Effective Customer Engagement- Examples of Customer Engagement


    Effective customer engagement components of customer engagement

    Effective Customer Engagement- Components of Customer Engagement

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

    • Products

    • Information

    • 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


    Agenda4

    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


    The community choice aggregation model what is a cca

    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

    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 choice1

    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

    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

    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

    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

    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

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


    Wg 1 customer engagement committee

    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


    Agenda5

    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


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