What Consumers Don’t Know About Electricity Deregulation Can Hurt Them
- Jan 3, 2012 11:19 pm GMT
- 392 views
Pennsylvania has one year of experience with deregulation of its electricity markets. Residential, commercial, and industrial customers can now switch to alternative electricity suppliers in a quest to manage the generation and transmission costs on their electricity bills. With some suppliers, they can even get energy from renewable sources to “green up” their electricity.
My mother lives in a retirement community in Pennsylvania, and I was there for the holidays. She handed me a stack of promotional mailings from electricity suppliers and said, “You’re the Smart Grid expert – you sort this out.” I began by reading the letter from her current electricity supplier which listed two phone numbers and two websites for more information. I visited the website sponsored by the Pennsylvania Public Utility Commission (PPUC). It is well-designed. It is easy to find suppliers by zipcode, listed in alphabetical order with costs, fixed or variable pricing identification, termination fees, and links to each supplier’s site. It took only 15 minutes of website reading and one call to a prospective supplier to answer a termination fee question, and my mother was enrolled with a new supplier. She’s looking forward to the reduced kilowatt hour (kWh) rate now in effect during the coldest months of the year in her electrically-heated home. Admittedly, this is a teaser rate that could increase in a few months time, so we’ll be watching for announcements of price increases and then revisit our supplier decision.
How is deregulation working for Pennsylvania? At the end of one year, almost 25% of residential customers in Pennsylvania switched suppliers. The churn rate is not evenly distributed among the seven regulated electric distribution companies, which ranges from a low of 7.7% to a whopping 70%. Contrast that to the first year of Texas electricity market deregulation, which had only 14% of residential customers transitioning. Almost 10 years into their electricity market deregulation activities, Texas now claims that 55% of its residential load has switched suppliers.
The Pennsylvania results show there is some consumer awareness about shopping for electricity, but here are a couple of suggestions that the PPUC should consider. While the supplier comparison website was nicely designed and easy to navigate, it only works if you have some means to access the internet. My mother doesn’t surf the web, and she’s not alone in a state with a large population of senior citizens. Of course, there’s the option of a phone number to call, but it can’t be easy to comparison shop some of the details of electricity pricing without a convenient display of information on a screen. There’s also a 50 page booklet from the Pennsylvania Office of Consumer Advocate (OCA) that contains much of the website information, but I doubt that it’s a popular option for many consumers.
And beware if you use an Internet search term like “Pennsylvania electricity deregulation” instead of visiting the official PPUC- or OCA-sponsored sites. Top page results come up for a number of third party suppliers that offer electricity at higher rates than those found on the PPUC site. It is too easy for unsophisticated electricity consumers (the majority of any state’s population) to get incomplete information or limited supplier choices that may cost them more money than if they stayed with their current supplier.
That doesn’t bode well for building positive experiences with deregulation, which could in turn impact the state’s ambitious Smart Grid goals. It highlights one of the ongoing problems confronting utility and regulatory agency outreach efforts to residential populations. More has to be done to provide convenient access to information for population segments that are not prepared to obtain their information via websites. These segments often correlate to the consumer segments that perceive themselves to be at risk for increased bills – whether the activity is deregulation or a Smart Grid initiative. If the PPUC is truly concerned about protecting its citizens, they should consider more F2F (face to face) outreach to educate them about their best sources of information for comparison shopping and find more ways to deliver that information to the “at-risk” populations. The PPUC and the Office of Consumer Advocate should track and promote positive results in the form of use cases that illustrate how ordinary people are benefitting from these programs. Making it easy and making it personal are two of the most important takeaways for deregulation education, and equally apply to Smart Grid initiatives as well.
The ebook, “The Smart Grid Consumer Focus Strategy: Transforming Utility Operations to Build Consumer Value” co-authored by the blogger contains these suggestions and more insights to help utilities create successful outreach campaigns for Smart Grid initiatives. The ebook is available at this website.