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Consumer Behavior and Electricity Usage

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  • Jul 14, 2010

To the ongoing conversation on how consumers behave, what they think and how to engage them, let's add a new Accenture study.


In January, Accenture surveyed consumers in 17 countries, including the United States, seven European nations, China, Japan and South Korea on residential energy management attitudes, knowledge and practices.


"We wanted to step back from the smart grid and its technologies and survey customers and consumers on barriers to changing behavior around energy usage, because -- especially in North America -- utilities are responding to pressures from various stakeholders to reduce use," says Greg Guthridge, managing director for Accenture's retail and business services for utilities.


"Most utilities are already fairly sophisticated in dealing with the large commercial/industrial sector, but not so on the small- and mid-sized commercial and the entire residential mass market," he adds.


A broad-brush take on the findings among Americans:


  • Consumers do not fully equate electricity usage with its environmental impacts.
  • Though more than two-thirds say they know how to optimize electricity use, only one-third know of programs to do so.
  • Though most Americans identify their electric utility as the preferred source for such programs, few trust them.
  • Americans will manage use only if that saves money.
  • Americans can be grouped into one of six demographic groups: skeptics (31 percent), pragmatics (25 percent), cost-conscious (13 percent), proactives and indifferents (12 percent each) and eco-rationals (7 percent).

"It would be a mistake if utilities treat consumers as a single mass of undifferentiated audience," Guthridge says. "One size doesn't fit all. They need to offer differentiated services, options and messages. And those messages need to be fine-tuned."


Based on the survey results, Guthridge said, "Smart grid-enabled programs aimed at the mass market are probably a waste of money."


Telco Parallels


Guthridge cited what he called a telco parallel. In the past, telcos treated the mass market as such. Today, the telcos are very sophisticated in offering differentiated services to various demographic market segments.


"The biggest surprise -- the headline message -- is the influence of 'control,'" says Guthridge. In other words, consumers are averse to utility control of their residential data and appliances.


"Consumers are still quite nervous about this and it's a growing trend," Guthridge says. "Energy providers and utilities need to really explain these programs. You can see growing resistance. We were surprised by the numbers. Consumers have a low level of trust in their utility and it's even lower in competitive markets.”


"Why? We've concluded that lower trust in deregulated markets is due to changing prices," he continues. "Fluctuation in prices turns off consumers, who want stability."


According to the study, the vast majority of consumers, asked if they know how to conserve energy, said yes -- but they don't know of any programs offered by their utility.


"We think they confused general energy use -- including other utilities such as water and gas, and recycling programs -- with electricity usage," Guthridge says. "Most premises in North America continue to grow in energy usage. Consumers don't tie electricity usage to broader environmental impacts and confuse electricity use with other energy usage."


So, what's a beleaguered utility to do?


"We're suggesting more education," Guthridge said.


Who is best positioned to deliver that education?


"Based on our findings about trust in utilities, the utility or energy provider will not be effective on their own," Guthridge says. "They'd better partner with other groups, such as environmental organizations, government agencies and even 'big box' retailers. This would make education more effective, swifter and less costly."


One startling finding: Consumers spend, on average, 6-9 minutes each year interacting with their utility. Four of the top five reasons are negative, Accenture found.


"It's not a high-value interaction," Guthridge noted.


Ideas for moving the needle: focus on educating those in receptive demographics, perhaps addressing children rather than adults.


One idea that's been cited in Intelligent Utility Daily is the notion that dynamic pricing programs should preserve one static rate for consumers who simply cannot or don't want to deal with changing rates.


"Regulators globally discuss a 'vanilla rate' option that doesn't disadvantage customers," Guthridge said. "But how do you limit use of that rate to only the disadvantaged? Fairness is an issue.


"In a sense, regulatory emphasis is on the opposite of our recommendation to differentiate the market -- regulators say everyone should be treated the same," he adds. "Thus, utilities will have to devise incentives for voluntary opt-in to differentiation. Not just with a stick, but with a carrot."


Of course, not everyone agrees with Accenture’s findings -- that utilities have a distant relationship with their customers. Others such as CoreBrand have argued that utilities oftentimes are connecting with their customers, which could give them the inside track on installing the new technologies to allow for smarter energy usage.


In any event, everyone agrees that more education is a must and that utilities are central to getting out the message. Joining forces is one way. But so is using their existing ties to the customers they already have.


This article originally appeared in Intelligent Utility Daily -- the thought-leading online newsletter on how to successfully deliver information-enabled energy.


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