Types of Demand Response Programs
Under reliability-based demand response agreements, customers agree to potential participation in the event of a threatened overload. If a problem arises, utilities request demand reductions and subsequently reward actual decreases in usage. Price-based programs use a different trigger – the wholesale price of electricity. Customers determine in advance a set price at which they will reduce demand.
There are dozens of variations on these two basic programs types, including guarantees on length of cutback and variations in response times and methods. Some programs even incorporate penalties for failure to reduce demand.
Customers are concerned about the environment.
That’s a message utilities have heard loud and clear. As a result, they’re working to ensure that customers understand the tough choices utilities face on environmental issues. At the same time, they’re directly addressing the negative impact that energy use has on the environment —putting more sophisticated controls onto smokestacks, using cleaner fuels, and promoting demand-side management programs that ensure that customers get the most value from the electricity they pay for.
Increasingly, customer service and billing departments are being asked to shoulder some of the environmental burden utilities bear. They’re eager to accept this new responsibility. But they’re able to do so only when their infrastructure —the customer care and billing system that lies at the heart of their operation—is able to accommodate new programs, new products, and new ways of doing business.
Here are three areas in which you’ll want to ensure that your customer information system, your call center, and the entire customer service and billing staffs are ready and able to contribute to the “greening” of tomorrow’s utility.
Demand Response Programs
Demand response programs are blackoutavoidance initiatives in which a wide variety of commercial and industrial customers can participate. Utilities initiate demand response programs in times of crisis—when demand rises precipitously on a very hot summer day or when an accident takes down part of the grid and forces excessive load onto the remaining lines.
In the past, utilities used interruptible rates to attack these crises. Large industrial customers got a special rate—easy for a CIS to handle—if they agreed to unexpected, utility-initiated reductions or service terminations.
Interruptible rates still work well for many utilities. But the rise in the electricity demand curve and environmental pressures against grid expansion are administering a one-two punch in some areas. Increasingly, utilities must find alternatives that expand their load-reduction ability.
Demand response programs are not the sole answer to load and congestion problems, but they can be a valuable part of the equation. In demand response, utilities ask facilities to reduce load during specific periods. They reward those that respond with financial incentives geared to the length and size of the reductions.
Billing Implications of Demand Response
The billing system is the primary vehicle for measuring participation in demand response programs and for distributing the rewards.
The primary tool is the ability to undertake complex billing (also known as “real-time,” “interval,” or “time-series” billing). Complexbilled customers install special meters to measure consumption during prescribed intervals. The utility then processes the time-series information according to its contract with the customer; mapping it, for example, to prescribed time-of-use periods.
In its routine use, complex billing helps customers save money and helps utilities predict and manage load. During periods of crisis, the fact that consumption can be measured during brief 10- or 15-minute intervals means that a wide variety of companies can sign up to curtail load by specific amounts during specific periods. No longer is the high-tech industrial confronted with the “interruptible” threat of losing power—and tens of thousands of dollars —in the middle of key processes. Instead, the facilities manager can sign up for a curtailment that begins after the process is completed.
Similarly, the manager of an office complex can enjoy the financial rewards of turning down the air conditioning for several hours without risking an “interruptible” power loss that would bring down the computers and strand people in elevators.
Green Power Programs
The option to use “green” electricity – power generated from renewable resources such as wind, sunlight, or biomass fuel – is increasingly. As a result, regulators are permitting, and in some cases requiring, utilities to offer green power options.
Many utilities are able to respond only minimally to the challenge of offering green power. Their billing systems limit them to requesting “charitable donations” from customers—not usually a type of program that attracts large numbers of participants.
Programs are more successful when they offer multiple choices—not just optional amounts of green energy but also choices among types of renewables used for generation. That’s because there’s a lack of consensus among environmentally sophisticated consumers as to the desirability of various types of renewable energy sources. One person’s “green” may well be another person’s “brown.” One utility in Nebraska, for example, found that its customers preferred wind and biomass, understandable preferences in an agricultural Great Plains state. Customers in the Southwest may lean toward solar projects. Hydroelectric power, once celebrated for its lack of emissions, has fallen into disfavor among some groups because of impacts on stream flows and fish populations. Wind farms are seen as beautiful by some, while others object to the “visual pollution” and to the hazards turbines pose to birds and bats.
UTILITY GREEN-POWER PROGRAMS ARE CLEARLY ON THE RISE. ABOUT HALF OF ALL NORTH AMERICAN UTILITIES ALREADY OFFER THEM.
Chart from Utility Green Power Programs, Chartwell, Inc., December 2003. Reprinted with permission.
Billing Implications of Green Power
Green power programs rarely impose billing requirements as complex as do demand response programs. But, taken in total, their added strain on existing billing systems can be significant. Utilities must be able to combine green power products with their full slate of other offerings across large and diverse markets. Some residential green power users will also be eligible for discounts offered to elderly, disabled or low-income customers. Small business customers may want to combine green power products with other pricing programs, like time-of-use plans.
Such pricing and billing demands will grow more complex as more consumers install renewable-energy generating facilities on roofs and in back yards. Some states already require utilities to permit these home-based generating facilities to feed energy into the grid and to reimburse customers for that energy, either through direct payment or by subtracting the energy fed into the grid from the energy pulled from it during higher-demand periods. This “net metering” could well be extended to generation from fuel cells, which may become relatively common as the technology advances, as prices decrease, and as fears or terrorism drive more customers toward some degree of electrical selfsufficiency.
Clearly, these emerging developments require greatly enhanced billing capabilities. Systems must be able to handle multiple products and services. They must be able to accommodate rapid change as customers revise their greenpower preferences and as they install new technologies.
And tomorrow’s requirements are likely to be even greater as billing systems must link with increasingly “smart” applications that increase efficiency but that also require two-way flows of information between the home and the utility.
Making Demand Response Work
Demand response programs need more than just complex-billing software to work.
Customer service departments may be called on to provide workshops and materials that educate customers about the advantages of complex billing and the variety of contract terms available.
Customer-care solutions that help develop and manage contracts can be very helpful. Customers with on-site generation, for instance, need different terms from those required by customers without such facilities. A customer that must halt a production line faces very different constraints from one that only needs to turn the air conditioning down. Customers will need guidance to understand these issues and arrive at demand-response agreements that are workable in their particular circumstances.
Utilities can also encourage participation in demand response programs by positioning participation within a package of wider costsavings. Interval data can
Ways to Offer Green Power
Utilities tend to offer green power via three different billing strategies.
Contribution programs offer customers the chance to contribute a monthly amount over and above the price of the energy they use. Contributions are then pooled to fund development of renewable energy facilities within the community. These programs are simple to bill and administer and account for about 20 percent of the current green power market, according to the U. S. Department of Energy’s National Renewable Energy Laboratory (NREL).
Energy-based programs allow customers to purchase discrete amounts of energy, commonly in 100 kWh blocks, to be generated from renewable resources. The utility either generates or purchases this amount of green power. NREL figures indicate that energy-based programs currently account for roughly three-quarters of the green power marketplace.
Capacity-based programs offer customers fixed blocks of electrical capacity for a monthly fee, commonly from about $3.00 to $6.60 per 100 watts of capacity. According to NREL, these programs account for only about 4 percent of current green power revenues.
Enhancing Efficiency Through Information
Today’s sophisticated billing systems can provide information that customers will find very useful in reducing their energy use.
Large customers, for instance, may use daily consumption breakdowns, normalized for weather conditions, to identify and eliminate power-consumption anomalies. Retail chains may use consolidated bills to compare consumption at similar outlets and identify efficiency “best practices.”
Providing more information to consumers will likely, of course, stimulate customers to pose increasingly complex questions to customer service representatives. But that doesn’t have to mean increases in call-center costs. The right billing and customer care system can speed the CSR to the detail behind a customer’s bill entry. Scripts and business process assistants can provide prompts that guide a conversation to a speedy and satisfactory conclusion.
Scripts and assistant tools will become increasingly essential as utilities provide customers with new services and energy-saving products. CSRs will require interactive diagnostic applications that accept input from the customer and provide solutions to problems like appliance failure, faulty circuits, and power fluctuations. (If this software incorporates marketing functionality to cross sell appropriate products, so much the better.)
Collateral Environmental Benefits
The billing process itself has a small but significant negative effect on the environment. In the aggregate, utilities use huge amounts of paper and ink to print paper bills, and the fuel required for bill and payment delivery is not inconsiderable. Billing systems that support electronic bill presentation and payment reduce this consumption.
Similarly, billing systems that provide wireless transmission of orders to field service personnel can drive down paper consumption. And an electronic interface between customer care and work management systems ensures efficient deployment of staff to the locations needed.
The Color of Money
Long before “green” came to mean “environmentally benign” it had another meaning. In American slang, “green” and “greenback” still indicate money.
Those meanings can coexist comfortably in today’s utility, which can readily “do well by doing good.” Reducing the need for new generating facilities and new transmission and distribution lines helps the environment while also cutting utility costs. The demand for increased efficiency means that utilities can offer new consulting services and energy-saving products that save money for customers, reduce the environmental demands of energy generation, and provide profit opportunities for utilities as well.
Enhanced customer care and billing systems represent one of the principal tools that providers can leverage to create and deliver added value in the demanding energy markets of the future. Enhanced customer care systems won’t by themselves sell demand management and alternative power products to millions of new customers. But they are essential to ensuring that the costs to provide these new services are low and that long-term customer satisfaction is high.
Under reliability-based demand response agreements, customers agree to potential participation in the event of a threatened overload. If a problem arises, utilities request demand reductions and subsequently reward actual decreases in usage. Price-based programs use a different trigger – the wholesale price of electricity. Customers determine in advance a set price at which they will reduce demand.
There are dozens of variations on these two basic programs types, including guarantees on length of cutback and variations in response times and methods. Some programs even incorporate penalties for failure to reduce demand.
Customers are concerned about the environment.
That’s a message utilities have heard loud and clear. As a result, they’re working to ensure that customers understand the tough choices utilities face on environmental issues. At the same time, they’re directly addressing the negative impact that energy use has on the environment —putting more sophisticated controls onto smokestacks, using cleaner fuels, and promoting demand-side management programs that ensure that customers get the most value from the electricity they pay for.
Increasingly, customer service and billing departments are being asked to shoulder some of the environmental burden utilities bear. They’re eager to accept this new responsibility. But they’re able to do so only when their infrastructure —the customer care and billing system that lies at the heart of their operation—is able to accommodate new programs, new products, and new ways of doing business.
Here are three areas in which you’ll want to ensure that your customer information system, your call center, and the entire customer service and billing staffs are ready and able to contribute to the “greening” of tomorrow’s utility.
Demand Response Programs
Demand response programs are blackoutavoidance initiatives in which a wide variety of commercial and industrial customers can participate. Utilities initiate demand response programs in times of crisis—when demand rises precipitously on a very hot summer day or when an accident takes down part of the grid and forces excessive load onto the remaining lines.
In the past, utilities used interruptible rates to attack these crises. Large industrial customers got a special rate—easy for a CIS to handle—if they agreed to unexpected, utility-initiated reductions or service terminations.
Interruptible rates still work well for many utilities. But the rise in the electricity demand curve and environmental pressures against grid expansion are administering a one-two punch in some areas. Increasingly, utilities must find alternatives that expand their load-reduction ability.
Demand response programs are not the sole answer to load and congestion problems, but they can be a valuable part of the equation. In demand response, utilities ask facilities to reduce load during specific periods. They reward those that respond with financial incentives geared to the length and size of the reductions.
Billing Implications of Demand Response
The billing system is the primary vehicle for measuring participation in demand response programs and for distributing the rewards.
The primary tool is the ability to undertake complex billing (also known as “real-time,” “interval,” or “time-series” billing). Complexbilled customers install special meters to measure consumption during prescribed intervals. The utility then processes the time-series information according to its contract with the customer; mapping it, for example, to prescribed time-of-use periods.
In its routine use, complex billing helps customers save money and helps utilities predict and manage load. During periods of crisis, the fact that consumption can be measured during brief 10- or 15-minute intervals means that a wide variety of companies can sign up to curtail load by specific amounts during specific periods. No longer is the high-tech industrial confronted with the “interruptible” threat of losing power—and tens of thousands of dollars —in the middle of key processes. Instead, the facilities manager can sign up for a curtailment that begins after the process is completed.
Similarly, the manager of an office complex can enjoy the financial rewards of turning down the air conditioning for several hours without risking an “interruptible” power loss that would bring down the computers and strand people in elevators.
Green Power Programs
The option to use “green” electricity – power generated from renewable resources such as wind, sunlight, or biomass fuel – is increasingly. As a result, regulators are permitting, and in some cases requiring, utilities to offer green power options.
Many utilities are able to respond only minimally to the challenge of offering green power. Their billing systems limit them to requesting “charitable donations” from customers—not usually a type of program that attracts large numbers of participants.
Programs are more successful when they offer multiple choices—not just optional amounts of green energy but also choices among types of renewables used for generation. That’s because there’s a lack of consensus among environmentally sophisticated consumers as to the desirability of various types of renewable energy sources. One person’s “green” may well be another person’s “brown.” One utility in Nebraska, for example, found that its customers preferred wind and biomass, understandable preferences in an agricultural Great Plains state. Customers in the Southwest may lean toward solar projects. Hydroelectric power, once celebrated for its lack of emissions, has fallen into disfavor among some groups because of impacts on stream flows and fish populations. Wind farms are seen as beautiful by some, while others object to the “visual pollution” and to the hazards turbines pose to birds and bats.
UTILITY GREEN-POWER PROGRAMS ARE CLEARLY ON THE RISE. ABOUT HALF OF ALL NORTH AMERICAN UTILITIES ALREADY OFFER THEM.
Chart from Utility Green Power Programs, Chartwell, Inc., December 2003. Reprinted with permission.
Billing Implications of Green Power
Green power programs rarely impose billing requirements as complex as do demand response programs. But, taken in total, their added strain on existing billing systems can be significant. Utilities must be able to combine green power products with their full slate of other offerings across large and diverse markets. Some residential green power users will also be eligible for discounts offered to elderly, disabled or low-income customers. Small business customers may want to combine green power products with other pricing programs, like time-of-use plans.
Such pricing and billing demands will grow more complex as more consumers install renewable-energy generating facilities on roofs and in back yards. Some states already require utilities to permit these home-based generating facilities to feed energy into the grid and to reimburse customers for that energy, either through direct payment or by subtracting the energy fed into the grid from the energy pulled from it during higher-demand periods. This “net metering” could well be extended to generation from fuel cells, which may become relatively common as the technology advances, as prices decrease, and as fears or terrorism drive more customers toward some degree of electrical selfsufficiency.
Clearly, these emerging developments require greatly enhanced billing capabilities. Systems must be able to handle multiple products and services. They must be able to accommodate rapid change as customers revise their greenpower preferences and as they install new technologies.
And tomorrow’s requirements are likely to be even greater as billing systems must link with increasingly “smart” applications that increase efficiency but that also require two-way flows of information between the home and the utility.
Making Demand Response Work
Demand response programs need more than just complex-billing software to work.
Customer service departments may be called on to provide workshops and materials that educate customers about the advantages of complex billing and the variety of contract terms available.
Customer-care solutions that help develop and manage contracts can be very helpful. Customers with on-site generation, for instance, need different terms from those required by customers without such facilities. A customer that must halt a production line faces very different constraints from one that only needs to turn the air conditioning down. Customers will need guidance to understand these issues and arrive at demand-response agreements that are workable in their particular circumstances.
Utilities can also encourage participation in demand response programs by positioning participation within a package of wider costsavings. Interval data can
- Pinpoint operational procedures that create expensive peaks (say, turning on all a facility’s equipment at one time).
- Reveal equipment problems, allowing customers to perform maintenance or repairs that reduce consumption and prevent downtime.
- Help customers identify billing errors (one facility or line cross-wired with another).
- Make a facility eligible for more favorable supply contracts.
- Allow customers to monitor individual production lines, facilities or operations separately. Businesses can therefore pilot test reduction strategies on individual lines and measure the results accurately. If a strategy produces significant results in one situation, the customer can extend it to additional units, individually monitoring each new case to insure that the remedy is effective in the new setting. The ability to document results across diverse settings is one reason that demand management products are gaining rapid acceptance across most C&I market sectors.
Ways to Offer Green Power
Utilities tend to offer green power via three different billing strategies.
Contribution programs offer customers the chance to contribute a monthly amount over and above the price of the energy they use. Contributions are then pooled to fund development of renewable energy facilities within the community. These programs are simple to bill and administer and account for about 20 percent of the current green power market, according to the U. S. Department of Energy’s National Renewable Energy Laboratory (NREL).
Energy-based programs allow customers to purchase discrete amounts of energy, commonly in 100 kWh blocks, to be generated from renewable resources. The utility either generates or purchases this amount of green power. NREL figures indicate that energy-based programs currently account for roughly three-quarters of the green power marketplace.
Capacity-based programs offer customers fixed blocks of electrical capacity for a monthly fee, commonly from about $3.00 to $6.60 per 100 watts of capacity. According to NREL, these programs account for only about 4 percent of current green power revenues.
Enhancing Efficiency Through Information
Today’s sophisticated billing systems can provide information that customers will find very useful in reducing their energy use.
Large customers, for instance, may use daily consumption breakdowns, normalized for weather conditions, to identify and eliminate power-consumption anomalies. Retail chains may use consolidated bills to compare consumption at similar outlets and identify efficiency “best practices.”
Providing more information to consumers will likely, of course, stimulate customers to pose increasingly complex questions to customer service representatives. But that doesn’t have to mean increases in call-center costs. The right billing and customer care system can speed the CSR to the detail behind a customer’s bill entry. Scripts and business process assistants can provide prompts that guide a conversation to a speedy and satisfactory conclusion.
Scripts and assistant tools will become increasingly essential as utilities provide customers with new services and energy-saving products. CSRs will require interactive diagnostic applications that accept input from the customer and provide solutions to problems like appliance failure, faulty circuits, and power fluctuations. (If this software incorporates marketing functionality to cross sell appropriate products, so much the better.)
Collateral Environmental Benefits
The billing process itself has a small but significant negative effect on the environment. In the aggregate, utilities use huge amounts of paper and ink to print paper bills, and the fuel required for bill and payment delivery is not inconsiderable. Billing systems that support electronic bill presentation and payment reduce this consumption.
Similarly, billing systems that provide wireless transmission of orders to field service personnel can drive down paper consumption. And an electronic interface between customer care and work management systems ensures efficient deployment of staff to the locations needed.
The Color of Money
Long before “green” came to mean “environmentally benign” it had another meaning. In American slang, “green” and “greenback” still indicate money.
Those meanings can coexist comfortably in today’s utility, which can readily “do well by doing good.” Reducing the need for new generating facilities and new transmission and distribution lines helps the environment while also cutting utility costs. The demand for increased efficiency means that utilities can offer new consulting services and energy-saving products that save money for customers, reduce the environmental demands of energy generation, and provide profit opportunities for utilities as well.
Enhanced customer care and billing systems represent one of the principal tools that providers can leverage to create and deliver added value in the demanding energy markets of the future. Enhanced customer care systems won’t by themselves sell demand management and alternative power products to millions of new customers. But they are essential to ensuring that the costs to provide these new services are low and that long-term customer satisfaction is high.
