First, utilities have to understand that customers expect the party that installs the equipment to provide support. If the utility supplies the equipment, they will get the calls. If the customer buys the equipment at Home Depot or Best Buy, those retailers or their service providers will get the calls. The more equipment provided by the utility – the more calls. The more complex the interface between devices – the more calls. I frankly cannot imagine the difficulty my elderly mother would have with any in-home device. She cannot operate her thermostat since we replaced it with a programmable model to save energy. (We get the calls.)

Customer service calls are not going to be just about loss of power or billing questions – they will be “How To” questions. Callers will also report problems with the devices themselves, some of which will need support to rectify, and some will eventually result in escalation to a repair specialist.

We cannot begin to project what these calls might be since virtually none of the equipment being considered actually exists, but – we can take a stab at the problems already faced by vendors of electronic technology products such as personal computers, cell phones, and cable TV boxes. The parallels are probably appropriate since all are portals for some kind of service, share circuit board technology, layers of software, and complexity of interface.

Most personal computer manufacturers support equipment purchases using toll-free Help Desks to manage calls for help with their equipment. The Help Desk function proved to be so expensive to operate that it was one of the first applications to be outsourced to India. Consequently, most PC buyers have come to accept that their calls for help will likely be taken by someone halfway around the world.

Regardless of the location, help desks and service desks for product support are essential to customer service. These groups are charged with helping triage calls about problems in order to assign the right team for problem resolution including running remote diagnostics. Domestically, costs to manage an inbound call are roughly $25 each (to start) when one includes the software licenses and employees needed to staff the system. Problems that cannot be resolved directly by the help desk are escalated to the associated repair provider at an additional cost of roughly $75 per call.

It does not take a lot of math to conclude that a single problem call from a customer about their in-home display not working can quickly cost the utility upwards of $100 before they spend a dime on the actual repair.

Repair at the consumer electronics level is usually done by having the consumer ship the product back to the warranty provider using a process called RMA (Return Materials Authorization). Warranty returns are only accepted after the customer service department authorizes the return and provides the shipping ticket or reference number for the package. While part of the customer service function, the costs to set up and manage the repair side of the business are not included in the help desk figures provided above. Shipping, warehousing, returning equipment to inventory, confirming restoration of service, etc. are all costs on the utility side of the RMA. At minimum, an allowance of $50 per device swap would cover shipping, plus another $75 for the management costs using the RMA approach for a total of $225 (i.e., $100 for the inbound call plus another $125 for the RMA).

The RMA process works best for products that the consumer can do without for days or weeks. In order to speed the delivery of a replacement part, several variations on the RMA are common, including “spare in the air” where the replacement part or unit is shipped immediately and the returned part following at a later date. This is more complex from a tracking standpoint, as exchange is not as clean so many vendors (such as Dell) charge for the replacement part and then credit the customer when the broken part is actually returned.

Physical service centers – or “repair depots” – are used in some industries where the consumer can bring their defective equipment in for repair or exchange. This is particularly common for mobile devices such as cell phones and other devices where the retailer is also a source of customer service. Think Apple Stores or AT&T or Verizon retail locations for the staffing of this type of customer service function.

Clearly, the RMA, depot repair, or retail service program options don’t fit the model of a smart grid where this equipment is merely a gateway to other device(s) and/or benefit(s). It is unlikely that a consumer would be willing to pull a smart device, package it properly for shipping, live without it for days (or weeks) and then return it to service. And it’s almost impossible if the device is integrated with appliances, vehicle charging stations, or solar arrays to name a few possible attachments.

If In-home Devices (IHDs) are as impractical to service remotely as I suspect, the costs to provide repair/restoration jump dramatically. Each “truck roll” costs hundreds of dollars (about $275 each, according to NARUC), so even the most marginal device can be exceedingly costly to touch. The more equipment in the home, the more things to breakdown, the more calls for the customer service teams… and the more truck rolls.

The Cable TV industry offers some further sobering experience with in-home technology. The “cable box” is an electronic device designed to enable use of billable and desirable services through the portal. Because the equipment is provided by the Cable TV service, they have accepted the customer service burden for the equipment. Customers routinely call their cable provider for help with missing channels, poor signal quality, and lack of signal. The parallels are strong. After lengthy attempts to remotely correct the problem – including remote diagnostics and remote control of the box itself, the cable company dispatches a technician to make the repair.

The staffing needed to manage both the inside call volumes and travelling technicians for cable providers are roughly 4 times higher than for current utility operations. My local cable provider generates roughly $4.6 billion in revenue using 19,000 employees. By contrast, my local electric and gas utility generates $12 billion in revenue using 10,000 employees. I believe that substantial portions of these disparities are directly due to differences in the size of customer service and repair crews.

Time for some additional scary math: Consumer electronics have failure rates of 3-8% per year. (Failure rates are documented by various sources including warranty repair allowances, service industry specialists and TekTrakker.) These same repair resources confirm that roughly 90% of all calls for service can be resolved remotely or are simply software issues or user confusion. So, to have a 3% actual failure rate, the volume of calls for questions or problems may be as high as 30% of all devices generating a call for support each year. For a utility managing 100,000 meters with 3 IHDs each (i.e., 300,000 IHDs) may be expected to generate 90,000 calls. At $20 per inbound call – this is $1.8 million just to answer questions at $18 per year, per meter).

The remaining problems that require actual repair rack up further costs. Using 3% as a rosy projection – a customer with an “Energy Orb” plus an EV charging station, plus a third gadget of some kind, now has 3% + 3% + 3% – or 9% total – per year physical failure rate, requiring an onsite repair. For a utility managing 100,000 meters, this is 9,000 truck rolls per year they never had before at a cost of roughly $425 – for an annual cost of $ 3.825 million. (Based on $100 for the call management and escalation, $275 for the truck roll and $50 for the parts) For the consumer this means $38.25 additional per year for every meter.

If the equipment deployed has failure rates at the high end of normal (8%) – we are now at 24,000 additional truck rolls per year for a total of $ 10.2 million, or an additional $102 per meter, per year, in consumer costs. Equipment selection for high-reliability devices is obviously critical to control costs as each small difference in failure rate calculates to enormous differences in support costs.

Some other questions to ponder…

How these costs would be allocated is an enormous issue. Would regulators agree to view this expansion of customer-service as a natural extension of existing system – or would they demand that these new costs be absorbed elsewhere? Is it possible to offer a separate service agreement for consumers with additional billable revenue as in the PC service model? Would consumers be willing to pay for a service plan for an IHD? Can a utility operate a consumer electronics field support organization profitably? Do any of the devices proposed suit the reliability profile necessary for profitable operation? Does a utility really belong in the consumer electronics business?

The easiest way for utilities to avoid exploding their customer service obligation is to end their engagement at the meter, and let the consumer electronics industry take on all of the problems with devices inside the home. Those that remain determined to be in the consumer electronics business will be wise to select only the most rock-solid devices to reduce the overall volume of trouble calls. Furthermore, unless utilities can bill appropriately for repair and support services for IHDs – the explosion of customer support costs can easily overwhelm any potential savings in other areas.

Be careful what you wish for!

About the Author

Gay Gordon-Byrne is a 30-year+ veteran of the IT industry with acknowledged expertise in the area of electronic equipment reliability and repair. She is the current Chairman of the Service Industry Association International Competitiveness Council. She is also engaged developing a consortium of trade organizations (e.g., APPA, NRECA, EEI, DOE, NARUC, TVA, ECNE, etc.) to fund and collaborate on building a database of hardware failure rates of “smart” equipment. Failure rate data is the missing foundation layer for all electronic equipment selections and associated support programs. As the President and Co-founder of TekTrakker, she has unique insight into reliability issues for common computing equipment, as well intimate understanding of the customer service function as the front line of repair and support issues for technology equipment.