The smart grid and smart meter are great ideas. The smart grid and meter is suppose to connect information technology to meters so consumers can actually see in real time what they are spending and how to save money.

So far the promise of the smart grid and meter has failed to connect with residential customers. One example is Boulder Colorado. When given the option of signing up for smart meters 43% of the Excel Energy’s Boulder customers signed up. The net result was Excel Energy filing with their commission a request for a $44+ million RATE INCREASE!

A similar disconnect between customers and their utility is happening in California. Residential consumers are organizing against smart meters. And city councils are passing resolutions against smart meters in their towns. The California Public Utility Commission is now holding hearings on an “opt out” program where a consumer can get their smart meter removed. The utility’s suggestion is to charge their customer for removal of the smart meter that the customer didn’t ask for, charge them for monthly meter reading and then charge them for re-installing a smart meter when they sell their home.

I speak on this topic based upon having the honor of leading a team at Georgia Power (a Southern Company operating company) that developed their Real Time Pricing program enabled through what we now call smart metering. Real Time Pricing system now bills $2 billion annually on the Southern Company system.

The absolute foundation of our Real Time Pricing program design was it had to offer a path for customer cost savings.

Early in our customer research we found that the lynchpin of achieving this cost savings result was the ability and willingness of the customer to work with this new data stream and find cost savings. Or expressed another way, we found that the vast majority of customers would be overwhelmed by this level of pricing sophistication and the result for them would be either higher bills or dramatic consumption changes they would resent making.

Therefore, our approach for introducing Real Time Pricing and smart metering was to meet individually with those customers that our analysis indicated had the ability and willingness to try something new if it saved them money. I will always remember our first customer meeting. It was with our largest customer that purchased million of dollars of electricity annually from Georgia Power. We met at their plant. We showed them the prices we expected they would see for the 8,760 hours during a year and how these hourly prices would be communicated. Candidly, the meeting wasn’t going too well until one of their engineers working a HP calculator pronounced he saw a way to save $1 million annually on his production line. This customer signed up for Real Time Pricing shortly after our meeting.

The lessons from this case study are still worth considering:

1. The bottom line customer expectations are that they want their “lights” to stay on and to save money on their bills. Any utility program that fails to address BOTH of these expectations faces an uphill climb in terms of customer acceptance.
2. Customers expect the utility to work at their level of focus and expertise. (Isn’t that the genius of Apple, the ability to design products that a person can intuitively align with and find value in using?) Why did we first approach our largest customer? This was very risky if our presentation ended up leaving them with a negative impression. On the other hand we understood this was also one of our most sophisticated customers. If they didn’t see value in Real Time Pricing enabled through a smart meter then none of our customers would. A very important ancillary note is that our market research told us that most residential customers were not yet at the point where they have the time or ability to extract value from a time based pricing systems enabled through smart meters.
3. One key observation on the marketing outreach material used by a major utility introducting smart metering to their residential customers is that the word PRICE was no where to be found! In fact, the value focus of “why smart metering” was upon cutting the utility’s costs for metering reading. Here are three words that residential customers want to hear when the word “meter” is used by a utility: LOWER MY BILL.

I have the privilege of working in Silicon Valley and being able to harvest their best practices. One key best practice is having a “killer app.” For the sophisticated electricity consumer a smart meter does have a killer app of being able to lower their bills. For the overwhelming numbers of electricity consumers that killer app has not been successfully designed by the utility to the consumer’s satisfaction.

Related to the killer app best practices is the best practice that consumer design is critical to success. Tablet computers were a device that had failed several times in gaining consumers’ acceptance until Apple designed the iPad. The difference was consumer design.

The smart grid and smart meter really are NOT smart unless they offer a killer app that benefits the consumer and the design is intuitively usable by the consumer.

Bill Roth is the founder of Earth 2017 that focuses upon the emerging smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

Charles McGlashan is an elected county supervisor in Marin County, a community of approximately 250,000 people located across the Golden Gate from San Francisco. He is a Democrat who views the “American Way” and free enterprise as the path for developing price competitive sustainable solutions for restoring jobs, the economy and the environment. And most importantly, he is a doer. In the role of Chairperson of the Marin Energy Authority he led the effort to create an electric utility that today has sourced 78% of its electricity from solar, wind and hydro generation.

The National Renewable Energy Laboratory reports that 800 electric utilities offer “green” power. But the average price for this green power is approximately 2 cents more than non-renewable sourced electric power. McGlashan and Marin Energy Authority have broken the price barrier by offering renewable energy for less.

The implementation of the Marin Energy Authority will also result in a 500,000 ton annual reduction in CO2 emissions equaling about a 13% reduction in the entire county’s current emissions levels.

3p readers will recall that California’s historic global warming solution bill AB32 mandates a 20% reduction in CO2 by 2020. With the 2011 full implementation of Marin Energy Authority the county of Marin will have leaped into a statewide county-leadership position in achieving AB32’s goal.

The following video interview with McGlashan is the first of a three-part article series on public policy options available to America for providing consumers with competitively priced renewable energy while also restoring jobs and the environment.

Is this picture our renewable energy future? Look at the technology deployed. There are the obvious solar panels. But there is also a battery storage system that would enable this outdoor light to operate at night using solar electricity generated and stored during the day. And there is the worker installing this technology on an age-old timber pole, speaking volumes on the potential for growing green jobs.

What this picture doesn’t speak to is cost. Utility electric lighting is typically supplied from the utility’s “base loaded” power plants that are the most efficient and therefore have the lowest per kWh operating costs. The implementation path suggested by this picture is directly tied to the economics of solar and batteries compared to based load power plants.

In much of the U.S. based loaded power comes from either nuclear or coal. The great news for the consumers during the last couple decades is that this is really low cost energy, averaging around 5 cents per kWh, or less! But that trend could be changing. Utilities across America that rely on coal fired power plants are announcing significantly sized rate increases. Independent rate tracking organizations are projecting up to 50% rate increases for customers in the Midwest and South.

And the cost for solar and battery storage is declining. How soon and how low are critical strategic issues the world solar industry is pursuing out of recognition that someday subsidies will go away and they will have to compete on price. A telling example comes from India where their government recently committed to a national program targeting solar electricity pricing parity with utility generated electricity by 2022. Their expectation is that price parity will result in solar accounting for 22,000 MWs of electricity supply.

I will always remember this picture as a symbol of what could be and what might be happening sooner than later.