Smart Grids Roadmap - Smart Grid Sherpa

zzzzHow much time differentiation in prices isneeded to deliver demand-response benefits?What transitional policies are needed to helpovercome customer inertia and risk aversion?zzIn jurisdictions with retail choice, are measuresneeded to ensure competing electricityproviders have access to customer data on thesame terms as the incumbent utility?Transition strategies and policies are especiallyimportant considering opposition by someconsumer advocates to smart meteringdeployments and associated pricing changesMore research is needed to examine how timedifferentiatedpricing can best induce behaviourchangingeffects, taking account of such factorsas the rate difference needed and the optimumnumber of time zones for consumer communication.Transition strategies to be studied include consumercommunications schemes, shadow pricing, billprotection mechanisms and two-part rate designs.Develop and implement consumerprotection policiesThe main consumer protection issues associatedwith smart grid deployments include: i) privacy,ownership and security issues associated withthe availability of detailed customer energyconsumption data; ii) customer acceptance andsocial safety net issues associated with new typesof rates, especially dynamic pricing; and iii)consumer protection issues associated with remotedisconnection functions made possible by smartgrids. These consumer issues should be addressedwithin the overall context of smart grid designand deployment planning; otherwise there is avery real potential for some customers to reactadversely or even be harmed.Customer data privacy, ownership and securityissues are a leading concern of consumer andprivacy advocates. Smart grid and smart meterdeployments create large amounts of detailedcustomer-specific information, while energyproviders gain a new medium for customerinteraction. Policy questions needing attentioninclude:zzzzzzWho owns the customer’s data, and how isaccess to and use of this data regulated?Who guarantees privacy and security ofcustomer data (e.g. against risk of surveillanceor criminal activity)?Will sale or transfer of customer data beallowed, and under what terms and to whosebenefit?Many regions are beginning to address theseissues, as evidenced by rules relating toconsumer data recently proposed in Ohio 25 andby the European Commission’s expert group onregulatory recommendations for safety, handlingand protection of data (part of the EU’s Task Forceon Smart Grids), 26 among other projects. TheOffice of Gas and Electricity Markets (OFGEM) inGreat Britain is proposing to have an independentorganisation (Data Communications Company)to access and store consumer data, and todisseminate only the basic required data to therelevant parties for billing or usage purposes. Bestpractices are coming to light in these and otherproject, and work in this area must continue.Customer acceptance and socialsafety net issuesCustomer acceptance and social safety net issues areof key concern where consumer advocates warn ofrate increases and adverse consequences, especiallyfor vulnerable consumers or those who cannotadjust their usage patterns as a result of pricing.Additionally, smart grids could allow quickerdisconnection of service and negatively impactvulnerable consumers such as low-income groups,pensioners and the handicapped. These groupsmay be disadvantaged by dint of their consumptionlevel or inability to change behaviour, or theymay be subject to new rate burdens that are notcommensurate with their opportunity to benefit.The development of smart metering and dynamicpricing technology also introduces new pressuresand opportunities for rate regulation. Chargingcustomers the same electricity price all hours ofthe year when the true cost of electricity changesconstantly may not be good regulatory practice– if it is possible to deploy the technology in a costeffectiveway to reflect these variations.There is also some evidence that smaller customers,including low-income households, have beenpaying more than their fair share for electricity,while larger users with big, temperature-sensitiveloads may be driving up electricity costs for25 www.puco.ohio.gov/PUCO/Consumer/Information.cfm?id=1003226 http://ec.europa.eu/energy/gas_electricity/smartgrids/doc/expert_group2.pdfPolicy and regulatory framework: actions and milestones39© OECD/IEA, 2010