May 16 , 2011

THE PEPCO PROJECT THE PEPCO PROJECT

Presentation for the CEDM annual meeting

Department of Engineering and Public PolicyDepartment of Social and Decision Sciences

WHAT IS THE PEPCO PROJECT?WHAT IS THE PEPCO PROJECT?

• Pepco (Potomac Electric Power Company) is an electric utility that serves customers in Washington, D.C. and Montgomery and Prince George's counties in Maryland

• In 2010, Pepco teamed with CMU in applying for Smart Grid Investment Grant (SGIG) funds from the U.S. DOE, resulting in a CMU sub-award of $4 million for 5 years

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CMU’S RESEARCH ROLECMU’S RESEARCH ROLE

• Pepco is currently rolling out advanced metering infrastructure (AMI) in DC and MD

• The success of AMI (overall reduction and peak shaving) depends on customer acceptance of pricing programs and technologies

• We are conducting consumer behavior studies to– Inform program design and evaluation – Improve customer response

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CMU/PEPCO RESEARCH AREASCMU/PEPCO RESEARCH AREAS

– Communication Design Research• Includes understanding customer perceptions of risks

and benefits, optimizing two-way communications

– Technology Design Research • Includes understanding customer expectations and

understanding of new technologies, selecting optimal technologies, assessing viability of new technologies

– Tariff Design Research• Includes anticipating customer response and

improving ongoing rate design for Dynamic Pricing and for other Smart Grid-enabled opportunities

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SAMPLE OF SAMPLE OF COMMCOMMUNICATION DESIGN RESEARCHUNICATION DESIGN RESEARCH

• To anticipate customer response to smart meter implementation:– Mental models interviews with 23 Pepco

customers– Follow-up survey completed with 430

respondents

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ACTUAL BENEFITS AND RISKSACTUAL BENEFITS AND RISKS

Reduced labor costs (benefit to utility and consumer)

Improved bill accuracy (benefit to utility benefit, risk to customers)

Increased operational efficiency (benefit to utility and consumer)

Violations of privacy (risk to customer)

Increased costs (risks to customer)7

PERCEIVED BENEFITS AND RISKS:PERCEIVED BENEFITS AND RISKS:QUOTESQUOTES

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Confuse them with enabling technologies

Think that they are a trust-building effort

Think that they will provide detailed information Think that they will control individual use

“[A smart meter] could let me know whether our HD isusing the majority of the energy or if it's our TV set.”[Caucasian interviewee, 52 years old]

“I think [a smart meter] would give me more of anassurance that I'm actually the one spending that money. I would actually see where the energy is coming from, so that would be a form of accountability for them. I would trust them more, I guess.” [African-American interviewee, 29 years old]

“[Smart meters] kind of make me think of when people wear pedometers to see how far they're walking every day. They're not really aware of it unless you start having a way to record it.” [Caucasian interviewee, 31 years old]

“ I've heard that if [a smart meter] is there, [the utility] can centrally control your energy use. So if they need toconserve electricity, I don't know if they shut it off or if they just limit how much you can get to your home.” [Caucasian interviewee, 57 years old]

SAMPLE OF TECHNOLOGY SAMPLE OF TECHNOLOGY DESIGN DESIGN RESEARCH: IN-HOME DISPLAYSRESEARCH: IN-HOME DISPLAYS

• MD PUC has mandated in-home energy display installation

• To determine customer anticipation, we sampled approx. 550 electricity customers– Customers expect to save 17% of monthly bill

on average– IHDs preferred among older sample, smart

apps stronger appeal to younger customers– Want simple information on a strong default

display, active feedback, automation– No gimmicks

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FINAL IHD CHOICESFINAL IHD CHOICES

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Current choice

Sample existing solutions

SAMPLE OF OTHER PROJECTS WITH SAMPLE OF OTHER PROJECTS WITH POTENTIAL CEDM CROSSOVERPOTENTIAL CEDM CROSSOVER• Studies in the field

– Field testing of IHDs and other technologies• Actual behavioral response to IHDs in conjunction with

various pricing programs• Comparison with lower cost, lower tech alternatives

– Testing the Hawthorne Effect• How much of existing interventions can be attributed to

customers’ response to merely being observed?

• Studies in the “lab”– Customer reactions to available dynamic pricing

strategies to inform ongoing program design efforts.– Understanding optimal motivations for energy use

reduction

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Baruch FischhoffJay AptWändi Bruine de BruinInês AzevedoDenise Caruso Tamar KrishnamurtiHsuchi TingAlex DavisShira HorowitzDaniel SchwartzJack Wang

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CURRENT PEPCO TEAM