Monopolistic Utility Companies Suppress the Use of Customer Data — Episode 149 of Building Local Power

Date: 21 Apr 2022 | posted in: Building Local Power, Energy | 0 Facebooktwitterredditmail

On this episode of the Building Local Power Podcast, John Farrell, Co-Director of ILSR, is joined by Michael Murray, the President of Mission Data. Mission Data is a national coalition of innovative technology companies that empower consumers to access their own energy usage data. John and Michael discuss how structural market problems prevent consumers from accessing electricity data and possible solutions for utilities to create a more decentralized energy system. 

Highlights include: 

  • How energy usage data plays a critical role in lowering costs for all customers.
  • How monopoly utilities are exploiting smart meter data. 
  • The difference between the U.S. and the U.K. in their approach to using electricity data.

“The usage data is really the fulcrum of the whole system because that’s how the aggregator goes to the wholesale market operator and gets paid for their service and in turn those payments can flow through and part to the consumers who are donating their flexibility and their power usage.”- Michael Murray

“We reward utilities for spending money on capital investment, but not for figuring out how to use it well.” – John Farrell

“How quickly do utilities acknowledge the existence of a problem and actually resolve it? […] I think it’s time for public utility regulators to take up the mantel and really think about themselves as overseers, as a tech support platform – that is an important part of accountability. – Michael Murray

Jess Del Fiacco: Hello and welcome to Building Local Power, a podcast dedicated to thought-provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and Communications Manager here at the Institute for Local Self Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands. This week, John Farrell, a co-director of ILSR speaks with Michael Murray, the President of the Mission Data Coalition. John and Michael discuss why clean energy advocates should be paying more attention to the value of customer electricity use data and how we can extract this data from the protective claws of monopoly electric utilities. Without further ado, here’s John.
John Farrell: Michael, welcome.
Michael Murray: Thank you, John. I am a big fan of the podcast and very happy to join you today.
John Farrell: It was such a pleasure to meet and talk to you earlier this year for the first time, and then to get a chance to read your recent report, Digital Platform Regulation, because it really intersects well with the way that ILSR and other folks across the country are looking at this issue of, who controls the platforms that we do business on and who has access to the information about themselves? Some people might think of this in the context of Facebook, as a Facebook user, this company controls a lot of data about you that you’ve given them voluntarily, and then sometimes you’re trying to figure out like, “Wow, maybe I want to cancel my account or close my account. How do I have access to that data? How can I get back my data?” Or you have Amazon, which uses data about the different sellers on its platform in ways that can enhance its ability to compete or unfairly compete with the independent sellers on its platform.
John Farrell: And then we have the utility business, and this is where I was so pleased to come across your work, because I wasn’t aware that someone had thought through so carefully, not just this idea of access to customer data as something that might be useful, but you’ve really thought through it in terms of, what are the structural market structure problems that prevent us from getting access to customer data? And I feel like there’s some good stories to tell as well. Maybe you could just talk about, in a heatwave or maybe in the Texas freeze context when these big events happen on the electricity system that constrain the system, why does customer data at this point in time matter? Why does it matter if we have access to how people are using their electricity? Why does it matter that customers might have access to their own data about that?
Michael Murray: I’ll give you two great examples. There was a heat wave, there’s been so many heat waves now in the West Coast, I can’t even remember how many years ago this was, but the usage data from a large number of customers is extremely useful, both for demand side management in these emergency situations, but it’s also valuable for load forecasting. And it’s that load forecasting function which often contributes to blackouts if you get it wrong. So if your day ahead forecast is too low and the demand ends up exceeding that, you’re in a bind as a grid operator, and so there was some evidence on an article written by an advocate for community choice aggregators in California that the time delay that the community choice aggregators had experienced in getting access to large scale customer usage data led to them underestimating their peak usage in the coming days of this heat wave. And so, that actually led to reliability problems and more spot market purchases, which increased costs to everybody, to the system as a whole.
Michael Murray: So that’s a great example of where there was a disparity or an asymmetry between the utility, the incumbent utility that had much faster access to this data, but then they would sort of say, “Well, there’s these processing delays and we have to run it through these big systems in order to provide it to you.” And that delay of 12 or 24, 48 hours could meaningfully impact your responsiveness on the supply side of things to the power grid. So, that was one example. Another, also in a heat wave context, is there are efficiency aggregators that will save a few hundred watts with one household and a few hundred watts with another household, and you wrap that up into tens or hundreds of thousands of households, and you end up with several hundred megawatts of flexible load on the power grid.
Michael Murray: And the only way to value those services is with the meter data. So you need to know, what was your usage before the heat wave event? What was the usage after? There’s a little bit of complicated mathematics to calculate a fair subtraction of your usage compared to the baseline. But the usage data is really the fulcrum of the whole system, because that’s how the aggregator goes to the wholesale market operator and gets paid for their service. And in turn, those payments can flow through, in part, to the consumers who are donating their flexibility, if you will, in their power usage. So those are two great examples of where the data on every household measured often at a 15-minute interval plays this really important role behind the scenes in lowering cost for everybody.
John Farrell: That’s so great. This reminds me actually, I had a great interview with Cisco DeVries from OhmConnect, I think it was last year, where we talked about their virtual power plant. So he’s, and folks should listen to that podcast if they want to better understand this idea of demand response aggregation, which I know is probably three words that most people don’t string together very easily. But this idea that you take a little bit from everybody, a little bit of energy savings from everybody, and you can put it together and you can make it as much as a big power plant.
John Farrell: And so one of the things we didn’t get into very much, so we talked a little bit about the fact that there aren’t that many markets where you can even do this, where you’re even allowed to pull together these different customers, but it sounds like there’s this other piece of it too that matters, which is even if you had a market for that, you need access to that data. You need to be able to say, here’s how much my different customers are using. Here’s how much energy they’re saving. Therefore here’s how much we ought to be paying them to be providing this service.
Michael Murray: Exactly. And that’s why it’s so critical that we solve this data portability problem, because we want 100 OhmConnects out in the world providing these services because it reduces the wholesale power costs. It makes so much economic sense, and yet what we’ve seen in many places, even in California which has a number of clean energy credentials, they ostensibly care about distributed energy resources and are trying to help customers on the local level through very generous energy efficiency programs and that type of thing. They still make it very, very difficult to effectively operate as an aggregator, and the access to that usage data has been a litigated issue for almost 10 years. Just to give you a sense of some of the complexities and the arrows that OhmConnect has taken in their back as they tried to pioneer this space.
Michael Murray: I met one of the founders of OhmConnect maybe in 2013, so some time ago, and they were trying to get, this seems like a simple task, but they were trying to get the California Independent System Operator to agree to treat the usage data that was available on, let’s say the PG&E website. So when you log in to pay your bill, you can view your energy usage history, and OhmConnect was telling the California ISO, “You need to treat the data that is available on the webpage as so-called settlement quality data that’s sufficient for meeting all of the rules and regulations around settlement data at the wholesale market level.” And that seems like a really simple thing, you have energy usage data on the website and shouldn’t you just be able to send that to the ISO and get paid?
Michael Murray: It was extremely difficult to get that and the utilities introduced all sorts of problems like, “Well, the data that we provide to customers isn’t really settlement quality data. It’s this other rough, raw data that is not sufficiently polished. And so therefore, you can’t take that to the wholesale market.” And every time you start peeling back one obstacle after another, it always seems there’s something else that’s in the way. And eventually we were able to overcome that problem, but let’s just say the system is not designed to help distributed resources get the information they need at a quality and timeliness that they deserve.
John Farrell: So I want to come back at some point to this issue of what data is out there and this whole process of why utilities have this data and getting access to other parties to provide services that can lower costs for everybody. But before we get into that too much in terms of how data is used or is available or not available, could you just talk about how much more data is being collected these days than it used to be? What’s out there? What are we getting? What information are we getting that we didn’t used to be? And I’m starting this conversation by thinking about the story of the first net metered solar project, which they’d had no idea how they would measure the energy usage or bill somebody, it just so happened that they plugged in the solar panel and this dumb mechanical meter started spinning backwards instead of forwards. And hence this whole policy concept of net metering was born.
John Farrell: But at that point, all we could collect really was how much energy is used in total on this meter over some period of time. So if I look at the meter today and then I look at it tomorrow and then I just do some subtraction, that was as sophisticated as it got, and the utility would literally go out and read the meter, a person would be sent to read it. Well, we’re a lot more sophisticated these days. What are we collecting out there? What are utilities collecting in terms of customer usage data and how could we be using that?
Michael Murray: I think you’re being generous, John, in saying that utilities are much more sophisticated now than they were a few years ago. So a couple of things have changed since those electrical, electromechanical meters were widespread. The first is that we have so-called smart meters, and I put big air quotes around those. They’re not particularly smart, they have two core functions. One is to read consumption or the back feed, if you will, if it’s a net meter with solar feeding back into the grid every 15 minutes. Some states it’s once an hour, some states it’s 30 minutes like in Illinois. So there’s different measurement intervals, but just generally less than an hour.
Michael Murray: And the second function is those meters communicate it over a radio network that’s sometimes proprietary back to the utility for billing purposes and this allows the utility to fire their meter readers. So, instead of having a person drive around in a van and go into your backyard and read the meter, they could lay off all those people and just solve the problem with a radio network instead. And that was sort of advanced metering infrastructure, AMI 1.0 you might call it. To date, there’s upwards of about 100, maybe 110 million of those meters that are deployed across the country. So it’s fair to say that the majority of American homes and businesses now have a so-called smart meter version one on their house or their business.
John Farrell: We have a less dumb meter, is what you’re saying, it’s not really a smart meter yet.
Michael Murray: Exactly. It’s less dumb, and to give you a sense of the dumbness, a lot of these meters came baked in with a second radio that was designed for local communications so that someone inside their home could get a sense of their real time power usage. And this was part of the vision, a somewhat techno utopian vision of smart meters that was put forth 10, 15 years ago. And in some states, those are turned on. Those radios are turned on and customers can actually use the information. Sometimes it’s broadcast every five or seven seconds, and so you could walk around your house and turn things on and off and get a very instinctive sense of what is using power. And it can be very, very useful for people who often don’t have a sense of watts and does their electric cooktop use more than their hot tub or their heat pump or whatever? So, there’s certainly some educational value to that.
Michael Murray: What’s been frustrating for me, and other DER aggregators, is that it has been extremely difficult for utilities to universally enable that capability. So there are states where customers have paid for this meter, it’s referred to as the home area network, but the utilities refuse to turn it on. And so this is the case in Washington, D.C. where the smart meters have been deployed for probably 12 years or so, and even to this day, despite a lot of clamoring from individual customers, from businesses, from the Washington, D.C. municipal government, Pepco still will not turn on the home area network radio for being able to use it for energy management purposes. So, it’s a big frustration and that’s the state of the US today, it’s a patchwork. Some states, like California, you can access the home area network, but then there’s other places in Maryland and in Washington, D.C., parts of Ohio where you can’t use it.
John Farrell: I’m just really curious about this specific example with D.C. So the meter hardware has this radio that allows this capability of home energy insight. And I feel like I’ve probably seen some of these glorified commercials or whatever of somebody having some device on their kitchen countertop that’s telling them like, “Here’s what’s using the most energy in your house,” so I’m sure we’ve all seen something like that, those of us who work in the field. Obviously we don’t think people are going to sit around just gazing at that all day, but there are some pretty interesting potential uses.
John Farrell: I’ve heard, for example, some electric co-ops that have smarter meters will actually call customers themselves or munis, I think this was in Tennessee, for example, Chattanooga, one of the pieces of their smart grid rollout was that if somebody’s energy use spikes, they’ll call the customer proactively and say, “Hey, by the way, did you know your energy use has been spiking over the past few days? If you haven’t been doing something different, you may have a faulty something or other, and if you need help, we can help.” So it’s really funny to think, funny, it’s not funny, it’s disturbing to think that we’ve all paid for this technology, we’ve paid for this hardware as a customer of the utility, to be installed outside of our home and yet we can’t use it.
John Farrell: So what’s going on in D.C.? I don’t know if you have more detail about D.C. in particular, but why wouldn’t they want to turn this on? What’s the problem?
Michael Murray: You’ve begun to ask the question of, why don’t the utilities want to play ball? Why don’t they want to empower their customers with their energy data? And there’s rhetoric and then there’s reality. And it’s kind of like peeling layers of an onion. There always seems to be some excuse or another, “Oh, there’s cybersecurity problems. God forbid someone is able to access the energy usage of their neighbor, and therefore violate their neighbor’s privacy.” For example, that’s one of the arguments that they put forth. That sounds like it would be concerning if you care about privacy. The fact is that that’s almost impossible to occur as a technical matter. The meters have a cryptographic key that’s installed on them that ensures that only devices that are approved by the utility can, in fact, communicate with that individual meter.
Michael Murray: So you hear cybersecurity concerns. You hear concerns about cost. This is, I think, ironic because the utility has no problem billing customers for the hardware that enables this capability, but then when it comes to actually turning it on, they say, “Oh, this would cost too much money. We might have to have skilled call center representatives who need to walk our customers through the device connection process to their meter and there’s a cost there. And it just would be unfair to put the costs of this enablement on all customers, even though only a small number of customers might use it.” So that’s another argument that we sometimes hear.
Michael Murray: And it’s frustrating because it’s the classic incentive mismatch where the utility wants to deploy, they want capital expenditure, and they want it in the rate base, but then when it comes to actual using the meters for what they were designed for, they say, “Oh, well, we couldn’t possibly do that.” Or, “Our IT systems can’t handle it.” And that sort of thing. So we’ve been circling around that in Washington, D.C. for a number of years. I will say that the meters that Pepco has in Washington, D.C. are exactly the same meters that Pacific Gas and Electric has, and PG&E has been enabling the home area network since probably 2013 or 2014. So we know it can be done, it can be done securely, it can be done on a large scale, this is a solved problem, but some utilities just don’t want to embrace that.
Jess Del Fiacco: We’ll get back to the show after a very short break.
Jess Del Fiacco: Thanks for listening to Building Local Power. If you’re enjoying this episode, I hope you’ll consider heading over to ilsr.org/donate to help support our work. Your donations not only make this show possible, but you’re directly supporting our work in energy democracy and beyond. You can head over to ilsr.org/donate to contribute today. Any amount is appreciated, but if you can’t donate right now, I hope you consider supporting us by rating or reviewing this show over at Apple Podcasts or wherever you find your podcasts. Your reviews make a huge impact in helping us reach a wider audience. Thanks again for listening, and now back to the show.
John Farrell: I really think it’s great that you’ve highlighted this issue about the financial incentive though, because what I hear you saying essentially is because of the way we generally allow utilities to profit, regulated monopolies to profit, it’s by building something and earning a return on it, expending capital. So they can make a profit on selling you an expensive meter that they can stick on the outside of your house, but if it costs money to run that meter, whether it’s through tech support or advice that they have to develop on the website, they don’t necessarily earn the same profit on that because it’s not in the rate base in the same way. So there’s not as much of an incentive to actually make good use of this.
John Farrell: I feel like this is the same, this is the corollary to the whole fight we have about power generation right now, right? So advocates are saying, “Don’t build new gas power plants. In the long run, you’re not going to use them because either your state has climate goals, it’s going to reduce your ability to use that power plant, or simply it’s going to be uneconomical because as the prices of natural gas, methane gas have gone up so much, it’s no longer as competitive with renewable energy resources.” And so as another example of stranded asset, except this time it feels like it’s on purpose. It’s to say, “Yeah, we really just wanted to put the meter on your house to make the money, but we don’t really intend to use it.”
John Farrell: So obviously that’s, I mean in terms of implications here though, what’s happening is that we’re spending a lot of our money collectively, the utility is spending this money for us, regulators are approving it and saying like, “Yeah, this is a great idea.” And then customers are essentially not getting to tap into the advantages, whether it’s for the individual customer who could maybe participate in some market where their potential to help save energy could benefit everybody, or we’re not taking advantage of it because the utility has to go out and build more resources to meet energy demand that we could be addressing if we collectively shared this information.
John Farrell: So, one of the things that I’m interested in talking about a little bit here is I really love essays that are written by Scott Hempling. He’s now an administrative law judge with the Federal Energy Regulatory Commission, but formerly did, as a litigator and attorney, a lot of work on utility mergers and utility market structure. And he talks about this idea of what he calls unearned advantages, and specifically the things that a utility has simply because it’s the monopoly, because the government has said, “Here’s a public franchise. You will have no competition. We will regulate your rates, et cetera.”
John Farrell: So as the incumbent, utility, just because they are the utility, because they read your meter, because they provide that customer service as the monopoly, they have access to data about your energy usage and what they’re essentially saying is, even though we didn’t earn that right to have your data, we didn’t do anything special, we collect it because it’s part of our business. We are using that as our competitive advantage against these other people that might want to do stuff. So we want to do a power plant and OhmConnect says that they could do the same thing for less money, well OhmConnect, because we can restrict their access to the data, we can keep them from competing with us in the field of power generation.” I mean is that what you’re seeing happening here? Does my description of unearned advantage capture what’s going on here with the data?
Michael Murray: Exactly. I would add a little bit more color to it. I think, so stepping back in smart meters really fulfilled this role, this important role in utility capital expenditure that economically was threatened with the deregulation and the forced divestitures of generation, going back to the early 2000s. So there’s a lot of utilities that were forced, like in New York and to some extent, California, were required to divest of their power generation and utilities, I think, reacted very thoughtfully and strategically to that in part by saying, “Well, we’re not going to be able to make money as reliably on power plants,” this is only true in certain states, not all states. “And so how are we going to grow? How are we going to tell Wall Street a story about up and to the right goes our profits and dividends over time and so forth?”
Michael Murray: And so they said, “Well, we need to invest in the distribution system.” And smart meters became a critical part of providing value, and it provided a CapEx opportunity that was arguably lost with power generation getting deregulated. What’s interesting is that utilities often don’t have the real digital capabilities in house to be able to use smart meters to their full potential. So there’s a new generation of smart meters, which maybe we’ll talk about in a second that provides a lot of opportunities for understanding where power’s being used in the home, and that requires a lot of data science and scale with managing data that’s provincially traditionally been within the scope of the tech sector, not really the monopoly utility world.
Michael Murray: And so on one hand you have utilities saying, “Well, we have to be the generator of this energy data because we bill you for it and it’s essential part of our system.” But on the other hand, they don’t really have the capabilities, even though they might have the ambitions, of exploiting it and using it in a way that’s maximally valuable. And so I would say that I agree with what you said, John, but I think there’s a capability aspect in addition to the mismatch of incentives and it results in some frustrating results.
Michael Murray: So for example, there’s some utilities that are sitting on lots of smart meter data and have not been putting it to use, but then when anyone else tries to go to them and say, “Here’s how we’d like to help you target your energy efficiency programs better using our mathematical prediction models. Here’s how we can deliver better load aggregation services, whatever it might be,” then the utility say, “Well, no, you can’t do that because of cybersecurity or privacy or this or that.”
Michael Murray: And so on one hand, they know that the smart meter data’s valuable, but they really think it’s their exclusive right to exploit it. And so even though they really may not have the capability of following through with it, they end up boxing out some of these other entities that have, even with customer permission. So this is where mission data gets involved, because we’re always advocating for permission based exchanges of data. And so this is not the case where we’re asking for wholesale copies of the utility database just to go on a phishing expedition or to market products and services to customers. That’s not what we’re talking about. We’re talking about an individual customer gives their permission to a solar installer or to a demand response aggregator or an energy efficiency company, and it is the utility’s job, as a steward, to deliver that in a standardized, rapid, simple way. And that’s where the utilities say, “Let’s hesitate. Let’s draw this out several years so that we don’t have to face the music.”
Michael Murray: And they’re afraid of what ultimately underlies a lot of the resistance and delays on the part of utilities to enabling data portability is, I think, an anti-competitive impulse that they really see this as theirs to exploit and they don’t like the idea of any other company doing a better job at using customer data and delivering useful services for people. To your example, John, that could be high bill alerts. So utility may have a rightful natural monopoly on a meter, it only makes sense to have one meter on the premise. That seems reasonable enough. But what about the digital services that are possible from the data collected? What gives the utility the natural monopoly over that? Things like energy disaggregation, where your power’s being used in the home based on analysis of trends, is that a monopoly function? I don’t think so.
Michael Murray: And so to your point about unearned economic advantages, this is definitely a case where utilities want to be able to be the only provider of these insights about your energy usage, and that creates a market asymmetry for the companies that we work with that are really, really trying to do some interesting things with energy data analysis.
John Farrell: I feel like we’ve actually covered a lot of different ways in which this sort of system that we have is problematic. So you have the mismatched incentives for the utility, right? Generally speaking, we reward utilities for spending money on capital investment, but not for figuring out how to use it well. So we’ve got this problem where utility rationally, as a utility manager, I’m rationally saying, “Let’s do smart meters,” but I’m also rationally not really concerned with whether or not it can be used well, which is funny because it’s not only do I not make money while doing that, but I’m also not really talented inherently at doing it, so it’s like the worst of both worlds, right? I have no idea how to use smart meter data, and I also don’t care.
Michael Murray: Exactly. Exactly.
John Farrell: And then you have this combined with the fact that the utility has access to this data as the result of this publicly granted franchise, not because of any merit, they haven’t proven to us, “We are the best holders of the data about energy use, because we will use it the most effectively.” They just have it because they’ve always had it, because like you said, it does make sense for them to be the only company that installs a meter on your house, we only need one of those, but they don’t have any particular advantage that they’ve shown, any competitive advantage they’ve shown in how that might be used. In fact, it’s the complete opposite. As you say, when people come and say, “Hey, we think we have ways we could use this data to serve customers better,” the utility is like, “No, let’s actually stop them from doing that.”
Michael Murray: Exactly. And there’s a variety of techniques to stopping those entities from doing it. One is just a brick wall, “We’re not going to talk to you. This is our data. We’re not going to share it with you.” There’s some other tactic, like cybersecurity. So they’ll say, “Well, we couldn’t possibly share this data with you, even though the customer wants us to, because you might have a cybersecurity breach and we spend hundreds of millions of dollars a year on cybersecurity and you probably don’t spend that much.” And so therefore you’re a risk. And they plant that seed of doubt in the regulator’s mind who then becomes hesitant to create what they might see as a cybersecurity vulnerability in their jurisdiction.
Michael Murray: So, there’s all sorts of tactics to delay the inevitable, but I will point out, the United Kingdom has thought about this a bit differently. In the UK, there’s one meter on each premise, but the data doesn’t go to the distribution utility, it goes to a centralized authority called the DCC, the Data Communications Corporation I believe is what it stands for. And from there, it’s available to the retail suppliers for billing, and it can be available to other third-party aggregators at that point as well.
Michael Murray: And so, the British are very, in many ways they invented deregulation with Thatcher in the 80s and the national grid was split up into different segments. And so that’s an interesting way of thinking about how to structure the industry. So we take it for granted that the utility has to own the meter and the data that’s generated from that, but that’s an assumption. I think the empirical evidence, as you suggest for utilities being the best, most capable users of that information is certainly up for debate.
John Farrell: I would love if you could talk a little bit more about, this is a perfect segue, I was just going to ask you about if there was a place that was doing this well. Are there specific examples of things that are happening in the UK market because the utilities don’t have a monopoly on this data granted to them by the government? And also are there examples State side where we’re getting it right, where maybe we’re not doing the exact same thing, but where we are making sure that data is getting out there and allowing competitive activity in the marketplace to lower cost for customers to make the grid run more efficiently, to encourage renewables, what have you?
Michael Murray: There’s a great example in California with a community choice aggregator called Silicon Valley Clean Energy, or SVCE, the acronym is a bit hard to muddle through that. Silicon Valley Clean Energy is owned by the community. They’re a governmental organization. And if you compare how they provide customers with access to their own energy data with that of PG&E, you start to see some important differences. Now, I will say at the outset, PG&E has generally done a good job of providing data portability. They were one of the first utilities to adopt the green button standard, but nevertheless, the pace of improvement has been much slower with the investor on utilities, as compared to the CCA’s.
Michael Murray: So Silicon Valley Clean Energy decided not to build their own data portability infrastructure from scratch, like PG&E did. SVCE hired a specialist called Utility API to be the software company that provides that exchange between the utility and numerous distributed resource companies. And Utility API has a lot of experience in this realm, they know how to serve the needs of the distributed energy community, so they know what the needs of the solar salesperson is who is trying to generate a price quote for solar and potentially a battery system with a net meter 2.0 customer in Southern California. And they know what an energy efficiency provider needs to sell heat pumps and help transition a customer off of natural gas heating to a heat pump in Massachusetts.
Michael Murray: And these are skills that utilities often don’t have. And so to give you a sense of the variation in a place like Chicago, Illinois, where ComEd has offered their green button system for several years, to date there’s only something like three companies that are actually using that system for a variety of technical challenges and failures on ComEd’s part. And yet, at Silicon Valley Clean Energy, within weeks of them announcing that they were providing this data portability system, there were dozens, I think it was more than 50 companies who actively started using it, serving the large commercial customers and the residential customers.
Michael Murray: And now there’s even an electric vehicle, a load management tool that’s extremely customer friendly where all the customer has to do to charge their electric vehicle at the optimum rate is just to share their energy usage from Silicon Valley Clean Energy to a smartphone app that coordinates with their electric vehicle charger and automatically has their vehicle charged at off-peak times and it selects the right rate that’s appropriate for them to save them money. And so this is an innovation that happened very, very quickly, and you compare that to some of the investor owned utilities and the pace of change and iterative development is just much, much slower.
John Farrell: It’s probably worth noting that ComEd, which serves Chicago in Illinois, probably has something like 2 or 3 million customers, and Silicon Valley Clean Energy probably has in the tens of thousands. So the fact that there are 50 companies already using their platform versus three with ComEd in Chicago speaks volumes about on a per capita basis how useful that system actually is.
Michael Murray: That’s right. And some companies have been trying to get the ComEd system to work. It’s ostensibly a green button standardized system, and what I hear is it’s just a slog. There’s technical problems. There’s unexplained errors. There’s bugs in the system that don’t get fixed. And so it really tests the resolve of these companies to continue working with ComEd, in some cases over the course of many years, to get the system working. And I think a lot of people don’t appreciate the level of effort that goes in on a third party’s perspective to make this work. They’re really the guinea pigs. They’re testing the software that the utilities often fail to test. They’re identifying problems that, sadly, a lot of regulators don’t pay that much attention to.
Michael Murray: And so this is what my paper that we issued about a year ago on digital platform regulation was trying to address, it’s thinking about utility regulator, not as just a rate setting authority over polls and wires, but as we enter a digital age, they have to become savvy regulators in a digital context, and that means holding utilities accountable for when their IT systems don’t perform very well. And just to give you an example, even California, which has aspirations to have a plug and play DER, high DER future, California has been sitting on allegations of data failures on the part of Southern California Edison for more than two and a half years. There’s a company that filed a formal complaint with the commission. They identified numerous alleged failures on the part of Southern California Edison. I’ve read the complaint, it seems very credible to me, and the only action that the Public Utilities Commission has taken to date is to grant themselves extensions on the statutory deadline to have the matter resolved.
Michael Murray: So, we’re now 2.5 years into getting resolution on some major technical failures and it just doesn’t seem like the regulators have the capacity or the will to take on this challenge.
John Farrell: It’s interesting to think about a comparison of another market. If you had a pothole in your street for two and a half years, the kind of rage and attention you could get to that as compared to this, when you have a digital pothole in access to data and the utilities just like, “Oh, we’re just going to take a little longer.” I just, I can’t imagine. And I think people would have a different sense of the expectation, but it’s really the same thing, right? The road is the way by which we can transact and move around and interact with so many people, right? Whether we ride a bike or drive a car or whatever, it’s how we connect to other people. And the data about the energy system, about the electricity system is the same thing. It’s how we’re going to be able to connect and interact with and exchange value with other people in a 21st century electricity system.
John Farrell: And yet regulators are letting it be littered with potholes by the utility, and it’s deliberate potholes maybe. I mean we’ve kind of described here, I think really well, the fact that we have an incentive problem, we have an expertise problem, we’ve got a anti-competitive instinct problem. There’s so many reasons there are potholes, but the problem seems to be in general that we continue to allow there to be potholes.
John Farrell: How do we fill the potholes? I wanted to ask you before we have to wrap up, what are some of the things that we can do? Maybe some things from your digital platform regulation paper, recommendations you might have for utility regulators, for legislators, how do we make sure that we can get the best and most efficient and most cost-effective energy system by making sure that this data about this isn’t just locked up in this concept of utility monopoly?
Michael Murray: It’s a great question. So there’s several things. The first is, I think it’s incumbent on utilities to hire experts who actually know how to build these systems and they know how to operate digital platforms for the use of distributed energy resources. That sounds obvious and yet, we see a lot of examples of utilities that have decided to build their own system and they have clearly indicated just a lot of challenges and high costs and a lot of frustration on the part of distributed energy resource companies. And so in this area, I’ll give a shout out to National Grid in New York. They hired the company called Utility API that I just mentioned, and it’s a similar story where they had a strong number of third parties express interest in using their system, much more than their neighbor to the south, ConEd, or Consolidated Edison in New York City. So there was an understanding, I think, among the IT and leadership teams at National Grid that they needed to know the limits of their expertise and hire a firm that could do a good job. So, that’s the first thing.
Michael Murray: The second thing also sounds really simple, but it’s really important, and that’s a bug tracking system. So if you’ve ever filled out a technical support request for your internet service being down or something like that, they create a ticket and that ticket works its way through the technical support system, it might get escalated if there’s higher levels of expertise that are involved. Many utilities don’t even have a trouble ticket system. They rely on email that many of them do not have phone calls. They’re giant corporations and they don’t want you to have anybody’s individual phone number, and so we hear stories from companies that we work with that have submitted support requests and they’re waiting months to get an answer.
Michael Murray: Basic things like, “When I hit this web server, I should get a response and I’m getting an undescribed error. I can’t move forward until you fix this,” and then nothing happens. And many of the energy companies that are trying to serve customers, they’re entrepreneurs, they’re innovators, sometimes they’re really small firms, and they’re not going to challenge the utility in a formal context. They don’t want to bring a formal complaint against the utility, they don’t want to make a lot of noise with the regulator or with politicians because there’s a fear of retaliation. And so having a trouble ticket system that’s transparent in which the utility regulator gets to see, what is the response time on average to a ticket? How quickly do they acknowledge the existence of a problem and actually resolve it?
Michael Murray: This is for any customer support organization, we had this figured out 20 years ago, but I think it’s time for public utility regulators to take up the mantle and really think of themselves as overseers of a tech support platform. That’s an important part of accountability.
John Farrell: Michael, thank you so much for diving into this issue of data access. I think it’s an area in which a lot of folks who care about a clean energy future don’t really think about. There’s so much focus on this broader issue of, how do we force the utility to do something different? How do we pass a mandate for clean energy or for community solar or for distributed solar? And I feel like we’re increasingly getting more attention to these back office things, but they really need a lot more attention.
John Farrell: And especially because it really gets into this issue that we’re starting to explore more broadly across our economy, which is when big companies have so much power over the systems that operate our economy, whether it’s retail online, shopping with Amazon, whether it’s Facebook and the way that we interact with other people, utilities are in that same role and in a space that is going to become so important as we electrify things in our economy, I mean electricity is already the backbone of our economy, it powers our phones and computers and all these other things, but it’s going to become even more important. So, thank you so much for the work that you do trying to expose the problems with access to data. We’ll be delighted to share more of the work that you’ve been doing on our show page, just really appreciate you taking the time to talk with me today.
Michael Murray: Thank you, John. It’s been my pleasure and thank you for bringing some attention to these issues. I like to say that this is the plumbing that’s really behind the scenes that a lot of people don’t want to think about, but as you say, it’s critically important to realizing the vision of a clean energy future and thank you for spending the time.
Jess Del Fiacco: Thank you for tuning in to this episode of the Building Local Power podcast from the Institute for Local Self Reliance. You can find links to everything discussed today by going to ilsr.org and clicking on the show page for this episode. That’s I-L-S-R.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website.
Jess Del Fiacco: Finally, we ask that you let us know how we’re doing with a rating or review on Apple Podcasts or wherever you find your podcasts. The show is produced by me, Jess Del Fiacco, and edited by Drew Birschbach. Our theme music is Spunk and Delude by Dysfunctionale. For the Institute for Local Self Reliance, I’m Jess Del Fiacco, and I hope you join us again in two weeks for the next episode of Building Local Power.

 

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Luke Gannon

Luke recently received a BA in journalism, creative writing, and ethnography from Hampshire College. She wrote, designed, and edited a magazine titled The Politics of Land in Teton Valley, ID that analyzed the environmental, economic, and social patterns of the region amidst Covid-19.