Kurt Yeager talks with Restructuring Today about importance of consumer focus in power industry

In a Restructuring Today article on November 23, 2010, Kurt Yeager talks about the need for consumer empowerment and how the power industry needs to be more consumer-focused.

Restructuring Today (November 23, 2010)
YEAGER: Customer controls data but go easy on TOU

The Galvin Electricity Initiative is stepping up its efforts to make the power industry focus more on the consumer than on shareholders, its Executive Director Kurt Yeager told us yesterday.  "Our goal here is to engage the trade associations and the utilities to be partners, not opponents -- and to begin to view consumers as partners, not as prisoners," he added.

The advocacy group -- pushing for big changes in the electricity industry -- sent an open letter to APPA, EEI and the National Rural Electricity Cooperative Assn last week asking them to adopt a 21st century business model that is aimed at serving the customer (RT, Nov-17).

The power industry still largely operates under rules designed when the country was still electrifying back in the '30s and '40s, noted Yeager.  For a time, those rules made sense but that job is done and utilities need their incentives changed as new forces have emerged.

Yeager and former Motorola CEO and initiative founder Bob Galvin see the move to open up competition on power services as vital to the economic health of the country.

"We have gone from having what was the world's leading electric power system to one which is literally behind almost all of our competitors in the developed and developing world," said Yeager.

The smart grid is more than a smart meter.  It is the seamless connection of supply and demand and to foster that, the consumer needs to have control over their information to be able to respond to the variability in wholesale prices.
Customers can then pass that data along to a third-party firm such as Google or Cisco Systems that can set up programs to have devices behind the meters respond to price signals.

EEI has been pondering the issue of who controls the data -- and now agrees with the initiative that customers do, though its members need to be able to look at the data to provide the energy, a spokesperson told us yesterday.

Any third party that gets access to the data should be under the same requirements as utilities in regards to customer protections and privacy.  Some states have laws on the books letting regulators ply their trade on such third parties while others do not, said EEI.

Customers are used to paying one flat rate for power as that has been the status quo since the system was built, said Yeager, adding he does not want to see all customers with a smart meter flipped over to dynamic pricing immediately.

Such pricing mechanisms should be voluntary at first and then when other consumers see the value they produce for early adopters, more and more will want to sign up for the rates.

If the smart grid is not rolled out correctly, Yeager fears the industry could be poised to repeat the mistakes of the implementation of the Energy Policy Act of 1992.

The two situations are different.  Electricity restructuring hit a major bump in the road when California forbade its utilities to hedge with long-term contracts and Enron took advantage of the situation.  But if customers get smart meters and only see their rates climb without any ability to respond, they will see their rollout as another "rip-off," said Yeager.

© 2010 GHI LLC. IMPORTANT: This article was reproduced from the November 23, 2010 issue of Restructuring Today with the limited permission of the owner.  To view the full story on Restructuring Today’s website, please visit http://www.restructuringtoday.com/public/12604.cfm?sd=77.