Smart Grid Consumer Acceptance: UCAN’s Hard-Hitting Prescription Part 2

By Michael Shames

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Editor’s note: In his first installment, Michael introduced his prescription for Smart Grid wellness, which involve adherence to eight basic and long-established consumer rights. The three detailed in last week were: 1) The right to receive reliable and affordable energy services; 2) The right to consistent and accurate product and service performance, and 3) The right to truthful advertisement, complete information and stable third parties. Today we pick up with the remaining five steps.

4.  Right to Honest, Transparent and Equitable Contracts

Contracts for Smart Grid products and services are crucial to making sure that consumers adopt and continue to use Smart Grid services.  Yet contracts are problematic for most consumers as they are viewed as indecipherable, one-sided, trap-laden tools of legal enslavement. Consumers must be assured that the agreements between utilities, third parties, and consumers are clear and equitable.  Regulators should consider adopting rules to enforce the provisions against the utilities and third parties. These provisions need to help consumers make informed choices at the point of purchases. This includes the ability to test a product before purchase or for a reasonable period after purchase. Contracts must be written in plain English so the consumer understands how the product operates and interacts with the Smart Grid and other devices. 

Further, the third party should be required to obtain clear and informed consumer authorization at the time of purchase for accessing any consumer data or employing devices on the consumer end of the Smart Grid. The contracts and bills need to clearly detail charges and fees, as well as the redress for any disputed and unauthorized charges and fees. The provisions should also require all changes to service terms to be bilateral. Lastly, contracts that include any financing for Smart Grid products such as solar or energy storage devices must contain fair and understandable financing terms.

5.  Right to Meaningful Choice among Products and Services

Regulators should ensure that consumers have the right to pick products and services from a wide variety of third parties. When service providers constrain consumer choice, it is harmful to the development of the industry. In order to ensure informed consumer choice, the Smart Grid standards should be open. Utilities should be encouraged to limit barriers from providers and services offering services to consumers. In addition to non-discriminating access to Smart Grid services, consumers need the freedom to change third parties freely without needing to replace hardware devices. Allowing movement among vendors lets consumers establish relationships with third parties that offer the best intangibles, such as customer services. These intangibles are not readily available to consumers as others will not have had the opportunity to test the products or services and provide valuable insights and reviews.  Similarly, consumers need to be free from long-term commitments usually associated with the emerging technology. Consumers should not be locked into long-term service arrangements while the Smart Grid technology is being developed and improved.

6.   Right to Control Consumer Information

In order for consumers to utilize Smart Grid technology and monitor their consumption and use, utilities will need to share consumer use data. This includes sharing potentially identifying consumer information with third parties. When connected to consumer identifying information, the data is valuable because it provides valuable insight into the use of energy consuming products. Consumers will be more likely to adopt and use Smart Grid technology only if this consumer information is protected.

7.  Right to Affordable Redress to Resolve Disputes

Regulators will need to create enforcement rules and penalties protecting the consumer rights discussed above. The protections need to extend to both the utilities and third parties.  Regulators must retain jurisdiction over the third parties offering various energy services and provide a means for consumers to resolve disputes concerning equipment, services and billing. Third parties will play a more involved role than merely requesting access to data. They will be providing equipment and services to consumers, and likely charging those consumers for services. The interaction between consumers and third parties will have a direct impact on consumers’ use and access to energy services.

Regulators must adopt rules and provide redress concerning how third parties will be allowed to bill consumers for these services (for example if energy management services will become a cost placed on a consumer’s energy bill) and the authorized and reasonable amounts charged. One source of guidance for such rules is the telecom cramming rules and regulations, which protect consumers from unauthorized charges and allow redress and penalties.

Most importantly, the laws must allow redress for the consumer through the informal and formal complaint process. The consumers should be allowed to seek redress as a group and not limit redress to individual actions to ensure that important but low-cost disputes are addressed.

8.  Right to Control of Smart Grid Information

Much has been written about the discomforting privacy implications of the Smart Grid. For example, frequent meter readings being fed into the Smart Grid networks could provide a detailed timeline of activities occurring inside the home. Additionally, privacy issues arise from the question of the legal ownership of the data being collected. With ownership comes both control and rights with regard to usage. If the consumer is not considered the owner of the data obtained, the consumer may not receive the privacy protections provided to data owners under existing law.  The constant collection and use of smart meter data has also raised potential surveillance possibilities.

These and other data-based scenarios pose physical, financial, and reputational risks that must be addressed. The industry currently lacks a clear set of privacy principles to govern Smart Grid technologies. Regulators should adopt a robust set of Fair Information Principles, such as the Organization for Economic Cooperation and Development guidelines, to form the policy framework to protect personal and household information with the implementation of the Smart Grid.

A comprehensive approach including a regulatory framework is needed. Any regulations must reflect the realities of a Smart Grid where consumers contribute sensitive personal data.  A lack of consistent and comprehensive privacy standards creates a very significant privacy risk, especially throughout the states, government agencies, utility companies, and supporting entities that will be involved with Smart Grid information collection and use. The ability to access, analyze, and respond to a much wider range of data from all levels of the electric grid is a major benefit of the Smart Grid yet creates significant potential problems from a privacy viewpoint, particularly when the data is associated with individual consumers.

Michael Shames is Executive Director and co-founder of the Utility Consumers' Action Network (UCAN), a non-profit consumer watchdog group made up of 31,000 San Diego households and small businesses. UCAN represents the interests of San Diegans in energy, telecommunication and Internet matters before the state and federal regulatory bodies. He also serves as an expert witness and attorney on behalf of UCAN and an adjunct professor at University of San Diego School of Business.

You might also be interested in …

Part 1 UCAN'S Smart Grid Wellness Prescription: 8 Not-So-Easy Steps Toward Consumer Acceptance

Blowback Attack: The Smart Grid’s Greatest Danger?

Smart Meter Paranoia: Could a Simple Toggle Switch or Software Fix Solve It?

Smart Meters: An Apology from PG&E – and a New Paper on Meter Accuracy and Customer Perceptions from EPRI

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