May 16, 2011 THE PEPCO PROJECT Presentation for the CEDM annual meeting Department of Engineering and Public Policy Department of Social and Decision Sciences

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 2

CMU’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 3

CMU/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 4

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SAMPLE OF COMMUNICATION DESIGN RESEARCH To anticipate customer response to smart meter implementation: –Mental models interviews with 23 Pepco customers –Follow-up survey completed with 430 respondents 6

ACTUAL 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: QUOTES 8 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 is using 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 an assurance 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 to conserve 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 DESIGN RESEARCH: 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 9

FINAL IHD CHOICES 10 Current choice Sample existing solutions

SAMPLE OF OTHER PROJECTS WITH POTENTIAL 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 11

Baruch Fischhoff Jay Apt Wändi Bruine de Bruin Inês Azevedo Denise Caruso Tamar Krishnamurti Hsuchi Ting Alex Davis Shira Horowitz Daniel Schwartz Jack Wang 12 CURRENT PEPCO TEAM