On May 18th, 2015, I attended an invitation-only forum in Washington DC, “Driving Energy Efficiency with IT.”
The CEO of New Jersey’s largest electric utility was a featured speaker. The utility is PSE&G, and the CEO’s name is Ralph Izzo. One of his most important jobs at the time was to figure out how to change PSE&G’s business model and create new revenue streams.
Izzo, like utility CEO’s across America, was under pressure. Electric utilities were losing money to the onslaught of the solar revolution. The century-old business model — selling electricity — wasn’t working anymore.
Net metering offers tidy savings for homeowners, but one person’s gain is another person’s loss. Utilities were on the losing side of net-metering.
Appliances as Revenue Streams
Izzo had come up with a solution. From the small podium on the 9th floor of the Capitol View Conference Center, the CEO of New Jersey’s largest utility leaned forward and said, “Do you remember Ma Bell?”
Izzo’s vision for the future meant going back in time more than 30 years. Before 1983, Bell Telephone/AT&T owned almost every phone in America, attaching a rental fee to customers’ monthly bills. Few people knew it, but that’s how it worked. PSE&G sees this as a good thing. Izzo’s “new” business model positions electric utilities as home appliance sales and leasing dealers. It’s a new take on the old Ma Bell model.
“I want to own every appliance in every house we serve,” Izzo said. “I want our customers to lease their heating and cooling systems, their refrigerators, and their dishwashers from PSE&G. The customer pays a small monthly lease and we’ll take care of everything else.”
Vermont follows New Jersey
So what does this mean for Vermont? Well, Green Mountain Power has adopted New Jersey’s appliance sales and lease business model. GMP is in the appliance business, selling or leasing heat pumps, Tesla PowerWalls, and a suite of eControl and eWater smart products.
Leasing is convenient for those of us who can’t plop down $5,000 for a whole-house heat pump. But it’s important to read sales/lease contracts, know who owns what, and who controls the on/off switch. The feel-good, save-the-environment sales pitch should be just one of several factors in your energy decisions now that you have a plethora of environment-saving options. You can be green and at the same time, become a smart energy shopper.
Smart Meters & “eControl”
Taking the appliance model another step, Ralph Izzo said he wanted to control appliance energy usage through smart meters. PSE&G could generate a lot of savings if they could control customer usage. Demand Response creates efficiencies throughout the system, balancing supply and demand across the entire grid.
So what is Demand Response? Do you remember when utilities would ask customers to turn down air conditioners in sweltering temperatures to help prevent a blackout? Now utilities don’t have to ask for your help. With your consent, outlined in a sales/lease contract, they can turn down your heat pump when you’re not home by way of your smart meter.
The question is, are customers given full disclosure before the contract is signed? Do customers clearly understand what they are agreeing to?
For example, Green Mountain Power sells or leases Tesla PowerWalls — basically a big, lithium battery which can store electricity produced by your solar panels. Through a Demand Response agreement, GMP can “borrow” energy from your Tesla PowerWall when it needs it — most likely in the evening when solar panels stop producing energy and demand increases. They recharge your PowerWall when demand is less. How can you tell if GMP is proposing a Demand Response program? Well, you’ll need to read the fine print of every contract you sign, and ask a whole lot of questions.
Some folks get creeped-out by the thought of a utility remote-controlling their thermostat, as if there’s a home invader entering through the electrical panel. But there’s no conspiracy theory here. A utility can respond to electricity demand more efficiently if it can turn off air conditioners in houses during the day. This type of Demand Response program helps everyone — and the entire grid. You get a notification via a smart phone, and all’s good. However, if you don’t like the idea, don’t agree to the terms. Just ask, “What’s in it for me?” and request an answer in dollars.
Transparency and Full Disclosure
As I mentioned in a recent Front Porch Forum post, “Know what you own, and why you own it.” GMP, SunCommon, and other energy product/service providers don’t have an obligation to teach you the ins-and-outs of the renewable energy business. In fact, Vermont’s new REC policy puts the average solar panel buyer/leaser at a huge disadvantage because it doesn’t include any type of consumer protection clause. If you don’t ask the right questions, you may not get what you really think you get.
And therein lies the problem. A company comes along and sells you on the idea that you’re going solar and helping save the environment. The first part is not true at all if you don’t ask to keep your RECs. The second part is somewhere in the middle of a truth-o-meter.
If you have solar panels on your roof, or if you are a “partner” in a Demand Response program, it helps if you understand the following:
- You are a solar power producer if you buy solar panels.
- You are not a solar power consumer if you don’t own your RECs.
- You are letting a utility “borrow” electricity if you have a Telsa PowerWall and participate in a Demand Response program.
- You are helping a utility if you let it control your appliances via a smart meter.
Then ask yourself, “What do I get in return?” Maybe you get something, maybe you don’t. It all depends on what is written in the sales/lease contract.
If a sales rep talks a rosy talk but doesn’t clarify the details, or if the contract is written almost entirely in small print, then it’s time to learn more and become a smart energy shopper.
Ultimately, here’s what you should understand: The energy business is complicated, from solar panels to smart thermostats. You have a lot of opportunities to go green and save money. Just make sure you read any sales contract before you sign it. Make sure it’s a good fit for you.
And beware of a sales rep dismissing anyone who suggests folks who advocate for transparency and disclosure are naysayers who don’t want to help the environment. We’re just folks who want consumer-friendly renewable energy policies in Vermont.