Consumers Unwilling to Allow Electricity Suppliers to Remotely Limit Energy Use without Significant Price Discount

Consumers are not willing to allow electricity providers to remotely limit the use of their home appliances as part of electricity management plans without significant rate discounts, according to a report issued by Accenture (NYSE: ACN). The report also found that almost half of consumers would be deterred from joining electricity management programs if their electricity bills were to increase as a result.

“In the new energy era, residential consumers who allow major household appliances to run at off-peak times will potentially receive a financial benefit”

“Understanding Consumer Preferences in Energy Efficiency,” based on a global survey of more than 9,000 consumers in 17 countries, found that while some consumers are open to the idea of moving to electricity management plans — under which suppliers can actively help households use energy more efficiently through the remote limiting of when home appliances are used — they demand very large price discounts in return.

For instance, only 16 percent of consumers said they would allow electricity providers to remotely limit their use of certain household appliances if they have no option to reverse the action taken by the provider and if no price discount were offered. Price discounts increase that figure:

• One in four respondents (24 percent) said they would give utilities such control when offered a price discount of 10 percent; and
• One in three respondents (35 percent) said they would give utilities such control when offered a price discount of 20 percent.

High bills and data privacy deter consumers

When asked what would discourage them from using electricity management programs, 46 percent of the consumers surveyed cited higher electricity bills — despite the fact that electricity management programs are designed to reduce usage during peak time rates and therefore lower costs. In addition, more than two in five respondents (41 percent) cited as a deterrent their energy provider’s selling, at a profit, the electricity they themselves saved, and one-third (32 percent) said they would be discouraged from using electricity management programs if it would give their electricity provider greater access to their personal electricity consumption data.

“In the new energy era, residential consumers who allow major household appliances to run at off-peak times will potentially receive a financial benefit,” said Greg Guthridge, managing director of Accenture’s Utility Customer Care Practice. “However, utilities must address consumer concerns about external control, privacy and lifestyle implications before broad-based adoption by consumers will occur. In the end, they need to articulate a simple and intuitive value-proposition that resonates with the end-consumer.”

Electricity suppliers not trusted on energy conservation. New market entrants fare worse.

The report also found that while 75 percent of consumers believe they understand the actions they need to take to optimize their electricity consumption, only 28 percent are aware of and understand programs offered by electricity providers to help them do so.

Further, only 29 percent of consumers said they trust their electricity providers to advise them on actions they can take to optimize their electricity consumption. This trust is lowest in deregulated markets such as Germany (10 percent of respondents), Sweden (16 percent) and the United Kingdom (17 percent) and highest in regulated markets such as Singapore (54 percent), China (41 percent) and South Korea (40 percent).

Other service providers fare worse. Only 20 percent of consumers said they trust online service providers to advise them on actions they can take to optimize their electricity consumption, and even fewer — 13 percent — said they trust retailers, equipment manufacturers, cable television or telecommunications companies to do so. The most trusted sources of energy-efficiency advice are environmental associations and academic / scientific associations, cited by 53 percent and 51 percent of respondents, respectively.

Social pressure

Social pressure plays a part in encouraging consumers to enroll in electricity management programs. Two-thirds (65 percent) of consumers said they have a positive impression of an individual who is on a program. However responses differ by country. Respondents in Brazil and Italy were most likely to have positive impressions of consumers enrolled in electricity management programs (92 percent and 85 percent, respectively). In contrast, enrollment in such programs does not influence the impression consumers have of an individual for close to half of the respondents in Germany (46 percent), United Kingdom (46 percent) and the United States (48 percent).

“Achieving broad-based and sustainable consumer adoption will ultimately define the success of energy management programs and the extent to which a utility meets environmental regulations and mandates,” Guthridge said. “To succeed, power suppliers will need truly differentiated programs and service — gone are the days of the ‘one-size-fits all’ utilities customer service model. The most successful utilities will be those that blend sophisticated consumer-centric capabilities with new smart metering and in-home technologies to best meet emerging consumer needs and expectations.”