Puget Sound Energy (PSE), Washington State’s largest utility, delivers electricity, natural gas, and energy solutions to 1.26 million customers in the Puget Sound area.
The challenge
Serving the state’s commercial and technology center, PSE’s consumer base is growing by almost twice the national average. And, while other utilities grapple with how to define themselves, PSE is at the forefront of the industry, proactively pursuing strategies to succeed in the midst of massive changes being driven by technology, deregulation, and privatization.
Historically, utilities have charged fixed prices for energy regardless of how demand affects the cost of service. In a move to give consumers more control and choices, PSE leveraged real-time data from the Landis+Gyr wireless fixed network to launch a program called Personal Energy Management™ (PEM) which provides online consumption and cost information for managing electricity use. PSE, known for its visionary approaches, is the first utility in the nation to implement such a far-reaching initiative to enable market price response. For years, fixed rates charged by utility companies have insulated consumers from the volatility of wholesale energy pricing. Most consumers are unaware of how sharp peaks in demand dramatically affect the cost of service, and therefore, they make few attempts to conserve. PSE recognized that to avert future energy shortages such as those at other West Coast utilities, and protect the environment by reducing the need for more power plants, consumers must be actively engaged in energy management.
The solution
PSE’s vision was to arm consumers with the information and technology tools they need to make informed energy-buying decisions and in turn, positively impact wholesale electricity prices. PSE created the Personal Energy Management program leveraging real-time data from the Landis+Gyr wireless fixed network Web-based energy management application expertise. This advanced technology enables PSE to make real-time consumption information available to consumers via secure portals on the Internet. Consumers can view their consumption and time-of-day (also known as time-of-use) rates for electricity and gas on a daily, weekly, and monthly basis, and compare usage patterns over an entire year. Knowledge of how pricing varies based on demand at different times of the day allows them to shift usage to hours when electricity is in less demand and therefore less expensive.
The results
Improved customer relations, lower operations and maintenance costs. Landis+Gyr feeds high volumes of real-time consumption information into several integrated systems:
- ConneXt’s ConsumerLinX™ consumer care and billing system
- Landis+Gyr advanced information services and website applications
- PSE call center applications
The Landis+Gyr system is the largest and fastest growing wireless fixed network for data collection in the utility industry. The PEM application of this technology is an industry first and the world’s largest implementation of advanced services ever attempted with a networked meter reading (NMR) system.
The Personal Energy Management program has been overwhelmingly successful since its rollout in December 2000. PSE consumers have welcomed energy usage information and have modified their behavior accordingly, resulting in an estimated 4 percent decrease in average consumption. The Electric Power Research Institute estimates a demand reduction at that level could correspond to as much as a 40 percent decrease in the average wholesale cost of energy for PSE.
This reduction in peak demand on regional electric systems eases the need for PSE to purchase expensive power on the wholesale market (a practice that can potentially bankrupt utilities). The long-term effect is less need to build new power plants and more efficient utilization of those already in place. The PEM program’s success prompted the Washington Utilities and Transportation Commission to approve a time-of-day rate plan for 330,000 PEM participants. Consumers in this pilot program who use less electricity and shift to low-demand times will now see the rewards on their monthly electricity bill.
“The secret to success for utilities in the future will be providing consumers with technology tools that empower them to obtain energy pricing and usage information. Buying as much electricity as possible during inexpensive times of day and using less electricity during peak demand periods have significant environmental market cost benefits. In time, we think consumers all over America may want and benefit from this kind of technology. This landmark technology is good for consumers’ pocketbooks and the environment. By shifting as much power usage as possible to hours when overall energy demand is lower, consumers can help to limit the number of new power plants their utilities need,” says Gary Swofford, V.P. and chief operating officer, Puget Sound Energy.