“Ratepayers”—or Customers?

It’s interesting,” observes Ian MacLeod of Master Meter Inc. (Mansfield, TX), “to look at how AMI [Advanced Metering Infrastructure] and the sharing of utility information with users can affect a behavioral change.”

To back this up, he cites a three-year study on the psychology of ratepayer conservation, conducted at the Coachella Valley Water District (CVWD) in California and completed in 2011. “Results were almost shocking, in terms of how dramatically people’s water usage was altered when they understood that they were being “˜watched,’ if you will, and that that information was shared with them to further empower their consumption behavior,” says MacLeod, Master Meter’s vice president of marketing. CVWD uses Master Meter equipment for its mobile and AMI meter data collection.

Although the voluminous info pumped out by automated smart meter networks brings along a familiar package of benefits, MacLeod suggests that the greatest benefit is turning out to be a relative newcomer: “from a customer service standpoint . . . these portals that are being created to share information with ratepayers to encourage them to use water more wisely and to understand what they could do with water budgeting, for example.”

Such systems “are empowering people . . . by letting them know periodically–during the course of a month–how much water they’re using, or what their bill is shaping up to be. And they’re actually showing you how much water you’re using, relative to other homeowners in the area.”

He goes on to describe how these newest-generation customer service tools are ingeniously tapping into customers’ social consciences, in a good way–“like pitting you against your neighbors”–to help heavy water users avoid the stigma of being profligate squanderers of the community aquifer. The online presentation of usage data in “near-real-time” also help some consumers overcome an occasional kind of psychological denial in which they tell themselves “I don’t use all that much water!”–when, in fact, they use a measurably greater amount than their neighbors and peers. The friendly Web-based customer interface then gently proceeds to let such people know, with graphics and daily or hourly numbers, exactly how much they use, relative to others. Usage is sometimes even broken down into categories like lawn sprinkling or interior water.

MacLeod continues: “These newer ways that AMI, combined with meter data management [MDM], is being used, is really shaping up to control consumer behavior and be a powerful conservation program.”

The research at CVWD is described in a report called “Time-of-Use Water Meter Effects on Customer Water Use, California Energy Commission, PIER Program, CEC-500-2011-023,” by Lon House.

What’s also quite curious, and perhaps even “shocking,” about state-funded water conservation efforts–at least in southern California–is that the major goal, in terms of financial savings benefits, doesn’t concern water so much as the very high electricity costs associated with moving and treating it.

In the voluntary research project, a very small sample 52 residential ratepayers–when provided with the water usage insights that MacLeod describes–readily slashed their on-peak water usage more than 50%. “On-peak” here refers to peak electric power rates (noon to 6 p.m.), which are, of course, much higher per kilowatt-hour than off-peak.

In terms of overall, “˜round-the-clock water consumption, the experimental group used 17% less than the control.

If all ratepayers would follow this sample’s lead, CVWD’s peak electrical demand would fall by 1,340,000 kWh and 3 MW or more, and total electrical usage by over 1,668,000 kWh a year, the report states.

The project had the goal of trying to shift peoples’ water consumption behavior, and participants were paid $25 monthly for taking part, but otherwise, they received no behavioral rewards. They got the point about shifting and conserving, more-or-less on their own.

Rich Data Yields These Four Major Service Impacts
We’ll return to the novelty of finely shaping customer behavior in a moment; but first, it will be helpful to review the well-known effects that the expansion of data received from automatic meter reading (AMR)/AMI systems will likely bring to bear on customer service improvement. The following ones, reported by managers at two recent rural AMI projects (in Weatherford, OK; and Olathe, KS) are being realized almost universally.

First, because meters no longer need to be read in person, former readers quite often become even more valuable by reassignment to other tasks. This happened in both locales.

Weatherford’s chief financial officer Tony Davenport reports that, “Our meter readers . . . are now freed to work on the water and sewer infrastructure.” The City (which has about 5,000 meters) never seriously considered using AMI as a way to cut payroll, he adds.

Likewise in Olathe (about 35,000 meters), a few meter readers voluntarily retired after the AMI project, but most were given new jobs in customer service to do tasks which, as water distribution manager Tonya Roberts says, were previously being neglected due to a chronic staff time shortage. These days, post-AMI, the department is getting caught up on long-delayed secondary maintenance, like meter pits, valves, and hydrant, she says.

“And there’s also an expanded leak-detection effort,” she adds, in which former meter readers are among those who now survey water lines “to chase down leaks, before they turn into full blown breaks.”

This proactive approach also provides earlier lead times for scheduling repairs and letting customers know about possible service interruption, and the workflow is organized more efficiently.

A second major impact and benefit from AMI naturally transforms billing and meter data management. Roberts explains that, in Olathe, “We don’t have to estimate bills anymore, and . . . don’t have to schedule meter reading visits” to enter locked buildings and meter sites. The same goes with leak detection visits.

“We’re not bothering those customers anymore, trying to meet with them,” says Roberts, as the AMI data can usually pinpoint leak locations remotely.

For customer service line staff, there’s almost always a major transition to undergo when the AMI data torrent arrives. Roberts recounts that “Perhaps the largest piece of this was working with customer service so they know and understand what the data means and how to access the information that they need, when they have a customer on the line.”

Making this transition required tight coordination between Olathe’s IT team and the AMI and meter vendor Sensus, until data was moving smoothly from MDM to billing and back again. “As prepared as we thought we were,” recalls Roberts, “it was still a little bit overwhelming,” but the department assigned a person to oversee it, and the conversion went fairly smoothly.

Her customer service data isn’t tied to the hourly info that is pouring into the billing department. This certainly helps by simplifying content: customer service staff simply log in to a service software module. Yet the voluminous granular data is on hand if needed, to help department managers tackle issues like peak demand dynamics in specific areas, tracking of water losses, and detecting backflow or possible cross-connects.

A kind of “classic” AMI benefit that all customer service departments will experience is the ability to respond in detail to customers’ challenges of high bills. Having such real data, says Roberts, “makes it easier to explain to them and show them where all that water went,” and gives customers specific timeframes when their usage was high. “That’s been the largest help to us,” she says.

Davenport tells a similar tale of transformation in Weatherford, where they’ve implemented a new customer engagement Web portal.

Previously, he says, “We couldn’t get any details . . . if customers came in and said “˜I never used this water.’ Now we can go back, look at each day, and tell them, “˜At six a.m. you were using [so many gallons].'”

There’s an overnight usage report every day, he notes, and customers can access data directly, through the Web. This portal actually nips many complaints in the bud, and some customers, after experiencing the rich content, have even visited the office “and told us that it has helped them manage their water usage, especially people who have new sprinkler systems. They can look and see, “˜Hey it’s using a lot more water than I thought it was using during this time period.'”

A third major benefit is reflected in customer gratitude whenever the AMI detects a water leak on their side of the meter, and enables prompt notification that saves a potentially nasty expense. Probably every AMI-equipped agency has such stories to tell. In Olathe, one ratepayer had a garden house that was running several days. “We called them,” remembers Roberts. “They were pretty adamant that they didn’t have anything going on. So we went out and talked to them, we looked around, and found the hose going . . . they were just thrilled that we were able to find that. . . .”

Davenport’s example tells of a neighbor’s house which suffered an inside leak while the owner was gone for the weekend. The city’s AMI flagged it early so it could be stopped. Later, the neighbor wanted to know how much had been lost and easily found out the volume, and when, by logging into the portal.

This direct access interaction is the fourth big impact, then, and, as MacLeod noted above, is surely the most dramatic.

For one thing, customer engagement will tend to shift from the telephone and service-call conversation to a richer, deeper two-way Web experience. Customer can mine all kinds of pertinent data, on demand (varying with the particular system, of course). This can be displayed in daily, and even hourly, increments. And, as research has clearly shown, it spurs conservation and better management. In time, many customers tend to become proactive and learn to budget their usage and perhaps set threshold alerts that will notify them about approaching volume levels. They’ll easily monitor water consumption, compare current usage to previous periods, configure individual alerts, and set budget and water conservation goals.

Olathe’s interface doesn’t exist yet, but completion is due by late 2013. Weatherford’s is now up-and-running. Davenport already considers it “our biggest customer service.” Users can log in and access data and watch numbers grow down to increments of every half-hour.

“They can get graphs showing usage” on multiple timeframes, he says. “That’s the main thing most of them want to see.” He adds that the software is still evolving and improving.

Neighbor Versus Neighbor for Friendly, Comparative Conservation
Interactive customer engagement is definitely the hot number these days, and the remainder of our report will show some of the exciting directions in which developers are going with their products.

Peter Yolles, founder and CEO of WaterSmart Software in San Francisco, CA, has developed a Web customer interface platform, which he introduced to water utilities in 2011. As of mid-2013 the service was being piloted and phased-in at seven sites in California, e.g., the East Bay Municipal Utility District, Irvine Ranch Water District, and the cities of Davis, Roseville, and Newport Beach; it’s offered nationwide.

What Yolles has sought to do with WaterSmart, he says, “is to create a multichannel platform around behavior change,” the behavior being to use less water and be more aware of it.

How WaterSmart accomplishes this, he says, is by making private usage of water something of a public event: Information about your consumption and that of your neighbors is shared openly, “as norms” (without disclosing identities, of course). This strategy “creates a social context around the data, so it’s not just how much water people use, but how a customer compares to others just like them.” This social norm becomes a motivator and yardstick for changing behavior.

“Multichannel” refers to a the multitude of ways that consumers can receive messages about their comparative water use, including Home Water Reports by print and e-mail, the online WaterInsight portal, and through their mobile devices.

Bits of data include things like house occupancy (highly correlated with usage), lawn footage (irrigation) appliance flow rates, house construction date, swimming pool size, hot tub(s), current and past actual water consumption, and so on.

What each participating utility ratepayer (or customer) receives out of this assemblage is a home water report, consisting largely of comparative bar charts. Reports are distributed periodically throughout the water service area, by Web or other means (currently optimized for smartphones and tablets), monthly or bimonthly, depending on the billing period.

And what’s perhaps most unique and innovative, Yolles notes: reports offer personalized recommendations for each household to do, for each billing period.

Does this approach actually change behavior?

Yolles describes a recent experimental setup at the City of Cotati to find out. Metered customers were divided into roughly two halves; one was given WaterSmart reports, and the other half were left in the dark without them. Result: the half who received reports reduced their residential water demand by about 5% over a one-year period, compared to the other half. And 70% of the WaterSmart-enabled homes reduced their water demand by some significant amount, versus their previous usage.

A third experimental result was a tripled level of “customer engagement”; this is defined by the relative number of requests for water conservation programs.

Asked why he thinks people changed their consumption, Yolles offers three factors.

First: social comparison–“seeing how they measure up to other homes like theirs,” he says. In Cotati the highest percentage of water usage reductions came from homes that had been the highest consumers; thanks to WaterSmart they realized their excesses. This kind of undesirable “conspicuous consumption” motivates profligates, says Yolles, to try to “keep up with the Jones'” in an opposite sense by consuming less.

A second factor, he believes, is WaterSmart’s personalizing interface. “The customer is addressed by name” whenever receiving information, he notes, and again gets “personalized specific suggestions and recommendations they might take to save water,” tailored according to their circumstances.

Yolles points out that, because the assemblage of report data is drawn from such a diversity of sources, strictly speaking it is not at all dependent on daily or hourly AMI readings or smart meters. In fact, a utility or customer could gain significant guidance with only a conventional monthly or even quarterly meter-read. “The system provides feedback incentive to change behavior, even if it’s less frequent,” he explains, because the strategy emphasizes social norms and personalization. More frequent readings are helpful, but not necessary.

How about the appeal of WaterSmart for utilities where conservation isn’t so crucial?

One answer Yolles offers is that it is proven to increase customer satisfaction: in the Cotati study the percentage of respondents saying they were “very satisfied with their water service” was double that of the control group.

WaterSmart also isn’t expensive: A utility pays only between five and ten dollars per meter per year.

But is there such a thing as a payback? This question actually raises the intriguing matter of why any utility would want to reduce water consumption, and thereby, logically, lose revenue.

Actually, well-informed utilities understand that reducing consumption also saves on costs, and this easily offsets the diminishing impact on revenue.

Yolles  points out, “It’s cheaper to save an acre-foot of water than to buy an acre foot of water,” and utilities also might save on wastewater treatment costs and by deferring capital projects, he adds.

U2You: On the Present and Future of Customer Service
Very similar points about the less-obvious, but sizeable, financial value of water conservation for utilities are offered by Graham Symmonds of Global Water Resources (GWR), in Phoenix, AZ. GWR is a utility holding company that has likewise developed one of these “new wave” customer engagement portals. It too is largely devoted to saving water.

Symmonds, who is GWR’s senior vice president of regulatory affairs and compliance and chief technology officer, argues conservation from a financial perspective. “It’s sort of the ultimate paradox of utility operations,” he says, especially for GWR or any utility that is investor-owned.

Yes, the more water saved, the lower the revenues. “But it’s not like a normal business that encourages consumption,” he says. “And some great things end up happening when you reduce consumption.” For example, “You’re actually saving on the cost of adding new infrastructure. A 20% reduction in demand means 20% of the capacity in your delivery system is saved for new growth.”

Secondly, “by reducing the demand flow, you reduce the velocity that you have to provide, which reduces the pressure that you have to operate that system, which will ultimately reduce the number of leaks and bursts you have in distribution systems,” he says.

Also, in practice serious utility water conservation efforts are generally accompanied by extensive re-metering. Having more income via this more accurate equipment will more than compensate for the reductions as people learn to tighten control of irrigation.

GWR began adding AMI to the 16 or so water utilities it owns, since the early days (ca. 2005). Over the years, the company readily saw the need for a customer information platform to handle the massively increased density of data that was coming across the networks. Thus there evolved GWR’s internal system, dubbed “U2You.” The “U” here stands for the utility as it shares information “to you,” the ratepayer. The latter sign up to the interface voluntarily; to date about 2,000, or 20% of GWR’s total base, log on to “U2You” regularly.

Next, about four years ago GWR spun-off a “U2You” Web-hosted product that it calls “Fathom” to offer to other utilities; to date, a dozen or so agencies have signed up.

As Symmonds describes U2You and Fathom conceptually, they use “what we call a geospatial backbone” that provides water consumers who visit their personal accounts “a geotemporal reference to their water use,” meaning, when and for what purposes. “The geospatial element,” he adds, gives a context to their usage, “with comparison to their street, their neighborhood, and their city.”

Raised awareness about consumption results in reducing overall usage by 10% to 18%, “just by providing people as near to real-time information as you can get,” says Symmonds. Based on a sampling, he’s found that regular U2You-ers use about 20% to 30% less water than other customers.

In assessing the psychology of the interactive portal experience, and why it works, Symmonds believes that the immediacy of usage feedback is key.

Under a standard monthly or bimonthly billing cycle, the “feedback” being given by any given statement “is so delayed, you really can’t connect the readings with your actions,” he says, because the actions occurred weeks before any bill is eyeballed. But a U2You or Fathom user can log on and sign up for push alerts and very quick usage notifications, via text message and e-mails, “so you have almost an instantaneous assessment of what it is or how you’re using water,” he says.

System users also tend to generate far fewer billing complaints and inquiries. GWR data inputs are refreshed hourly; at an extreme, they could be done every 15 minutes.