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Transparency About Demand Response Is Key for Utilities

Roberto Rodriguez Labastida
Jul 20, 2021

Smart Home 4

On June 19, 2021, demand response programs made headlines in USA Today. The heatwave that has been affecting the Western US hit Texas, and some people noticed that their thermostat’s temperature setting went up by itself.

Some customers were alarmed—and with good reason as cyberattacks on the energy industry have recently increased. SolarWinds was targeted in December 2020, and in May 2021, the attack on the Colonial Pipeline impacted energy flow in the US. In the case of these thermostats, however, it was a feature, not an attack.

Many of the smart thermostats installed in the US are subsidized by local utilities, which offer these thermostats with a rebate or an option to join demand response programs in exchange for monetary or in-kind rewards. In the case of CPS Energy, one of the utilities mentioned in the USA Today piece, it offers $85 when a qualified smart thermostat is enrolled in its demand response program. In exchange for the reward, CPS Energy gets the right to briefly adjust a thermostat’s settings by a few degrees on summer peak energy demand days. Customers can opt out of participating in a peak-demand event by manually adjusting their thermostat or adjusting their thermostat through an app. After the summer, customers earn a $30 bill credit per business or household account, even if they opt out of peak-demand events.

Customer Engagement Can Help Prevent Backlash

Most demand response program reward websites I checked from different utilities mention that they might adjust settings during these peak-demand events. In the cases highlighted in the news piece, more communication and transparency could have been used. Demand response programs are not called upon often, and while we are all up for freebies, people don’t always understand what they are agreeing to and rarely interact with their utilities. 

Demand response and distributed energy resources (DER) programs are key to enabling the flexibility at the grid-edge to successfully integrate clean but variable generation technologies like solar and wind. For this, we need households to understand the benefits these programs bring and participate in them, even if they will face some mild discomfort from time to time. For this, customers need to be able to trust that utilities will be transparent and ensure that if people need to opt out of an event. Households should be allowed to opt out before the event occurs, since opting out during an event could be dangerous for the grid stability. Guidehouse Insights’ report, Remote Engagement Strategies to Enroll Customer-Sited DER, presents potential strategies for customer engagement that could have been used to prevent the backlash against the demand response programs in Texas.