At some point on the afternoon of Aug. 19, the land-line phone rang in Linda Thompson’s bedroom. She was there to answer; a debilitating spinal condition keeps her from working outside the home and leaves her sensitive to the weather. “My body is a real indicator of what’s going to happen,” she explained recently. “I pay for heat and humidity big time.”
The voice on the line wanted to talk about weather, oddly enough. It asked Thompson if she would please dial back her air conditioning the following day, though the temperature outside would be climbing. All in the interest of civic duty.
The call came courtesy of an Arlington company called Opower, which works with electric utilities to help them reduce their costs when demand for electricity soars. Opower was running an experiment with the utility Green Mountain Power and a nonprofit program called Efficiency Vermont. They wanted to see if peer pressure could nudge (or goad or shame or whatever you call it) people into saving electricity on hot days.
They weren’t offering customers money to cut back — just for the satisfaction of helping the whole state pay less for power.
And maybe the joy of beating the neighbors at something.
The nudges worked. Opower will announce today that summertime pilot programs in Vermont and Southern California delivered, on average, electricity use reductions of nearly 3 percent over the course of several hot days. At 5 p.m. on the hottest of those days in Glendale, Calif., the reductions topped 5 percent. That’s on par with the average savings the company saw in its first municipal pilot program, last year in Baltimore, when customers were essentially paid to turn down the AC at peak times.
‘People want to do the right thing’
Company officials, and utilities they partnered with, say the pilot programs’ success hints at greater possibilities for how much energy and money people might conserve simply because they’re asked to, or baited into, or both. They represent the next step in a new wave of energy efficiency programs based on principles found in behavioral economics, which studies how thoughts and feelings — not just money — drive consumer behavior.
“People want to do the right thing, and if it can be made easy for them and made convenient, most people make good choices,” Opower President Alex Laskey said in an interview. “Whether that has a direct economic benefit or not is secondary.”
Good choices are relative, as utilities are well aware. When temperatures rise, residential customers have all sorts of reasons to keep their fans and window units humming, from debilitating medical conditions down to simple personal comfort. But if everyone cranks the thermostat at once, power demand soars, and utilities pay through the nose to accommodate it. For example: Green Mountain Power typically pays 6 to 7 cents per kilowatt hour of power, which is the standard way of measuring electricity consumption. At peak hours on the hottest days in the Northeast, a kilowatt hour can cost close to $1.
Forecasts called for temperatures in the mid-80s on Aug. 20 in the creekside town of Vergennes, Vt., where Linda Thompson lives. That’s not a scorcher by any means, but it’s plenty warm for Vermont. Certainly hot enough for Thompson, and for folks across New England, to keep the air conditioner running in the bedroom. When lots of people turn up the air, the Northeast flips on more oil- and diesel- and gas-powered generators, which pollute more, spew more globe-warming carbon emissions and, yes, cost a lot. (See Jeff Guo’s breakdown of that process here.)
If customers like Thompson didn’t curb their electricity use, Aug. 20 was shaping up to be a dirty, expensive day.
The messaging technique
For the second time that summer, Thompson took a phone call from Opower. The first had been in July, before another day forecast to be in the 80s. She hadn’t been expecting that first call, but it didn’t surprise her, per se. “You know, I live in Vermont,” she said. “You come to expect just about anything here. I know that sounds really weird … but for us it came with a little bit of excitement.”
By August, Thompson knew the drill. After that first phone call in July, she and her husband had turned down the air conditioner the following day. The day after that, they’d received an e-mail from Opower detailing how much they’d cut back on electricity — and comparing them to the average reduction for people in their neighborhood. That was the peer pressure, at block level. Thompson didn’t feel motivated by it, but she thought it was helpful. “All of us have different needs and whatever,” she said, “but I think it’s a great idea notifying people, because some people may not be keeping track.”
Thompson’s needs were acute: At age 59, her spinal condition had forced her onto disability. Still, three out of the four times that she took a call this summer about a looming peak day, she responded. She turned down her air the following afternoon and did her laundry in the early morning, before most folks were sapping the grid. Nudge, successful.
As you might expect from a company whose business depends on helping utilities cut costs, Opower sees great potential for the approach. Laskey estimates that, if the nudge program was deployed tomorrow in every household that is equipped to make use of it, the resulting savings would be the equivalent of shutting down 94 power plants running at peak time.
The potential would be even larger if more U.S. homes were equipped with smart meters, which communicate with utilities and allow real-time tracking of electricity use. In Baltimore, more than a million customers are on track to have such meters by next year. Baltimore Gas and Electric already has a nudge program running; over the last year, it’s produced a 1 percent sustained reduction in electricity demand among participants. That’s not just at peak times; it’s all the time.
Trash-talking on Twitter
“You have customers challenging each other on Twitter” on how much they’ll save, said Ruth Kiselewich, BGE’s director of demand side management programs. “You have another element here, which is competition.”
Efficiency Vermont plans a sustained nudge program of its own, in hopes of cutting back electricity use year round, especially in the depths of winter. “A lot of the future of energy efficiency is this type of engagement,” said Jim Merriam, director of Efficiency Vermont.
The nudge calls definitely saved Green Mountain Power money on Aug. 20. At 5 p.m. that day, a kilowatt hour cost of electricity cost $47, or roughly seven times the normal price. Thanks to the phone calls, customers cut back demand by nearly 3.5 percent at peak.
“This is all part of what we see as a necessary, radical transformation of our energy-delivery system, one that is about customer choice” and saving money, said Mary Powell, Green Mountain Power’s chief executive. “It gets much deeper into what, in my experience, motivates human behavior, which is our values system.”
There was one day this summer when the nudges weren’t enough for Linda Thompson. She needed to run the bedroom air, in order to soothe her back, and she needed to dry tomatoes in her oven all day, or she would lose them. Usually, she and her husband equaled or exceeded their peers’ savings on peak days. “That day,” she said, “we were higher than our neighbors, a lot.”
She called the folks at the power company to apologize.