DROPS AND DOLLARS: THE IMPORTANCE OF COMBINING CONSUMPTION DATA WITH COST DATA
The persistent droughts in California, Texas and other jurisdictions throughout the United States have placed an increased emphasis on conservation and strategies to effect reductions in demand. Just last week, Lake Mead — one of two primary reservoirs on the Colorado River supplying water to more than 40 million people — reached the lowest level since its original construction, 1,078.95 feet. This is less than 4 feet above the water level that triggers the shortage condition (1,075 feet) defined in the U.S. Bureau of Reclamation’s Interim Guidelines for the Operation of Lake Powell and Lake Mead, where water deliveries to the Lower Division States begin to be rationed.1
Adding to the complexity is the clear volatility of the water supply, which makes it nearly impossible to accurately predict. Federal forecasters originally predicted that the Colorado River would flow at 71 percent capacity this summer, however current estimates suggest that flow could be substantially lower — 50 percent or less. Current estimates indicate that there is 21 percent chance of Lake Mead dropping below 1,075 feet by January 2016, and 54 percent chance to reach that level by January 2017.2
To survive in this increasingly volatile water reality, utilities and communities must adapt to an environment where water must be conserved and management practices must be deployed that ensure the long-term sustainability of our water use.
DATA AS THE AGENT OF CHANGE
Traditional responses to solve the world’s water crisis typically focus on supply side solutions. These types of solutions, however, require immense activation energy and lead time, and can be inhibited by stringent permitting, design, cost and public acceptance issues. FATHOM believes that there is a better solution to be found through demand-side management (DSM) — reducing and controlling water demands — by increasing the availability of data for customers. To be effective, these DSM programs must not only include the necessary information, but they also require that utilities adopt a customercentric, information-rich, educational position with their customers.
A recent Blue Economy Initiative Blue City Report3 describes the need for utilities to adopt and provide Customer-Oriented Information to achieve sustainability, focused on personalized feedback on water use and behaviors. These elements, crucial for active and enlightened customer engagement, are similar to information provided by mobile phone companies, internet providers and energy utilities. Taking the example of these sectors, water utility customer engagement must be4:
- Easy – engagement through ubiquitous computing and adopting web, mobile and social communication channels;
- Normal – engagement through common interest groups and social and economic norms; and
- Fun – engagement through education and gamification
Through these tools, utilities can tap into a fundamental human trait: our propensity to copy or imitate the behaviors, choices and opinions of others.5 That is, given examples of leaders, humans can adapt our behavior.
IMPORTANCE OF LEARNING FROM COST SIGNALS
Adaptation is not only about copying behavior or comparing usage. It is about being able to connect personal actions with results and consequences, and being able to relate the impacts to other elements of our daily routine to support and strengthen that adaptation.
One of the most primary customer considerations is cost. And while a utility may send “price signals” by increasing prices, or changing rate tariff structures, customers receive “cost signals”. Until the cost of water registers in the monthly budget there is little incentive to conserve. However, with water costs continuing to increase at twice the Consumer Price Index6, the importance of cost as a driver for conservation is increasingly more significant.
Effective customer engagement, therefore, must include two critical elements for effective demand-side management:
- Understanding the costs associated with specific water use; and
- Learning how our actions affect both cost and consumption.
To achieve this, information that is provided to water customers must be both tied directly to their costs, and be as close to real-time as possible.
Turning to examples from the energy sector, analyses of energy consumption have shown that “households with real time information feedback are significantly more responsive to price changes than those without” thereby reducing usage by 11 to 14 percent and increasing the price elasticity of demand.7
More striking in these studies, however, is that the availability of near real-time information “facilitates learning about energy choices and the mapping from usage to expenditure.” This near real-time information serves to “inform consumers and (in doing so) influence their subsequent choices,”8 demonstrating that customers are learning the value of those choices.
This is significant because it infers that it is not simply “awareness” that generates the behavioral change. Simply having a single set of information, such as consumption, is insufficient. Providing consumption data without cost implications will not achieve sustained demand reductions. However, when that information is combined with temporal and financial relevance, customers can learn the connection between their actions and costs and consumption. The benefit is derived from learning, not simply awareness. In short, information without context is insufficient.
This differentiation – connecting consumption and cost – is imperative for the success of customer engagement for conservation. The FATHOM U2You customer portal is unique in this regard. By integrating with Advanced Metering Infrastructure (AMI) and Customer Information Systems (CIS), FATHOM U2You delivers to customers the near real-time data required to understand how their activities impact consumption, and also gives users a direct cost implication of those activities. Using this combination of cost plus consumption, FATHOM U2You clients have realized sustained demand reductions of 10 to 15 percent.
To achieve sustainability, municipalities and utilities need to engage their customers in becoming more aware of, and learning from, their water use. FATHOM U2You is a key enabling technology in achieving that goal.
1Record of Decision, Colorado River Interim Guidelines for Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead, December 2007. http://www.usbr.gov/lc/region/programs/strategies/RecordofDecision.pdf
3Econics, Blue Economy Initiative, “Blue City: The Water Sustainable City of the Near Future”, January 2014
4Jacob Tompkins, Waterwise
5P. Ormerod, “Social networks can spread the Olympic effect”, Nature, 20 September 2012, Vol 489, 337
6J. Beecher, “Trends In Consumer Prices (CPI) for Utilities Through 2013”, January 2014, http://ipu.msu.edu/research/pdfs/IPU%20 Consumer%20Price%20Index%20for%20Utilities%202013%20(2014).pdf
7K. Jessoe and D. Rapson “Knowledge is (Less) Power: Experimental Evidence from Residential Energy Use”, April 18, 2013, http:// www.econ.ucdavis.edu/faculty/dsrapson/KnowledgePower.pdf 8Ibid.