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Smart Thermostat

Smart thermostats, such as Google’s Nest, use artificial intelligence to learn peoples’ habits and adjust temperatures to meet their preferences, saving energy when no one is home.

Some Wisconsin utilities are offering ratepayers cold cash to let them turn down the air conditioning from time to time.

Madison Gas & Electric has asked regulators to extend its “smart thermostat” pilot program and expand it to include an array of new Internet-connected thermostats.

The way it works is customers agree to let the utility adjust their thermostats for a few hours at a time when electricity demand is high — typically fewer than a dozen days each summer.

This gives the utility a way to balance its load, which in theory could prevent the need to build new generators or power lines.

Smart thermostats such as the Ecobee and Google’s Nest use artificial intelligence to learn peoples’ habits and adjust temperatures to meet their preferences, saving energy when no one is home. Other Wi-Fi-enabled thermostats, such as Emerson’s Sensi, follow pre-set schedules but allow users — or utilities — to make adjustments through the cloud.

Scott Smith, vice president of regulatory affairs for MGE, said the growing popularity of these devices presents an opportunity for utilities to manage them as a collective resource “where the customer wins, and all the other customers win as well.”

“Instead of everyone playing their own instrument … if we can kind of conduct that we can extract additional value that will serve everybody,” Smith said.

The Public Service Commission recently approved a similar program for Xcel Energy. While Alliant Energy does not offer a smart thermostat program, the utility says it is exploring similar load management programs.

“Load control may be one way for us to reduce our costs, hold rates down and help customers control their costs,” said Alliant spokeswoman Annemarie Newman. “We are taking a close look at avenues that do that.”

MGE’s proposal is similar to a two-year test that ended last year and is known as a “bring your own thermostat” program (BYOT), open to customers with Internet-enabled devices.

In exchange for their participation, customers receive a $25 pre-paid VISA card each year.

MGE plans to launch its expanded project later this month. Spokesman Steve Schultz said the company expects all 1,000 spots to fill quickly.

“Our pilot program had 500 participants sign up within three weeks,” he said.

Smart thermostats generally cost about $80 to $250 and qualify for a $50 rebate from Focus on Energy, Wisconsin’s utility-funded energy conservation program. Xcel is offering its customers an additional $45 rebate.

Once enrolled in a load management program, customers are notified through their thermostat apps when the utility needs to make an adjustment and have the opportunity to opt-out. Schultz said temperature adjustments are limited to four degrees.

Schultz said there were eight events during the two-year test with Nest owners when temperatures were between 82 and 92 degrees. He said more than 70 percent of participants completed each event.

Xcel also allows customers to override a certain number of events each year, although the number of opt-outs is “quite low,” said Deb Erwin, manager of regulatory affairs for Xcel in Wisconsin.

“We don’t need every single one of them to participate every time,” Erwin said. “It’s a collective resource.”

‘Prying eyes’?

Utilities have long made use of so-called demand response programs to manage loads during peak times — usually less than four hours on a dozen hot afternoons per year.

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Already offered in Minnesota and Colorado, Xcel’s AC Rewards is an update to a 35-year-old program that allowed the utility to temporarily interrupt power through a switch installed on customer air conditioners.

With the new BYOT programs, the utilities no longer need to provide switches or install anything at the customer’s home — a big cost savings — and system operators can bump the thermostat setting up a few degrees rather than simply shutting off the air conditioner.

“We’re able to more precisely manage the load and minimize the impact to the customer,” Erwin said.

And while utilities in regulated states such as Wisconsin don’t compete for customers, they are generally worried about the growing threat of competition from cable, internet and even home-security providers, said Stuart Schare, managing director for energy at Navigant Consulting.

“Think of a cable TV provider partnering to offer internet, rooftop (solar) and a battery … all controlled from an app,” Schare said. “So utilities are looking to keep engaged with customers to help remain as the central power provider, in mind as well as in practice, and to be part of whatever those customers do with home automation and other services.”

On the other hand, some people might have qualms about handing over this level of control — and personal data — to their electric utility.

“Amazon and Google are spying on us all the time,” said Jeff Ihnen, CEO of Michaels Energy, a Madison-based energy consulting firm. “But it seems like if a utility would come to a customer with a high-energy alert … all of a sudden that’s like prying eyes.”

Smith acknowledges such programs aren’t for everyone.

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“Some of our customers believe we’re spying on them … and want us to. Others don’t,” he said. “We’re trying to meet them where they are.”

Reduced costs

As of 2017, Xcel had more than 18,600 Wisconsin customers — mostly residential — enrolled in demand response programs, giving the utility about 8.3 megawatts of potential peak load savings at a cost of about $6.4 million.

Based on its Nest pilot, MGE estimates savings of 1 kilowatt-hour per customer.

There are other benefits, too.

Smart thermostats — like their programmable counterparts — have been shown to cut heating and cooling costs by up to 15 percent and some have software to help customers optimize “time of use” electricity rates.

And the programs don’t just benefit those who participate.

If successful, demand-response programs like these could stave off the need to build a new power plant — something far more costly for ratepayers. And energy efficiency is seen as a key strategy for eliminating carbon emissions.

“Programs like this help advance MGE’s goals for a sustainable energy future by working with customers to test the use of new, smart technologies to reduce our collective energy use, lower emissions and manage long-term costs for customers,” Schultz said.

Xcel and MGE have committed to providing carbon neutral electricity by 2050, and consumer advocates say programs like this will be key to managing the costs of that transition.

“We need to think of affordable and economical ways to do that,” said Tom Content, executive director of the Citizens Utility Board. “Industry studies show cutting energy use is the cheapest way of cutting carbon emissions.”

[Editor's note: This story has been updated to note that the Focus on Energy rebate for smart thermostats is now $50.]

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