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California's 'psychology of influence' to slash energy use

October 21, 2009 |  4:45 pm

GWP-Report-Web

Psychologists call it the norm to conform. A well-known behavioral phenomenon that prompts people to mimic the actions of their peers, this subtle psychological trick is now used by utilities to cut their consumers’ electricity use.

Providing customers with information on how their energy use compares with their neighbors, along with specific energy-saving tips, has delivered dramatic results for the Sacramento Municipal Utility District, which has used so-called comparative home energy information since April 2008. Of the 35,000 homes that receive Home Energy Reports from the utility, 75% are taking action to cut their energy use, the result being an annual average savings of $40 per household and $20 to $30 per customer for the utility.

"Most people say they try to save energy in their homes, yet next to none of us have any idea whether we’re doing a good job. The utility bill we get in the mail is inscrutable," said Alex Laskey, president and co-founder of OPOWER, an energy efficiency software firm in Arlington, Va., that works with utilities to engage their consumers and encourage conservation. "We thought there might be some opportunity to provide people with a better context for understanding their consumption and, in doing so, motivate people to take action."

The results OPOWER saw with Sacramento and other utilities formed the basis of a new state bill. Signed in to law by Gov. Schwarzenegger this month, SB 488 encourages California utilities to create pilot programs that use energy information-sharing by July 2010. It requires the California Public Utilities Commission and California Energy Commission to study the effectiveness of those pilot programs.

"These programs have been shown to be extraordinarily cheap and remarkably effective ways to increase conservation... If such programs were instituted statewide, [they] could have the effect of removing 300,000 homes from the electricity grid, and 4.5 million metric tons of carbon dioxide from the air annually," said the bill’s author, state Sen. Fran Pavley (D-Agoura Hills).

About 20% of greenhouse gas emissions come from the electricity used inside homes. If a nationwide home energy reporting system were implemented, it would be the equivalent of taking 6 million cars off the road, according to OPOWER’s Laskey.

At present, four California utilities are providing comparative home energy information to their consumers. In addition to Sacramento, which will be expanding its program in early 2010, San Diego Gas and Electric, Southern California Edison and Southern California Gas have pilot programs up and running. In November, Glendale Water and Power will start one with 25,000 of its 83,000 metered households; early next year, Pasadena Water and Power will also add its name to the roster of utilities that have partnered with OPOWER, bringing the total to 21 nationwide.

Currently, 1 million homes across the country are receiving the firm’s Home Energy Reports. The recipients are randomly selected by their utilities and targeted with personalized mailings that are separate from their regular bills in envelopes that are mailed from the utility. Comparisons are based on homes’ square footage and age as well as heating type. Customers who want to receive more accurate comparisons and targeted tips can provide additional information about themselves, their lifestyles and their homes on the OPOWER web site.

OPOWER’s program draws heavily on behavioral science research pioneered by Robert Cialdini, who is an investor in the company. Specifically, the program draws on two psychological concepts: "the norm to conform to what most other people do and the desire for social approval," said Yale Law professor Ian Ayres, who researched the impact of two OPOWER utilities and outlined the results in a study on peer comparison feedback’s ability to reduce residential energy use.

It’s the norm to conform that drives high energy users to reduce their use, Ayres said, and the desire for social approval, in the form of a simple smiley face, that keeps low energy users from increasing their power consumption.

Ayres noted that comparative information yielded the greatest conservation gains in low-value houses and households that used the most energy. It also found that low energy users are inspired to conserve even more when presented with the Home Energy Reports.

"If I said that relative to people in your neighborhood in similarly sized houses, you’re using 50% more water, you’d think, ‘I probably have a leak in my house’ or ‘I’m doing something wrong.’ It conveys powerful information about what’s possible," Ayres said. "It’s really the psychology and the informational economics that’s driving this behavior."

A water conservation component will be added to OPOWER’s Home Energy Reports some time in 2010.

-- Susan Carpenter

Photo: OPOWER

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