Smart meters have arrived for many Californians. More than 11 million have been installed by electric utilities in the state, with PG&E leading the way. The new meters digitally track a household's energy use. So, for the first time, we can see our daily and even hourly data online (with a one-day lag before it's posted).

Studies have shown that consumers reduce their energy use when they have access to this information. But as PG&E and other utilities have discovered, raw energy data doesn't mean much to most of us (including me in this week's QUEST story).

A PG&E SmartMeter on a Bay Area home. (Photo: Lauren Sommer)

A number of clean tech start-ups and major corporations are jumping into this space, trying to bridge the gap between hardware (meter) and, well, "soft"-ware (consumers).

Getting busy people to change their behavior is no simple task. So I spoke to two companies that have worked with PG&E and other utilities on this problem. Both Opower and Silver Springs Networks have designed the web portals that consumers see when they log into their utility accounts. They're designed not just to make us understand, but to inspire us to use less energy in our daily lives. I asked Dan Yates of Opower and Eric Dresselhuys of Silver Spring Networks what lessons they've learned.

Lesson 1: Keep Up with the Joneses

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You might think that saving the planet would be enough of a reason to guilt us into energy conservation. But it turns out that our competitive streak is a bigger motivator.

The companies' websites show customers how their energy use compares to similar houses in their neighborhood. Don't worry – they're not publishing exactly how much electricity the Smiths use down the street. But the companies say knowing how you compare to others is a powerful motivation.

"It's not shame," says Yates of Opower. "It is really just recognizing an addressable opportunity to reduce usage. If I have a $250 utility bill, I don't really know how much I can save. But as soon as I know that a similar home in my neighborhood is paying $150, suddenly I feel like I have an addressable gap of $100 that I want to pay attention."

It's called "normative comparison" in the behavioral science world. And Dresselhuys agrees. "People don't like to lose. People start to wonder why they use so much more than their neighbor does and they start to dig into it."

Opower is rolling out new social features later this year that allow customers to compare themselves to friends on Facebook. "It puts the information in a context that's relevant to people. We've seen the power of the neighbor comparison and we're taking it to the next level with the friend comparison," says Yates.

Lesson 2: Provide Concrete Advice

Once you get people's attention, they need specific recommendations to take action on – and those recommendations need to be doable, say Yates. "People don't want data, they want insights."

"I always joke that my mom is my litmus test. And I know that she would never spend a minute looking at raw energy data. But what she would love to find out is that her freezer is very energy intensive and it would be worth it to buy a new one," he says.

Opower is working with PG&E to roll out a new web portal to customers by the end of the year. Using smart meter data, they can analyze a household's energy use and break it into four categories: heating, cooling, base load (like refrigerator and DVR) and everything else (like lighting and TV watching).

Heating and cooling makes up half of a home's energy use on average. Yates says reducing your heating and cooling load is one of the easiest ways to save energy and reduce your bill.

Lesson 3: Get Information Out There

"The average customer isn't getting up in the morning and checking their energy use data," says Yates. Emails, text messages and plain old snail mail are crucial for getting customers to pay attention.

Eric Dresselhuys says mobile devices, including iPhone apps, are making it much easier. "You can get a text if your electricity usage is getting high. Or the utility can send a message on peak days when they need customers to conserve energy," he says.

Letting customers know what their bill will be is also a good way to get their attention. "Today, getting your utility bill is like shopping for groceries all month long and never seeing a bill until the end of the month," he says.

Lesson 4: Set a Goal

Remember those gold stars in elementary school? It turns out we still like to be rewarded when we achieve something.

"What we see is that getting people to go after a goal, even 5%, has a big impact," says Yates. When they track a customer's progress towards a goal, Yates says it helps them save energy, no matter the size of the goal. "It's applicable even if you're at the very bottom of the pile and use a ton of energy," he says.

Lesson 5: Tell People When They Do Well but Don't Overdo it

Say you're super energy efficient, turning off lights and power strips in your house with unrelenting dedication. If your utility tells you that you're head and shoulders above everyone else, chances are you'll stop trying so hard. "This was a concerning outcome of earlier studies we did," says Yates.

"It's been seen in other scenarios. There was an anti-drinking campaign called ‘two beers is enough' at college campuses. There were non-drinkers who started thinking ‘if the campus is telling me two is enough, maybe I should drink more beer," he says.

"We've designed our reports so everyone has a goal in front of them," says Yates. It's always good to reward people for doing a good job, but Yates says they stay away from telling people if they're achieving way above expectations.

Lesson 6: The Smart Grid is Probably Smarter without Consumers

Home automation, as its known, is almost a holy grail for utilities. If technology can take care of energy conservation, then customers don't have do remember to do it.

The idea is that on peak days, when the utility needs to conserve energy, it can send a message to a customer's smart meter. The meter is connected to the thermostat over a Home Area Network, so the thermostat adjusts itself by a few degrees to conserve electricity. Customers can opt out any time.

Both the carrot and stick in this case comes in the form of a varied pricing plan. During hot afternoons or so-called "peak events," electricity would be more expensive. So the customer has the potential to save money by shifting their energy use later in the evening when power is cheaper.

Dresselhuys says they saw the potential of this in a pilot with Oklahoma Gas & Electric customers. "The more automation in the home, the higher the level of savings. Using that home automation about doubles the amount of money they can save," he says.

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