A Standard for Consumer Satisfaction with Utilities from ISO, Which Believes Standards Help Make the Free Market Economy Work

Are you satisfied with your utility? Does it offer you help to reduce your bill and buy clean energy, or does it make things difficult for you? Are you paying less every month than comparable families or businesses?

These are the sort of questions the International Organization for Standards, known within the industry as ISO, is beginning to address. (Careful readers may note the initials in the acronym don't fit the English name. This is by design: they aren't the same in French, German, Spanish, Portuguese, Russian, or Chinese either. No language of any of ISO's more than 150 countries is given priority.)

Business group says standards are good for business

ISO is an international nonprofit composed of standards-setting organizations, some of which are government agencies, but in the case of the U.S., the ISO member is a business-based nonprofit, the American National Standards Institute (ANSI).

ISO makes a point of how its standards benefit business, and based on its case studies around the world, ISO concludes "companies achieve tangible benefits from using standards." This conclusion is in stark contrast to the U.S. House Republican leadership's fairy-tale argument that standards impede business.

The U.S. member of ISO--ANSI --takes the same position:

"Standards are essential tools helping today's businesses stay innovative, reduce costs, improve quality and market their products or services. Standards are the foundation for innovation. They help break down barriers to trade, provide industry stability and encourage commerce."

ANSI sees standards as so important that its mission statement is

"To enhance both the global competitiveness of U.S. business and the U.S. quality of life by promoting and facilitating voluntary consensus standards and conformity assessment systems, and safeguarding their integrity."

These statements are important right now, as the Republican leadership is trying to dismantle environmental standards on the grounds that they supposedly hurt business. So it's significant that business organizations that exist to serve the business sector have been saying the reverse, and saying it consistently: that standards are good for business and help make a free-market economy work.

ISO and ANSI standards are voluntary, consensus standards. Good standards can be voluntary and consensus-based, or mandatory standards adopted by government. There really is no difference if the standard is followed. The "voluntary" nature of a standard that is met is irrelevant, and if a standard is voluntarily violated, it isn't really a standard at all. Also, not all mandatory standards are well enforced, and NRDC has needed to have an active program to assure that "mandatory" standards really are met.

Water utilities now, energy service ones next?

ISO recently published a standard (ISO 24510) for assessing (and improving) consumer satisfaction with water utilities. This standard lists a set of criteria against which water utilities must evaluate themselves. It is especially aimed at developing countries where affordable, clean and reliable water services are a crucial health issue. An example of how it is being effective in rural Argentina is provided here. The driving force behind this standard, Consumers International, is now supporting a similar standard for energy utilities to evaluate themselves.

This energy standard was discussed last year at the meeting of the ISO Technical Committee of which I am a member, and will get more attention at a meeting in Mexico next week.

The Technical Committee last year looked at the approved title and scope--"activities related to energy service..."--and realized two key things. First, a standard on energy services refers not only to energy supply, but also energy efficiency and renewable energy ( both customer-sited renewables and utility-procured renewables), so the standard had to evaluate how providers like utilities promote clean energy options for their consumers. This is not only common sense, it also is the meaning of energy services as defined in the Technical Committee's main standard, ISO 50001. Second, the quality of customer service depends even more on how well the utility provides efficiency than it does on the reliability of their billing services, and not only in developing countries but worldwide.

For example, my utility has a 40-year history of supporting appliance energy efficiency standards and of incentivizing the very best for their customers, and of promoting better building codes. The monthly bills reflect this by being about the lowest in the country, even though rates for kilowatt-hour consumption are not. My utility also offers an option of buying 100 percent renewable energy produced at large wind farms or solar stations. This affects my satisfaction very strongly: I get to pay low monthly costs and feel good about my electricity being zero-emissions.

In contrast, a utility that also has high rates but has not helped customers with efficiency and renewables, such as Tokyo Electric Power, might rate far lower on a satisfaction standard.

More work ahead

An energy utility standard on customer satisfaction would help encourage all utilities around the world to provide reliable service, transparent business operations, and cleaner, lower-cost energy services. In a rural village off-grid, it might encourage creation of a solar or wind-based microgrid without connecting to the remote national electric grid, and make it affordable for low-income villages by providing efficient phone and lantern battery chargers, LED lanterns, efficient TVs and refrigerators (that might be shared by more than one family), etc.

This standard still needs a lot of work and review, the next stage of which will occur in Mexico the first week of June. This is in accordance with the ISO committee's plan to finalize the standard by about the end of 2016.

NRDC strongly supports the direction that this standard is moving. It has the backing of Consumers International as well as the members of the American committee and the overwhelming majority of the international working group drafting it.

We hope that this could be a significant step in encouraging energy suppliers and delivery organizations to look first at clean energy, along with more conventionally understood good business practices.

And we hope that readers will look at ISO's and ANSI's discussion of the critical role that standards play in making markets provide greater benefits, and question the misleading arguments that somehow standards impede markets from working.