Why the customer is King in any utility transformation

02/02/2018 By Kelvin Ross

Having guided many utilities through customer transformations, Juliet Shavit explains where companies went wrong in the past and what they should do for the future

She has been dubbed the ‘Queen of the Smart Grid’ and named as a ‘Woman of Power’ for her contributions to smart energy and smart grid.

In an energy industry where many utilities looking to make a digital transformation can’t see the wood for the trees, Juliet Shavit has an impressive track record of guiding companies through this time of convergence with new technologies.Juliet Shavit explains why the customer is King in any utility smart grid strategy.

Shavit is the founder and president of SmartMark Communications, a US-headquartered strategic communications firm which in 2010 won an International Business Award for Best Public Relations Agency. She is also the founder of The Homeland Security for Networked Industries (HSNI) Conference, which seeks to increase communications and collaboration between the telecom, transportation and utilities industries in the area of network security and critical infrastructure protection, as well as increase effectiveness of public private partnerships.

Speaking to me from her base in Philadelphia, she says her company, which was formed almost 19 years ago, “grew up in telecoms and utilities”.

Having worked on the transformation of the telecoms sector through the introduction of wireless services, she was subsequently approached in 2009 when a US utility was about to roll out a smart meter programme.

She was asked to build a marketing plan for smart meter deployments and she explains: “It turned out that what was needed was not a marketing programme, but an educational programme for consumers around smart meters.

“I quickly realized that this was a void in the industry.” She was instrumental in creating awareness for the need for smart grid customer education. As a result of this project, she also worked with the US Department of Energy on forming a working group of utilities from around the country to talk about their various deployments. “There was a need to share best practices and also share mistakes. We also created a symposium to annually bring these people together.”

Given her experience in guiding companies through digital transformations, I wonder if she has any ‘golden rules’ that need to be followed?

She says there are “two fundamental things – internal buy-in from the executive team, because of the level of investment. And also the regulatory and policymaker side. Because the question is always: who is going to pay for it? It is going to be capital; investment from the utility? Is it going to be passed on to the customer in a rate increase? Who is going to pay for the transformation?

“Regulators and policymakers need to be hand in hand. In many environments you cannot roll out without the approval of the regulators. And in Europe, in many cases, the regulators are pushing for change.”

She stresses that “there must be an understanding that the customer plays a role in any technology transformation. That was the number one mistake that the early utilities made – and it ended up becoming a huge barrier.”

She explains that for utilities, there is one fundamental difference today about technology compared to past years: “Traditionally if you wanted your lights on, you paid your bill. There wasn’t a need for the utility in any way, shape or form to market to consumers. But in early deployments they realized there was backlash from customers that could interfere with technology deployment. That was not anticipated.”

She highlights the case of PG&E in the US: “The customers ended up sueing the company, halting the deployment and terrifying the industry. After that, the regulator started to say that the utilities needed to have a customer education plan that would match the operational plan.

“Now, so many years later, I have watched those customer benefits outweigh the operational ones. Nobody could have seen that coming.”

Shavit says there is a fundamental mistake around smart technology: “There is a misunderstanding that smart technology by itself can do anything. It is the interaction between the technology and the people that creates the solution.

“You could have the smartest technology in the world, but unless customers are engaging with them and reducing their energy use and playing a proactive role in the energy transformation, then really we don’t have a sustainable value. And you are not going to realize the investments into the technology.”

She warns that “building the next great app and not talking to consumers is a huge mistake”.

“Ask consumers, what is going to motivate them to go home and turn their lights on and automate their homes and adopt smart technology. There is a very important role for utilities to talk to customers about technology.

“One of the mistakes that utilities make is that they assume customers don’t care. They assume customers are afraid of technology. They assume these things have no impact on customers. And those are all big mistakes. Because if you get past the meter deployment, and talk about grid modernization and all the smart home products out there, then teaching customers how to utilize and optimize these types of technologies will only enhance the investments that utilities have already made.”

And she adds that “utilities will reach their energy reduction goals much quicker if they have customer participation”.

Shavit stresses that “customers want control. They don’t want somebody else to be in control – they want to be in control. So offering them applications where they can understand their energy use and offering them tools that they can decide to put in their homes and use is really critical to acceptance and adoption of these technologies. Forcing it down customers’ throats usually has a negative impact. Education of customers is very important in the age of technology.”

Shavit says that for utilities planning a ‘smart’ transformation, it is vital that they look to other sectors and even start-ups for inspiration, best practice and talent. She says there has to be a convergence and collaboration between new and established companies.

“There is no secret that utilites are not generally the most innovative technology companies. It’s very important that utilities not only look for tech-savvy companies inside their space, but also outside their space. What’s working in the financial services industry? What’s working in retail?

“Utilities would be remiss in not looking outside their own industry to see what are the best practices in engaging consumers. It’s not hard to take an engagement software platform and transition it for industry. You don’t have to just use utility vendors specifically. It’s really important to be open minded. Utilities know the utility business. What they don’t know is how to be creative, engage customers and build apps. Absolutely they should be looking outside the box.”

So what are the major challenges for utilities in 2018?

“I think that utilities are really struggling with ‘what is smart cities?; What is smart homes?; What is my role as a utility in this crazy cloud new world? Is is just to deliver energy? Am I supposed to go into the home and help customers reduce their energy?’

“So I think that one of the guiding compasses for utilities is to focus on their customer. If they decide that they can make their customer relationship better and the way they deliver service to their customer, I think that will help guide them through some of these confusing things.”

As an example she cites smart cities: “Everyone is talking about smart cities. There is a lot of inconsistent definitions of what smart cities are. But if you say a smart city is only as good as making the lives of the people better, safer and secure, then you can start to understand what the role of the utility is in that equation.

“If you just say a smart city is basically everything is wired and connected to the internet, then so what? That’s not smart – that’s just busy. Smart is when there is a solution: when something is actually being solved.”Juliet Shavit explains why the customer is King in any utility smart grid strategy

She says that if “utilities focus on grid modernization, smart cities, smart homes, smart energy: if they can focus on these technologies, it will not only impact their operational efficiency, but their ability to provide better, safer more reliable service to customers. I think that is what they need to focus on in 2018.”

I ask Shavit what she thinks about the talk of companies like Google and Amazon entering the energy market. “The race is on,” she says. “When Google decided to buy Nest, everybody started to get concerned.

What is Google doing? Google bought Nest to get into the home. They didn’t necessarily buy it to become a smart services company – that is not the intention. One of the great benefits that the utility has against these newer players is that they have reliability, they have trust, and they are already at the customer level.

“If the utility is smart enough to leverage those benefits, then they can succeed in really optimizing this market. There is a tremendous opportunity for those utilities that can understand the business value of getting inside the home in these different areas. And many are starting to. They have the advantage against these other players because at the end of the day, Google does not operate when the internet goes down. And everybody knows that when your power goes down, it’s the utility you go to in order to turn it back on.

“Does that mean that they are not going to compete? Absolutely not – they are going to try. They are going to try and take over this market. But there is an advantage to utilities that can see the opportunity and really go for it.”