Four Corners of the Utility of the Future

12/12/2017 By Juliet Shavit
SmartMark Communications

These days, there is a lot of talk in our industry about abstract ideas—whether that is the smart home, smart city, digital customer, and of course utility of the future. Nearly every utility I meet with seems to be on this path for the Holy Grail, but not one seems to know how to define it exactly. But, the task is not impossible for those of us that have come out of AMI and smart grid deployments and are actively engaged with people outside our industry. Below is a look at what key requirements are necessary to become the utility of the future, based on lessons learned from technology innovation and industry leadership.

Lesson #1—Customer First
One of the greatest lessons learned from smart grid deployments is that customers matter. Not just that they can disrupt large-scale investments, but that they legitimately matter in the adoption of tools to help meet the needs of the business case. For example, we have seen utilities with strong operational business cases simply not get recovery. Whether that is because they overextended themselves in terms of rose garden promises or that they misjudged the power of strong stakeholders that argued against cost recovery, it is the case. And these same utilities did not do an adequate job of educating their key constituents including stakeholders, policy makers and consumers on the benefits of smart grid investment.

Educational programs were ignored because the funding was not deemed meaningful to the business case. Unfortunately, these same regulatory attorneys who made that case unfortunately did not weigh customer benefits into the cost recovery process. It was a missed opportunity. We learned from those utilities that did, that the investment was well worth it. Further, for those utilities that are now contemplating optimizing those investments through more sophisticated demand response and time of use programs, the early education will pay off triple fold. Those utilities that did not educate are left at ground zero of the process and many with an already heavy burden of AMI line items on the bill. Now they must educate customers why they must increase peak rates in addition to paying a fee for other operational benefits for the utility.

For those utilities that began customer education early and invested in a more meaningful two-way relationship with the customer, you are already winning the race to Utility of the Future.

Lesson #2—Smart Technology Adoption
Meters are in. Customers have been told that utilities are future proofing their infrastructure. Now what is the story line for technology adoption. For those utilities who have communicated a long-term commitment to technology adoption and already have begun introducing benefits, the path to next phase customer control is clearer. New in-home energy management technologies and tools are more prevalent than ever before, and the utility has an opportunity to take advantage of this.

How does the utility take advantage of the marketplace for in-home smart energy technology and ride on the current innovation tidal wave? Those utilities that can develop strategic partnerships with some of the technology vendors and build awareness around what products and applications map best to their segmented audiences, will rise ahead of the pack. The bonus is that they will help automate energy use for customers and make long-term smarter energy lifestyles attainable.

Lesson #3—Commitment to Education
We have discussed how early education has become the advantage for those utilities coming out of AMI deployments and thinking about dynamic pricing or TOU rates. We have also noted that education around the tools and technologies available to consumers is a pathway to sustainable energy reduction. That makes a strong commitment to customer education a key requirement for the utility of the future.

There is only one thing about the future that is certain, we don’t know what it will look like. That means that taking all your stakeholders with you on the journey will help make the life of utilities easier. That’s not just customers. That’s education for policy makers and special interest groups – even naysayers.

Lesson #4—Fearlessness to Innovate and Be First
Finally, it is fearlessness that will crown the Utility of the Future. One thing is true about the utility industry—nobody wants to be first, especially when it comes to technology. We have a safety system around pilots. It takes a whole lot of approvals to even try something.

But what if one utility just makes the leap because they think it is best for their customers. I can think of one cooperative that did just that. The Chief Business Officer decided to redesign the bill entirely. He gave a blank slate to the designers and met with customers to talk through what works best for them. The result is industry leadership and the nicest looking bill in the industry. That utility’s customer satisfaction levels remain very high.

In speaking with many regulators over the past year, I find it terribly hard to believe that regulators want to stand in the way of innovation. It is their job to decide who will pay for it, and that is fair. The utility must understand the needs of its customers and present a business case worth approving. But, innovation is not the problem and the opportunity to innovate in today’s world is astounding.

It should not be left up to applications and product developers alone to invest in innovation. Their goals are different than utilities. They want to push products. Utilities need to be innovative and respond in real time to the needs of customers. That makes them leaders in customer service, leaders in technology adoption, and leaders in the industry.

This means that the customer plays a critical role in the definition of requirements around utility of the future. Engaging with customers to partner on technology innovation and adoption will lead all to a better, brighter future.