Realizing the Vision of a Smart Electrical Grid -- Installing the Technology is Only Half the Battle.

These are exciting times. The electric industry is undergoing tremendous change. Smart Grid initiatives are being developed and many are proceeding across the country, with engineers, technologist, accountants and others designing and implementing systems, technologies and rate structures that have the potential to help many. These initiatives span many jurisdictions and a great number of people have contributed a lot of time and effort into making the various projects successful. However, there is more work to be done -- a lot more. While not intended as a disparagement I fully believe the title: Realizing the Vision of a Smart Electrical Grid -- Installing the Technology is Only Half the Battle must be internalized if the nation is going to realize a significant objective of the Smart Grid, the reduction of demand and energy use through changes in consumer behavior.

Up until now I suspect, based upon my interactions with various Smart Grid project leads and executives around the country (and in my own backyard) that the primary focus of the Smart Grid has been almost exclusively limited to the technology and accounting aspects of the project. This is understandable as the technology is a major enabler of what we as an industry (along with significant help from the federal government) are trying to accomplish. However, we are quickly approaching the time where we must broaden our focus and give deliberate consideration to the people aspect of this initiative -- the customers. This broadening of our focus is critical to our success. We must begin to foment the transformation that all utilities must undergo to ensure that the desired results are achieved. What am I getting at? Simply put, a successful Smart Grid implementation is not just a technology initiative; it's a behavioral change initiative. The technology is a means to an end. The end game is assisting customers with changing behavior - behavior related to energy usage.

While it is true that the benefits to be derived from the distribution automation aspects of the Smart Grid require little of the customers, nearly every other aspect of the Smart Grid - energy conservation, demand peak shaving and the adoption of and participation in Demand Response, Energy Efficiency programs and dynamic pricing rate structures - will require us to convince customers to become engaged, and to change their behavior with respect to their energy consumption. Put another way, if we are successful in deploying a perfectly functioning meter to every premise, if the various regulators adopt favorable dynamic pricing structures, if the communications systems, customer information systems, Meter Data Management and head-end systems work exactly as designed but few customers participate we will not have succeeded in achieving the ultimate objective.

Take a moment and ponder the implications of this. No matter how successful we are at implementing the technical and rate aspects of this initiatives, if the customers do not participate we will not have reached our end objective -- facilitating through an advisory role -- the reduction in energy demand, energy usage and ultimately supply prices.

Consider the following scenarios:

• #1 -- customers call their local utility contact centers and indicate that they are aware of new electric rate (dynamic pricing) options that they can choose from to help lower their energy bills. They desire to know what the rates are, what they mean, how can they benefit from them and which one would be right for them. At a minimum this is going to require a far more lengthy conversation than most contact centers currently can afford to engage in and still meet existing regulatory obligations with respect to Telephone Service Factors. More importantly, if the Customer Service Representatives (CSR) do not take the proper time to address these issues the customers may not get the proper understanding of what their options are and which choice maybe right for them. More importantly, if the CSR fails to persuade the customers to participate or inadvertently persuades the customer to participate in a rate structure that is contraindicated for their situation it could result in an unintended consequence -- a higher bill than they otherwise would have had.
• #2 -- as a result of the Energy Efficiency and the Weatherization Programs in different regions of the country various contractors visit customers' homes and make recommendations to the customers indicating what they should / could do to decrease electric usage in their homes -- replace windows, insulate, buy energy efficient appliances etc. It's very likely the customers may be unsure about accepting the recommendations at face value and turn to their utility (contact centers or approach a Lineman/woman working in the field) and asks questions similar to the following: "Contractor ABC just left my home after performing a energy audit and said I should get a new Energy Star refrigerator and receive a discount. But even with the discount I am not sure I should spend all that money. Should I do that or replace all of my light bulbs with CFLs? Which option will save me the most money? Then again, my neighbor has a switch on her HVAC system. Should I do that instead of spending money (even with the rebate) on a new refrigerator?"

Remember, customers are going to expect the utilities to provide the answers to a multitude of energy related questions -- many customers are going to turn to their utility to be their trusted energy advisor. Our frontline team members have to be able to effectively speak to these issues. The skills required, particularly for CSRs to meet these challenges are beyond what we currently use in our everyday exchanges with customers to discuss high bills, lost of service and start/stop service orders. The environment we are moving into will require negotiation, selling and persuasion skills; and these conversations will be longer and more detailed. I convey this to sensitize us to the challenges that lay ahead.

I recently participated in an `All Hands' meeting with our Customer Care team and laid out our company's vision of the future vis-a-vis our Smart Grid (we call it the Blue Print for the Future) strategy in conjunction with other inputs regarding customers' expectations. We broke the leadership team into 8 different groups and asked them to develop a list of initiatives and actions that they believe the organization and the broader company should be engaged in to realize our strategy and meet the customers' expectations. The two salient themes from the breakout groups were the need for new and different training for those who are directly in contact with the customers (and their supervisors) and a need for the company to be more proactive and creative (leveraging multiple channels including social media) in communicating to frontline employees and customers our value proposition. Nearly everyone of the groups came to the realization (independently) that a lot of customer engagement, selling and persuasion is going to be needed to get customers to change electric usage behavior.

I am really confident and excited about the changes coming to the industry and the industry's ability to respond; however it's going to take a significant shift (on our part as leaders) in how we view the new role the utility will have to play in helping customers understand their role in leveraging the new technologies to understand their energy consumption and how best to reduce it. The industry is moving into a relationship oriented business; one where the emphasis on the technology, while very important, is going to have to be subordinated to a better understanding and emphasis on the customers (not as a monolith) their preferences and behaviors. Installing the Technology is Only Half the Battle.

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