Do regulated monopolies still have to compete?
'New' ideas and their upshots for utilities, explained
Today's column will be an essay—an attempt, in the old-school definition of the word—at connecting the dots, composed of several recent columns.
Perhaps a better notion than the clichéd "connecting the dots" is to discern "the upshot"—the relevance—of recent columns, and get the week off to a brisk start.
Herewith are the top ideas articulated in April and the "upshot," appropriately launched from the hip. Guess I'll just "fire away," if you'll excuse the overreliance on martial figures of speech.
In "Connecticut: In Search of Microgrids" it became clear that investor-owned utilities will need to develop policies regarding power alternatives employed by states and cities, because that trend is accelerating as you read this.
Don't take it from me: we're talking the governor of Connecticut, who has called for combining state agencies to more effectively shape the state's energy future. The IOUs serving the state will have to collaborate or cooperate; resisting an effort that high-profile doesn't seem to be an option. The collaborative model offered by San Diego Gas & Electric (local IOU) and the University of California San Diego (microgrid) would seem to point the way toward the benefits of synergy. (See "Big Picture Thinking: Lab to Market.")
In "California's Energy Storage Policies," the upshot appeared to be that clear-cut policies are difficult to enact in a jerry-rigged system. As "the free market" when it comes to power is hamstrung in myriad ways—the "regulated monopoly" model is somewhat akin to Gulliver, pinned down by a thousand tiny strands—it is difficult to move any single piece without moving others. The stakeholders in the status quo, centralized power industry and in the energy storage debate all have ideas on where this topic should go. Procurement targets in California are out, for now, and cost-effective, specific applications—particularly if they directly benefit customers—are in. But what are those applications? I'm guessing that neighborhood-level batteries could become temporary solutions to improve reliability on capacity-constrained feeders, deferring capital investment where appropriate. Still, the critical question lingers: Who pays? (See some nitty gritty background on AEP Ohio and its work in community energy storage.)
In "Ameren Missouri: From CSR to 'Energy Advisor,'" we explored how Ameren Missouri is trying to deliver truly knowledgeable customer service to customers by moving customer service reps into energy advisor roles with the goal of raising customer satisfaction and lowering costs. That would seem to qualify as a proverbial "win-win" proposition. But it occurs to me that when CSRs become knowledgeable energy advisors they also become eligible to work for energy auditing companies, contractors and, well, columnists. (Although that column-writing work, like repairing high voltage lines, is a very, very dangerous job!) As with data analytics practitioners, many new roles at power utilities will need to be compensated in a manner that effectively competes with other verticals. (See "Data Analytics: Start 'In the Middle,'" which noted that First Choice Power lured Lloyd Tokerud, senior manager for analytics, from PepsiCo.)
Finally, a pair of columns, "Utilities Race to Reach the Customer" and "Accenture on Utilities and Customers," posited a theory and provided some data. We all know the utility-customer paradigm of the past was a passive one. Astonishment reigns when the factoid is cited that most utility customers spend less than ten minutes per year interacting with their utility—outages and blood pressure-spiking bills being the main driver. And with the do-it-yourself tailored applications of Web-based music and other entertainment, bundling and grocery store points counting at the gas pump, the general public is swiftly concluding that utilities are laggards. Meanwhile, anyone with a hammock and a partly cloudy day can dream up a thousand ways to offer value to serve both parties. That's the point of the second column, in which Accenture's global survey found that utility customers are open to offers, should utilities furnish them.
Ah, the upshot: as in all other aspects of life, you can expect some utilities to "get it" and keep pace with digital consumerism, others will "muddle in the middle" and yet others will be consigned to running infrastructure alone. Look to the competitive markets for a taste of the future.
Intelligent Utility Daily