Readers: 'business as usual' or a perilous future?
Consumers may be wild card in future business plans
They say if you lock a monkey into a room with a typewriter, the law of odds means that monkey eventually will produce "War and Peace."
Welcome to my world. Of course, I work on a somewhat shorter timeframe. And each day's output is subject to kibitzing and kvetching - at my invitation, naturally.
Whether due to my overt exhortations, subconscious prompting or their own predilections, I'd suggest that many reader comments tend to fall into one of two categories. First is the "What? Me worry?" camp where utilities blithely pursue business as usual. The second camp acknowledges a rapidly changing landscape that threatens the business model for centralized power.
That said, I'll put our readers in charge of assessing readers' comments, while I slip away for the weekend to rest my sub-optimal wits.
In last week's "Top Five Issues of 2012 (So Far)?" I suggested: keeping the lights on (while integrating new technologies), recruiting new talent while documenting institutional knowledge, developing forward-looking business models, dealing with intrusions into their business domain and continuing grid modernization without rate increases.
In response, one would-be prankster wrote "I think you are right and I think you have the issues in the right order." (Like most monkeys, I do not write to garner agreement.)
Another reader, a vendor, Peter Lilienthal, CEO of HOMER Energy, which makes software for microgrids, wrote that integrating new technologies and business intrusions are linked.
"Microgrids are the best way to keep the lights on when integrating high contributions of renewables," Lilienthal wrote. "The traditional model has trouble getting past 20 percent with some utilities balking at more than 10 percent. Our customers are designing systems in all sizes and parts of the world with 50 to 90 percent renewables."
Certainly, we'd all love to hear more about how that level of penetration works out. (By the way, HOMER Energy is based in Boulder, Colo., so you have to wonder whether this claim has been recognized locally.)
In "Hydro One: Data Analytics Requires Lead Time, Legwork," Director of Business Architecture Brad Bowness detailed the arduous, step-by-step process for wringing business value out of utility data.
"A very enlightened view of using conditions-based information to drive predictive maintenance," wrote an anonymous reader. "Using actual conditions-based surveys of the grid overcomes the use of faulty data such as age of infrastructure as a primary indicator of condition. I am very interested in any discussion on the success of this program."
We promise to follow-up with Bowness at an appropriate juncture to deliver just such a discussion.
In "Three Steps to a Smarter Grid" I actually offered four steps, which included determine a future business model, decide on your approach to customers, create a technology roadmap and switch from pilots to "phased deployments."
It may be something in the water this week, but another reader agreed with me. In this case, the use of the phrase "business as usual" had a distinctly positive ring to it.
"Good column, as usual," our anonymous correspondent wrote. "As someone who works with co-ops, I am observing that segment of the utility business doing all three steps (plus your fourth, Phil), across the nation. For them, it's not about virtue, or smart grid (though the stimulus has accelerated deployment of advanced meters), it's about using proven technology to improve reliability, operational efficiency, enhance customer involvement and gain better control over their large, low-density service areas.
"They've been doing this for decades," our correspondent added for emphasis. "And because they're cooperatives businesses, there is a direct connection between the utility and their owners/customers. Nothing of an overwhelming unique nature, just business as usual."
FINALLY! At the eleventh hour! A reader decided to smash some crockery. With the first step - determine a future business model - I had quoted an Accenture executive who suggested four basic business models for today's utilities, ranging from sticking with poles and wires to varying degrees of customer ownership, ending with a "full-service provider" of energy-related offerings.
"The four utility business models presented in the article represent the business strategies that have been playing out at utilities in the U.S. in an attempt to drive and promote the smart grid," wrote faithful reader Richard Pate, principal at Pate & Associates. "The common thread and key element in each of the models is the consumer and their reaction, use or pushback to the models and the new disruptive concepts.
"Utilities are attempting to anticipate consumer reaction," Pate added. "This is being debated and analyzed in every utility because of the impact it will have on all models, regardless of which one the utility chooses. Whatever conclusions they may reach, the reality is that the consequences are immense. Despite all the internal discussions and analysis, the stage is now being set by consumers as to how these new disruptive concepts will play out; and the consumer's pushback is raising a fire-breathing, multi-headed beast to ignite the industry like nothing we have seen before."
At long last, the consumer as a "fire-breathing, multi-headed beast"! Talk about using urgent language. And Pate backs it up with the article, "An Electricity Market in Flux" in Crain's Chicago Business. The city of Chicago is evaluating whether it should switch to an alternative power supplier from incumbent Commonwealth Edison for the city's three million residents. Another 100 suburbs, which together comprise roughly one-third of ComEd's demand, are in a similar process.
Regardless of your position on any issues discussed here, I suggest you read the Crain's article and we'll return soon to discuss the implications for grid modernization.
Intelligent Utility Daily