The grid coach
CEO DRIVES OG&E INTO SMART POWER
Published In: Intelligent Utility Magazine May/June 2009
ONE OF THE WORLD'S BEST EXAMPLES OF SMART GRID TECHNOLOGY AND APPLICATIONS IN action is smack in the middle of the U.S. heartland at Oklahoma Gas & Electric (OG&E).
OG&E - whose service territory covers a sizable stretch of the state and a small portion of Arkansas - is a storied electric utility that's been in business longer than Oklahoma has been a state.
In fact, Oklahoma only attained statehood in 1907. OG&E dates back to 1902. And in recent years, a developing smart grid vision has taken root in corporate strategy, expressed clearly and succinctly to the OG&E entities that are now working diligently to make that vision a reality.
''Our CEO [Pete Delaney] put a stake in the ground when he said, 'I want to go to the year 2020 without any new fossil fuel power plants,''' said Jesse Langston, vice president, utility commercial operations, OG&E. ''So this has become the management team's job to figure out: How do we get there?''
Actually, it's the classic chicken-and-egg dilemma of which came first - the vision or a series of smaller-to-greater steps toward smart grid implementation? Clearly, it's the vision that motivates OG&E, but it's the process of execution that has everybody scurrying to make sure the various pieces fit into the developing puzzle in a timely manner.
VISION I NTO ACTION
OG&E labels its major move into smart grid territory as Positive Energy and SmartPower - and there's definitely progress to report as OG&E pursues its strategic goals of containing and reducing emissions, and helping save its customers considerable expenses in the long term. It involves just about everything:
- Multiple generation resources
- A more robust transmission infrastructure
- Significantly greater efficiency in distribution
- Technologies that enable better and more useful communication with customers, and deliver price
''How do we change our relationship with our customers?'' asked Langston. ''It's very important that we change the relationship by providing transparency to our customers as to what they use. They cannot help us manage electricity, and there's no way we could influence them to do it differently, if we don't give them price transparency,'' he said.
''That was the first 'ah-ha' for us. SmartPower is a tool that will help us realize the vision - it's become the vehicle to help us empower our customers. That's the sustainable piece, because at the end of the day those are the people who are consuming our product.''
In the ongoing commitment to put its money where its mouth is, OG&E conducted a highly successful experiment with smarter technology in the summer of 2008 - including 6,600 digital meters and advanced communication technology - through a SmartPower relationship with customers in northwest Oklahoma City.
Among other benefits, the customers received electrical information on home energy displays regarding the cost of energy at peak and off-peak times of day, and embraced the capability to modify their usage patterns to save money.
Next on the SmartPower agenda is what OG&E refers to as its first Positive Energy Community in the city of Norman, which is home to some 100,000 residents and, not insignificantly, the University of Oklahoma.
What's planned for Norman is expanding OG&E's SmartPower principles - again with the idea of enabling lowercost remote meter reading and connect/disconnect functions, but also empowering more customers with a greater range of choices through smart meters and broader communication. The resulting knowledge gained by customers is expected to encourage them to save money by shifting much of their electric usage to off-peak hours.
NO MATTER WHAT, CUSTOMERS FIRST
The theme common to all of OG&E's efforts is the customer-centric nature of its smart technologies - among which are the technologies that empower customers to choose and to save.
''I've been pushing for three, four years to really kind of change the way we think about the nature of our product - not selling electricity, but that we sell comfort and convenience, safety and security,'' said Ken Grant, managing director, customer programs and product development, OG&E. ''And we sell heating and cooling, we sell lighting, we sell power, we sell security lighting - all those things.
''But from an emotional perspective, if the customer sees us as just providing electricity, you run the risk of eventually becoming irrelevant if they see somebody else is providing all the value that's derived from that electricity,'' he added.
Once again, among the philosophies OG&E is advancing is a fundamentally different way of dealing with customers, as well as injecting much more of a value proposition into electric utility transactions.
''We can now provide customers with information they've never had before,'' said Grant. ''When you think about the way we've done business with our electric customers in the past, it would be like going to the gas station, pulling up at the pump, putting the pump in your fuel tank and pumping gas, then finishing and it automatically charges your credit card.
''Then you drive off - but you don't know how much you put in your car, and you don't know what price per gallon you paid. And, say, you buy gas every three or four days, and you drive a lot through the month - not knowing how much gas you pumped or how much you're paying. Then at the end of the month, you get a bill in the mail. Surprise!
''Well, that's how we've traditionally sold electricity. And if you think about it, that's nuts - we don't buy anything else that way.''
The solution, as OG&E is aptly illustrating during its SmartPower test market stage, is to place more of the responsibility for deciding about electrical usage into the hands of the customer.
''What SmartPower now allows us to do is tell the customer exactly how you're using energy,'' said Grant. ''It allows us to tell you how much you're using, how much you have used compared to yesterday, at the rate you're using energy, what your bill's going to be at the end of the month, how much you've spent so far this month, and what you're spending right now per unit.''
And the SmartPower prognosis for the future sounds highly optimistic - especially considering OG&E's penchant for continually pitching value to its customers.
''People in Oklahoma like saving money just as much as anybody anywhere else,'' said Grant. ''And as long as you educate them - and help them understand what they need to do to save
money, and they can do it without really becoming uncomfortable, and you can make it simple - then they'll do it.
''You don't need to control it for the customer. All you've got to do is educate them and help them understand that there's real money involved. And if there's money involved, folks are
going to change behavior.
''To me, what we're doing is really exciting, because it could really change the way we do business.''