The recent Smart Grid Roadshow in Vancouver covered
interesting ground in terms of how electric utilities must
transform to meet expectations of stakeholders – be they
consumers, regulators, or shareholders. BCHydro resources
discussed the unprecedented scope of ambitious grid
modernization projects that their utility had underway to
achieve two objectives: become more efficient and
consumer-centric in their operations.
These are excellent objectives for any utility to thrive as
Smart Grid technologies and services transform
electricity ecosystems and create new market opportunities.
BCHydro’s operational efficiency projects range from
substation and distribution automation technologies to
distributed storage pilots and smart meter deployments. All
of these projects require re-engineering business processes
and oftentimes re-skilling of existing resources to fully
leverage all potential technology benefits. And while all
of these transmission and distribution (T&D) deployments
present unique tests for utilities, the biggest challenge
for every utility will be building consumer-centricity in
their customer service operations. Greg Reimer, EVP of T&D
at BCHydro, noted that the utility expects that its delivery
of customer services will be compared to telcos and cable
companies. That’s a significant paradigm shift for
utilities, which historically haven’t dealt with customer
service expectations gauged against highly competitive
businesses like wireless communications service providers.
This paradigm shift presents nearly equal challenges for
regulators or other entities that oversee budgets for
electric utilities as for utilities themselves. Imagine
being on the regulatory receiving end of a utility request
for a rate increase to improve customer services, when the
historical metrics for quality of customer service have been
based on the number of customer complaints. It’s sadly
reminiscent of the reliability metrics for allowable
downtime (SAIDI, SAIFI, CAIDI, etc.) instead of expected
uptime. Regulators of investor-owned utilities (IOUs) have
to consider a very different landscape that includes new,
nimble competitors to slow-moving monopolies, courtesy of
Smart Grid-enabled technologies and services. And that
means changing expectations about utility investments in
customer service technologies and processes.
For instance, competitive businesses can justify investments
in customer service operations (ie contact center
hardware/software upgrades or acquisition of tools to manage
social media interactions) through quantification of
customer acquisition versus retention costs. As the old
marketing saying goes – it is cheaper (and easier) to keep a
customer than get a new one. Utilities, being accustomed to
monopoly environments, aren’t operationally or culturally
structured to compete to acquire or retain customers.
So how can utilities change expectations? Adoption of the
lifetime consumer value metric can help utilities and
regulators transform existing operations into
consumer-centric operations. Lifetime consumer value
provides an industry-standard measure of consumer
participation as prosumers – producers of negawatts and/or
kilowatts. (A negawatt is a reduction in electricity use –
usually through deliberate time-shifting of electricity
usage as structured in a demand response program. Kilowatt
contributions come in the form of local renewable
electricity generation or energy storage sold back to the
utility.) Establishing lifetime consumer value helps set
expectations of topline and bottom line impacts to business
cases for wise investment decisions that build
consumer-centricity as well as operational efficiencies in
utilities.
The Smart Grid has the capacity to dramatically change our
expectations of what services electric utilities deliver,
and how these services are delivered. Building
consumer-centric operations based on lifetime consumer value
can be a potent motivator for utility transformations that
go well beyond customer services and exceed our
expectations.
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