Your Local Municipal Utility: Stodgy No More
By Greg Sarich, CIO, CPS Energy
Municipal utilities have generally earned their reputation as being slow-moving, stuck in the past, and reluctant to embrace change. If you look back over the last century, the traditional electric utility has changed little since the days of Thomas Edison.
With the convergence of information operating technologies, the landscape for utility companies is transforming. This union, facilitated by the Internet of Everything (IoE) is morphing the business model for utilities-not just how they operate, but how they interact with their customers and even what business they will be in, going forward.
It’s all about the customer
While a cautious approach is understandable given the complexity and history of our business, technology is driving a new power shift from the business enterprise to the customer-even in monopoly environments like CPS Energy. ‘Customer obsession’ is the new normal. Utility companies that embrace this shift are beginning to see the benefits in their markets.
Like any other business, utilities must establish a new strategy for business applications and infrastructure that anticipates their need to exploit technology, create differentiation and drive innovation, while providing a secure and cost-effective environment to support core business processes.
Take our Smart Grid Initiative, for example. Technologies like Automated Meter Infrastructure (AMI) are just the beginning of a new foundation to provide the community faster, better, more efficient service. No longer will customers have to plan weeks ahead of time to simply change or order new services. They won’t have to wait until the end of the month to find out how much their energy usage will cost, either. With the Smart Grid’s interactive portal, same day service will become a fact of life and instant access to the cost of that service will be routine.
Customers are demanding responsive interactivity, and they want it on the device of their choice. Electric and gas service providers that have no mobile or digital strategy will find themselves falling quickly behind as customers compare them to the best and most recent customer experience they had elsewhere. Customers want to know every detail of how they are using their energy, including minute-by-minute information made available through an energy portal. This allows customers more control and provides a better and more useful experience.
“Technology is driving a new power shift from the business enterprise to the customer-even in monopoly environments like CPS Energy. ‘Customer obsession’ is the new normal”
Data, analytics lead to good decision-making
The amount of data that a utility company creates is mind-boggling. With AMI, customer data reads occur every 15 minutes, 24/7, every day of the year. Customer data, voltage data, transformer data, substation data, and information on generation and power supply are just some of the data pointsthat utilities manage every day. The exponential amount of information that utilities are processing can be factored into strategic decisions on how to run the business.
Solar energy and battery storage pose opportunities and challenges
As the price of solar energy decreases each year, making it more affordable to both residential and commercial customers, its increasing adoption puts tremendous pressure on utilities to come up with new business models on how to work with their customers. New products, services, and specialized billing algorithms are evolving that will enable consumers to utilize rooftop or community solar in ways that were unavailable until recently. Solar technology is moving forward quickly and customers want choices when it comes to renewable energy.
Simultaneously, new technologies are developing around battery storage for homes and business. Fast forward a few years: the solar energy harvested from your rooftop at high noon can be stored and used later when the sun goes down— or whenever you so choose. Or you may decide you want to sell that energy back to the utility and take a credit on your monthly bill. Either way, the customer will have more choices and flexibility than ever. The challenge for utilities is how to handle this disruption within a very functional traditional business model. Instead of fighting it, those that work with their communities to find win-win scenarios will find themselves in an advantageous position compared to those that resist change, because of worries about revenue loss.
Connected everywhere, always
The future energy system will be loaded with multiple devices and endpoints all designed to be interoperable between utility providers and consumers. Homes, cars, phones, thermostats, batteries and appliances will communicate together in real time, machine to machine.
This interoperability will require new standards and an open architecture so that information can be passed seamlessly and securely across the energy landscape. Companies that traditionally have served utilities with proprietary software systems and operating technologies will find themselves becoming less competitive and more likely to be squeezed out due to lack of responsiveness or inability to meet the needs of the new hybrid-utility model.
These connected devices will enable utilities to become digital and more responsive. The Digital Grid will become a reality for every utility in the near future. Micro grids, self-healing networks, sensors-even drone technology will transform the industry.
The Energy Value Chain
The energy value chain is a dynamic landscape, ripe and ready for transformation. Many new players and technologies are inserting themselves between the traditional utility and the consumer. Those utility companies that embrace disruption will position themselves well for the new model of energy providers. In the near future, utility companies will be brokers of energy information that enable their customers to make choices about how they consume energy, based on data mined through technology.