Intelligent Utility JanFeb2012

VOL 4, ISSUE 1 » JANUARY/FEBRUARY 2012

Where smart grid meets business—and reality.

IT + ANALYTICS

#UtilitySocialMedia SEGMENTING CUSTOMERS What Works?

ENGAGING THE MOBILE CUSTOMER Is there a technology road map?

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CONTENTS S PECIAL REPORT IT + ANALYTICS

22 Analytics evolution

Utilities are preparing to unleash smart grid data

26 OGE’s Information

Factory takes flight Handling disparate data effectively for analytics

DEPARTMENTS

10

This issue, we’re turning the spotlight on Customer Service topics, and how they affect the utility as a whole. With that in mind, our IT Insights and Operational Perspectives departments, as well as the Special Report, also offer a view into other issues of import to the industry.

FEATURES // JANUARY/FEBRUARY 2012

#UtilitySocialMedia

10 To tweet, or not to tweet?

Twitter, Facebook, company blogs — utilities are using new tools

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12 Turning customer rants into raves

2

Avista used rate hike protest to roll out social media campaign

13 Improving the customer experience Nashville Electric Service turns to Facebook, Twitter

Customer segmentation

16 Understanding your utility customer base Actionable data is key to successful project implementation 19 Customers under the microscope

16 22 28 38 40

OGE and Pepco are data mining for success

Mobility and customer engagement

20 Connecting 24/7 The right information at the right time — on the right device

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4

Drawing the line

6

Transmissions 6

Letters from readers

7

Around the globe

8

Top 11 8

Top 11 consumer engagement ideas

28 Knowledge2011 Summit

28 Planning for the future; dealing with right now 31 KITE and UtiliQ awards

34 2011 UtiliQ rankings

34 Top 25 U.S. utilities

38 IT insights

38 Leveraging lessons learned

40 Operational perspectives 40 New Jersey energy master plan 42 Long-term view = speculation

43 Customer focus

43 Smart grid and competitive markets

46 Out the door

46 Changing the regulatory construct

Vol. 4, No. 1, 2012 by Energy Central. All rights reserved. Permission to reprint or quote excerpts granted by written request only.

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D R AW I N G T H E L I N E

Continuing the conversation

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SOMETIMES, A CHALLENGING DISCUSSION IS JUST TOO GOOD TO LET GO OF,

4

and so we continue it over weeks, even months, through telephone calls, e-mails, suggested additional reading and even in person. Many of us can recall these extended conversations from periods in our lives in which we were exploring new concepts, meeting new people, engaging in intellectual debate or developing shared solutions.

At the Knowledge2011 Summit in November, utility representatives from across North America started discussions on topics as diverse as IT hiring strategies, social media and how it’s changing the customer dynamic, how data visualization is being used within the utility and more. At the end of an intense two days of discussions, many delegates voiced the wish to be able to “continue the conversation” throughout the year.

Form relationships, exchange ideas, develop strategies: These are the goals of the Knowledge Executive Summits.

Continue the conversation: This is the goal of Intelligent Utility.

Within the pages of this issue, we’ve turned the microscope sights on engaging the utility consumer. We spoke to Avista Corp. and Nashville Electric Service about each utility’s social media best practices, and the lessons they’ve learned in implementation and practice. What works, what doesn’t and why?

We’ve also taken a look at electric utility customer segmentation practices. As Patty Durand, executive director of the Smart Grid Consumer Collaborative, recently wrote: “It’s an evolutionary shift for a utility to go from serving all customers the same smart grid message and program to tailoring the message and offering based on customers’ needs, wants, habits and practices.” There’s no one-size key to successful segmentation. Rather, the most successful approaches are those that are specifically tailored.

Finally, in an Intelligent Utility Daily column preceding the November/December issue, I issued an industrywide question: “What is the No. 1 issue facing electric utilities as we head into 2012?”

Charles Dickerson, vice president of customer care at Pepco Holdings, Inc., took up the gauntlet, and wrote a column for this issue’s Out the Door department about the necessity of and opportunity for changing the regulatory construct. He asks the elephant-in-the-room question: If non-regulated providers can profit from information services, why can’t utilities, especially when the utilities are the ones collecting the data in the first place?

These and other stories in this issue of Intelligent Utility are intended to provoke further discussion.

I invite you to continue the conversation with me via e-mail, and encourage you to head to our Web site at www.intelligentutility.com where you will find the articles posted online, as well as a platform for online discussion on each of these stories with your peers.

Kate Rowland Editor-in-Chief, Intelligent Utility magazine krowland@energycentral.com

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TRANSMISSIONS

Letters from readers language and it will help speed adopThanks, Kate. Your Intelligent Utility tion of enabling technologies. Please publication is certainly providing feel free to check out my blog around utilities a wealth of information to growth of smart grid and renewables: keep everyone abreast of what is going www.infosysblogs.com/smart-utilities on in the smart grid world. And most importantly, you provide this great Ben Edelbrock Infosys publication for free! You deserve a lot of credit for providing a Top 11 projections valuable update on the for 2012 evolution that is taking November/December 2011 place in the smart grid One of the biggest by compiling selected issues facing the utility valuable articles and industry is that regulasharing them with all of GeNerAtION tory reform is stuck in us who take part in the INtellIGeNce the mud at the state smart grid effort. Keep level, with very limited the good work going! prospects for meaningAlthough you may not ful progress during the hear back from many of next year or two. Policy us, we are just too busy to give a word initiatives that were gaining momenof thanks more often. tum a few years ago have now slowed, Francisco DeLaRosa and regulators are very much in “wait Director, Electrical Engineering and see” mode, hit by fears of disruptZenergy Power, Inc. ing a fragile economy and responding to an increasing level of consumer Rethinking smart grid September/October 2011 pushback. This regulatory timidity is Great article Kate! One of the largest happening at exactly the same time issues utilities face in the adoption of that smart grid infrastructure deploysmart grid technologies is in simple ment—and specifically AMI—is hitting communication with customers. critical mass. The very moment when Utilities primarily speak in terms of potentially transformative applications kW, but consumers really only underare finally becoming technically posstand the message of dollars and cents. sible (e.g., dynamic pricing), utilities Very few utilities properly articulate and regulators are pulling back, putting the value proposition for the customer. key elements of the overall smart grid You have captured the thoughts of enterprise at risk. In the midst of this many early adopters succinctly. It is timidity, all eyes remain on a handful truly innovative to be able to comof pioneering smart grid utilities to see municate directly in the consumers’ which models will be successful. The smart grid industry will very soon need To contribute to the to shift from deployment mode to apTransmissions department, plication enablement, and the success please e-mail your submission to of those early pioneers will be critical in intelligentutility.editor@energycentral. paving the way for a new wave of regucom. Provide your name, address and latory action and utility investment. daytime phone number. Letters may be VOl 3, Issue 6 » NOVember/December 2011

Where smart grid meets business—and reality.

smArt cO-OPs & muNIs success stories pile up

smArt tecH eQuIlIbrIum Is Dr balancing the scales?

A system Of systems

An E n E rgy C E ntr Al Pu b liC Ation

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» WWW.INtellIGeNtutIlIty.cOm

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edited for style and space.

Clint Wheelock Pike Research

www.intelligentutility.com EDITOR-IN-CHIEF Kate Rowland

krowland@energycentral.com 250.227.8938 SENIOR CONTRIBUTORS

Phil Carson Editor-in-chief, Intelligent Utility Daily pcarson@energycentral.com 303.228.4757 FEATURE WRITERS

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AROUND THE GLOBE

PA R I S , F R A N C E

AUSTRALIA

EV sharing program

Victoria’s smart meter program to continue

In a city in which medieval cobblestone streets are the norm, and air and noise pollution a definite concern, a self-service electric car program, Autolib’, was launched in early December. It is hoped this program will be as popular as the city’s bike-rental program has been.

There are 250 four-seat compact Bluecars now available for rental, and the program is expected to grow to 2,000 vehicles by next summer, and 3,000 vehicles in the coming two years.

In December, the Victorian Government in Australia completed its comprehensive review of its electric utilities’ smart

Standard subscriptions to the program are avail-

meter program. The consensus:

able by the day, week or year, with hourly fees

With more than 900,000 meters

tacked on for actual usage. As well, Autolib’ is installing 1,200 charging stations throughout the city, both for the vehicles within its program, and also for the city’s other electric vehicle owners to use (for 180 euros per year).

It may be a drop in the bucket in a city of approximately 12 million people, but the program is the largest of its kind so far in Europe.

already installed across Victoria, many of the economic benefits of moving from a manual to an automated metering system can only be delivered if smart meter technology is installed at all properties across the state.

SWEDEN

There will be some changes to

602.7 million installed smart meters globally by 2016

the program, however. Among

Analyst firm Berg Insight, based in Sweden, says that the worldwide installed base of smart electricity meters will grow at a compound annual growth rate of 26.6 percent between 2010 and 2016 to reach 602.7 million.

It projects that penetration rates for smart metering technology will increase from around 15 to 25 percent today to around 50 percent in Europe and North America, and to more than 75 percent in the Asia-Pacific region.

And by 2020, Berg Insight says penetration rates for smart meters are expected to approach 100 percent in most developed countries, with massive rollouts also taking place in new smart meter territories such as Latin America, India and the Middle East.

The author of the report, Tobias Ryberg, said, “Securing a sustainable supply of energy will be one of the greatest challenges for mankind in the 21st century. Smart grid technologies

control their electricity bills; the

subsidized to help households

introduction of flexible pricing will be delayed until at least 2013, to allow more time for educating consumers about their options, and flat rates will continue to be an available option even after flexible pricing is introduced.

As well, there will be greater oversight of the program by government going forward, and consumer and welfare groups will be given a stronger voice in the smart meter rollout process through a new Ministerial Advisory Council.

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will make a major contribution to achieving this goal by improving the efficiency at all levels of the electricity supply chain from generation to transmission, distribution and consumption.

“Smart meters are the gateways that connect consumers to the smart grid and enable them to interact with other players in the ecosystem.”

While China and other countries in East Asia are at what Ryberg calls an early phase of adoption, they have aggresive installation plans. For example, the State Grid Corporation of China is currently deploying 50 to 60 million advanced electricity meters per year, with the goal of a nationwide smart metering network within five years.

them: in-home displays will be

7

TOP 11

11 TOP consumer

engagement

IDEAS ++Utility executives, and a few consultants, share their experiences

By Kate Rowland

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OVER THE COURSE OF THE PAST YEAR, ELECTRIC UTILITIES

8

have been immersed in customer communication and learning the ropes of what works for them (and for their customers), and what doesn’t. In Intelligent Utility magazine, and in Intelligent Utility Daily, we’ve shared their thoughts and experiences, as well as those of industry consultants and analysts.

As we all realize, there is no one-size-fits-all consumer engagement plan or road map. Instead, there are some guiding principles worth noting. The details, and the specific strategies, must be built one by one, and evaluated at every step along the way.

Here, in no particular order, are 11 of the top pieces of advice we’ve heard throughout 2011.

1 Communicate. Early and often.

But even before that, Capgemini’s David DuCharme cautioned, “Get your homework done before you even engage the consumer.” If you set the expectations very clearly, he said, as San Diego Gas & Electric did when it communicated about the benefits of its smart grid projects—efficiency, cost benefits, and outage benefits—it’s a matter of “proving the benefits of what we said was going to happen when we started upgrading our infrastructure.”

2 Leverage all digital modes of communication.

Johnny Magwood, vice president of customer experience and chief customer officer for Northeast Utilities, told Intelligent Utility Daily that before Hurricane Irene hit, NU sent out 1.6 million voice messages to its customers, advising them on how

to prepare for the storm’s impact and informing them of the utility’s preparations. After the storm hit, with the technology NU has in place, its utility subsidiaries such as Public Service New Hampshire and Western Massachusetts Electric Companies could take customer calls by a live operator within 26 seconds of the customer dialing; and with a combined live representative plus automation “Average Speed to Answer” was 10 seconds. A year ago, in a similar situation, the wait was 30 minutes.

3 Keep it simple.

“I think utilities need to convey to the customers that they will be involved to the extent that they want to be involved,” said Mark Webb, director of policy and business evaluation at Dominion Resources. “Ultimately, customers will have the opportunity themselves to engage and analyze their power usage, and if they’re concerned about the environment, they’ll also be able to see how their energy usage impacts the environment.”

4 Develop customer- centric engagement programs and complaint resolution processes.

In a study of utility consumer engagement practices, the Smart Grid Consumer Collaborative noted that Austin Energy used direct mail, door hangers and newspaper ads to notify customers of an AMI deployment.

Installation personnel notified the billing department of customers who might experience higher bills because their analog meters were running slowly. Customers could schedule the meter swap-out if the utility’s first attempt failed. A “rapid response team” immediately addressed the few complaints that arose.

5 Discuss benefits that can be delivered upon within a few months.

Long-term benefits don’t ring the same bells. Chris Thomas, policy

advantage of social media to educate customers on what’s taking place. And it enabled the utility to listen to what’s being said publicly about its initiatives.

7 Put your customers first, and mean it.

JEA has built a history of looking at different ways of adding to its customers’ options, and decreasing its customers’ costs. It introduced online bill payment in 2002, and embarked upon its first automated meter reading (AMR) deployment the same year. “Our marketing puts terms like ‘smart grid’ in the background.

We’re focusing on the customer who says, ‘Hey, I want you to help me manage my energy consumption today,” JEA’s director of smart grid programs, Victor Monfort, told an Intelligent Utility Reality webcast audience in 2011.

8 Provide choice, convenience, control.

First, it’s important that consumers understand their energy consumption, even before they engage in using tools provided to control their usage over time in the future, said Michael Grasso, TXU Energy’s chief marketing officer. To this end, TXU Energy has launched a number of hardware and software tools that provide information and education first, as well as a wide variety of toolbox choices for the consumer to then use to change and control their energy usage. It also offers cashback rewards and other incentives for saving energy.

director, Illinois Citizens Utility Board, told a consumer symposium at ConnectivityWeek, “When you give someone a smart meter, give them an immediate opportunity to tie that information to their pocketbook. It starts to wrap their minds around the way they consume energy and the cost of that energy.”

10 Listen.

Really listen to your customers to understand their needs and expectations before a smart meter rollout. Both Portland General Electric and Pepco conducted focus groups in advance of their program implementations. Charles Dickerson, vice president for customer care at Pepco, confirmed that it used a third party for the process, did not regard it as prohibitively expensive and cautioned that focus group results offer good insights, if taken in context. Stan Sittser, customer communications supervisor for Portland General Electric, said that PGE talked about smart meters in terms of utility-side efficiencies first, holding off on tangible customer benefits until those were teed up.

11 Empower for engagement.

“We think customer empowerment and engagement are critical to the future of energy at Connecticut Power & Light and across the nation,” Jessica Brahaney Cain, director of customer relations and strategy for the utility, told Intelligent Utility Daily. “By ‘empowerment’ we mean providing customers options and personalized, actionable energy information. Customers are more satisfied when we provide them with options, even if they don’t choose those options. From the engagement perspective, without having that personalized information, it’s not nearly as actionable.”

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6 Use social media, where appropriate.

“We’re finding that customers will communicate via the platform they’re most comfortable with,” Carey Sullivan, social media manager at AEP, the parent corporation of AEP Ohio, told Intelligent Utility Daily. Though phone calls were the preferred method, followed by e-mails, Facebook and Twitter played a significant role in its community energy storage (CES) project, reflecting Sullivan’s observation that, offered all channels, customers will use what suits them. As with the CES project, AEP Ohio’s gridSmart program, which is testing interval meters and other elements in the greater Columbus metro area, has taken

9 Build a trusted relationship.

Dave Ling, director, customer service best practices at PPL Electric, told Intelligent Utility Daily: “We realized about four years ago, with the end of rate caps in sight, we’d need our CSRs to become more skilled in the role of being trusted energy advisors. So we trained them to discuss how to use our energy audit tool, in energy conservation techniques and in energy choice. And at the same time we strengthened and expanded our self-service offerings. As we offer more self-service applications for customers, we expect more basic inquiries to get handled via self service. That’s vital from a business perspective when we get 5 million customer contacts in a year with contacts increasing significantly each year.”

9

#UtilitySocialMedia To tweet, or not to tweet? ++Twitter, Facebook, company blogs — utilities are using new tools

By Kate Rowland

10

social media in the utility industry is during power outages or other events that affect customer service, many electric utilities are finding other positive uses for social media, too.

Twitter, Facebook and even LinkedIn are finding their way into savvy utilities’ communications toolboxes, and being used to positive effect in building new and better customer relationships.

Investing in the future Earlier in 2011, E Source published its “Utility Social Media Survey,” which included questions about social media business drivers, tools, staffing and governance. At the time of its release, Matthew Burks, senior manager of E Source Mass-Market Services, noted: “The most successful utilities see the long-term implications of this channel and are investing the time, staff and infrastructure to integrate it into their daily operations.”

According to the utilities that participated in the survey, who were asked which utilities they considered to be social media leaders, Avista ranked at the top of the list of investor-owned utilities. Intelligent Utility spoke to Avista’s Dan Kolbet and Linda Jones about the utility’s social media efforts, and how they began (see page 12).

Building online communities Sharing in online communities is a big step for an industry that has, by nature, been used to one-way communication throughout its history, and dealing with customer issues in the call center. But as consumers, and the utilities’ customers, use these online tools in greater numbers, the utility that chooses not to use them stands to get lost in the fog.

Studies have shown that it’s not just the teens and 20-somethings using Facebook, Twitter and more. For example, the fastest-growing group on Facebook is between 25 and 45 years of age, and they’re not just playing FarmVille.

Instead, they are building online communities, and becoming influencers in those communities.

Scott Klososky, author of Enterprise Social Technology: Helping Organizations Harness the Power of Social Media, Social Networking, Social Relevancy and The Velocity Manifesto, explains the social media phenomenon this way: “Technology is changing the world more than we understand. Social technology is just another part of the toolbox that people can reach into.”

The importance of social CRM But beyond communication, social media tools also offer an excellent opportunity to gain valuable customer intelligence, beyond customer segmentation. Embracing “Social CRM,” or social customer relationship management, means an op-

ILLUSTRATION BY DANA LECHTENBERG

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WHILE THE MOST OBVIOUS USE CASE FOR

We also interviewed Nashville Electric Service, which ranked high on the list of public utility social media leaders. Laurie Parker, the utility’s communications coordinator and the architect behind its social media strategy, told us about the series of storms and resultant flood in 2010 that put Nashville Electric’s social media plan, launched in 2009, to the ultimate test (see page 13).

portunity for a new and better relationship with customers.

Even dissatisfied customers, who may tweet something negative about the utility, offer an opportunity for the utility to engage, and to make things right.

Klososky and other social media experts offer the following general advice for companies getting into the social communication space: ??

defensive. Fix the problem. If it’s positive, build a relationship, because that person could become an influencer in your utility online community, or in others. ??

LINES WITHIN YOUR ORGANIZATION. For example, you

don’t want all your employees willy-nilly tweeting about you. Social media isn’t just a tool, it’s a power

DETERMINE YOUR AUDIENCE. Some say niche audiences

tool, and it needs to be used carefully and safely.

are better (this is where customer segmentation can come into play), and others advocate broader mes-

??

REMEMBER THAT THIS IS A TWO-WAY INTERACTION. The

best relationships are built not by simply watching

one with specific consumers when needed to solve

what is being said about you, but engaging in a

a positive tweet or Facebook message.

MONITOR WHAT IS BEING SAID ABOUT YOU ONLINE. If you don’t know what they’re

saying about you, you don’t know how you’re doing. If it’s negative, don’t get

positive two-way discussion.

“Tomorrow is the battleground you must not lose. Today is just the warm-up,” Klososky says of enterprise social technology. “You’ve got the tools to be creative and innovative.

You just have to use them.”

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sages to begin with, and then interacting one-ona problem they’re having, or to thank them for

??

THINK ABOUT ESTABLISHING FORMAL SOCIAL MEDIA GUIDE-

11

#UTILITYSOCIALMEDIA

Turning customer rants into raves ++Avista used rate hike protest to roll out social media campaign

By John R. Johnson UTILITIES ARE ACCUSTOMED TO RECEIVING

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negative feedback when it comes to rate increases, power outages and what is sometimes perceived as lackluster customer service. It’s a fact of life that utilities live with, and one that isn’t likely to change.

What is changing is the way that utilities are dealing with customer complaints and concerns.

Utilities are flocking to social media avenues like Twitter, Facebook and YouTube to respond to angry customers and to set the record straight when incorrect information spreads to the Web.

12

Opening a dialogue After a group of 100 or so customers organized a peaceful demonstration to protest a series of rate hikes in 2009, Spokane, Wash.-based Avista used the incident to roll out a social media campaign. The customer protest was organized over the Internet, and “we didn’t have any way to help facilitate the online dialogue happening before the protest,” said Dan Kolbet, a communications manager at Avista.

That event spearheaded the utility’s social media strategy, which now includes a blog page, an interactive e-mail program for customers to reach out to the utility, and a Twitter account. Avista is working on deploying its Facebook page.

The goal behind Avista’s blog is to allow customers to discuss any and all topics, such as rate increases, where energy comes from, or new wind or hydro projects. No subject is off limits for customers who log in to the blog through their customer account.

“We’re trying to engage the customer,” said Kolbet. “A lot of utilities have created blogs that are pretty much centered on energy efficiency or environmental concerns and they stay within those boundaries. We wanted to use our blog as a tool to tell our own story to our customers, regardless of the topic, even if sometimes those topics are not our favorite things to talk about, such as rate increases or executive compensation.”

Turning rants into raves The Avista blog averages about 2,000 hits per month.

In addition, just under 2,000 customers subscribe to the utility’s two Twitter feeds. That represents a fraction of Avista’s customer base of 350,000, but increasingly more people are turning to social media to get their news, and the utility is noticing a difference in customer service levels and the number of calls fielded by its customer service team.

Recently, a customer who was frustrated with her bill posted an online rant about the utility through her Twitter feed. The Tweet caught the attention of Kolbet, and Avista’s customer service team reached out to the customer immediately. The issue was quickly resolved.

“She was basically dealing with some misinformation, and we decided to be pro-active and reach out to her,” said Kolbet. “She was venting, but she ended up putting out a new Tweet about how appreciative she was of Avista and that we solved her problem. She was pleasantly surprised.”

Monitoring for misinformation Avista is using social media to its advantage in several ways.

For example, when the utility filed for its last rate increase, Avista sent out a traditional press release, but also had prepared a blog post that was released just prior to the press release. When local media outlets picked up the press release, most referred their readers back to the Avista blog for more information. So, in effect, Avista’s media campaign served to send people back to its own blog site.

In addition, Avista monitors articles that appear about the utility in local newspapers, including the online conversations that customers start after reading an article. Avista

often will join in the discussion to curb what is in many cases misinformation being created in those discussions.

“Customers may not understand the topic or are sharing information that just isn’t true,” said Avista director of corporate communications Linda Jones. “So our goal is to correct the information and then redirect them back to our blog where they can see our side of the story on that topic.”

“

”

John R. Johnson is a Boston-based freelance writer who specializes in alternative energy and technology topics.

++Nashville Electric Service turns to Facebook, Twitter

By John R. Johnson IN MAY OF 2010, POWERFUL THUNDERSTORMS

dumped more than 13 inches of rain on Nashville over a span of 48 hours. When the Cumberland River, which runs through downtown Nashville, crested at 12 feet above normal levels, flood waters ravaged the city and its surrounding suburbs.

Many residents in Tennessee were left without power, including 42,000 in Nashville, the service area covered by Nashville Electric Service (NES). Many customers were without power for up to two weeks as repair crews needed to wait for flood waters to recede before beginning the power restoration process.

Tweeting the outage While the event was a major test for NES’ infrastructure and its repair teams, it was also the first major test for the social media programs that Nashville Electric deployed in early 2009. Unable to reach the utility’s emergency response phone line, customers flocked to its Twitter account, seeking information about the time frame for power restoration.

Following the paralyzing flood, NES relied heavily on Twitter and Facebook to relay important information to customers and to answer the 24/7 influx of questions about outages.

“That was our first big test and it was somewhat overwhelming,” said Laurie Parker, Nashville Electric’s communications coordinator and the architect behind the utility’s social media outreach. “At that point it was just myself and our public relations team trying to respond. We were trying to respond to individual customer questions and this went on for a two-week period.”

Customers tweet support One surprise during the crisis was that customers used Twitter to rally behind the restoration efforts of the utility. When negative feedback was posted on Twitter about the utility being slow to respond, the comment

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Blending social with traditional While social media is far from becoming the dominant means of communicating with customers, Kolbet believes that social is blending in with Avista’s traditional Web presence. “Customers who go to your Web site expect some sort of interaction with you instead of just reading content or sending you an e-mail,” he said.

On that note, Avista rarely deals with outage information on its Twitter page because of the near real-time outage information it provides on its Web site, which is also available as a mobile phone app for customers without power. By visiting that part of the Web site, a customer can determine if an outage has been reported. An interactive map provides a timeline for when power will be restored. Electronic media use the Avista Web site outage map during their We wanted to use our news broadcasts.

As a result of the outage blog as a tool to tell information system, Avista has been able to reduce the our own story to our number of media calls that it receives from 1,200 a year to customers, regardless just over 300.

“Since we launched our of the topic. social media outreach in 2009, our customer satisfaction scores have increased quite a bit,” said Jones. “The objective was to meet our customers where they gather.

They were having online conversations about Avista and we were not present. We wanted to be included, and rather than have this being a rant and rave kind of dialogue, we established our blog to make it a more personal experience.”

Improving the customer experience

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#UTILITYSOCIALMEDIA

was typically rebutted by positive Tweets from customers who understood the pressures that the utility faced in restoring power.

“We were surprised at how many people found us [on Twitter] and how people supported us through our social media efforts,” said Parker. “We had a lot of positive feedback from customers saying to keep up the great work, which was a surprise.”

NES first implemented a social media campaign in 2009 when it became aware of several “energy conservation myths” residing on online sites. In order to clear the air and set the record straight, NES turned to Twitter and Facebook.

“There was some misinformation out Laurie there about energy conservation, so we Parker saw this as a great way to get out there and spread the right message,” said Parker.

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Social media as a constant communications tool While the NES Twitter feed and Facebook page clearly see the most action during storms and power outages, the utility uses the social media outlet as a constant communications tool with customers, relaying content about energy conservation, billing information and other company news.

The utility has about 3,600 followers on Twitter, and just under 1,400 on its Facebook page. Parker said that the biggest challenge moving forward is to continue to engage customers through social media, especially during calm periods

14

with no storms. NES hopes to accomplish that by pumping plenty of content through both social media channels.

“Our goal for 2012 is to establish a formal editorial calendar so that we can identify and target all of our key messages and make sure we cover what we need to,” said Parker. “We’d like to be a little more strategic with that effort in 2012.”

In addition, the utility will continue to promote dialogue with customers and expand its monitoring and We were surprised at reporting efforts and do a better job analyzhow many people found ing traffic numbers and how they correlate with us [on Twitter] and customer service and customer satisfaction. how people supported NES posts all kinds of energy conservation tips us through our social on Facebook, including a post in December about media efforts. how much energy is consumed by 10 strands of Christmas lights left plugged in for 13 hours a day. Customers communicate back, with one recent post drawing attention to several blown out street lights. Another complained about a high electric bill. The latter post resulted in information being posted about how to obtain energy assistance.

“

”

Benchmarking social media progress Parker said that the utility believes its social media campaigns are improving customer service levels, although it is difficult to measure.

“We’ve included some social media benchmarking in our annual survey that we do each year, but it’s hard to prove that social media has driven up customer satisfaction by a certain percent,” she said.

“We would like to think that we’ve definitely improved the customer experience for those customers using social media, especially during outage situations. Before, the only way for a customer to get information on an outage was to wait on our customer service call line, but often they can’t even get through during storms because there are so many calls coming in. Through Twitter, customers can obtain information specific to their homes without calling in. From that standpoint, we feel like we’ve improved the customer experience.”

John R. Johnson is a Boston-based freelance writer who specializes in alternative energy and technology topics.

Customer Segmentation

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++Actionable data is key to successful project implementation

By Kate Rowland

Analysis-based segmentation An analysis, within the Accenture report, of answers received concerning customer preferences showed six separate categories for residential customers: ??

manage electricity consumption on their own. A demographic breakdown

AS ELECTRIC UTILITIES IDENTIFY THE BEST ways

in which to engage residential customers with tailored smart grid products and services, customer segmentation efforts are being re-examined and refined.

An Accenture global study released in mid-2011, “Revealing the Values of the New Energy Consumer,” noted: “As more consumers gain access to smart in-home technologies, utilities have the opportunity to offer new, value-added products and services in both regulated and competitive markets. However, these opportunities will likely attract new market players and may lead to industry convergence.

SELF-RELIANTS: This group prefers to

indicates self-reliants have a higher proportion of women, and a higher proportion of consumers who are 55 years old or older. ??

SOCIAL INDEPENDENTS: This group enjoys testing new

technologies. Social independents have a higher proportion of men, and are found at all ages and levels of income. They value a program that allows them to connect with a community and share experiences, and like the idea that a program would be regarded as “trendy” by family and friends.

ILLUSTRATION BY JIM SWEET

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Understanding your utility customer base

Utilities that embrace the perceptions and behaviors of their consumers will ultimately generate the most value in the evolving energy marketplace.”

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CUSTOMER SEGMENTATION

COST-SENSITIVES: This group looks, above all, for

Price in the new economy As the categories listed indicate, price is not the key motivaa higher proportion of women, and include a tor for all customers. However, in broader project deployrelatively high proportion of ments that cross customer segments, consumers who are 25 to 34 price needs to be placed near, if not Utilities that embrace years old. This segment has a at, the top of the list. Harsher ecohigher than average share of nomic times have forced even more the perceptions and lower-income consumers. financially comfortable households into adopting new attitudes about ??

SERVICE-CENTRICS: This group behaviors of their the ways in which they spend. In the would like the best service same study, Accenture found that for themselves and their consumers will 83 percent of the global population in families. Service-centrics have the survey said that the No. 1 impact a higher proportion of women, ultimately generate for them was the cost the new service and are spread across all ages would add to their utility bills. and income levels. the most value in The perception of value—and value ??

TRADITIONALISTS: Traditionalthat exceeds the cost of the service—is the evolving energy ists prefer a familiar experiimperative, and must be addressed in ence. They are divided equally utility marketing in such a way that marketplace. between the genders and levels each segment of the utility’s customer of income, but have a higher base perceives its importance to them. proportion of consumers who As an example, cost-sensitives would first look for the finanare 55 years old or older. cial reward: Will this new service end up saving me more ??

TECH-SAVVYS: This group values convenience and money over the course of the year than what I’m spending efficiency. Tech-savvys have a higher proportion on it? Tech-savvys, on the other hand, would want to know: of men. They include relatively high proportions How much will this new service simplify my life? of consumers 25 to 34 years old and who are high With the proper advance effort, consumers can be better income earners. They are more likely to choose a engaged with the products and program that simplifies their lives. services that best fit their needs.

Using information wisely This is but one example of customer segmentation. Some utilities, using what they know about their customers, and available demographics, have segmented differently. There is no wrong answer here, just a number of different ways of breaking down a utility’s customer base into actionable segments—groups who are more likely to accept and benefit from one type of program rather than another.

The key here is that customer segmentation is imperative to program planning and implementation.

And it begins with looking at what you know about your customers, and what might be important, such as age, income level, preferred method of communication and home ownership. To be most effective, any segmentation effort needs to be able to combine customer information with account and premise information.

Put quite simply, good customer segmentation is the key to being able to launch successful project pilots, and to being able to provide the products and services customers want. ??

the best financial rewards. Cost-sensitives have

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Customers under the microscope ++OGE and Pepco are data mining for success

By Kate Rowland FROM PILOT PROJECTS TO DYNAMIC PRICING

products, U.S. electric utilities are taking a clearer, more microscopic look at the needs of their customers, segment by segment, before launching.

As one utility insider recently quipped, the focus has turned from “what’s good for the utility is good for the customer” to “what’s good for the customer is good for the utility.”

New data, and the ability to analyze it even more specifically have led to the ability for utilities to build more complete customer profiles. Age, income, neighborhood, electrical usage patterns and more all play roles in better defining customer preferences—and perhaps even needs— for the utility.

Customer segmentation for energy efficiency messaging Pepco Holdings, Inc., which serves 1.9 million customers through its regional subsidiaries Pepco, Delmarva Power and Atlantic City Electric, realized that it needed a new brand positioning and messaging platform to support its energy efficiency, demand response and overall smart grid efforts.

As well, it wanted to move its customer engagement efforts forward, in an effort to better position each regional electricity provider as a trusted energy advisor for its customers.

The first step? Identify and profile key customer segments to focus messaging, marketing efforts and resources.

The result? Key customer segments were identified and profiled, and a three-year marketing plan was built around the core identified audiences to help reposition the organization and its regional brands. An integrated marketing communications plan was built that appealed to specifically identified audiences in ways that attracted their attention (i.e., a mix of traditional and new media, a visual platform with emotional appeal, etc.).

“The days of viewing customers through three large prisms—commercial and industrial (C&I), residential and residential low income—have long passed,” said Charles Dickerson, vice president of customer care for Pepco Holdings. “They have different strengths and need to be communicated to in a way that resonates with them. In order to be effective in the communications space, the traditional views need to be disaggregated.

“Segmentation is a very effective tool to accomplish that objective. It allows the message creator to develop a message that will be tailored to a customer’s preference for how they want to be communicated to and what messages are likely to be well received.”

Working outside the box In the past, customer segmentation, for the most part, never got past the basics: residential, small business, commercial/ industrial, etc.

And while there has always been an understanding that not all residential customers are alike, data mining has given the industry the ability to make that knowledge actionable.

And we’re just scratching the surface of what’s possible.

“The evolution of the customer and the grid analytics capability are just being scratched at this point,” OGE’s Dick said. “We’re working to integrate those two together, and we’re looking forward to future innovations. We’re all creating methods to implement those.”

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Data and dynamic segmentation Data is playing an increasing role in the electric utility’s daily operations, as well as its plans for the future. “The data theme continues to weave its way through the future of energy and the needs of our customers,” said Alan Dulgeroff, director of IT enterprise and corporate systems for Sempra Utilities, in a recent Intelligent Utility Reality webcast, “Lessons Learned: How Utilities Leverage Data.”

Meter interval data, in particular, is a primary source of new information. For OGE Energy Corp., it’s key to the company’s efforts in customer segmentation.

“Essentially, where we see meter interval data is the ability for us to do what we’re calling dynamic segmentation,” said Paul Dick, OGE’s director of enterprise information management. “To be able to slice up our customers in all these new ways, to get that insight into what these new segmentations are with the customers and the way they react reflects the services that we offer them.”

But it also offers OGE other opportunities. “As well, this is now giving us the ability to enhance load curve analysis, and be able to do that across all segments using the segments that were created in the dynamic

segmentation, so that we can now do rate-making, and look beyond the traditional methods of load research-type meters, and the interval data that they provide on a statistical sampling,” Dick said.

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Connecting 24/7 ++The right information at the right time — on the right device

By Kate Rowland

mobile devices have heard the familiar phrase, “Is there an app for that?”

People on the move—and that’s most of the U.S. population—want information quickly, at the touch of a button.

“Land lines” for telephones are quickly becoming antiquities,

BY NOW, EVEN THOSE OF US WITHOUT

as personal mobile devices such as iPhones, BlackBerries, tablets and more mean consumers can talk to friends, access information, do their banking, “tweet” with friends — all with just one touch. In essence, the consumer of today is both intensely mobile and seemingly ubiquitous. And they like it that way.

Green button access In Washington, D.C., last September, in a keynote address to GridWeek attendees, the chief technical officer of the United States Government, Aneesh Chopra, issued a “green button” challenge to the electric utility industry: Do for electricity consumers what the private health industry has done with its “blue button.” (A program initiated by the U.S. government at Veterans Affairs—and subsequently taken up by the private health industry—the “blue button” allows

ILLUSTRATION BY DARREN MOORE

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MOBILITY + CUSTOMER ENGAGEMENT

veterans to access and download their personal health Spurring new energy apps records with one click.)

It didn’t take long for California to jump on “the button.” In “The U.S. Department of Veterans Affairs original- early October, PG&E Corp., Southern California Edison and ly launched Blue Button with industry and nonprofit San Diego Gas & Electric told Chopra they’d be ready by the collaboration. It’s a simple, commonend of 2011. (PG&E had already given sense idea—people should be able to its customers the ability to download Consumers would be access and download their own health their energy usage information.) All information—with the potential for a three utilities agreed to harmonize enabled to make more big impact,” Chopra said in his official the format of their information, so blog that day. that customers could send the data to informed decisions “Why can’t the same commonthird-party vendors. It is hoped this sense concept be applied to the will also spur development of energy and empowered to energy industry with a ‘Green apps and other innovative uses for Button’? Consumers should have customers’ energy information. actively manage access to their energy usage informaIn fact, consumer-facing energy tion. It should be easily downloadapplications, or “apps,” are being their energy use. able and in an easy-to-read format developed at a rapid pace by the offered by their utility or retail energy industry, which is growing increasservice provider.” ingly aware of a few important consumer needs: simplicity, The message at GridWeek was this: Chopra challenged connectivity, the ability to ask an energy expert a question the smart grid ecosystem to deliver on the vision of Green online, and even a set-it-and-forget-it function.

Button and provide customers access to their energy usage But mobility is the imperative key. If it’s not easily accesinformation electronically. “With this information at their sible, readable and one-touch from a mobile device, it’s usefingertips, consumers would be enabled to make more in- less to today’s increasingly mobile consumer. formed decisions about their energy use and, when coupled Since the launch of the first iPad, industry technology with opportunities to take action, empowered to actively providers have been launching consumer-facing applicamanage their energy use,” he said. tions, as well as energy-specific dashboard gadgets. And “Furthermore, making this information available—in there are sure to be more, with Chopra’s Green Button chalsimple, standard formats—will help spur innovative new lenge urging them on. consumer applications and devices from entrepreneurs, big “Industry is already stepping up to empower customers,” companies, and even students,” he added. “Imagine being wrote Nick Sinai, Chopra’s senior advisor, on the Office able to check your air conditioner from your smartphone or of Sciency and Technology Policy Web site 60 days after having a clothes dryer that saves money for you automati- the challenge was issued. “California’s three largest utilically during critically hot days or simply getting some help- ties—Pacific Gas & Electric, San Diego Gas & Electric, and ful customized hints on how best to save energy and money Southern California Edison—are working together to crein your house or apartment.” ate a “Green Button” that would allow customers to download their detailed energy usage with one click.”

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» I T + A N A LY T I C S

across the utility, even outside the company.

Analytics evolution ++Utilities are preparing to unleash smart grid data

??

PREDICTING, NOT JUST REPORTING. Analytics that

don’t just report past trends, but can predict and model what will likely happen in a variety of situations. ??

BUILDING FOR FLEXIBILITY.

Analytics that offer flexible customization capabilities. ??

SERVING THE “CUSTOMER.”

Analytics that open up the

By H. Christine Richards

data to the entire organization—and beyond.

THE UTILITY INDUSTRY IS FORGING AHEAD WITH THE NEXT

evolution of analytics. This new wave of analytics initiatives is about more than having a database, extracting data and analyzing historical trends.

Analytics initiatives today are moving closer to real-time data and analysis, all while dealing with increasingly complex data feeds and information demands.

To better understand this emerging and rapidly evolving analytics market, we at the Utility Analytics Institute, a division of Energy Central, recently picked the brains of close to 170 utility companies, as well as our own, to develop our first report, the Annual Market Outlook and Forecast. We’re taking a little magazine space to share some of our findings.

Analytics initiatives today are moving closer to real-time data and analysis.

Defining utility analytics If we were to put analytics in one sentence, maybe one slightly rambling sentence, we’d say that: Analytics are the technologies and applications along with the people and processes that enable utilities to transform data into actionable insights. This transformation includes four key areas:

Analytics that provide various analytics customers with information to make better decisions, but can also make automated decisions once the data is analyzed.

When talking about all these changes, it’s important that we not forget that these analytics initiatives aren’t just about software applications.

Other technologies, services and processes are critical to the success of analytics initiatives. Therefore, we need to divide analytics into five key areas: ??

Hardware

Collecting, managing, cleaning and storing data

??

Software

??

Extracting and analyzing data

??

Services

??

Reporting analysis results

??

Process

??

Making decisions and taking action

??

People

In the emerging analytics market, utilities can apply analytics to a variety of business applications, including: ??

GRID ANALYTICS enable utilities

to analyze data to ensure better planning, design, construction, operation and maintenance of utility transmission and distribution networks. ??

CUSTOMER ANALYTICS enable

utilities to analyze data to

BRINGING TOGETHER MULTIPLE DATA SOURCES. Analytics that can pull

better serve the utility and

together information from multiple business areas and sources

its customers.

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LEVERAGING “REAL-TIME” DATA SOURCES. Analytics that can quickly

extract and process data that arrives to the utility in near real-time. ??

INCREASING AUTOMATION.

??

We admit that analytics, in some form or another, have been around for years.

Data warehousing and query capabilities, and even business intelligence, have been around for decades. We’ve just found that the smart grid, and its associated technologies, are unleashing a new wave of analytics initiatives. Where do “old” analytics end, and “new” analytics begin? There isn’t an exact line between the two. At the Utility Analytics Institute we like to visualize the future of analytics by looking at what newer analytics initiatives are more likely to have, or at least be heading toward. Here are some characteristics and capabilities that you’ll see in new initiatives: ??

??

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As many utilities do move forward, we’re finding that many others still struggle to start initiatives.

Approximately 33 percent of utilities haven’t moved forward with an analytics initiative. Those utilities cite a lack of support, not having the right fundamental systems in place, budget availability, and the lack of necessary skills and staff as key hurdles.

Despite these hurdles, utility needs for improving efficiency and customer service, coupled with the implementation of smart grid and increasing executive support, are creating the perfect storm for significant utility analytics growth over the next five years. We project that North American utility analytics spending will grow about 29 percent per year from $552 million in 2011 to nearly $2 billion in 2016.

We’ve seen that approximately 57 percent of utilities are currently working through an analytics initiative, and ?? another 17 percent of utilities will OTHER ANALYTICS enable utilities to analyze complex data to improve undertake an initiative in the next 12 planning and operations in areas such as generation, energy trading/ months. Of these near-term projects, portfolio optimization, and shared services. about 46 percent are worth $1 million or more.

Key analytics trends When we segment the data further, From our analysis, we found that analytics are just starting to roll out and there are definitely some key hurdles in the way, but things are working out just fine. for example, we project that in 2011, approximately 39 percent Here are our key findings for why utilities are undertakof analytics spending goes ing analytics and what challenges they’re facing.

Despite the toward grid analytics, 33 We found that utilities are moving forward with percent for customer anaanalytics for a variety of reasons. Utilities have an oldexcitement, not lytics and 28 percent for fashioned interest in improving business operations and other analytics. Between decision-making—and the smart grid helps supply the all utilities have 2011 and 2016, you can technologies and data to improve their ability to do so. expect faster growth rates Topping the list of drivers for utilities to invest in analytmoved forward for grid and customer anics initiatives is performance improvement, indentifying alytics, with a 33 percent and implementing cost savings and then improving cuswith analytics average growth rate per tomer service. Another key driver is increased executive year for grid analytics and support of analytics initiatives, with over 23 percent of initiatives.

32 percent for customer utilities reporting that the chief executive officer is the analytics. Other analytics primary driver for the initiative. will grow about 18 percent per year.

Since most utilities have historically had access to basic data query capabilities For additional insights, please to address their business needs, we’re finding that extracting relevant information is where utilities feel they are doing their best in analytics. However, utilities check out our full report at are generally accepting of new analytics and the opportunities these initiatives http://bit.ly/y7nXAY provide them.

H. Christine Richards is a senior analyst at Despite the excitement, not all utilities have moved forward with the Utility Analytics Institute. She can be analytics initiatives. reached at crichards@energycentral.com.

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OGE’s Information Factory takes flight ++Handling disparate data effectively for analytics

By Kate Rowland

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IN “LESSONS LEARNED: HOW UTILITIES LEVERAGE DATA,” an Intelligent Utility Reality Webcast held in mid-December, panelists discussed the ways in which their utilities were leveraging and analyzing the data available through meter data management, outage management, distribution management systems and more.

Paul Dick, director of enterprise information management for OGE Energy Corp., explained OGE’s “big data” in these terms.

26

Defining big data “What does OGE’s big data look like? In the past it was SCADA, it was OMS, it was all these different messages and events that we’re trying to capture,” Dick said. “So for us, meter interval data with the demand response program we have is going to drive our typical meter interval data just a bit higher in terms of the volumetrics of that. We’re actually taking in 50 billion events annually, just from a meter interval perspective.

“Our Integrated Operating Center, also, when we collect all the messages that are coming from this kind of technology, and we put together the meter events, the AMI events, the OMS [outage management system] integration, the DMS [distribution management system] messages too, it’s a very large volumetric again that’s going to take some skill to manage, incorporate it into the data model, and also to build analytics on top of that.”

DMS messages “can be massive, and they can be large in width, as well,” Dick said. “The value there is also providing OMS the intelligence from DMS, so your reliability processes can be better maintained. The Holy Grail, from a distri-

Handling data from disparate systems With all that data to manage, OGE developed what the utility calls an Information Factory program. “It’s basically, in a nutshell, nothing different than anyone else has ever seen, but maybe we’ve just tooled the capabilities in a different way,” Dick said.

“We’ve spun up our enterprise service bus to start handling messages from all these disparate systems in nearreal-time and real-time fashion.

“So we had the traditional batch processes ... big chunks of data over specific time dimensions like everybody else has, but this is now giving us a new capability to be extracting and (building) composite applications above and beyond the transactions which everyone’s accustomed to.”

Geospatial-enabled presentation, he said, “allows us to layer these things on dynamically, so that each time we add a new subject area within the warehouse, it’s automatically picked up in a new layer it was assigned. Users can actually go and pick that layer from a dynamic library. We also beefed up and added some statistic modelling capabilities, so that we can start to do these predictive looks into the IOC and the operating centers as well as the predictive looks into the DMS system, IVVC and so on.”

But the last piece of the equation needs not to be underplayed in importance, Dick said. “We believe that the importance is that after these analytical findings are present, then everybody else needs to know, to be able to go in and show what’s been done, and show how to leverage those things and the governance around these things, so that people use them in the correct way. Collaboration is becoming a bigger and bigger thing for the presentation layer.”

We would like to thank our Knowledge Utility Executive Summit Sponsors for supporting this exclusive summit.

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He offered six mega trends: an aging workforce, the carbon capacity conflict, the nexus of water and power production, the evolution of the utility business model, the advent of intelligent infrastructure and customer engagement. Amid these unrelenting shifts in the industry, grid modernization will require a departure from the excessive caution that once was the hallmark of the power industry, he noted.

“You have to be willing to take Knowledge Executive Summit 2011 measured risks,” Dickenson said. delegates share experiences “You cannot always use a bottomBy Kate Rowland line business approach.

“We’re all enamored with technolTHE SIXTH ANNUAL KNOWLEDGE EXECUTIVE SUMMIT FOUND ogy,” he added. “You need to ask yourus on Amelia Island, just outside of Jacksonville, Florida. self whether you’re getting the most Recognized as one of the utility industry’s most valuable and prestigious value out of your base systems. We forums for chief information officers, the summit last year expanded its scope call them our 12 essential to include other mission-critical utility executives in systems. The business side Continuing customer service and operations. must change and the busithe conversation With mounting political and environmental presSo much was discussed at ness side and technology sure, increasing energy demand and the potential Knowledge2011, in only two must be engaged. Know what for rising fuel prices, the utility industry is faced short days, that Intelligent you want to accomplish. with making some costly investment decisions based Utility felt it appropriate to Deploy your best people.” on desired outcomes that will depend largely upon

Planning for the future; dealing with the right now ++

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continue the conversation

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multiple factors. As a result, the intelligent utility of throughout 2012, leading up to Roundtables on the future means more than intelligent endpoints the next Knowledge Summit. overarching themes on the grid. It also means the intelligent integration The knowledge gained through While some roundtable of the customer with IT and operations. These three continuing discussions and sessions during the summit areas are moving to work as one team to address the information exchange, both in were broken down into CIO, the magazine as well as online at serious challenges and opportunities facing the intelcustomer service and operahttp://www.intelligentutility.com, ligent utility over the next several years and beyond. tions topics, there were also a will help us share best practices, Through small roundtable discussions, interactive challenge industry thinking, and number of integrated roundleadership forums and networking opportunities fire up new thought leadership table sessions that involved over two days, top executives in all three areas noted leading up to Knowledge2012. participants from all three above are able to gain new perspective and share their We invite you to join the areas. These small sessions own knowledge. discussion! encouraged open discussion Here, we’d like to share with the rest of the industry among peers, with the undera bit of what was discussed throughout the summit. standing that their comments In the coming issues of Intelligent Utility magazine, we will endeavor to continue would not be publicly attributed. the conversation even further, delving deeper into particularly intense subject Sessions covered topics such as the areas first discussed at Knowledge2011. strategic versus tactical transformation of IT; addressing low-income Be willing to take measured risks Host utility JEA’s CEO Jim Dickenson provided keynote leadership at the beginning customers in today’s utility climate; how social media is changing the of the summit, recounting four decades of technological change in the electric utility industry, using a slide rule to illustrate his point. The slide rule, he said, had been customer dynamic; cyber and physical security issues for operations; stratehis critical tool, and his father’s, upon graduation in 1973 and 1952, respectively.

Today, the challenge is planning for the future while dealing with the “right gies and considerations when building now,” Dickenson said. out a smart grid communications

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infrastructure; bring your own device (BYOD) thoughts and strategies; planning for the future with smart grid/meters; skills necessary for the workforce of the future/generational change; strategies for NERC CIP requirements and beyond; mobility and customer engagement; how data visualization is being used; demand response and the roles of IT versus customer service versus operations; and best practices in IT/OT collaboration.

Often, discussions occurring in one roundtable session carried over, in part, to other roundtables across the summit, a good indication of the peer-to-peer discussions being encouraged across the three silos.

Smart meters and data A session on the future of smart grid and interval meters confirmed utilities are at disparate take measured risks. You points in their deployments, as well as in their use of the meters cannot always use a bottombeyond meter-to-cash applications. One municipal utility is just line business approach. embarking on a pilot program to see how strategic use of smart meters can help hone its outage reporting and management efforts—a potential angle for customer engagement—while another, an investor-owned utility, had crunched the numbers and decided it could not currently justify the deployment of advanced metering infrastructure. Yet another utility said it had completed deployment of interval meters to its residential customers, and will use the data to reach self-imposed energy efficiency and renewable goals while maintaining high customer satisfaction.

A question from the session moderator—Could a smarter grid contribute to improved SAIDI (system average interruption duration index) numbers?— elicited a mixture of responses. One participant felt that AMI could improve the accuracy of outage information and make responses more efficient, and another said that, in a major outage, smart switching can reduce the impacts on the grid as well as on SAIDI numbers. One possible unintended consequence of adding intelligence to the grid, however, is that while SAIDI numbers today are estimated from various values, greater exactitude could initially make those numbers worse. Would that lead regulators to tighten oversight?

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You have to be willing to

30

Addressing low-income customer needs Advanced technologies don’t always mean a lot to low-income, cash customers without a lot of trust in their local utility. Participants in this roundtable discussion came up with a lot of questions for one another, and a few suggestions, as well.

“We pull every lever we can to help them meet their bills,” said one. “We have people who can’t pay, but then they won’t learn to conserve,” said another. Some utilities have found the response rate to be low to marketing efforts, because their low-income customers don’t trust the utility company. With the trust issue paramount—how do you get a customer to open something coming from the utility, when they don’t want to look at a bill they’re not sure they can pay—at least one utility suggested doing the initial outreach through other agencies.

“The economy’s not great, and [low-income assistance] programs are being slashed at federal and state levels. Do utilities become the social agency? Who fills that gap?” one roundtable participant asked. “There is a certain bill amount where it becomes too expensive for people to pay off, so we want to get to people before they hit that threshold,” another said.

Hiring the workforce of the future This integrated roundtable hit the track running, sharing ideas, concerns, challenges and potential solutions. As one utility representative posed a question to the group, another two or three had suggestions as to how they handled it within their own organization. Here were some of the high points: ??

It is important to build a primary and secondary knowledge program around specific systems, and to do a lot more documentation so that people with the right skill sets can be hired without those people having to “take ownership” of that system. (There seems to be some reluctance by the new breed of utility employee to take ownership of a system, preferring to rotate from responsibility to responsibility.)

??

Train in redundancy so you can keep the system going when someone leaves. The new person in the seat then validates the documentation for the system, what’s there, what’s missing, and what’s needed.

??

Challenges to hiring: IT analysts are difficult to find or hire in some areas of the country. That’s also the case in terms of power engineers, as they’re now all computer engineers. Having the ability to bring in additional staff (even when needed) is not always possible. And when you can, the new challenge is, how do you meet a new employee’s needs? Suggestions included perks, flexible working hours, and the opportunity to “bring your own device” or to telecommute.

“We need to recognize that society is changing,” noted one participant. “We have to understand that our new people are looking for a quality of life that work does not completely provide.”

With files from Phil Carson, H. Christine Richards, Jill Feblowitz, Christopher Perdue and Robert Sarfi.

Knowledge, Innovation, Technology, Excellence ++Intelligent Utility KITE and UtiliQ Awards

By Kate Rowland KNOWLEDGE,

INNOVATION,

TECHNOLOGY

AND

EXCELLENCE:

These are the characteristics that set leaders apart from the pack.

During the Knowledge2011 Intelligent Utility Executive Summit, executives from IT, customer service and operations were recognized—leaders who have moved their companies forward through strategic initiatives, measurable technology efforts, and innovative solutions that have met business objectives, such as higher efficiency, greater production, measurement and profitability. In addition, we recognized the top three leaders in Intelligent Utility magazine’s UtiliQ top 25 (see pp. 34).

CIO of the Year Reid Nuttall, vice president and CIO of OGE

Gregory Knight, division vice presi-

dent of customer services for regulated operations for CenterPoint Energy Inc., was named Customer Service Leader of the Year for his visionary leadership and focus on CenterPoint’s technology efforts around business process improvement and the voice of the customer.

Knight manages CenterPoint Energy’s electric and natural gas call centers, customer service training and quality assurance, billing exception management, and gas credit and collections, a position he has held since 2009. In total, he has more than 18 years of customer service and business operations experience, in both service industries and utilities.

Knight’s nominator said: “Gregory has been at the forefront of the emerging focus in utilities around customer engagement. His vision is to be able to benchmark CenterPoint with best-in-class operations within and outside the utility industry. He believes that prudent capital investment in customer service technology can benefit customers and the utility’s bottom line.”

W W W. I N T E LL IG E N T U T I L I T Y.CO M

Energy, was presented the award for CIO of the Year for his innovation in the area of orchestrating smart grid at the right pace. One nominator wrote: “Reid has also taken a thoughtful and purposeful approach to smart grid security and is building bridges between operational technology and information technology.”

Nuttall has worked with OGE since early 2006. As CIO, he is a leader in the transformation of OG&E electric services, allowing both the utility and its customers to benefit from new smart grid technologies. In partnership with its customers, OG&E (a subsidiary of OGE) is building the Positive Energy Smart Grid to improve energy efficiency.

Nuttall’s nominator noted: “Nuttall’s vision is in line with the corporate vision to enable the smart grid. In the short time he has been with OGE he has been able to understand the needs of the business and articulate a road map for reliability and customer engagement in the future.” In addition: “All of the employees from OGE that I have talked with since Reid has been on board have been enthusiastic and energized by his approach—especially those in IT.”

Customer Service Leader of the Year

31

Operations Leader of the Year Paul Lau, assistant general manager, cus-

tomer, distribution and technology, for the Sacramento Municipal Utility District, was awarded Operations Leader of the Year for his vision and stewardship of SMUD’s smart meter and smart grid deployment effort.

Lau is responsible for overseeing SMUD’s retail and technology operations including customer services, energy delivery, energy efficiency, customer renewable programs, telecommunication and enterprise business applications. He has worked with SMUD for almost 30 years in the utility’s distribution services and customer services departments.

His nominator wrote: “Paul faces constant pressure to maintain a low cost of service while demonstrating that SMUD is a progressive utility. He was instrumental in assisting SMUD in receiving considerable ARRA funding for Smart Sacramento. He has since led the deployment of the smart grid and smart meters in a manner that has been embraced by the community as a whole.”

UtiliQ 2011 Utility of the Year

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For the third straight year, Sempra Energy’s San Diego Gas & Electric (SDG&E) leads the country as the most intelligent utility in America, according to the annual UtiliQ survey of U.S. electric utilities.

The UtiliQ ranking is based on a company’s performance using five quantifiable intelligence metrics, including productivity, renewable energy portfolio, smart initiatives, energy efficiency, demand response and load management

32

programs (and customers enrolled) and IT investment. We believe that the few companies with IQs over 140 are at near genius level compared with the rest of the industry.

SDG&E topped the rankings at a combined utility intelligence quotient of 169.3.

The company’s award was accepted

by Lee Krevat, director of the smart grid initiative for Sempra Energy’s California regulated utilities, SDG&E’s and Southern California Gas Company, and James Avery, Sempra Energy’s senior vice president of power supply.

UtiliQ 2011 First & Second Runners-up Last year’s first and second runners-up flip-flopped positions this year, a definite indication that the neck-and-neck UtiliQ race between the two last year is still a close one.

This year, PG&E Corporation nabbed second place, with a combined utility intelligence quotient of 157.6, and Austin Energy was close behind in third place, with a combined utility IQ of 153.2.

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analysis • Expert and editorials posted throughout the day

2011 UtiliQ rankings ++Top 25 intelligent utilities

By Jill Feblowitz and Kate Rowland

ed, utilities will see demand response as the top initiative for the next three to five years. Utility executive leadership will need to learn as much as possible about how to deploy technology to maintain reliability, affordability and efficiency.

In this respect, utilities have a lot to learn from peers that have years of experience with traditional load control programs. Much can be learned as well from new programs such as critical peak pricing, critical pricing with load control, demand bidding buyback, real-time pricing and peak time rebates.

WELCOME TO THE THIRD ANNUAL UTILIQ RANKING OF U.S.

UtiliQ methodology electric utilities—a list of the top 25 intelligent utilities based on a The UtiliQ ranks utilities using an detailed analysis by IDC Energy Insights and Intelligent Utility magazine. The intelligence quotient (IQ). Companies UtiliQ analysis provides utilities a way to benchmark progress against a set with IQs over 120, in this of metrics that are consistent, but also provide analysis, exhibit very superoom to accommodate changes in this dynamic For the third year in rior intelligence compared industry. The aim is to provide a fact-based with other U.S. electric analysis based on disciplined studies. a row, San Diego Gas utilities. Companies with For the third year in a row, San Diego Gas & IQs over 140 are at nearElectric has taken the top position on the UtiliQ & Electric has taken genius level compared with list. The company has worked hard to develop the rest of the industry. and deploy a well-planned road map and business the top position.

The current ranking plan for smart grid initiatives, supported by faris based on a company’s sighted IT spending. This is what has ensured its performance using five quantifiable place at the top of the list. Pacific Gas & Electric Corp. and Austin Energy follow intelligence metrics: in second and third place. This year, Arizona Public Service has emerged in the ??

PRODUCTIVITY An intelligent utility top five utilities, along with Southern California Edison.

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is a productive utility, measured

34

What is an intelligent utility?

An intelligent utility is one that is productive, uses resources wisely, deploys information and technology to the best advantage, provides options to its customers, maintains reliability, and runs a sustainable business. The intelligent utility is steadfastly and thoughtfully re-aligning its objectives, business processes and technology to prepare for the future.

Becoming a more intelligent utility requires more than technology investments; it requires a real investment in people and processes, too. It is our intent to provide a way for utilities to benchmark their intelligence and measure progress against their stated goals and objectives. Even after three years, we view the UtiliQ ranking as an ongoing effort that will continue to evolve over time, as it has every year since its inception.

What has changed in 2011?

Every year, due to the diligent efforts of many organizations within the industry, the quality and consistency of data available has improved. With better data, we are able to do a more thorough analysis. We have also seen a shift in what is getting attention. Now that many foundational technologies have been implement-

by revenue per employee. ??

RENEWABLE ENERGY An intelligent

utility has a commitment to renewable energy as part of its resource portfolio (measured by renewable energy sales, renewable energy customers and renewable capacity defined as wind, solar and biomass, not including large hydro). ??

SMART GRID INITIATIVES An intel-

ligent utility makes investments in developing smarter grids.

(Smart grid intelligence is based on the level of investments in smart metering, as well as smart grid initiatives.)

UTILIQ RANKINGS /// 2011 RENEWABLE SCORE

SMART GRID IQ

DR, EE PRICING IQ

IT SPENDING IQ

San Diego Gas & Electric

169.3

115

134

231

149

166

2

PG&E Corporation

157.6

118

162

187

152

120

2

3

Austin Energy

153.2

100

123

225

171

125

29

4

Pinnacle West Capital Corporation

147.1

112

110

164

205

118

8

5

Southern California Edison

145.3

116

158

166

161

119

10

6

IDACORP, Inc.

141.5

113

100

193

148

127

15

7

Sacramento Municipal Utility Distirict

139.6

116

172

157

131

119

14

8

Portland General Electric Company

139.4

117

114

220

113

120

6

9

Salt River Project

137.3

116

100

191

120

119

26

10

JEA

136.3

116

100

221

112

115

4

11

NextEra

135.6

126

138

132

152

112

12

12

Alliant Energy Corporation

134.4

118

117

189

127

112

14

13

Black Hills Corporation

130.8

115

113

200

103

115

13

14

Southern Company

130.1

117

100

185

112

116

7

15

Pepco Holdings, Inc.

130.0

135

116

130

135

116

38

16

Hawaiian Electric Industries, Inc.

128.4

119

159

105

134

123

70

17

Nebraska Public Power District

128.2

110

121

154

103

115

19

18

Xcel Energy Inc.

126.9

123

130

103

148

110

5

19

NV Energy, Inc.

126.1

128

100

120

130

119

23

20

DTE Energy Company

125.5

122

100

125

132

138

42

21

Ameren Corporation

124.3

120

100

161

116

126

20

22

Duke Energy Corporation

124.3

120

110

111

125

118

27

23

CenterPoint Energy, Inc.

124.3

125

100

165

103

122

60

24

Public Service Enterprise Group Incorporated

123.8

130

101

102

133

122

21

25

Constellation Energy Group, Inc.

123.1

149

104

108

103

128

1

1

3

UTILIQ RANKINGS

2011 RANKING

COMPANY NAME

RATINGS: 90-109 Normal Intelligence // 110-119 Superior Intelligence // 120-140 Very Superior Intelligence // Over 140 Near Genius NOTE: Overall IQ is an average of the IQs for Productivity, Renewable energy, Smart initiatives, DR/EE/Pricing, and IT investment.

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IQ

PRODUCTIVITY IQ

2010 RANKING

35

in position can also be attributed to inclusion of traditional demand response programs.

Looking ahead With the development of a price on carbon, higher costs for energy supply, and the FERC mandate that demand response be considered a supply resource, utilities that follow the path of highly intelligent utilities will stand to gain in the long run. Companies that want to make the list or improve their position should focus on the following strategies and investments: ??

OFFER YOUR CUSTOMERS MORE OPTIONS AND BUILD PROCESSES AND SYSTEMS TO SUPPORT THOSE OPTIONS. Even if your company is

in a regulated environment, there are multiple options that a utility ??

W WW.INTELLIGENTUTILIT Y.COM /// JAN UARY/FEBRUARY 2012

??

36

can provide to their customers

DEMAND RESPONSE/ENERGY EFFICIENCY (DR/EE) An intelligent utility allows

such as targeted energy efficien-

consumers to manage their energy usage and costs. (In addition to en-

cy programs, pricing options and

ergy efficiency programs, we made the decision to include participation

green power. Customers in some

in all types of demand response programs, whether these are the more

regions will want to exercise their

traditional programs, such as load control, or newer programs.)

options to purchase electric ve-

IT INVESTMENT An intelligent utility invests in information technology to

hicles or sell electricity that they

enable business process improvement (measured by IT spending as a

produce on site back to the util-

percentage of revenue and on a per-employee basis).

ity. Stay one step ahead by fully

This year, we applied a factor to the entire score for sustainability based on whether a utility has senior-level sustainability or corporate social responsibility officers and an annual sustainability report. We also decided to drop power authorities that serve a wholesale function, as these companies have few retail customers, which makes a comparative analysis different. (That said, both TVA and Bonneville Power Authority are exemplary for investment in energy efficiency.) Finally, we decided not to include penetration of newer technology, such as electric vehicle incentive programs, as these programs are in the very early stages of development.

This year, too, UtiliQ benefited from more comprehensive sources of data than in previous years. We strive to use published studies based on a consistent methodology wherever possible. Data sources included SNL Energy, AWEA, SEPA, NREL, FERC, the Consortium of Energy Efficiency and the IDC Energy Insights Worldwide Quarterly Smart Meter tracker. Where studies are not available, we supplement data using utility Web sites and annual reports. As a result, the 2011 analysis is based on better data on renewable generation, as well as energy efficiency, demand response, and smart meter implementations at the utilities.

There were some changes since last year, besides having more comprehensive data upon which to draw. It is clear that some utilities rose in the ranks based on better information—renewables as a percentage of generation, energy efficiency budgets, smart meter deployments and demand response. Changes

exploring future scenarios and understanding what processes and systems need to be in place to accommodate changes. ??

MAKE INTELLIGENT TECHNOLOGY INVESTMENTS. Find ways to get

the best return from your technology investments by ensuring that spending on information, communications and energy technologies is in line with business objectives. Evaluate technologies based on maturity and how well the technology scales. Get advice from others on whether technologies are expected to decrease in price or cost in the near future.

Jill Feblowitz is vice president, utilities and oil and gas, IDC Energy Insights.

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IT INSIGHTS

Leveraging lessons learned ++Accelerating business value from the intelligent utility

By Dutch Holland, PhD LOOKING BACK, IT IS EASY TO SEE HOW NEW TECHNOLOGY

W WW.INTELLIGENTUTILIT Y.COM /// JAN UARY/FEBRUARY 2012

can smoothly enter and sweep an industry, bringing technical and business improvements beyond expectations. Yet, viewed from the inside as a participant in the technology implementation process, the experience is typically anything but smooth.

What are the consequences of most implementation struggles? First and foremost is the delay in getting valuable technology integrated and put to work for the benefit of utility stakeholders. The second consequence is the perception that technology implementations should be avoided since they are “quagmires” waiting to afflict the next technology innovation.

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Accumulated know-how Fortunately, an accumulating body of knowledge about implementations can ease much resistance and negative feelings from utility managers. Significantly, many industries have faced the same implementation issues—from the aerospace industry implementing business control systems, to global chemical companies implementing ERP systems, to upstream energy companies implementing the Digital Oilfield (DOF), to today’s issues surrounding the implementation of smart grid and the intelligent utility.

At a recent workshop on the intelligent utility (IU), 20-plus utility executives had the opportunity to examine technology implementation lessons learned both from utility companies and from companies in other industries. Workshop participants were asked to evaluate lessons learned for applicability and value to IU initiatives under way in their companies.

Lessons learned Interestingly, some of the most important lessons learned are at the senior management level rather than at the level of IU projects. Although a high level of executive commitment is clearly important to success, the needed commitment is stronger than management pronouncements. Therefore, commitment through a formal, written company strategy that includes exploitation of intelligent utility concepts is paramount.

In addition, if targeted business improvements from IU efforts are not shown in the utility’s financial projections, commitment from senior management will be considered lacking, reflecting an attitude of “Let’s not count on IU initiatives for business results; let’s wait until we see the dollars.” A final lesson learned at the senior management level was that specific incentives for IU results considerably strengthen management commitment.

Lessons learned also apply to portfolio management. Potential IU initiatives must be on the company’s short list of priority investments or there will be inadequate management attention or energy for IU success.

Management must explicitly communicate a “deploy or adopt” decision for every IU initiative. Failure to communicate a decision to “deploy the IU solution by a specified date” will likely cause the organization to

Management must explicitly communicate a “deploy or

risk categories facing any IU initiative:

Dutch Holland, PhD, is a Houston-based management consultant.

W W W. I N T E LL IG E N T U T I L I T Y.CO M

wait years for technical risk (Will the technology work?), organizational risk (Will the organization use the technology to enable across-the-board adopt” decision for improved business processes?) and business risk (Will the use and value. At deployed IU solution make money for the company?). the project level, every IU initiative.

A hard lesson learned at the technical level is to continue a critical lesson to invest until IU technology is fully tested, lest an early learned is to keep “failure in action” cost any or all ground gained or even short-circuit the entire IU initiatives focused on improving internal IU movement. A second important lesson learned on the technical side business processes and results, not is the need to provide a proven methodology that absolutely minimizes risks letting the focus slip to “implementof an operational upset during implementation. A sophisticated technical IU ing IU technology,” likely resulting in solution cannot fit into a complex business environment without a similarly technical success but business failure. sophisticated and robust implementation methodology.

Another lesson is to divide IU implementation into two separate but inteThe bottom line grated projects: one must ready the IU Overall reactions of the utility executives at the workshop were that lessons solution for the business and the other learned could be directly applied to their organization’s IU projects and also readies the business for the IU soluprovided vital insights not currently present. In addition, participants felt that tion. This two-project approach greatly applying these lessons-learned concepts would definitely add business value to increases the chances of “going to work their companies, giving their projects much higher chances of success.

If the utility industry can learn from other companies and industries that at Go Live,” the ultimate goal of any have already implemented and gained value from digital technology, much time implementation. The need for robust and energy can be saved. At the same time, the IU movement can accelerate and risk management is an obvious lesson learned, but a more important learning quickly become one of the dominant sources of business innovation and value for the industry. takeaway is that there are three major

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O P E R AT I O N A L PERSPECTIVES

New Jersey energy master plan ++Collaboration with state, PJM, FERC on transmission necessary

By Corina Rivera-Linares NEW JERSEY MUST WORK WITH PJM INTERCONNECTION AND

W WW.INTELLIGENTUTILIT Y.COM /// JAN UARY/FEBRUARY 2012

FERC to ensure a reliable supply of energy and capacity at reasonable rates while advocating for policies that help control electricity costs, maintain system reliability and adhere to environmental objectives, according to the state’s final 2011 Energy Master Plan.

New Jersey is opposed to a FERC-imposed paradigm that hinders in-state generation development while simultaneously imposing on ratepayers an investment premium for transmission projects that import power from outof-state generation sources far from the state’s loads, according to the plan.

“FERC’s adoption of incentive rate treatment for non-routine interstate transmission facilities must not become routine because it unjustifiably rewards transmission companies for simply being mindful of necessary system upgrades,” the plan said.

40

Equitable capacity price results needed The state will continue to participate in and, as appropriate, challenge PJM’s transmission system planning and wholesale market design processes and rules.

New Jersey should also evaluate ways to modify reliability pricing model rules to produce more equitable capacity price results across the region. “New Jersey residents should be protected from paying premium capacity prices—averaging $1.4 billion annually—while seeing very little of the anticipated new generation capacity that would modernize the current resource mix in New Jersey,” the plan stated.

PJM’s current transmission interconnection process stifles approvals for interconnection and imposes unreasonable costs on merchant generators, the report said. Generators seeking interconnection enter a queue defined not by project viability, but by the date of the interconnection request. “The state is committed to rationalizing this process through PJM and FERC approval of a queue breakaway mechanism that would allow viable generation projects to advance in the queue based upon the state of their actual development and in-service date,” the plan added.

Another challenge is that transmission upgrade studies are done by the transmission owners, which may have generation affiliates in direct competition with the merchant generator requesting interconnection. “New Jersey is committed to having independent third parties with no vested interest in impeding project development and ultimate interconnection, perform interconnection studies and necessary transmission upgrade cost estimates,” the plan stated.

Projects in the works The plan noted that since PJM determined that new transmission was required to serve northern New Jersey, Public Service Enterprise Group subsidiary Public Service Electric and Gas (PSE&G), along with PPL

border. PPL is targeting an in-service date of April 2015 for the Pennsylvania portion of the line.

“To hedge against uncertainty about the timing of new transmission, uncertainty about load growth and generator retirements, New Jersey should continue to encourage the development of new generation that meets the economic, environmental, and reliability goals set forth in this [plan],” the plan said.

Another project in the works is the 660 MW Hudson Transmission Project, which has encountered market-related delays and has an uncertain completion date. If built, the project would link New Jersey with midtown Manhattan, and will require $172 million in PJM transmission upgrades to support the project’s firm withdrawal rights of 320 MW. However, the transmission upgrades to ensure grid security and stability objectives in New Jersey are not designed to protect New Jersey ratepayers from economic consequences, according to the plan.

Corina Rivera-Linares is senior analyst for Energy Central’s TransmissionHub. She can be reached at corina@energycentral.com.

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Corp. subsidiary PPL Electric Utilities, developed the 500-kV SusquehannaRoseland transmission project.

While New Jersey and Pennsylvania state regulators approved the line in February 2010, PSE&G and PPL said the line will not be in service until June 1, 2014, and perhaps later due to permit delays related to a 1.65-mile line segment requiring National Park Service approval. The National Park Service has said the review will be completed no earlier than January 2013.

The best estimate for the inservice date of the New Jersey portion of the project is June 2014 for the eastern portion between Roseland and Hopatcong, and June 2015 for the western portion between Hopatcong and the state

EE, DR and the smart grid Providing reliable service requires substantial investment in generation, transmission and distribution infrastructure, the plan said. It may be more costeffective to reduce electricity use during peak hours instead of investing in conventional supply chain infrastructure to serve peak demand.

Various ways to address peak demand growth include energy efficiency, building new generation and expanding demand response. “Peak shaving” makes the use of transmission and distribution systems more efficient.

Among other things, the plan said one of the most straightforward ways to store energy is in a spinning flywheel where electrical energy is converted into the kinetic energy of rotation by running it through a motor/generator, which accelerates the flywheel. When energy is needed, the flywheel’s motor/generator converts the kinetic energy of rotation into electrical energy. “In conjunction with New Jersey’s support for offshore wind, New Jersey should monitor the technical and commercial developments that may support the installation of flywheels to promote grid reliability objectives in response to increased wind penetration in New Jersey.”

The plan also said New Jersey expects that smart grid technology will be an integral part of the energy balance throughout the state. Indeed, the state is involved in a smart grid demonstration project in the Jersey Central Power & Light service area, which involves a two-way communications network that enables JCP&L, a FirstEnergy company, to monitor available load for control and to measure load reductions associated with central air conditioning systems.

Currently, all customers in New Jersey with demand of 1,000 kW and above have interval meters that store power use data at regular intervals and two-way communications that support dynamic pricing. “New Jersey should continue to monitor smart metering technology advances in the broader context of gauging the increased market potential of smart grid technology,” the plan added.

According to a Dec. 6 statement, after the draft 2011 plan was released in June, the state Board of Public Utilities hosted several public hearings and assembled technical working groups designed to solicit more specific recommendations on clean energy funding, alternatively fueled vehicles, innovative technologies and biomass.

“This final adopted energy master plan demonstrates the administration’s firm commitment to change the way energy is produced, distributed and used as part of our broader emphasis on driving the development of cleaner and renewable sources of energy to spur business and economic growth throughout the Garden State,” Gov. Chris Christie said in the statement.

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O P E R AT I O N A L PERSPECTIVES “The longer term you look, the more speculative the plans become and I think it’s certainly more definitive in that shorter time frame,” Henderson said.

This sentiment was uniform among the panelists, who also included Jim Busbin, Southern Company’s supervisor of bulk planning; John Buechler, the New York ISO’s executive regulatory policy advisor; and Bob Bradish, American Electric Power’s managing director of transmission planning and business development.

The workshop was the first of four the DOE is holding to solicit input on its 2012 transmission congestion analysis process.

“You can’t do anything less than five years in this transmission world,” Bradish said of a forward-looking study.

Long-term view = speculation ++Panelists say DOE congestion study should take near-term view

By Rosy Lum

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THE U.S. DEPARTMENT OF ENERGY’S 2012 CONGESTION STUDY

42

should take a five- to 10-year outlook, panelists at DOE’s congestion study workshop said in early December.

Extending beyond that in a congestion analysis will render DOE’s study too speculative to be useful, they said.

“The valuable time frame is that in which we engage in actionable planning— the planning pursuant to the criteria we’ve laid down that results in projected needs for resources in the relatively near term,” said Chuck Liebold, manager of interregional planning for the PJM Interconnection. “It should include the resources we’ve identified that have a relatively higher commercial probability of coming to fruition.”

Near-term to lend more definition to plans Given impending EPA regulations, generation retirements and interconnection requests for wind power that will be taking place within the next five to 10 years, a near-term outlook will lend more definition to transmission plans, said Mike Henderson, director of regional planning and coordination for ISO New England.

Henderson added that focusing on historical congestion on various transmission systems and evaluating the robustness of the transmission plans that are in place and the historical success of implementing those particular plans lends more to a “closer-in” view as a primary focus.

Regional data can guide For source material and guidance, the panelists suggested DOE look at data from the various regional transmission organizations and independent system operators, including planning authorities’ studies of transmission system upgrades; the Strategic Midwest Area Renewable Transmission study, or SMARTransmission study; and the Eastern Interconnection Planning Authority’s (EIPC’s) two-phase transmission study. The latter, they cautioned, should not be relied upon heavily, however.

“I draw the analogy of the EIPC study to a Detroit concept car,” Liebold said. “You’ll never see it built, perhaps, but there are lots of elements in those cars” to learn from. “We learn lots of things from the very long-range studies that we can begin to anticipate and perhaps incorporate into our actionable plans. In order to have a good plan, you need to have a range of ideas of where you might be going in the future. In terms of this DOE congestion work, [the EIPC study] is probably of lower significance.”

Rosy Lum is chief analyst for Energy Central’s TransmissionHub. She can be reached at rosy@energycentral.com.

CUSTOMER SERVICE

Smart grids and competitive markets ++Retailers push meters to expand product options

By Phil Carson

“We also strive to make sure customers have all the information they need to make an informed choice. The price for electricity in our competitive market remains low.”

Quoting Pat Wood, former chairman of the Federal Energy Regulatory Commission (FERC) and PUCT commissioner, Nelson said: “‘Competition on its worst day is better than regulation on its best day.’”

THE NOTION THAT TECHNOLOGY SHOULD SERVE A BUSINESS

Grid modernization and retail competition I asked Nelson about the relationship between grid modernization steps, such as interval meter rollouts, and the development of a competitive retail market.

“The retail companies wanted to offer Focusing on competitive markets ‘Competition on its additional products Four points came out of the call, which involved the that depend on smart chairs of the public utilities commissions in two of the worst day is better meters and so they three top states for retail electricity competition, Texas pushed to get smart and Pennsylvania. (According to the report, the top three than regulation on meters installed,” are Texas, New York and Pennsylvania, in that order.)

Nelson replied.

The first point is that interval meters play a signifiits best day.’

What role do smart cant role in the growth of competitive retail electricity thermostats or inmarkets, in that they offer retailers the ability to develop home devices play, if any, for the receipt and differentiate innovative products and services. The second point is that it’s and management of pricing signals? too soon to tell what role, if any, in-home devices and/or displays will have, due “We’re working through those issues to the rapid evolution of products in that area and residential customers’ diverse right now,” Nelson said. “Oncor and desires for how they receive price signals and other utility communications.

CenterPoint will finish their meter deThird, hurdles to competitive markets include fears of the impacts of dynamic ployments in 2012, so we’re not at full pricing, particularly among the elderly. Fourth, consumer education is a major deployment yet. They’ve done studies effort undertaken by, in this instance, the Public Utilities Commission of Texas. where they provided in-home devices Entering the information age to customers, with good results. But “We’re seeing continuing innovation and a variety of new products and services we haven’t seen mass deployment of being brought to the market, such as a prepaid product using real-time data from in-home devices because the technoladvanced meters that allows customers to get [account] balance information in a ogy is changing quickly. Some retail way they find most useful, such as a text message to their telephone,” said Donna providers are providing them. They’re Nelson, chairperson of the Public Utilities Commission of Texas (PUCT). “We’ve operating in different ways to meet entered the Information Age with our electric service here in Texas. the needs of the individual customer.

“We’ve had massive rollouts of advanced meters [in Texas],” Nelson continued.

Some customers want the [energy “And we’re also seeing the rollout of charging stations in Houston to allow Texas usage] information on their computdrivers to conveniently charge their electric cars. We’re seeing retail providers offer ers, some want it on a phone. We have time-of-use products that more accurately reflect the wholesale cost of electricity. started a Web site where customers This allows customers to take advantage of lower cost electricity at night to charge can check their usage in real-time.” their electric cars, using our abundance of cheap wind electricity generated at night.

Phil Carson is Editor-in-Chief of “Our Power to Choose Web site makes shopping [for a retail provider] conIntelligent Utility Daily. He can be venient and allows retail customers to make an informed choice,” Nelson added. reached at pcarson@energycentral.com

case, not the other way around, has become axiomatic in the grid modernization industry. As it should be. The role of education in serving—or hindering—a business case is not far behind.

So it was interesting to hear details recently on a conference call held to discuss a report on progress in competitive retail electricity markets. The report, “2011 Scorecard for Retail Electricity Consumer Choice,” was issued by Distributed Energy Financial Group LLC.

“

”

W W W. I N T E LL IG E N T U T I L I T Y.CO M

43

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OUT THE DOOR ness. The value derived from information is what is used by service providers to tailor their offerings and attempt to make a profit—a return on their investment in parsing information and creating value with a service.

Changing the regulatory construct ++If non-regulated providers can profit from information services, why can’t utilities?

By Charles R. Dickerson WHILE NOT MOVING AS FAST AS SOME MAY LIKE, THE SMART

W WW.INTELLIGENTUTILIT Y.COM /// JAN UARY/FEBRUARY 2012

grid is becoming a reality. There is a proliferation of new meters. A number of utilities are considering or have begun filing for more creative rate structures, i.e., dynamic pricing.

However, even with all of the changes, the basic paradigm of the regulatory compact remains essentially unchanged. That paradigm is one that by design exposes utilities and those investing in them to regulatory lag. It is also is a paradigm that, for the most part, does not allow a regulated utility to earn a return on the investment in services—not assists, but services.

In the not-too-distant past that construct, at least the part of the construct that relegated a return to physical assets, was OK. However, the advent of the smart grid and the promises it is supposed to bring—either implied or explicit— has shifted the value proposition away from the standard and important physical infrastructure.

The value proposition is (in my opinion) more related to services, not things.

46

Services beyond traditional reliability To be perfectly clear, reliability is extremely important. It’s essential. However, reliability is analogous to poker table stakes—you need it to join the game but you need far more to actually play the game. It’s the entry-level price to pay for the franchised right to serve. Although there is a tremendous price to pay for not providing as much reliability as customers desire, on the other hand, customers expect reliability, demand it, and are not particularly impressed with a utility’s mastering the successful execution of reliability processes. It’s necessary to engender confidence, to open the door to increasing customer satisfaction, but it certainly is not sufficient.

Reliability is necessary, it’s expected; but services beyond traditional reliability are what the explicit or implied promise of the smart grid is supposed to deliver.

Although it is a cliché, it is very hard to argue against the point that we are in an information age. Information is nearly everything. The gathering, analysis and synthesizing of information is the key to nearly every service-related busi-

A fair playing field Both longstanding and newly formed energy service companies hoping to leverage the information to be derived from the smart grid will do so with the intent of making a profit by providing a valued service. The physical assets (smart meters, meter data management and customer information/ billing systems) from which much of the information will be derived will have been either already added to the utilities’ rate bases, added coincident with the installation of the assets or shortly thereafter.

This raises an interesting point. If non-regulated service providers can have customer-authorized access to the information derived from the smart grid installed assets, and then use that information to create valued services for which some customers are willing to pay a premium, why can’t the utilities, who installed the assets, use the same information and sell similar services to customers for a profit?

I contend that utilities should be allowed to earn not just a return of, but a return on the investment from valued services beyond the essential and expected reliability services, which are traditional and far from sufficient.

Reasonable logic—to a point A dialogue needs to begin in earnest to discuss how best to change the longstanding construct. Cui bono?

Everyone, potentially. Cui malo? No one; no one is harmed. The traditional regulatory construct suggests that customers are disadvantaged by utilities if the assets used to obtain the information are in the rate base. If the assets are in the rate base and the customers

Utilities will have to operate in a similar fashion to consumer products companies.

Incenting change With the advent of smart grid technologies, energy service companies and utilities have an excellent opportunity to position themselves as trusted energy advisors. This aspiration exceeds the standard offerings, the promises of yesterday. In order to accomplish this, companies need to listen to their customers and provide them with meaningful information they can use to make better informed decisions.

W W W. I N T E LL IG E N T U T I L I T Y.CO M

are paying for the assets as a part of base rates, then all the services that the utilities could/should provide from the resulting information derived from the assets should be delivered as a part of basic services.

This logic is reasonable save for the fact that the costs customers are will-

ing to incur for services to pay non-regulated providers will be costs in addition to the costs customers will pay the utilities for the physical smart grid assets.

Since customers are willing to pay the non-regulated service providers—whose cost of service will have imbedded in it a return of and a return on their investment to provide the services—utilities should be afforded the same opportunity to derive a return of and return on their investments associated with valued services created with information derived from smart grid-obtained information.

47

OUT THE DOOR

W WW.INTELLIGENTUTILIT Y.COM /// JAN UARY/FEBRUARY 2012

I envision a world built on the premise that in order for customers to really more efficient. This means more take advantage of the various explicit and implicit promises of the smart grid choices will be available to custom(such as energy conservation and demand reduction programs that are under ers and thus customers will benefit. way now and those that will come in the future), utilities will have to operate Finally, there may be an opportunity in a similar fashion to consumer products companies. In order to incent them to leverage another class of investor to do so, they must be provided with a new construct by which they are who might be interested in investing incented to do so. in utilities if the utilities are allowed The true promise of the smart grid is in leveraging information related to to earn on services. The markets may specific groups of customers. That information can then be tailored to develop be able to benefit. different solutions for different groups. Companies like Hewlett-Packard, Canon, One may argue that utilities can Victoria’s Secret and Toyota, for example, don’t avail themselves of the have a one-size-fits-all marketing approach. They non-regulated markets Services beyond market certain products to certain segments by forming non-regudepending on what customers’ needs and wants lated subsidiaries. True, traditional reliability are. That marketing is informed by customer but having to form information. An analogy to that information now new companies that are what the explicit exists in the energy space. It is being provided by many times confuse smart grid technology—installed assets. To levercustomers about who or implied promise age that information, utilities are going to have to they need to contact, be creative. Creativity costs time and money. creating entirely new of the smart grid is management hierarchies Competition = an efficient market and other duplications, In the future, new programs may be able to reach supposed to deliver. is not the beginning of specific customers. Having access to important a more efficient journey; consumer data that provides trends about it’s just the opposite. preferences and energy usage will allow energy companies to use business A change in the traditional regulaanalytics to determine how to market. Offerings, such as bill-to-date, and various tory construct—or at least an earnest dynamic pricing constructs that utilities now offer (at no return on investment) dialogue related to changing it—is will soon be offered by non-regulated companies with embedded profits— what’s needed to begin the journey returns on investments. for all to realize the full promise of If utilities are allowed to earn a reasonable rate of return on services (again the smart grid. above and distinct from what they earn on traditional assets), then more utilities Charles R. Dickerson is vice president of are likely to develop the creativity and efficiency that the non-regulated service customer care for Pepco Holdings, Inc. providers have been developing and leveraging for years. The utilities benefit.

To comment, please look for this article If the utilities develop these competencies and work competitively to be the online at http://www.intelligentutility.com/ magazine. customers’ provider of choice for non-traditional services, the market becomes

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