Don’t Count Utilities Out Yet

I go to a lot of conferences. And I’ve often noted, with chagrin, that at the sustainability conferences I attend about one-third of the content/insights/prognostications are related to energy … and there are almost never any folks who work for utilities in the room. At these conferences, I’ve repeatedly heard sustainability folks who work at Fortune 50 companies say things like, “I don’t really see a role for utilities in our energy future,” and there aren’t any utilities around to hear this proclamation of their demise and offer an alternate point of view.

This is indicative of the many challenges utilities face:

  1. According to our ongoing polling, about half the population – on both the consumer side and B-to-B side – are less than satisfied with their utility and interested in buying energy or energy management products and services from someone other than their utility.
  2. In an Uber world, utilities are seen as archaic and frustrating. Despite the fact that we can all track the pizza being delivered to our homes in real time or find a dude to drive us to the airport by looking at icons of who’s near us at the moment, most utilities can’t tell us when the lights will be on during an outage. And that’s no longer acceptable.
  3. Because utilities hold all the information, currently, when it comes to how much energy we’re actually using on a daily basis, we’re all consistently, unpleasantly surprised when we get our monthly utility bill. We psychologically make the utility the bad guy, rather than looking at our own behaviors.
  4. Because the largest utilities in our country are regulated monopolies, by nature they aren’t entrepreneurial. They’ve been charged with keeping the lights on at the lowest possible cost, and a rigorous, foreboding process has been put in place to provide oversight to any change utilities want to make to their pricing or business models. So when utilities want to/need to change the way they charge, it can take months, even years, to gain approval, and it’s all handled very publicly. So utilities get painted as greedy bad guys who want more money when, in reality, they’re just doing what any business does from time to time and responding to economic realities. And it’s easy to paint them as greedy bad guys because, for the most part, they’re not very good communicators, preferring to explain things in terms most of us don’t understand (net metering, demand charge, etc.) vs. appealing to our hearts and painting a vision for the future we can all buy into.

Then there’s the issue of renewable energy. Americans expect their utility to generate a good portion of their energy via renewables, and most of our country’s largest companies have assigned themselves renewable energy goals and are working towards ensuring significant portions of their monthly energy consumption is from wind or solar. The popular thinking has been that utilities are behind on this front – that businesses need to work with renewable energy developers to hit their goals vs. working with their utility, and consumers need to get their own rooftop solar systems and go around the utility to get their clean energy desires met.

But I wouldn’t count the utility industry out just yet. I’m at the Utility Solar Conference, and I’ve heard a few impressive stories from utilities:

  • The EVP and Group President for Utilities of Xcel Energy stated yesterday that Xcel’s generation mix is now 24% clean. Their statewide mandate was to hit 20% renewable by 2020, and they think they’ll be at 30% by 2020. Further, they intend to be at “63% carbon free energy by 2040.” And they intend to “build out an advanced, intelligent, secure grid that serves as the backbone of a system that enables trust, control and choice for customers.” In this vision, Xcel “gets it” that they’ll provide some products and services as a result of this new grid, and so will some other players – they see their role as being enablers and their aim is to “please and delight” customers. I have to say, I was impressed … these are not things we’ve heard from a senior executive at a utility company before.
  • Someone from SMUD laid out three very smart strategies (which aren’t approved yet, so I can’t reveal them here) that clearly exhibit that they, too, “get it” about their role connecting customers who want renewables and energy management technologies to those solutions – and that it needs to be seamless and reliable.
  • Someone from Rocky Mountain Power laid out how they pulled together a community solar pilot … and that they started by inviting in several environmental and renewable energy groups that are typically critical of the utility and said, “Let’s design a community solar program together.” This is an approach we often recommend to utilities – don’t avoid the folks who are criticizing you; invite them in and see what they have to contribute so you can create solutions together. Very few utilities actually follow that advice.

Utilities still have a long way to go to get back to a position of trust and leadership. But I’m impressed by the strides some are making and by how the thinking is shifting. If all utilities follow suit, I think we’ll all realize that reports of their demise were grossly overestimated.

Skills

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Posted on

April 14, 2016

About the Author

Suzanne Shelton

Where Suzanne sees opportunity, you can bet results will follow. Drawing on her extensive knowledge of both the advertising world and the energy and environment arena, Suzanne provides unparalleled strategic insights to our clients and to audiences around North America. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz, and she speaks at around 20 conferences a year, including Sustainable Brands, Fortune Brainstorm E and Green Build.

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