The procurement and supply-chain functions of today’s utility are the Rodney Dangerfield of the utility cost-cutting paradigm: They don’t get any respect. Supply chains in most industries extend...
Web technologies are transforming the utility-customer relationship.
the California Global Warming Solutions Act of 2006, are estimated to increase customer rates drastically by 2020. Rising concerns about climate change, and the higher prices that result, will force customers to increase their interest and involvement in utility affairs.
For example, in the United States, 234 electric utilities offer demand-response programs today, most of which are triggered during an emergency. But with the adoption of automated metering, dynamic retail pricing soon will become a mass-market phenomenon. The success of time-of-use (TOU) pricing and critical-peak pricing requires customers to have access to information about their load and usage patterns, and the ability to make choices about those patterns.
Utilities will use the web as a platform to engage customers in TOU pricing and DR programs, providing an opportunity to create value through that customer engagement. Customers are wide awake and hungry to participate—and utilities will take advantage of this to remain relevant in the new digital era.
The purpose of this effort isn’t to “wikify” utility customer service, but to leverage the ubiquitous nature of the Internet so utilities can listen to their customers and take advantage of the Internet as an information system via Web 2.0 technology (See Figure 1) .
Prahalad and Ramaswamy proposed DART—dialogue, access, risk assessment, and transparency—as the building blocks of value co-creation. 1 Following are a few examples of how these building blocks shape up for electric utilities, using the Internet as the medium.
• Dialogue: Today’s utility websites typically are designed primarily for account holders to view and pay their bills, even though consumers outnumber the account holders by a factor of four.
To help increase awareness of critical issues facing the electricity industry, and of special programs run by utilities, an interactive medium using blogs, forums, networking and polls will allow consumers to build thematic communities and share their ideas and opinions. Such open dialogue also will help boost environmental awareness and improve brand loyalty and value.
Additionally, this platform can help employers attract the younger generation of workers who will be needed to replace a strained and shrinking labor force. 2 A company’s Web presence translates into brand perception among Generation Xers and Millennials 3 —the young masses who particularly value openness and continuous feedback.
• Access: Most utilities today have basic customer-service functions built into their self-service websites. However, higher levels of access further can enhance the ability to reduce customers’ calls to contact centers, and also improve customer satisfaction. For example, self-service Web tools can provide access to usage history, appliance power ratings, and temperature trends to enable users to analyze high bills and select optimum service plans.
If dynamic retail pricing becomes a common reality, participants in these tariffs will need access to real-time usage information to trigger responses to price signals. In addition to notifying customers of their usage, Web 2.0 applications can host tools for customers to analyze their load-shape patterns. They also can hold information to educate prospective participants and work as a promotional tool.
If the utility’s Web site enables customers to log information about