The utility’s role is changing, and regulation must change along with it – to spur innovation and respond to evolving customer needs. Modernizing the industry will require a dynamic approach.
Look to other industries for lessons on marketing services.
shifting and consumption reductions that are in the smart business case.
Think for a minute about buying a book on Amazon. The Web site offers suggestions as to additional items the customer might like based on previous purchasers’ baskets of goods. Tools such as this weren’t commonplace until relatively recently, but as the data began to be captured and analyzed, it became a very profitable tool for the retailer and a well-liked advisory feature for customers. Could utilities do something similar—alerting customers that others with the same consumption patterns have opted for pricing programs A and B and reduced bills by X percent?
In competitive markets, the data might be used to identify customers who are primed for up-selling or cross-selling innovative service bundles. For example, a customer with data that shows consumption usage in line with a reliance on air conditioning might be a strong candidate to target for an appliance service contract. The good news is that even for regulated utilities, tremendous opportunities exist.
Marrying consumption patterns with external data such as green propensity scores can increase the effectiveness of these campaigns. Potentially, the targets for an A/C cycling program could be the pool of customers who have central air conditioning. However, if the program concerned rebates for more efficient air conditioners, it would make sense to remove from this target list those customers that have bought a unit in the last two years. This isn’t data the typical utility has or tracks today, but such data is available.
Utilities need to separate their obligations to make all programs available for all qualified customers from their proactive focus on the best prospects— i.e., those customers that have the propensity to participate and the ability to deliver the desired results.
The data also can assist in identifying customers who would be ideal candidates for control technology for central management of appliances such as air conditioning. According to Stephen George, a principal consultant at Freeman, Sullivan & Co., “combining price signals with control technology can increase demand response by as much as 50 percent in some markets.” If utilities execute programs effectively, they will see an increase in participation and much greater returns on their investments in the smart grid.
Other industries have gone down this road and so must the utility industry. The alternative would doom utilities to operate blindly, as some local phone companies do, sending customers bill inserts for services that can’t even be provisioned at that particular house. A smarter approach is the way of the future, not only for grid technologies but also customer-engagement strategies.