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OMG Opportunity?

Electrifying the Android generation.

Fortnightly Magazine - February 2010

assumptions, however, ignore a basic point. While tomorrow’s ratepayers likely will expect more from utility customer service operations, they won’t embrace features or technologies that don’t serve their basic motivations. Smart meters and energy management systems can’t help people in their personal relationships and aspirations, so customers never will get excited about such technologies the way they get excited about iPhones and Androids.

This doesn’t mean the smart-metering trend is doomed. Rather, it means the industry and its regulators need to base their technology investment decisions on market realities rather than on wishful thinking ( see “ Engaging Customers ).

Learning from Ma Bell

Looking at today’s telecom market, it’s difficult to believe all this innovation started in the market for long-distance minutes.

After Ma Bell broke up, very little changed for customers. The first new product offerings did exactly the same thing that the old products did—just for different prices and under different names. Rivalry among long-distance carriers started the era of telecom competition, but initially the new market seemed to be going nowhere. Many consumers viewed shopping for long-distance carriers to be nothing but a burden, and they did it only when market prices got so low that the default carrier’s rate became exorbitant by comparison.

Ultimately, this led the Baby Bells to abandon the long-distance game in the early 1990s, because selling the long-distance commodity didn’t offer much value or growth potential. Phone companies went looking for better growth opportunities, and they found them in wireless phones. Advances in electronics technology meant mobile phones were becoming small enough and cheap enough to carry around in a purse or briefcase, and Moore’s Law suggested they’d soon become powerful enough to allow substantial computing capabilities—just in time for the Internet boom that was already underway.

Not every investment was a grand success in the short term, but in the long term phone companies’ wireless investments have paid off handsomely for shareholders and customers alike. America’s largest wireless carrier, Verizon Wireless, brings in revenues amounting to more than 50 percent of the total for its parent company, Verizon Communications ( née Bell Atlantic, GTE and NYNEX, plus long-distance upstart MCI WorldCom).

Whether the electric power industry faces similar growth prospects, however, remains questionable at best.

Going Mobile

Smart-grid technology heralds major changes in utility operations, and advanced metering might transform the way utilities interact with customers. When combined end-use tools like dynamic rates, smart appliances and household energy management systems, the smart grid promises substantial conservation and peak-shifting benefits.

Unfortunately, however, no teenager I know today gives a whit about peak shifting. Many people, including kids, profess generalized interest in environmental concerns. But helping the environment by opting into a demand-response program is about as fun as picking a long-distance carrier—that is, no fun at all. All the Web 2.0 and social networking applications in the world won’t change the fact that electricity is a utility service, like water, sewer or trash collection. No kid will ever say, “You know, Dad, all my friends have an energy management system; please can