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.
Customer Service: 2020
Grid upgrades spark an interactivity revolution.
rooftop solar panels, with the ability sell power back into the grid. Utilities can sell HAN equipment or become HAN service providers. You can create green power bundles and allow customers to self-select their segment.
I think it’s a good thing, not only for consumers who will have greater choice, but also for utilities that are looking at ways to increase revenue.
Sullivan, Vertex: Unless we have a complementary change in the way utilities are regulated, then the billions of dollars we’re investing won’t be used as beneficially as they could be. To get the true leverage out of that investment, we need a change in the utility’s economic model. The challenge we have in the United States is that, unlike such markets as England, we have 50 states with different regulations. The regulatory process is very political, and politics can get in the way of creating new opportunities for utilities and consumers.
Sweat, TFCC: In a number of jurisdictions, rate caps are coming off, rate cases are ongoing, and things are changing outside of the utility’s control and pushing them along. You’ll start to see business models that resemble deregulated businesses, with more customer segmentation and customer life-cycle analysis. In regulated jurisdictions, commissions have more or less ruled out using customer segmentation to do any targeted marketing. There is behavior scoring happening on the collections side, but in the future we’ll see more emphasis on customer usage analysis and segmentation with regard to the way programs are offered. That doesn’t mean the program isn’t available to everybody, but that it just isn’t necessarily communicated to everyone.
Absent anything else, utilities won’t do anything without being pushed to do it by the commission. But the second driver for utilities is shareholder value, and they want an appropriate return as an investor-owned company. In the broad market space utilities will learn to take advantage of their market information more precisely and proactively. With segmentation and life-cycle analysis, and with the capabilities of new CIS systems, you’ll be able to identify customers and put them into appropriate channels for customer care. This will reduce the cost of customer care while providing the same level of service.
Coveney, SAP: Government agencies and commissions could enact policies that have a very beneficial impact, or they could put us into the place where they’ve often put us—not by design, but into a place where we can’t accommodate regulatory changes in the time required.
We will have to ask utilities to change their business model slightly, and PUCs to change the regulatory structure, from a system where vertically integrated utilities do everything, to companies that deliver energy in a little more competitive fashion.
You’ll start to see natural competition happening. Companies will become competitive internally to take costs out of the enterprise. But the business model will have to change to accommodate distributed generation and microgrids. Utilities will have to wrap their business models around those things.
When we get to the point where we’re following our European brethren and incorporating emissions credits into energy costs, then there