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CEO FORUM: Dealing with Disruption

Leaders adapt to strategic shifts in the utility landscape.

Fortnightly Magazine - June 2010

customer in our business model. We have to engage the customer by offering pricing plans, applications and technologies like the iThermostat, and thing like a smart charger at home for a plug-in EV that can separately manage the EV charge so customers can see how much money they’re saving relative to the gasoline alternative. We can bundle that with a night-charging rate plan so the customer can take advantage of lower night-time prices from the wind in the supply stack. That’s a nice bundle for retail customers.

We have to win accounts one at a time, and that makes our job harder. But when we get the opt-in customer, it means they’ve made a choice to sign up for a direct relationship with us as the retailer.

Spence, PPL:  We saw what happened in Maryland and other states where rates went up more than 50 percent, and we wanted to make sure our customers were we

ll prepared when rate caps expired in Pennsylvania and we had a 30-percent increase in rates last January. We signaled to the customer that it was coming at the end of the decade. But the E-power campaign was as much about using technology and informing customers as it was about having a smooth transition to market-based rates after the rate-cap period ended, and providing customers with different pricing options.

We also made sure our employees were well prepared, with training on the technologies available and the customer-choice options. That was a key component of our strategy.

As an ancillary effect of the rate caps expiring, we went from zero customers shopping last year to 410,000 shopping this year. Fully 30 percent of the load is now shopping for their energy supplier, and we’ve promoted that significantly to our customers as a choice they should explore. It’s been a real success story in many ways. Pennsylvania has leapfrogged ahead of many states in customer choice.

 

Weston, Direct Energy:  Texas has the best chance for customer engagement because you have a fairly rich competitive landscape, and that provides a great environment for innovation. The retail utility business is evolving beyond just payment of bills.

Retailers in Texas are looking at how they segment their customer base, and what types of products and services they deliver to their customers, whether it’s a green product, a fixed tariff, a dynamic price or a portal that helps them understand their energy usage and what they can do to change it. These things will lead to customer engagement.

 

Avoiding Backlash

Fortnightly: What lessons should the industry learn from recent controversies regarding smart meters and dynamic-pricing programs?

 

Burke, TXU Energy:  The smart-meter rollout in Texas was a system-wide decision made by lawmakers. Any universal decision to bring the technology into the 21st century will get a lot of support, but there will be detractors, no matter what. That’s what comes from a one-size-fits-all model.

The billing complaints we’ve seen in Texas and California were related to seasonal variations, but that wasn’t the immediate impression. The immediate impression was of a

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