Customer backlash over dynamic pricing and the smart-grid caught the industry unprepared. CIOs and top customer specialists share their strategies for engagement and attaining consumer...
Engaging the consumer takes on new meaning.
When utilities across the country began rolling out smart-grid and dynamic-pricing programs, many expected some push-back from customers who would resist changes in their static rate plans. But few expected these initiatives to turn into full-blown controversies. Consumers in several jurisdictions—reacting to utility initiatives they didn’t understand—unleashed a tirade of opposition against smart-metering and dynamic-pricing programs.
By now the examples are well known: class-action lawsuits in California and Texas; picketing outside the offices of the California Public Utilities Commission; rate-case rejections in such states as Maryland and Massachusetts; and even a possible municipalization of the utility system in Boulder, Colo.
Right or wrong, many consumers distrust utilities’ planned use of customer data and their ability to control power usage in the home, and this has proved to be a major challenge in utilities’ efforts to communicate the benefits to customers. This challenge isn’t just affecting utilities’ communications approaches, but also their strategic, regulatory and financial plans.
For example, rating agency Moody’s raised the issue in a September 13 press release after the natural gas explosion in the residential community of San Bruno, Calif. Despite reaffirming the ratings of Pacific Gas and Electric and its parent company, PG&E Corp., Moody’s called the San Bruno tragedy “yet another piece of negative news” for PG&E, specifically citing a recent California PUC report criticizing PG&E’s customer communications in implementing its smart grid program that “contributed to substantial negative customer reaction in certain PG&E communities.”
Partly in response to this apparent backlash, utilities across the country are working harder at customer engagement, pursuing education and outreach programs designed to help consumers understand the smart grid and their role in making it work. The industry’s prior emphasis on technologies and regulation wasn’t necessarily misplaced, but utilities have realized that customer empowerment is an element that must be considered and emphasized in order to achieve the desired end-use benefits.
Forward-thinking companies are focused on the customer, but all companies know that customer adoption rates for utility programs can be improved. With the need for customer engagement gaining renewed prominence, Fortnightly turned to investor-owned utilities to learn what tactics, processes and systems are working for companies in the trenches, and how they are ascertaining which ones have the most promise in attaining true customer partnerships.
Fortnightly asked several of the industry’s leaders about their experiences in determining what the customer wants; how to overcome customer resistance to new utility programs; and what lessons they’ve learned. These experts are:
• Joseph A. Forline , v.p. of customer operations, Public Service Electric & Gas
• Brenda Jackson , senior v.p. and chief customer officer, Oncor
• Reid V. Nuttall , v.p., information technology, chief information officer, OGE Energy and OG&E Electric Services
• Tammy McLeod , v.p. & chief customer officer, Arizona Public Service
• James E. Schinski , v.p., chief information officer, PPL.
Fortnightly: What led your utility to realize it needed a chief customer officer or someone in upper management