When the goals of a utility and its host community aren’t in sync, breakups happen.
Learning from Retailers
As the electricity market changes and consumers become more energy independent, utilities will have to become far more creative and proactive to keep their customers happy.
This industry is changing – fast. More and more customers are going solar, buying electric vehicles, and aiming to reduce their energy bills or eliminate them entirely. Furthermore, energy monitoring web portals, energy management devices and smart appliances are being deployed in millions of homes. This all adds up to a connected, savvy, and far more demanding energy consumer.
For most investor owned utilities (IOU), the issue isn’t quite at their doorstep yet, but electricity retailers already are dealing with churn in their consumer base. In fact, customers can – and do – switch providers at the drop of a hat. With consumers across all energy markets asking for more choice and control over their energy purchasing decisions, utilities everywhere – not just retailers – will need to adapt to remain relevant. This is why, for the energy industry overall, what retailers are doing now could provide a template for what all utilities will need to do to differentiate themselves in the near future.
So far in the U.S., at least 25 states have set specific goals for reductions in energy use. In 2010, the total budget for utility customer energy efficiency programs was $4.6 billion, more than four times the $1.1 billion spent on such programs a decade earlier, according to the American Council for an Energy-Efficient Economy. These figures underscore the importance of energy efficiency, and serve as a call for action for energy providers. Successful companies will adopt creative ways to increase consumer engagement in programs that can help utilities meet reduction goals, especially when taxpayer dollars have been allocated to help them do so.
Because retailers are under pressure to acquire, retain and improve the lifetime value of customers, competitive offerings – such as energy monitoring tools and renewable energy – are becoming a core part of their business. Over the long-term, retailers also are interested in moving their consumers up the energy value chain, in order to unlock the value of the emerging energy marketplace. While these retailers might start with energy efficiency tools, their ultimate objective is to establish a long-term, two-way dialogue that will lead to success with future programs such as demand response, direct load control and, eventually, whole home orchestration.
Looking at Australia – which has some of the world’s most mature competitive electricity markets – Origin Energy is a prime example of a retailer taking the necessary steps to tailor offerings to the needs of customers. Operating in an unregulated energy market with the potential for significant customer churn, Origin focuses on providing leading-edge technology as a differentiator, and demonstrates a commitment to its customers’ satisfaction.
In 2011, Origin launched Origin Index, a national survey on Australians’ attitudes towards energy and the environment. The survey found that Australians are confused about the impact they can have on their bills and the environment, with 93 percent stating they wanted to be more focused on implementing sustainable