[BETA] Fortnightly

Smart metering and beyond-the-meter technologies are challenging the utility monopoly model. Now, regulated utilities must re-think their customer relationships as a revitalized retail sector provides growth opportunities.

America’s electric utilities understand their central role in taking efficiency and conservation to the next level. Accordingly, the industry has nearly doubled its spending on efficiency measures in the past few years. But encouraging customers to save energy won’t be enough to keep pace with the electricity demands of a growing digital economy. The country’s efficiency efforts will be most effective as part of a clean energy portfolio strategy.

Investor-owned utility executives have long understood the benefits of prepaid metering, but technical and regulatory roadblocks have prevented wide-scale implementation. Now, however, two IOUs—Arizona Public Service and DTE—are planning prepaid metering programs that could be offered to all customers. Smart metering technology might pave the way for prepaid to become a standard service.

Is customer engagement more about damage control, or helping customers understand their options?

Those who don’t embrace new technologies will get left behind when the world changes around them. This is true across generations and across industries. At the same time, however, the telecom revolution offers a cautionary lesson about what motivates consumers and how it translates into business opportunities.

The concept of a wireless smart grid is gaining popularity. Some utilities are participating in pilots providing two-way secure radio frequency network coverage. They say the grid is well suited to wireless and the benefits only now are becoming known.

As utilities announce new smart-grid programs, they need a strategic method for quantifying benefits. Analytical models generate baseline benefit estimates and reveal big-picture trends. Decision makers need the best resources available to mitigate risks in choosing a smart-grid strategy.

Achieving the smart grid’s potential requires a revolution in electricity pricing. Smart metering and smart rates might yield surprising and beneficial changes in the U.S. utility industry. But capturing those benefits will require an intelligent and careful approach to implementing dynamic pricing.

Consumers await the revolutionary interface that will allow them to control their energy consumption. Besides maximizing efficiency in the home, these units will allow more

price and product competition. But disincentives to innovation are making for slow progress.

State and federal incentives provide the carrot for utilities to invest in grid intelligence. But regulatory and technological incentives are not enough without customer participation. Smart-grid policies will succeed only by focusing on customer needs and benefits.