innogy Consulting US

We are a management consulting firm working with industry leaders to create the sustainable, innovative, people-centric energy world of the future.

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Customer-Centricity and the New Utility

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In 2019, "change" is the new normal for utilities. This constantly dynamic state makes it more important than ever to put the demands and expectations of the utility customer first. Our customer-centricity whitepaper takes a deep dive into the factors shaping the new utility and the steps necessary to connect with a customer base that is more engaged and more empowered than ever before.

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Graham Dickson's picture

Thank Graham for the Post!

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innogy Consulting US
We are a management consulting firm working with industry leaders to create the sustainable, innovative, people-centric energy world of the future.

Discussions

Matt Chester's picture
Matt Chester on Oct 9, 2019 1:37 pm GMT

Great overview of what utilities can (and should) do to embrace the new customer-central paradigm in the industry. I appreciated how you framed the trend in this way:

How electric utilities think about servicing their customers has changed dramatically in recent years. Increasing customer demand for more tailored energy solutions, coupled with growth in new product innovations, has created a new commercial environment. This new world will be more competitive than anything utilities have previously experienced. Success will require utilities to embrace the changes reshaping how energy services are delivered. It will also force them to focus more sharply on delivering customer-centric solutions.

I'm curious if you could also comment on what will happen to the utilities that don't focus on these customer-centric solutions? A large majority of customers still don't  have any sort of choice when it comes to their power provider, so what are the downfalls to utilities in regulated markets that don't embrace this type of change? 

Graham Dickson's picture
Graham Dickson on Oct 17, 2019 1:26 pm GMT

Hi Matt,

I think it is really a question of how we define customer choice. Even in the most heavily regulated monopoly, there is still some choice – on the commodity side of things, for example, do I self-supply and install PV and a battery? And on the energy solutions side – who do I work with to get my energy efficiency or to install my at-home EV charger?There the competition might be the local handyman or a DIY option.

Being customer centric needn’t be driven by having choice of supplier. At the end of the day, being customer centric is also about efficiency in operations. Having multiple sign-up calls, or not allowing use of digital channels... these are examples of cost being driven to a utility, whereas factors such as a customer-centric app gives choice and lowers operating expenses and costs. 

Matt Chester's picture
Matt Chester on Oct 17, 2019 1:46 pm GMT

I think it is really a question of how we define customer choice. Even in the most heavily regulated monopoly, there is still some choice – on the commodity side of things, for example, do I self-supply and install PV and a battery? And on the energy solutions side – who do I work with to get my energy efficiency or to install my at-home EV charger?There the competition might be the local handyman or a DIY option.

Interesting perspective on what it means to be customer centric-- I never really looked at it that way. Thanks for the response, Graham. 

Gary Hilberg's picture
Gary Hilberg on Oct 14, 2019 2:48 pm GMT

Graham - good post, one interesting change in the ERCOT market is that most consumers probably do not directly access their meter data except through their retail electric provider if that provider offers the feature on their system.  Starting in December of 2019, all smart meter data will be available via API's, prevsiouly we could down the data from their web site - but that was painful.  I expect that their will be consurmer friendly Apps to evaluate your data and this could encourage even more change in the market place.  As I posted a couple of weeks ago, consumers can eliminate the middle man with Griddy that charges a fixed fee to buy power at actual wholesale rates.  What you learn there is that the T&D charges are very large piece of our costs - in Centerpoint territory - about $0.037/KWH (plus $5/month)- most of the time higher than the wholesale power price.  

Graham Dickson's picture
Graham Dickson on Oct 17, 2019 1:29 pm GMT

Hi Gary,

APIs are an interesting one. If you look at the parallels to city transportation authorities, who have the challenge of moving people around a congested system (like electrons around a grid), by opening up travel information to third parties, such as Google or Citymapper, suddenly you have a city operating more efficiently, and the assets being more effectively utilized without any extra capital expenditure. Could that parallel be seen as a non-wires solution to the existing grid challenges facing the United States?

Steve Wickman's picture
Steve Wickman on Oct 14, 2019 4:59 pm GMT

good article...one comment I have--there are really two aspects of getting power to the customer...(1) is the choice of energy supplier the customer selects--whose generation is the customer going to buy?  (2) is the "wires company" that ultimately still delivers the energy to the customer--there is still just one company that has the authority to run the wires through the community to the customer's home.  And that company has the challenge of cost effectively maintaining their infrastructure to contine to reliably keep the power flowing to the homeowner.  The challenge for these delivery companies is to continue to get proper rate relief to cover the costs of maintaining this level of reliablity by properly maintaining their assets.

Graham Dickson's picture
Graham Dickson on Oct 17, 2019 1:31 pm GMT

Hi Steve,

100% agree. And you end up with a system where those who are most able to pay for solar, for example, (i.e. the most affluent), stop paying so much for the “back-up” local grid. And those who can least afford luxuries like solar end up picking up a larger proportion of the bill. Germany is an interesting case study of this.

Gary Hilberg's picture
Gary Hilberg on Oct 17, 2019 6:54 pm GMT

Steve - here in Texas our wires companies continue to get full coverage for their infrastructure investment.  We do not have the penetration of retail solar, yet and unless customers add storage, our heavy HVAC load will keep significant demand when there is no solar generation.  I agree we need to make sure that those who use the grid as backup pay their share - since we all have smart meters, maybe a minimum connection fee, based on your actual KWH delivered and the rating of your connection. 

As to whose generation the consumer buys, in the deregulated market the consumer can buy directly from the market, see my note above on  a newer retail electric service in Texas called Griddy where the consumer pays the wholesale price + T&D.  I have been using it and see power prices from negative (not often) to lots of 1-3 cents/KWH and then during peak periods - $10/KWH.  A novel experience that most consumer will not want to participate in.  Interestingly the service offers to connect to your home automation systems to shut off your HVAC and other systems during peak demand periods.  

William Buchan's picture
William Buchan on Oct 17, 2019 8:41 pm GMT

Graham, Thanks for the post.  I have no doubt that you are right in that the electricity customer will become more sophisticated and utilities will need to be more customer-centric.  This appears to be happening in a big way in the EU.  But, outside of Texas, customer engagement on electricity does not seem to be big in the US today.  There are not a lot of retail choices and it seems we pay as much attention to it as a bi-annual election.  Other than Texas whee regulations are different, where do you see active customer engagement in electricity, either as a consumer or prosumer?

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