As a telecom veteran, I sometimes get a sense of deja vu at Smart Grid conferences. There are some strong similarities between the telecom industry of 25 years ago and electric utilities today. I know how much the utility industry hates to hear that but it is true. Here are the similarities and important lessons to learn from history.
Exceptional Mission. Employees in the land-line phone company had an obligation to deliver dial tone – even when the lights went out, and they had their own banks of batteries for back-up power so people could call to report electricity outages. Failure was not an option. And telecom resources were ignored and taken for granted– until you picked up a phone and didn’t have dial tone. This same sense of mission is expressed by utility resources too – no one thinks about electricity until an outage, and electric utilities have an obligation to deliver power regardless of circumstances. Utility resources have done an excellent job managing today’s electrical grid. I sometimes see and hear bewilderment, frustration, and defensiveness in utility resources when talking about the traditional grid and the changes the Smart Grid will bring. Lesson #1 – Change is not a criticism of past performance. Be excited that electricity is something that will no longer be taken for granted.
Monopoly Skills. In 1980 you had no choice for local phone service except Ma Bell. Phone company practices, policies, and processes were heavily influenced by state Public Utility Commissions and the Federal Communications Commission (FCC). The price of monopoly is regulation, and utilities are very good at interacting with regulators. Another price of monopoly is the lack of utility skills in working in any other type of market. Phone company resources had a steep learning curve to build knowledge about how to effectively communicate with customers and how to successfully introduce and manage a growing deluge of new technologies and services to customers while satisfying regulatory requirements. It will be a painful climb for some utilities, but it can be accomplished faster and at less cost to ratepayers by learning from telecom industry experiences. Lesson #2 – Hire outside talent to build corporate readiness for a transitioning marketplace. Develop and deploy corporate-wide change management plans that address concerns of existing employees.
I’ll continue my observations about similarities next week after attending the ITExpo East Smart Grid Summit.
Let’s give a standing ovation to the Department of Energy. The DOE’s new energy efficiency enforcement is producing positive results. The DOE entered into a Consent Decree with Haier America, about a parts defect that caused certain freezers to consume more energy than reported to consumers. The Consent Decree obligates Haier to notify affected consumers, repair defective units, add one year to warranties, and contribute $150,000 to the U.S. Treasury. The manufacturer cooperated with the DOE investigation, and I hope that other manufacturers will do likewise, just like I hope that the Consumer Electronics Association (CEA) takes some notes in case it contemplates fighting California Energy Commission energy efficiency standards again.
The DOE had a huge response to its call for efficiency certification documentation – 600,000 residential appliances in 15 different product categories from 160 manufacturers submitted their data so far. The DOE will review compliance with minimum energy efficiency standards, and those products found lacking will be required to deliver the energy and cost savings required by law.