Investor Owned Utilities (IOUs) have a monopoly status in the USA that is regulated by state utility commissions. Depending on the state, IOUs are responsible for generating, transmitting, and distributing electricity; and interacting with ratepayers for customer services, outage reports, and billing questions. In a few states, this vertical integration does not exist because of deregulation and divestiture, thus generation and/or transmission assets are owned by other entities. While this regulatory model has safely delivered electricity to much of the US population with three nines reliability (99.9% uptime) from the traditional grid, today’s Smart Grid technologies and focus on consumer participation prompts reassessment of utility and commission operations. Residential, commercial, and industrial ratepayers have increasing opportunities to generate electricity and/or participate in microgrid, energy reduction (aka demand response), and energy efficiency programs. The success of IOU-based programs in these areas will hinge on the accuracy of utility and commission knowledge about ratepayers and the relevance of utility marketing and communications to them.
Having observed utility/commission interactions and worked with utilities in their customer contact centers, it is quite clear that for many regulated utilities, their focus is on satisfying their local commission, and then their ratepayers. This means that IOUs spend their time building business cases and justifications to win approval from commissions, not interacting with ratepayers and learning about them. IOUs have become experts in managing their relationships with commissions.
Commissions are there to protect the public and ensure reasonable and fair rates are set for regulated services like electricity. IOUs have not had to concern themselves with really knowing much about their ratepayers, since there has been little need to know more than basic categorization such as residential, commercial business, or industrial operation, and the amount of electricity used each billing cycle.
These practices worked well in the past, but the advent of disruptive Smart Grid technologies and the importance placed on increasing consumer participation puts new pressures on utilities and commissions to learn more about ratepayers. We often talk about the need to educate ratepayers about the short and long term benefits of Smart Grid initiatives, but what about the need to educate utilities and commissions about ratepayers? Any transition to a real consumer-oriented Smart Grid will require utilities to revamp their marketing and communications departments to create more touchpoints with their ratepayer bases and build more knowledge about them. The questions that IOUs and regulatory commissions should be asking themselves are: How differently would we communicate and market to our ratepayers if they become consumers with choices about how much electricity they buy, sell, store, and use? What do we need to know about their issues and aspirations around energy use to effectively communicate with them?