How Utilities Can Gain Maximum Benefits from Consumer Data Analytics

Utilities have been analyzing data for years.  From tariff development to forecasting future electricity needs, utilities have leveraged data for grid operations.  However much of the analytics work was done with spreadsheets and dealt with mere fractions of the big data volumes now generated by smart meters and other intelligent electronic devices (IEDs) in distribution and transmission grids and communications networks.  And very little analytics work was performed on consumer data.  Since ratepayers were “captive”, utilities didn’t need sophisticated consumer analytics for customer acquisition, retention, or profitability programs.

There are compelling benefits for utilities to deploy consumer analytics in their operations.  Detailed knowledge of consumers can increase the lifetime consumer value* of residential and commercial users.  Utilities can optimize their outreach campaigns through consumer segmentation, so time and money are better spent.   These are benefits for utility consumers too.  When lifetime consumer value is properly leveraged, consumers are fully participating in utility programs that manage and modulate their consumption with the right financial incentives.  When consumer segmentation is used in creating outreach programs, customer satisfaction can increase.  But given the relative paucity of utility experience with consumer analytics, utilities should rely on knowledgeable partners to help them design and deploy analytics for maximum benefits realization.

San Diego Gas and Electric (SGD&E) wants consumer data analytics to deliver benefits to their customer base.  The main goal of their first consumer analytics initiative is to “provide the right product or service to the right customer through the right communications channel,” stated Ted Reguly, Director of Customer Programs and Assistance.  He is responsible for SDG&E’s energy efficiency, demand response, bill pay assistance and HAN- enabling technologies that provide information to residential consumers.  One new use of analytics is consumer segmentation – leveraging data from several different sources to determine the best products and services to offer based on profiles.

For example, SDG&E has an existing air conditioning (AC) load cycling program that is an “opt-in” program whereby customers allow the utility to manage their ACs during peak periods of electricity use.  Utility electricity use is decreased with no loss of comfort to participants.  Analysis of smart meter data will identify customers who would gain the most from enrollment in this program.  SDG&E can selectively reach out to them with information about the program and its benefits.  The anticipated benefits include new participants who are happy to reduce their energy bills– not to mention grid stability for everyone.   As Ted explained, “We want to use technology to create the most personalized, proactive, customer-friendly, and timely experience.”

Other industries have similar objectives and achieve them through decision support and insights based on data analytics to deliver the best consumer experience.   PreClarity is an advanced analytics company that has been helping clients in the communications and retail/hospitality business sectors reduce churn and improve service delivery.  Their analytics capabilities help deliver a 360 degree view of utility/consumer interactions and insights into the right mix of products and services that best meet a particular consumer’s interests.  Correlations of time-synched data from multiple application silos (think CIS, CRM, billing, Meter Data Management, outage management and asset management) can help a utility suggest the best rate structures and energy efficiency and demand response programs for customers.  When asked about what benefits consumer analytics can bring to utilities, Bob Becklund, principal and co-founder of PreClarity Utilities said, “Analytics can assess and describe consumption patterns from large amounts of data and help utilities create consumer segments, profiles, pricing and offer options.  Most regulated utilities may not yet experience the competitive customer churn of some of our other clients, but proactive knowledge of consumer interests and probable responses to different programs, products, or services certainly pays off in improved customer satisfaction, higher  program successes and more effective use of internal marketing budgets.  And those are definitely positive impacts to any company’s bottom line.”

Beyond providing direct benefits in the form of proactive services to consumers, new consumer analytics applications that can readily manage big data can also improve data quality in utility asset management and outage management systems.  Most utilities have fiction mingling with truth in these databases, which negatively influence their reliability metrics and customer service.   For instance, if meters are associated with the wrong transformers, then work crews are given incorrect work orders and require extra time to resolve outages.  Bob explained, “We have seen many similar industries such as cable and wireless where asset and inventory management systems on a good day are around 50% accurate.  The ability for analytics to identify, correlate, and improve the customer to asset relationship has shown tremendous value in reducing both capital and operations expenses, plus greatly improve the customer service experience.  It’s a win-win for utilities and consumers.”

Indeed.  There will be a great panel discussion about utility analytics that I’m moderating at Grid ComForum West on Friday, March 9 in San Diego.  Join us there to learn more about the benefits that advanced analytics can deliver to utilities and consumers.

*For more information about lifetime consumer value, follow this link.