Four Terms Every Utility Executive Must Know

Jargon is a fact of life in any business sector, and as the author of the Smart Grid Dictionary, I assure you its quite prolific in the Smart Grid sector. Jargon has a beneficial purpose. It is useful referential shorthand that encapsulates complex topics in minimalist terms. Buzzwords are an excellent barometer about business sector trends, and are the emerging jargon in a business vocabulary. Here are a few buzzwords that should become part of every utility C-level executive’s Smart Grid vocabulary in 2015.

Consumer-centric. This term refers to a deliberate strategy to re-engineer processes, reskill employees, and restructure operations that put the consumer at the heart of the business. It’s an oft-misused term in many business sectors. But here’s the rule of thumb to use as a reality check for utilities: When your utility can put numbers to consumer value, and you have built transparency into your customer-facing business processes, you have consumer-centric operations.

Consumer value. Electricity consumers are increasingly electricity producers, and personify the “producing consumer” or “prosumer” term invented by Alvin Toffler back in 1970. Prosumers create kilowatts with distributed energy resources such as solar panels or energy storage that can be discharged back to the grid. Prosumers create negawatts by active participation in demand response programs. Utilities must recognize consumer value as calculations that encompass much more than electricity consumption. (There will be more information about consumer value in a future article.)

Customer churn. The retail electricity providers in deregulated states are familiar with this term, as are all business sectors that compete for customers. Churn or attrition is the loss of a customer. Churn has costs – because to regain or reacquire that customer incurs greater expense than customer retention. Utilities traditionally enjoyed a captive customer base and direct interaction with their customers, but new technologies create viable alternatives for customers and new service providers can intermediate the direct relationships that utilities have had with customers. Increased customer churn and intermediation may result in increased grid operational challenges as well as increased costs.

Customer defection. Defection is the permanent loss of a customer. Given the ability of consumers to become self-sufficient prosumers, the electric utility sector may experience defections on a scale not seen in other industries. That won’t be an enjoyable distinction, and the loss of this aggregated consumer value will have significant financial and operational implications for utilities.  Its a situation every utility executive wants to avoid.

Contact centers perform critical roles for utilities to become consumer-centric and build consumer value, while reducing churn and preventing defections. We consider them to be the “tip of the spear” in successful consumer outreach, acquisition, retention and value-building strategies. There is no time like the present to work on your vocabulary and your plans to leverage your utility contact centers to perform to these expectations.

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The Two Technologies with the Greatest Impact on Utility Contact Centers

Utility contact centers will face significant transformations as utility business models transform. Re-engineering processes to accommodate captive consumer to prosumer with choices is one profound set of changes. Shifting from a cost center to a strategic revenue center is another change of tectonic proportions. But what about technologies in contact centers – what will change there? My colleague, Bill Maikranz, Consulting Director for the Smart Grid Library and a long-time contact center expert, offered his insights in this guest column.

Phone calls for outages and billing issues make up the vast majority of residential consumer contact in utility contact centers now. That hasn’t changed for over one hundred years. The traditional utility contact center technologies required specialized phone systems (ACDs) with supporting tools such as IVRs for self service, and agent applications that could associate a phone number to a customer record to intelligently route callers to agents. Communication channel options expanded with introduction of websites and webchat, email, and text for customer services. Lately utility contact centers have been adding twitter and other social media channels for responses to consumer queries and sometimes more importantly, their feedback.

There are two major areas of technology changes. First is the rise of the smartphone as the main communications channel. With over 1 billion smartphones in use continued adoption across all demographic, geographic, and economic categories, it holds strategic value for utilities to build strong consumer and prosumers engagement. Smartphones have a ubiquity not seen with computers. Smartphones have certain attributes that will have to be factored into the technologies, processes, and agent skill sets for utility contact centers.

  • Smartphones support non-intrusive communication options.   Text and email doesn’t require interruption and/or reaction, and that opens up a wide range of proactive outreach options.
  • Smartphones provide “paper trails” of information that can be viewed and saved. That has important implications for rapid development of approved messages that can be distributed by a contact center through multiple communication channels
  • Smartphones enable social media activity. Many consumers are attuned to using social media to complain, make inquiries, or seek advice. Technologies that support the development and maintenance of prosumer relationships must include integrated views of the “tapestry” of communications woven from different channels. We see social media becoming much more granular in the prosumer space. It extends beyond a utility’s single Facebook or Twitter account and into the local level such as your neighborhood or street. Nextdoor.com is an example of neighborhood granularity. This granularity could be related to consumers who have customer side of the meter distributed energy resources (DER) assets, share a circuit, and may have social media preferences for notification of scheduled maintenance that changes by time of day, day of week, or time of year.

Of course, utility contact centers still need to handle traditional phone calls and manage information about caller preference and reason for call.

The second significant technology impact is the rise of realtime information and feedback loops. The ongoing adoption of smart meters and use of Green Button data demonstrate the value of real time data and near realtime data about energy consumption.  The ability to deliver timely suggestions for electricity (or gas or water in the future) reductions will have value to prosumers who can then granularly manage their production of reductions in use as well as utility planners.   Some of this realtime information includes presence – the knowledge of a consumer’s location and closest preferred channel of communication. In our prosumer model, presence adds extra value to manage power usage or send alerts regarding remote options. The right applications can include approved rules that govern actions to take in service outages when consumers are not at home.

The feedback loops can take several forms, but the most interesting involve gamification.  Once again, the smartphone is a key technology to exploit the increasing amounts of data into applications that educate and entertain, and in the process reward and reinforce behaviors to improve the persistency of those behaviors over time.  The smartphone offers non-intrusive immediacy by converging multiple channels of communication into one ubiquitous device.

Data begets more data, and feedback loops like gamification can produce very meaningful data to help consumers and prosumers manage consumption of energy and/or water.  The field of prosumer analytics is very new, and it is unique to utilities.  We’ve been focused on it to help utility contact centers prepare for prosumer engagement.

The traditional utility contact center will go away.  If you value your consumers, you don’t want to push them away into IVR jail to identify themselves, pick a multiple choice reason of why they are calling (which they might not know), or force them to interact with agents who lack the specific skills to handle their requests.  You’re begging for consumer intermediation by a competitor like Comcast or AT&T or other non-traditional service providers.  Building highly personalized relationships starts by recognizing that electricity consumers will have choices, and that decision points come down to the quality of services delivered through preferred communication channels.  It will be important to have the right technologies in place to support services delivery that is consistently engaging, informative, and convenient.

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The Energy Ecosystem – Managing Its Evolution

The electrical grid in the USA is sometimes called the greatest machine ever built.  Its evolution into a Smart Grid is often described as an energy Internet or Internet of things that will improve overall grid operations, reduce inefficiencies, reduce greenhouse gas emissions, and improve reliability.

Something is missing from these descriptions, and it is time to recognize that the Smart Grid is an energy ecosystem.  Ecosystems are marvelously complex, inter-related environments.  Remove a food source from the food chain, and watch it change.  The same is true with our energy ecosystem – just substitute a form of energy, like coal, for food, and consider the impacts of its absence.

We have to plan the reduction, if not outright extinction of the dirtiest fossil fuels, and replace them with renewables.  Since many renewables are intermittent energy sources and not steady-state, it means we also need to introduce layered (generation to distribution) energy storage into the grid to accommodate not only ancillary services but complete continuation of electrons even when the sun isn’t shining or the wind isn’t blowing.

However, the challenges of introducing new technologies are even more numerous.  For some technologies that make the grid more robust and reliable – like synchrophasors, their deployment won’t cause disruptions – they improve and enhance existing operations.  Most importantly, they are invisible to the average consumer.  But there are other classes of technologies that are much more visible to consumers, like smart meters.

And here is where the challenges really surface for the evolution of the energy ecosystem.  Yes, developing technology is easy.  Deploying technology is hard, especially when it is visible to consumers.  Take the unfortunate example of Pacific Gas and Electric (PG&E).  This utility is the subject of a lawsuit regarding its introduction of smart meters in the Central Valley of California.  Residential consumers in towns like Bakersfield are understandably alarmed at increases in their summer electricity bills, which reflect lots of days with air conditioning to cope with the blast furnace temperatures outside.  I would be too if I were in their shoes – what consumer likes increased bills?  And I should be in their shoes, since my small niche of the PG&E energy ecosystem was altered with a smart meter this past summer.   But I’m not in their shoes.  My bills did not increase.   PG&E did raise electricity rates this summer, but unless you pay close attention to every insert in your bill, these changes in the ecosystem could escape your notice.  However, introduce something new like a smart meter, and an increased electricity bill is the result of that most visible change.

It’s a planning problem influenced by corporate culture, marketing and communication plans, and consumer awareness.  It is easy for those of us in the Smart Grid and energy sectors to forget that not everyone has the same level of awareness about Smart Grid technologies and benefits.  That’s one reason why I wrote the Smart Grid Dictionary, but this great resource alone won’t be enough to educate consumers about the powerful and compelling reasons to embrace smart meters and other technologies that will be coming to our homes in the next few years.  And face it, most utilities in the USA do not have to compete for consumer mindshare.  That’s one of the tradeoffs of being a regulated business, and the deficits of knowledge resulting from this environment can have expensive ramifications for introductions of visible technologies into the consumer base.

In hindsight, PG&E should have conducted an advance information campaign to inform, demystify, and reassure consumers about what changes smart meters would bring to their energy ecosystem.  They might have chosen to rollout smart meters first along the cooler coastal areas and go the Central Valley in the wintertime, thereby avoiding a correlation of higher electricity bills as a result to smart meters instead of higher electricity rates.  As a consulting veteran of technology introductions, the best practices include extensive interdisciplinary planning and execution of the plan.  Properly managed evolutions in the energy ecosystem keep the call volumes down in the contact centers, avoid legal entanglements and bad publicity, and maintain harmony with the regulatory agencies.  

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