- Industry: Energy & Utilities
Utilities are now in the age of customer choice. How can they adapt to secure their share in the 21st century energy economy?
By: Sam Uyeno
Paradigm Shift within the Energy Industry
Whether you believe electric utilities are destined to evolve into competitive service providers or distribution system operators, or whether they’ll continue to generate revenue from cost-of-service or performance-based ratemaking, one thing is certain, the industry they do business in will evolve more in the next 10 years than it has in the previous 100 as it relates to “how” they conduct business. Utilities need to decide whether they’ll emerge as opportunists or road blocks to change.
The widespread proliferation of Distributed Energy Resources (DER) provides an answer to a growing number of concerns across the US – climate change in California, reliability and resiliency in the wake of New York’s Super Storm Sandy, and high energy costs in Hawaii. Regardless of the origin or priorities of each state’s energy vision, all seem to converge on the concept of an increasingly decentralized clean energy economy, with significantly more industry participants as compared to yesterday’s model. This has led to a paradigm shift within the energy industry, from a rigid monopoly to that of a flexible competitive marketplace.
Seizing a Natural Advantage
At the heart of this confluence lies customer choice – which energy efficiency program will save customers the most money? Is solar the right and best choice? Which devices can help automate customer participation in demand response? And, the list goes on. So while other market participants (i.e. DER service providers) closely evaluate their own strengths and weaknesses in the hopes of developing a sound market strategy, utilities should look no further than their own customer relationship to competitively stake their claim in a 21st century energy economy. After all, they currently own the customer relationship, have established lines of communication, unique customer knowledge, wide-spread branding and are often viewed by customers as trusted energy advisors in a crowded space of new offerings.
Enhancing the Customer Relationship
However, in the midst of widespread disruption on all fronts, these advantages are likely to be short-lived. Utilities need to focus their efforts on creating an enhanced customer experience and embracing digital technologies that optimize those experiences in order to retain and strengthen the customer relationship and create value in a decentralized energy economy. Utilities must exercise “voice-of-the-customer” techniques to better understand their customer’s expectations and preferences. And, customer wants and needs are rapidly changing due to their everyday experience with best-in-class practices in other areas of their life (e.g., convenience of Uber, choice of Amazon, simplicity of Apple). By conducting in-depth customer surveys, focus groups, developing customer personas and journey maps, a utility can access important information about the needs and wants of its customers – which energy supply choices are of value to its customers, how they wish to control their energy use, and which channels of communication are most convenient to interact.
Just as customers are becoming increasingly digital and mobile in all areas of their lives, it’s important for utilities to embrace technologies that will enhance their customer experience. Unlike the conventional utility bill found under a stack of papers on the coffee table, digital allows the customer to connect with the utility anywhere, at any time (e.g., smartphone, tablet, and laptop). By adopting a flexible underlying architecture with digital-enabled analytics and coupled with Advanced Metering Infrastructure, utilities are positioned to provide unprecedented customization and personalization so that customers can more easily connect with the energy products and services being offered. Adopting agile operating methodologies across the organization will ensure utilities can develop and deploy with speed in order to maintain a competitive advantage.
Most importantly, utilities will need to ensure customer messaging is clear, consistent and continually reinforced. Unlike traditionally siloed utilities of the past, this will require utilities to act collectively and collaboratively across the organization in order to continuously deliver highly relevant content and communicate in one unified voice, which will deliver a best-in-class customer experience and perpetuate the utility’s role as a trusted energy advisor.
Staking Your Claim in a 21st Century Energy Economy
The successful utility will leverage this transformed customer relationship to operate as a strategic energy broker, facilitating transactions in a digital marketplace where innovative DER products and services are successfully marketed to the right customer, or even exchange energy services amongst different customers. Customers will look to utilities to enable secure sharing of data and information necessary for third-party providers to develop and offer new innovative products and services. Lastly, utilities will remain the customer’s trusted energy advisor, continuously empowering and navigating them through all the many choices the 21st century energy economy has to offer.
Sam Uyeno is a manager in West Monroe’s Energy & Utilities Practice, supporting utilities with grid modernization and customer engagement transformations. He has over 10 years of experience spanning strategy, regulatory, business case analysis, and project management. For more information about this topic, Sam can be contacted at firstname.lastname@example.org.