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Please … tell us you’re not still calling your customers “ratepayers” or something even worse — some utility staffers still think of the folks receiving their electrons as “load.” If that’s you, it’s time to stop.

“Ahead, utilities will need to earn the right to control customer devices … “

“Ahead, utilities will need to earn the right to control customer devices,” says Andy Marshall, Landis+Gyr’s practice director for Distributed Energy Resource Management. “A comprehensive customer engagement strategy can walk customers from awareness of their energy bill to participation in utility programs.”

Help on the line

Why will utilities need to control customer devices? Because there are going to be increasing numbers of energy-consuming, energy-producing and energy-storing devices on the line. A 2017 report from Navigant Research and Public Utilities Fortnightly forecasts capacity from distributed energy resources (DER) to grow as much as five times faster than traditional, centralized generation over the next 10 years. Behind-the-meter solar, energy storage, microgrids, electric vehicles as well as demand response and energy efficiency are the DER components that will be delivering that capacity.

The same study found that more than two-thirds of utility personnel surveyed see the role of energy platform provider or network orchestrator as a role for utilities to pursue in the future.

How will utilities achieve that? It’s going to take more than regulatory changes and rate reform. Utilities are going to need more customer support.

That view shows up in the Utility DER Strategy Benchmark, a survey conducted last year by E Source with 28 North American utilities responding. The quick takeaway? “None of the utilities included in the study believe they currently have a robust and integrated DER strategy,” noted Alanya Schofield, Senior Director of Strategy, Consulting, and Products at E Source in a new release announcing the survey report.

According to Schofield, about 66 percent of the utilities were working on it, but she called the efforts “narrow and disjointed” due to several factors, including limited dedicated resources and a clearly defined strategic approach. Most of the utility respondents said that “improving customer satisfaction” is important to their DER strategies, but fewer than half have active efforts underway related to customer experience analysis and improvement planning.

“People realize consumer engagement is important, but they don’t always connect it to business value,” says Marshall. “That’s the thing that makes it hard for utilities to spend money on it.”

Count on it

As it turns out, customer satisfaction has long been correlated with higher returns for utilities. J.D. Power has found that a 10-point increase in satisfaction (based on a 1,000-point index scale) correlates with a .04 percent increase in utility return on equity (ROE).

Likewise, utilities that score in the top quartile of customer satisfaction one year prior to their rate case earn an average of 10.7 percent ROE while those scoring in the bottom quartile earned 10.1 percent. For a utility with a $1 billion equity base, that’s $6 million more in annualized earnings. In addition, J.D. Power found that utilities in the top quartile also receive rate increases that more closely match their requests to regulators than utilities in the bottom quartile.

What’s more, consumer engagement is correlated with customer satisfaction. Even though only 18 percent of utility customers surveyed by J.D. Power participate in utility-sponsored programs, simply knowing about those programs raises customer satisfaction. In fact, satisfaction among residential electric customers who are aware of utility offerings is 79 points higher than among customers who aren’t in the know.

Fill ‘er up

On top of rates and ROE, customer engagement offers enormous potential operational benefits to utilities.

Just take one DER: electric vehicles. According to Bloomberg Energy Finance, EV power consumption is likely to increase to 33 TWh annually by 2025 and 551 TWh by 2040. Managed charging — the process whereby utilities or a third-party provider turns the charger on or off — has the potential to help utilities lower peak loads or avoid “timer” peaks, which occur when customers on time-based rates set their chargers to go on as soon as rates are low. Once vehicle-to-grid technology is more mainstream, EVs can serve as mobile grid storage and support reliability efforts.

Without managed charging, utilities are looking at more peaks and more problems. Studies conducted by the Sacramento Municipal Utility District show that this utility may need to upgrade as much as 12,000 transformers — 17 percent of the utility’s transformer assets — due to EV-related overloading. The average cost of each transformer is $7,400.

With managed charging, a utility could minimize such transformer impacts while also improving utilization of generation assets, reducing stress on the system and slashing emmissions by charging when renewables are producing power.

EVs are just one of the devices soon to be part of our growing internet of things. Researchers at Cisco anticipate that more than half of the world’s 27 billion gizmos and gadgets will be internet-connected by 2021. All of those devices can be used to shift demand, provided utilities have customer permission. Higher customer engagement will help utilities get it.

Dismally digital

How can utilities raise engagement quickly? Marshall is quick to point out that utilities now compete against some savvy brands for their customers’ attention. These brands have trained customers to seek out communication and offerings that are individualized, immediate and facilitate choice.

As examples of individualization, he points to Spotify. “With it, you can listen to one of 35 million songs right here and now,” he says. Amazon feeds the need for immediate gratification. “You can get groceries delivered in less than two hours.” As for choice, look to Netflix. There, consumers can get content of all types. Actually, the same can be said for Amazon, as well.

“Customers expect more from brands today,” Marshall notes. He offers a few pointers on meeting those expectations.

One is to improve the digital experience. Some 65 percent of consumers experience challenges using their utility’s digital channels, Marshall says. J.D. Power agrees. In a 2018 study that used the Centric Digital DIMENSIONS Score that evaluates digital proficiency, the utility industry scores 571 on a 1,000-point scale. The retail sector, by contrast, scores 771.

Also, utilities should communicate more through all available channels, including mobile ones. People do expect it … and they want it. The 2017 J.D. Power customer satisfaction survey showed that an increase in power outage information was a key driver for rising customer satisfaction scores. Satisfaction among customers who receive outage information average 716 out of 1,000 possible points versus 683 for those customers who don’t get a call, text or email.

Finally, Marshall recommends utilities look at segmentation research such as that produced by the Smart Energy Consumer Collaborative and validate those findings with utility-specific studies. According to SECC results, more than 50 percent of utility customers would engage with pricing plans, demand response techniques, thermostats, home energy-management systems and other programs, provided they receive messages that resonate with their motivations.

Savings seekers, who represent around 20 percent of utility customers, want to cut costs. The technologically cautious — or 17 percent of consumers — want to use energy wisely, but they need to know how technology can help them out. Movers and shakers, a group that makes up 15 percent of folks, love new toys. Impress them, and they’ll be more engaged and loyal.

“Most utility customers are served by a monopoly that has to serve everyone in territory, so the utility can’t pick and chose a segment they want to focus on,” Marshall says. Each customer set is swayed by different messages, so it’s vital that utilities do their own segmentation.

“The most under-tapped, under-utilized resources for the utility isn’t DER, it’s the customers’ hearts and minds.”

Still, he adds, the potential to bring more customers into utility programs is high, and the payoff is significant. “The most under-tapped, under-utilized resources for the utility isn’t DER, it’s the customers’ hearts and minds. That’s what you need for loyalty and engagement.”

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