Utilities look to a customer-centric business model
AUSTIN, Texas – Like telecom and other industries, the energy sector is moving to a customer-centric business model as new technology changes the paradigms associated with generation and distribution across the power grid.
This need for an industry pivot was highlighted during the 2016 Energy Thought Summit this week during a panel titled “The Next Generation Utility.” Moderated by The Economist Energy and Commodities Editor Henry Tricks, the session covered how energy sector players need to strategically invest to add flexibility to the power grid, while becoming more responsive to increasing levels of consumer choice.
Harold DePriest, president and CEO of EPB, a Chattanooga, Tennessee, electric and fiber optic services provider, discussed the synergies around municipally owned telecom and energy utilities.
The combination is “very symbiotic,” DePriest said. “It is changing us as a company and it’s changing our community. It’s bringing jobs and businesses and opportunities that we simply wouldn’t have had if we had chosen to wait for the standard communications companies coming to us.”
As for customer focus, Ken Cornew, CEO of Exelon Generation, outlined the balance between process-based “operational excellence” and the need to embrace innovation. “Those are two conflicting cultural elements,” he said. “I think … what we really have found out in the last four years of having that combination together is we need to think differently.”
Exelon is a holding company comprising six utilities and 10 million customers.
“We talk about matching products to customers,” Cornew said. “Where the innovation is coming from is competition and customers, what customers want. Those types of things are things we need to really think about and not just think about if we run plants well, we’ll sell the power and everything will be fine.”
Scott Prochazka, president and CEO of Centerpoint Energy, said the energy sector needs to ensure that as renewable sources of energy continue to gain adoption, the power grid is able to accommodate new associated generation and distribution models.
“As we look at distributed generation, we look at alternate sources of renewable. … I firmly believe the grid becomes the space to make this happen,” Prochazka said. “I see a very exciting future in terms of meeting consumer requirements.”
To illustrate the way consumer behavior is changing, Gary Wetzel, VP of U.S. sales for S&C Electric Company, gave the example of sustained and momentary power outages.
“We all recognize that trying to solve sustained outages and trying to solve momentary are two different issues,” Wetzel said. “Consumers have become kind of used to the light blinking. They’re changing their mind. Blinks are not acceptable anymore. You’ve got to do something. In order to do a real grid reliability improvement, you’ve got to jump in with booth feet and do a system-wide deployment.”
That type of systemwide approach is exactly what Florida Power and Light had to undertake to harden the utility particularly against damaging tropical weather. Brian Olnick, VP of distribution operations for FPL, said multiple hurricanes in the 2004-2005 timeframe served as “really a big awakening for our utility. We recognized that what the impact of mother nature and events like that can do,” prompting creation of a “grid resiliency or storm hardening program to make sure we balanced our approach and our investments in the future into what our customers were really expecting.”
