Electric utilities face a market shaped by increasing competition, increased consumer access to data, and regulatory and cost uncertainties. Technology provides ways in which utilities can address these risks and find opportunities in the changing marketplace.
The Changing Market
Electric utilities face increased competition across multiple factors. Utilities operating in deregulated markets such as Texas continue to see intense competition in a market where consumers have literally hundreds of choices for their Retail Electric Provider. Given the low barriers to entry of offering basic electric service in a deregulated environment, incumbents must compete on customer service and through enhanced offerings in order to avoid competing purely on price.
Even utilities that continue to operate in traditional, regulated, and vertically integrated markets face increased competition from various forms of distributed generation, including residential solar.
Competition is increasing in parallel with the opportunities created by smart meters, which give both utilities and consumers greater access to usage data than ever before. Smart meters not only give utilities an entrance to home automation for the consumer market, but also enable richer, personalized interactions with customers. Smart meter data also enables improved “demand response” by which utilities have the potential to save money during peak loads by reducing demand instead of buying extra electricity at elevated “spot” market rates.
Finally, long-term investment decisions continue to be hampered by uncertainty about both government regulation, especially the regulation of C02 from coal-fired plants, and the long-term cost of other energy inputs such as natural gas. Slower investment in new generating capacity increases the risk of electric price volatility during peak demand as reduced investment leads to lower reserve generating capacity.
How Utilities Must Respond
In the face of these challenges, utilities must change how they interact with customers to become more responsive, increase satisfaction, and reduce customer churn. In addition, utilities must look beyond their traditional service offerings to find new sources of revenue and increase customer interaction. Areas where utilities can expand include home services, home warranty, home security, and providing services for in home installations of solar panels and other distributed generation.
Utilities must also look beyond adding generating capacity to handle peak loads. Personalized customer interactions enable new demand response mechanisms by which individual customers can be asked to reduce load in exchange for benefits that are still better for the utility than buying additional power at peak rates.
Broad Role for Technology
One area where technology can have a critical impact on the electric utilities business is in improving back end processes such as customer service call centers and order processing. These functions, which may have historically been considered “back office”, are now the front line of the battle for the customer, since a customer’s satisfaction is a primary driver of whether or not he or she will renew or expand service in a competitive market.
The opportunity for technology improvement is not limited simply to automation or the replacement of enterprise applications. User-centered design of the processes and tools used by back office workers can dramatically impact both employee performance and customer satisfaction. Often, such updates can be made by improving antiquated user interfaces even while continuing to use existing enterprise applications.
In addition, as utilities expand the portfolio of services they offer beyond traditional electric service, new technology platforms will be required to acquire, keep, and grow customers. A web platform that worked for a protected monopoly will no longer work in a competitive market, and the tools needed to service residential solar installations or home warranty items will not be the same as those used for maintaining power lines. Utilities must invest broadly to support every facet of their expanded service offerings.
Specific Roles for Mobility
Specialized mobile applications have long had a role in the utility industry in order to support workers responding to downed lines and other outages. In upgrading these solutions, utilities must carefully evaluate whether using ruggedized versions of iOS and Android devices with specialized apps can provide better value when compared to legacy custom devices.
Mobile solutions are also at the core of strategies to reach out to customers in their homes. Mobile devices represent the natural “master control” for home automation services, allowing users to use the device they already own to control their home from any location. By coupling mobile applications with push notifications, this also gives utilities the ability to directly contact individuals who can most dramatically impact demand response and receive permission to make changes. For example, utilities can now have the capability to ask an individual “Would you let us turn your thermostat up by 5 degrees in exchange for a credit on your next bill?” when the cost of buying the power for the air conditioner would exceed the cost of the credit after accounting for peak generation and congestion transmission pricing. This sort of interaction benefits both the customer and the utility.
Mobile solutions also provide a key link in helping utilities expand their service offerings. Often, subcontractors will provide new services such as home warranty. Mobile applications provide a convenient way to provide subcontractors with tools they can use on their own devices to record services as they are provided. This enables automation of billing that is of benefit to the subcontractor, while providing verification of subcontractor activity that allows the utility to ensure that services are being provided as promised to their customers. These solutions can also be extended to customers, providing data such as real time feedback on when a worker will be at your house. Instead of having to wait at home for the cable guy to arrive sometime between 8 a.m. and 4 p.m., mobile solutions give the cable guy the ability to notify customers with real-time tracking information of when the truck will arrive. Customers won’t have to waste as much time waiting, making the dreaded “four hour window” a thing of the past.
Solutions for the Utilities Industry
The utilities industry can definitely benefit from technology and mobile solutions. As the market continues to change, it will be crucial that utility companies seek out solutions that will help them stay competitive and meet customer needs.