Updated: 7 days ago
By: Jack Doueck & Christina Corcoran
In the months of June and July 2020, the Utility 2030 Collaborative held a 2-part webinar series “Balancing Empathy and Utility Needs When Money is Tight”.
During part one, thought leaders from Algonquin Power & Utilities Corp., Duquesne Light, Zpryme and Appos discussed how the global pandemic of 2020 set in motion changes in the way we live and work that will carry through into the future as a “normal” way to do business.
Part two featured panelists from Duquesne light, Avertra, and Zpryme discussing the Future of Utilities that concluded with crystal ball predictions.
Hear a replay of the discussions through the links below and keep reading for discussion highlights:
How has the ‘Office’ Working Model Changed?
Communities are hurting. There are estimates of 25% - 35% of small businesses that are now out of business. This has a direct effect on utilities. The most visual change is in how we now work. While the change was seamless for customers, utilities across North America have responded to the pandemic maintaining their focus on safe and reliable services. They had to very quickly move their customer contact centers and offices to remote access. Crisis breeds opportunity and utilities had to ask many of their contact center members to go home and work from home, which was a new thing, a new experience and it's challenging. But they rose to the challenge and made the transition. These changes have forced workers to step back and reevaluate how they work and interact with each other, with project teams to implement the changes, and with customers. One observation that was commented on is how working remotely and talking to people in their home environments helps you start to understand a little more of who your co-workers are as a person when they're not just a vendor or a consultant who sat at a desk on-site. You get to learn a lot more about the people you’re working with, which is a very positive aspect, and learning a little more about people and building up a little more empathy has definitely been a plus. Finding our shared humanity and communicating with empathy.
How are utilities putting an emphasis on the customer?
Utilities needed to put an emphasis on the ability of customers to self-serve and making sure that there are programs in place to be able to help and support the customers. Utilities, like most industries across the board over the past few months, have had empathy with their customers and trying to work with them and the situation. We’ve seen utilities suspend shutoffs with a disconnection moratorium which gives customers a chance to continue services. Nobody's losing their water, power, or heat/air conditioning because they lost their job. Although in the long term this is not a sustainable way to do business, at some point you have to have the ability to get paid for the services you're providing, without giving your customer “bill-shock”. Having empathy for their customers, Algonquin has even partnered with Hallmark to send cards to their customers to make them know they are important and to give them a smile when they might need it the most.
The utility’s ability to put digital tools into the marketplace to support their customer has been very beneficial for both the utilities and their customers. Contactless, safety precautions, automation, and the process of reducing paper will be long-term (and positive) results of this pandemic. The panels are seeing that utilities are doing virtual building audits for the first time. They are doing it cheaper and better and this is another new program that they think will stick going forward. Utilities are getting more and more comfortable with these kinds of changes.
The 3-5-year trend has been the creation of new roles and titles at the major utilities such as Director of Innovation, Director of Electrification, Chief Mobility Officer. New leadership roles. Big utilities are partnering up with startups that can help them. One example is the partnership between OSI Soft and Sempra - Pxise to create the Distributed Energy Management system. At Duquesne Light, they have prioritized affordability and innovation and started a new management office devoted to this. They are making organizational changes even during this stressful time and are investing in new roles and a new culture. There are a lot of other utilities that are doing the same thing.
How has the pandemic impacted digital transformation?
The pace of change has definitely quickened. Utilities need to use machine learning and AI for predictive forecasting. Over the last decade, there's been an explosion in the amount of data that has filtered through and been collected by utilities… usage data, billing data, customer interaction data and they're taking that data to create models to understand how to best communicate and connect with their customers. Utilities are proactively reaching out to customers to let them know they’re here to help their customers, if the customer is having trouble paying their bill, the utility can tell the customer they can put them on a payment plan now to avoid having to shut the customer off a few months down the road. Or if their usage is higher than normal, the utility will let the customer know so it lessens the bill shock but also offers suggestions on how to change their behavior to lower the usage moving forward. If utilities had not made the investment in digital expenditures over the last five to ten years, they wouldn't have been able to pivot as effectively as they did.
What is the impact on demand and renewables?
A few months into the pandemic now, we are seeing some of the economic impacts to utilities and their customers were significant in reductions in demand across the Midwestern region, across New York and California, we've seen reductions of 9 to 13 percent in the Midwest; 11 to 14 percent on a daily basis for New York and California is less with about 3.7 percent average weekday reduction. That doesn't seem like a lot by percentages but it's significant in terms of demand and utility revenue. The extent of the reduction in demand in all cases that we've seen, is a reduction in industrial, and particular, service industry demand, and of course, residential demand has actually increased. Another thing looking at the data was the speed and severity of the stay at home orders issued in each area had a significant impact on how quickly and how deeply demand was reduced. Now what we're also starting to see is that demand is coming back and that come back is also very closely related to the speed with which the stay at home orders are being relaxed. In many regions that demand is getting close to being back to where it was and we're seeing wholesale prices get close back to where they were beforehand.
James Riley, a partner at Appos Advisors, also noted that although there's been a decline in electric demand, that decline has not been felt by renewables as a source. From a broad perspective of the economic impact for utilities, there are questions arising around why renewables haven’t seen the downside during this pandemic. The thought is that primarily it has a lot to do with usage patterns on the demand side. Yes, the industrial and retail commercial demand has been down for the last three months, but residential usage is up during the day. This matches very neatly with the ability of renewable sources of energy to meet that demand, that intermittency that you see with solar and wind that particularly fall off during the evening time period when residential customers are typically coming home and turning on their appliances. It didn't, in previous times, meet that demand, but now that we've flattened to a degree, the residential usage demand, those intermittent resources, are able to meet them more effectively throughout the day, which is part of the reason why the researchers at Zpryme think solar and wind has seen a slight and steady amount of generation.
As for crystal ball predictions; what do you think utilities will look like in 10 years?
We asked this to our panelists. Bashir Bseirani from Avertra said, “Let's think out of the box! What if we stop charging for energy and sell other products and services on a subscription basis (such as electric vehicles, appliances, etc.)? Utilities can transform into financial services firms! If utilities don’t do this, GOOGLE will step in and do it themselves! If utilities don’t do this, they will lose customers to others. Energy is a necessity in life – it should come for free. In telecom – we used to pay by the minute… not anymore. We should not be paying by the kWh for electricity. We should be charging a fixed budget for energy and this will seriously disrupt the industry. There is a magic break-even point. Do we really need to spend so much money on meter reading and billing? Let's create new business models!”
Duquesne Light is hoping to execute on IoT, leveraging smart data on meters and on the entire infrastructure in a more meaningful way to build data and leverage it into work processes. They hope to get regulatory to catch up with digital age-communications.
Chris Moyer from Zpryme, said, “Two things that utilities uniformly do very well is an emphasis on safety and it's an emphasis on operational reliability and this challenge has only enforced those strengths, yes we're not in the office with each other anymore and that is an anathema to utility culture but we as an industry, as utility professionals, and as analysts studying the industry, there really is a strong care for making sure that employees are safe, that the customers are safe and that the lights come on when they need to come on. Those two core principles have been foundational as each utility navigates different operational challenges and finding our shared humanity there's so much talk about empathy and communicating with empathy”.