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Customer Lifecycle Management for a DER-world

image credit: Dean Chuang, 2020
Dean Chuang's picture
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Dean Chuang is an independent consultant providing advisory services to energy industry clients.  Dean has held a number of roles over a 13-year career in the energy industry, from financial...

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  • May 25, 2020

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Utility product engagement through DSM is no longer just a one-time sale of EE products, but is increasingly an operational partnership between the customer and load management entity.  Here are a few lessons from the Retail world that can help utilities “operationalize the customer” as a demand side asset.

Since the passage of PURPA in 1978, Demand Side Management, delivered through customer products and programs, has been a valued pillar within the utility Integrated Resource Planning process. 

DSM began as energy efficiency and, as a static load shaping resource, the operational burden upon the utility has been relatively minimal; customers are offered a subsidized utility-defined product, typically through implementation partners, and energy savings from customer adoption are statistically calculated using local Technical Resource Manual (TRM) assumptions. 

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As DSM has evolved from EE into DR and DER however, what was once a planning resource has become an operational asset.  Given the balancing needs of a more variable grid, these assets are being dispatched more frequently…and, at times, have failed to deliver

While many of these failures can be attributed to the design of legacy programs intended for a simpler grid, the management of dispatchable assets clearly requires a greater degree of customer engagement than traditional energy efficiency[1].  Drawing upon retail marketing principles, I’d like to share a customer-product lifecycle framework that can help improve customer satisfaction and resource availability.

The Utility Customer Lifecycle is unique.  In traditional retail marketing, the customer lifecycle begins with the development of brand awareness.  However, regulated utilities market to a captive audience with an established brand as a “trusted energy advisor;” accordingly, there is less need for a Utility to devote marketing dollars towards brand marketing.  Demand Side Management is also a unique “product.”  As DR/DER, the utility “product offer” is a hardware-based service partnership that (theoretically) offers a win/win for both the customer and utility.  Maximizing the value delivered from this partnership requires integration into utility operational systems. 

Given these unique requirements, my DSM customer lifecycle prioritizes four phases for DSM customer operations.


The goal of the engagement stage is to convince the customer to deepen their relationship with the utility.  This conversation should begin with a compelling reason to convince the customer to engage beyond the existing billing relationship; customers can purchase EE and load management products (e.g. thermostats, and DERs) elsewhere…why should the customer choose the Utility’s offer? 

“Mass Market” campaigns can be successful for programs that have broad appeal but, in this digital age, best practice is to segment and target customers based upon marketing analytics.  This segmentation also has applications in the development of performance forecasts in the “Operation” phase of the DR/DER lifecycle.   


After the customer decides to enroll in the Utility offer, the new customer resource must then be “operationalized” according to the Utility’s desired use case.  This means that the resource must be enrolled (or “associated”) at the appropriate operational level.  Broadly speaking: 

  • Applying a Demand Side resource against Bulk Power, Wholesale, or Transmission level applications will require association with the appropriate transmission level node.
  • Distribution use cases will require more granular integration. At minimum, the demand-side resource should be associated with the distribution transformers that serve the customer load; customer level optimization will require association with the customer meter. 


The operation of demand side assets is a balance between the preservation of a positive customer experience and utility resource performance requirements[2].  While program design is critical, thoughtful customer engagement throughout the operational lifecycle can improve customer satisfaction and resource availability. 

It is important here for the utility to prepare for the program impact on utility/customer touchpoints:

  • Billing is the most critical touchpoint, as most customers enroll in utility DSM programs with an expectation for bill savings.  While “on bill” presentation of program credits (or debits) should be considered best practice, bill modification can require costly and time-consuming IT development.  
  • Dispatch is “where the rubber meets the road” for an actively managed DSM program – does the resource perform as expected?  The customer segmentation models developed during the Engagement phase can improve the forecasting of resource availability.  From the customer experience perspective, the priority during the Dispatch phase is to provide consistent messaging.  This is particularly important for programs that leverage multiple vendors (e.g. Utility, DRMS vendor, implementation vendor, hardware vendors).
  • EM&V, or “Evaluation, Measurement & Verification,” is primarily a back-office calculation, but timely performance can provide useful inputs into customer support, particularly for programs that are structured around event-based compensation. 
  • Support.  Each dispatch event is likely to cause an uptick in customer call volume and it is important for the program manager to staff accordingly.  Best practice would include proactive outreach and multiple support channels.    


Just as the Enrollment phase requires integration with utility operational systems, the customer resource must be “unenrolled” at customer request or at the conclusion of the program.  For dispatchable programs, the utility back-office needs to be able to remove customers; this is particularly important for programs utilizing customer owned assets, as failure to comply with an unenrollment request will impact the customer relationship.  From the customer engagement perspective, best practice upon attrition is to survey for sentiment and attempt to “retain” the customer with a “save” offer.

Why this Matters:

To paraphrase a presentation I delivered at PLMA last May, the scale and availability of an operational demand side resource is driven by customer interest and customer satisfaction.  Failure to engage customers with a compelling message will hinder program scale, while failure to maintain a positive customer experience will impact the performance and availability of the demand side resource. 

A holistic, operational customer-driven program will target customers based upon locational resource need and propensity to adopt.  This requires systems and processes, IT and OT, to manage customer experience throughout the lifespan of the resource.  The architecture included in the title image illustrates some of the systems and processes that may be impacted…though, as I’ve rambled on once again, the detail will have to be covered in another post.

[1] E.g. Lightbulb replacement or energy audit programs

[2] Specific resource requirements will depend upon the use case but, broadly speaking, DSM delivers locational capacity or energy that can be aggregated for system services. 

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Thank Dean for the Post!
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Matt Chester's picture
Matt Chester on May 26, 2020

the scale and availability of an operational demand side resource is driven by customer interest and customer satisfaction.  Failure to engage customers with a compelling message will hinder program scale, while failure to maintain a positive customer experience will impact the performance and availability of the demand side resource. 

This is a great point. Because demand side management is new to so many customers, i would think a main way the word spreads is also via word of mouth-- neighbor to neighbor. So you want those early customers to have a great experience so they can start bragging about it at the next block party!

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