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Top Ten Resolutions for the Nation’s Utilities in 2021

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Jason Price's picture
Business Development Executive - East Coast Energy and Utilities Group West Monroe Partners

Current function is the East Coast Business Development Executive for West Monroe Partners. Recent NYSERDA scholar and NYU Clean Energy and Technology Diploma recipient, completed a thesis...

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This item is part of the Special Issue - 2021-01 - State of the Industry, click here for more

Utility of the Future

Top Ten Resolutions for the Nation’s Utilities in 2021

by Jason Price

There is an old adage “the more things change, the more they stay the same.”  This couldn’t be truer as the utility industry looks to the near- and long-term future.  On the one hand, it is fairly predictable what the utility industry will look like in 2021 – much as it does today. On the other hand, given the continued pandemic, change in administration in Washington, various state and regulatory mandates, and profound technological changes confronting the industry, so much can change.  The one constant will be the need to continue to reliably deliver service to customers.

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Unknowns to the industry are as equally vast in concept as in their potential impacts.  To what extent might investments to modernize the electric grid slow once the pandemic abates and utilities must shore up balance sheets following increases in arrears. Whether decarbonization goals proceed as planned and governments continue to support through policy and financial incentives, or timelines are extended and general interest and funding support for these initiatives fade. Perhaps industry advances in clean energy solutions and greater customer choice scale back and are replaced with traditional carbon practices in order to jump start the clean energy economy.  Despite an uncertain outlook, our nation’s electric and gas utilities have been tested to a degree not seen in recent history.  And like our first responders, utility crews and field operators, and tens of thousands of utility professionals went to work every day to keep the lights on, and the gas flowing. Utilities implemented their pandemic response plans immediately and customers continued to be served reliably.

Whether an investor owned utility, municipal or cooperative, a power authority or developer, our nation’s utilities face a transformative year and decade ahead. Likely, 2021 will show continued advancements in grid modernization and decarbonization and a renewed focus on the triple bottom line of people, profit, and planet.

As we move into the next year, with hopes the pandemic is brought under control and the industry and general public look towards reemerging in a ‘new normal,’ there are actions today’s utilities can take to address major issues impacting the industry in the coming year and beyond.  In the spirit of the New Year, the following are “Top 10” resolutions for the utility industry.

1. Work with all stakeholders to align and prioritize capital investment where most needed.

Most utility rate proposals are scaled back and fall short of expectations and planned expenditures working their way through regulatory proceedings. Regardless of the reasoning, the investments in grid modernization suffer when utilities and regulators are not in synch. Twenty-first Century utilities are required to devote more attention to communicating to the general public and customers what infrastructure investments are needed, how they will get done, who will be held accountable for performance, and what they will cost. Working to align priorities by collaborating with the public, consumer interest groups, policy makers and regulators is a solid first step.

2. Modernize digital operations in order to better serve customers.

Retiring dated legacy systems and replacing them with customized solutions abiding by widely accepted industry standards and best practices will help. While overall costs of information and operations technology (IT/OT) trend downward over time, they are still costly. Inertia to make necessary and costly upgrades remains an all-time high due in part to regulatory uncertainty. It is time to upgrade and modernize. Embrace automation. Install low cost robotic process applications to streamline the multitude of repetitive back office practices. Deploy advanced meter infrastructure to reduce truck rolls and costly maintenance operations and support grid modernization. Upgrade to a customer information system that provides a 360-degree view of the customer. Make 2021 a year to re-evaluate practices and modernize where necessary.

3. Leverage data to its fullest.

A data driven strategy is a process that forges a deep understanding of how data are collected, stored, cleansed, and monetized. Data are the utilities greatest currency and cannot be overlooked or underused. Data can drive down operational and maintenance costs. Data can drive changes in commodity consumption behavior that will reduce waste, inefficiencies, and harmful environmental emissions, including carbon and methane. A complete utility-driven end-to-end data strategy requires a multi-year investment that will push the utility well into the twenty-first century. Utilities are data rich entities and leveraging data as an asset can be used advantageously.

4. Deliver on the customer promise.

The customer experience, particularly under COVID-19, has garnered far more utility investment and attention. Whether it’s supporting the contact center staff with remote technologies and new trainings or finding ways to deliver on the customer promise, such emphasis has increased attention on tending to customer needs. Utilities have an increased desire to continue to own the customer relationship and the customer journey, and measure against JD Power and CSAT scores to ensure outcomes. Amazon is the envy of ecommerce. Hospitality is the envy of customer service. By looking to leading industries on how best to serve the customer, the utilities will benefit from public support for future utility initiatives. A utility that puts the customer first will remain relevant well into the future.

5. Reduce the energy cost burden of low- and moderate-income customers. 

Safe, reliable, and affordable power is important now more than ever as our nation endures and recovers from COVID-19. For one-third of Americans as much as 10 percent of their disposable income goes to pay the electric bill. The appropriation of additional funds to the states through the CARES Act uncovered gross disparities on how utilities managed programs, or lack thereof, and served low income and distressed families. Reevaluating how low-income customers needs are being addressed and playing an active role in designing programs and outreach to support distressed customers is an important, and necessary, public benefit. 

6. Secure modern IT/OT systems that serve the overall utility operations.

A roll-out of next generation platforms enable utilities to see a macro view of its entire operations and to improve performance and lower costs. Transformative examples like Advanced Distribution Management Systems (ADMS) reconfigure the entire structure of utility operations. Look to the cloud to relinquish unnecessary barriers in becoming a leaner, cleaner, and far more efficient Utility. Such transformative thinking will allow the utilities to monitor, control, prevent, and mitigate outage events and push the utility in new directions on staffing, skill sets, and other human factors. The time has come to begin the transformation and nowhere is this greater than in IT/OT. Look and learn from leading utilities who have made the Utility of the Future a reality. 

7. Improve the resiliency of the utility.

Climate risk drives more frequent, intense, and longer duration weather-related outage events. Cyber risk remains a constant and represent an increasingly unpredictable danger to utility infrastructure. However, durability of the electric grid to rebound is essential given climate change and rogue behaviors. Upgrade technologies and cyber strategies to support grid hardening for greater endurance during extreme weather and cyber threats. Beyond table-top exercises, listen to data signals from enterprise asset management systems in order to pinpoint weakness long before failure. Deploy drone-driven machine learning strategies to monitor vegetation growth and equipment fractures, install next generation telecommunications and LTE for a sister-network of back-up support, and invest in distributed energy resources (DERs) strategically at the grid edge. Resiliency is not prevention, rather it is mitigation. Provide utility staff with the tools and know-how to meet our next generation of threats.

8. Integrate DERs for greater operational flexibility and customer value.

A decentralized electric grid calls for new grid-edge technologies to allow for greater resiliency, cleaner generation, and changing behaviors for energy use.  With new technologies utilities are actively investing in tomorrow’s energy future, today. Hosting capacity, non-wire and non-pipe solutions including demand response and resource substitution programs are growth drivers at the utilities. Look to the competitive marketplace to partner and acquire the array of tools and technologies to support DER and various clean energy alternatives.

9. Make clean transportation infrastructure a priority and support EV and alternative fuel literacy in commercial and residential communities.

Of the nearly 300 million registered cars in the United States, approximately 1.6 million are electric vehicles. Range anxiety, cost of ownership, available and equitable charging stations and charge rates, and issues related to load management and electric system impacts remain top barriers to EV adoption. These societal issues are best solved by our nations network of utilities. Regulators, government, and the public find EV, hydrogen, and other clean vehicle technologies adoption a top priority for years to come. Accelerate your path forward in all things clean transportation-related for the economy and the environment.

10. Make decarbonization the framework for every utility investment made.

Every investment, communication, or other action by the utility must be framed in consideration of decarbonizing the economy. Indeed, by following the lead of the utilities corporate America can more swiftly move toward a 100 percent clean and renewable energy system. Not only to reduce carbon and methane emissions but reduce revenue loss from water leaks and backups. Gas utilities must think differently and look to far greater accountability in defining and meeting metrics in reducing methane emissions, gas leakage, and more optimal use of existing pipe systems. Much can be planned today and enacted tomorrow in order to move toward a fully decarbonized future.
 

Our nation’s utilities are strong, resilient, and far more responsive than just a generation ago. The deregulated-side is entrepreneurial and competitive while the regulated is trust-worthy, steady, and reliable. For a system that is over 100 years old it held up quite well during the pandemic. Now with a possible end to the pandemic in sight and as new beginnings lie ahead, let’s stay focused on the top issues facing our utilities.

Jason Price and Paul A. DeCotis are executives of West Monroe in the Energy & Utility Practice and based in New York City. For more discussion on any of these issues you can reach Jason Price at japrice@wmp.com (646)448-9953 and Paul A. DeCotis at pdecotis@wmp.com (646)448-9147.

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Matt Chester's picture
Matt Chester on Jan 22, 2021

A complete utility-driven end-to-end data strategy requires a multi-year investment that will push the utility well into the twenty-first century. Utilities are data rich entities and leveraging data as an asset can be used advantageously.

Well said, Jason-- the resolution to collect data is for the past, because data collected but not properly used is really no better than no data at all. Smart data collection is not a item to just check off on the to-do list, but it's really the beginning of a transformation/journey that takes commitment of time and resources. 

Jason Price's picture
Jason Price on Jan 25, 2021

Agreed! What we see in the utility industry, particularly as we continue to move toward AMI, is the bulk of use cases around AMI data is for billing and cursory information - no more than 15 use cases and highly generic treating all customers as one. We've designed and have begun rolling out next generation customer experience programs for a handful of forward leaning utilities to address in excess of 60 use cases. You could describe the movement as AMI Utility Data 2.0 and that is where we are heading in years to come. Happy to discuss this further. 

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