Top utility threat: consumer energy behavior

Electric utilities, the ground is shifting under your feet. You may have thought you had time to develop customer-facing programs, dabble in customer engagement and mull over your future business case.

The conventional wisdom supports your notion that there's still time on the clock. Consumers, it is said, don't know much about how electricity is generated, delivered, priced, etc., nor do they care. Consumers only wish to "set and forget." Engaging and educating them will take time. So you've got time.

Yet a new survey, released today, contradicts those conventional notions. Welcome to the two-edged sword of threats and opportunities for electric utilities.

A new EcoPinion survey, "Consumer Cents for Smart Grid," finds that customer awareness of the phrase "smart grid" hasn't really budged since last year, and the word "electricity" remains the most cited response. That has implications.

"Smart grid, for many Americans, remains an empty vessel that is yet to be filled with any value or significance," according to report author Jamie Wimberly, CEO of EcoAlign, who will present his findings today at Connectivity Week in Santa Clara.

Opportunity! Between this year and last year, consumers have become more receptive to engagement with electricity suppliers to help manage their bills.

Threat! They are looking for alternatives to traditional service, especially concerning bill payment and energy management options.

In my own view—not necessarily that of the report—this means that the electricity customer is up for grabs and we all know that myriad firms are either bypassing or partnering with utilities to present consumers with new value propositions.

The report does detail that the vast majority (89 percent) of Americans would like their utility to suggest ways for consumers to reduce their bills. Again, in my view, many utilities already do this—but who reads bill stuffers with generic entreaties on energy efficiency measures? That's got to get personal, granular and specific about value propositions.

Opportunity and threat! According to the new report, more than half of Americans (56 percent) expect smart grid to improve the customer experience. (Upshot: utilities, if you don't step up your game, someone will take your place.)

What's driving this interest? One major driver: money.

"A primary reason is that consumers in 2011 were extremely concerned or very concerned about the potential for rising utility bills," according to Wimberly.

That concern stood at 74 percent last year and, since then, it has jumped four points to 78 percent.

"Thus, the challenge will be for utilities and energy suppliers to meet these strong expectations that smart grid will lead to short-term savings and better energy management options, especially given that utility rates are in fact increasing and will continue to increase," Wimberly wrote in today's report.

This is another threat/opportunity, in my own view. Many well-informed people have over the past year emphasized that selling "smart grid" as a way to "save money" is a false promise. Rather, the notion that costs will rise and energy management options can help consumers control costs seems much closer to the truth.

It's also been pointed out that marginal savings of, say, 15 percent per month on a $100 per month bill is a mere $15 per month. Multiplied by 12 months = $180 per year. For many, that's not enough to motivate behavioral changes. So, controlling costs is likely to be only one of several motivators.

The new report offers many granular insights and I found it worthy of your attention. If these issues matter to you, you may also be interested in an upcoming webcast, "Best Practices in Customer Connections," taking place on Thursday, July 7. Sign up by clicking on the title.

The very same issues will be the focus of the customer service track at the upcoming Knowledge Utility Executive Summit, Nov. 7-9, 2011, on Amelia Island, Florida.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757