Leveraging the Utility Trust Dividend

Patrick McGarry
Senior Director

A period of crisis often shines a bright light on the true nature of a relationship and where it is likely headed in the future. When times get tough in life or business, you learn who runs and who rallies.

Respect is earned. Trust is gained. Loyalty is returned.

Special relationships often form during times of great hardship. Whether a world war or global pandemic, lifting other people up when they’ve been knocked down is the best way to earn respect, trust and loyalty.

What was true yesterday is still true today, especially in the energy industry.

The Ties That Bond

The University of Notre Dame and United States Naval Academy have a long, mutually respectful history.

Immediately after Pearl Harbor, Notre Dame lost a significant part of its (then) all-male student body to the World War II effort. Total enrollment dipped below 3,000 and the future of the university was in serious question.

As Notre Dame needed more students and money to survive, the Navy picked South Bend as the site for a V-12 Navy College Training Program – essentially, an ROTC for Midshipmen – and sent a bunch of students, along with hundreds of thousands of dollars to the campus. During the Vietnam War, some colleges cracked down on, or abolished their ROTC programs altogether. Notre Dame didn’t however, which was a return of the favor to Navy

Even though the fortunes of the Notre Dame and Navy football programs took drastically different turns in subsequent years, Notre Dame refused to drop Navy from the annual football schedule. Today, the game remains a great recruiting tool for the Navy Academy, especially given it’s strict admission requirements and military regulations.

Since 1927, the Midshipman and Fighting Irish have maintained a special relationship, helping each other in times of vulnerability.

Relationships forged from mutually helping to survive a significant crises tend to last a very long time, if not forever.

The Utility – Customer Relationship

Like the impact of WWII on the Irish and Midshipman, Covid-19 presents a unique chance for utilities to redefine the customer relationship. The human behavior and analytics firm Escalent published a study in which it examined the historic high in utility trust by customers due to the industry’s effective response to the pandemic.

“It is clear from our research the utility industry has done a fantastic job supporting customers during the pandemic. This has won utilities the trust and goodwill of their customers,” said Chris Oberle, Senior Vice President at Escalent. “The utility industry is used to handling crisis and quickly provided customer support.”

Before the pandemic, many futurists were predicting the age of digitalization would leave utilities in the dust. Giant, global, high-tech companies would step in between the utility and their customer to form a new relationship based in part, on sharing demand data from homes and businesses.

But the futurists missed two significant points:

  1. People love their technology and social media, but they don’t trust it.
  2. People haven’t always loved their local utility, but they do trust it.

Trust is the cornerstone of any lasting relationship and without it, all the money, technology and algorithms in the world are meaningless.

The utility industry’s response to Covid-19, particularly not shutting power off to the newly unemployed living paycheck-to-paycheck, has earned them a notable trust dividend. Customers now expect utilities to be their energy advisor, and to invest the earned trust dividend to advance new energy efficiency opportunities.

A fragile economy along with extreme budget pressures, both in the home and at the office, will provide additional incentives to work even more closely together as time goes on.

While we don’t yet fully understand how future demand profiles will be reshaped, all signs point to increased residential usage and declining commercial consumption due to the massive growth in teleworking. Here too, lies another unique opportunity to further leverage the trust dividend.


Load Disaggregation,
“Welcome to my Home”

Seizing on advances made in analytics and algorithms, load disaggregation represents a significant opportunity for utilities to partner with customers in order to capture energy efficiencies and manage larger power bills.

Otherwise known as “Non-Intrusive Load Monitoring” (NILM), load disaggregation is a broad term covering a range of techniques to split a household’s energy consumption by the individual appliances used. NILM offers insight into consumer end use of electricity (or gas, or water) using data from a single meter. Disaggregation allows a utility to take an entire building’s (aggregate) energy signal and separate it into appliance-specific metrics.

End uses of Load Disaggregation“, a whitepaper by the forecasting and behavioral analytics firm ONZO, states that load disaggregation offers the following value end use value streams:

For Customers

  • Detailed appliance use logs show what appliances are used, when (and how intensively) they’re used, and what their associated energy costs are.
  • Personalized, appliance-level energy advice provides actionable tips on how to save energy based on observed usage patterns.
  • Whole bill breakdowns tell customers what they’re spending money on based on a list of “top use” appliances.
  • Condition advice informs consumers about the relative efficiency of their appliances and broadcasts early warnings about potential servicing concerns.

For Utilities

  • Enhanced intelligence provides increasing knowledge about customers, how they use energy, and the appliances they own.
  • Segmenting information on customers’ energy use habits supplements existing demographic data breakouts.
  • Targeted marketing and messaging enables outbound communications to customers who meet certain criteria of ownership for a particular appliance.
  • Targeted demand response helps identify likely shift-able load through better understanding end consumer appliance usage.

The Rise of Prosumerism

“Prosumers” are people who produce some of the goods and services they consume.

When individuals consume electricity and other types of power, they generally benefit from reliable and stable supply systems. As there must be a constant balance between supply and demand, stability is ensured by utilizing various types of flexibility services that exist within the power supply system.

Enter the prosumer.

Much in the same way that energy and capacity should be viewed separately, energy and flexibility should be seen as two distinct commodities.

Constant advancements in technology and data analytics are making it increasingly possible to provide greater customization for consumers. Hence, utilities no longer consider their customers simply as “ratepayers” but, as strategic partners who provide much needed flexibility to the grid – particularly as intermittent renewable energy continues to grow.

The rise of prosumers signals a more symmetrical relationship between partners in the control framework than the conventional, centralized, top-down relationship between utilities and end-users. This represents a significant paradigm shift where load disaggregation will play a central role in unlocking latent value for both prosumers and their power suppliers.

Conclusion

In a world where the momentum of technological advancement and disruption is increasing seemingly by the day, Covid-19 has “slowed our roll” and allowed people and businesses to focus on things that matter most, including:

  • Health
  • Family
  • Helping others
  • Sustaining the economy

The utility industry has stepped up to maintain a reliable stream of power during an unprecedented crisis and, in doing so, has helped to ensure that customers will look to repay that loyalty and deepen the relationship with their supplier.

The elite thinker, professor, and author Sir Ken Robinson once said, “Copernicus, Galileo, and Kepler did not solve an old problem, they asked a new question, and in doing so they changed the whole basis on which the old questions had been framed.”

Utilities are now asking the new question, ”How can we form a new relationship with our customers to meet their needs while providing low cost, reliable power in an environmentally considerate manner?”

Trust is the ultimate competitive advantage. Utilities made a big deposit to the Trust Bank in 2020 and can leverage the trust dividend by working closely with customers to apply data science skills to optimize energy use. Meter data will be a key source that utilities rely on to create and recommend programs for homes and businesses that include:

  • Tailored energy efficiency strategies
  • Demand response
  • Solar panels
  • Electric vehicles

Meter data will also serve to help utilities leverage homes and businesses as solutions to complex problems such as balancing load and generation in a landscape of increasingly intermittent (renewable) generation.

Trust will be the glue that makes this transforming relationship lasting and effective.

Other Sources

Load Disaggregation Made Easy
Itron Technology Briefing

Energy Use Disaggregation Is Coming
Utility Dive

Consumer Pulse and Market Segmentation Study
Smart Energy Consumer Collaborative (SECC)