I just got back from the Association’s National Conference, held in New Orleans from June 17-20. The Conference drew 1,450 attendees from across the country. We addressed a wide variety of topics, including general sessions on the future of public power, the current political environment, megatrends impacting the electric utility industry and cybersecurity. We held 40 breakout sessions covering a plethora of topics, including pole attachments, sellout threats, new generation resources, cybersecurity, electrification, employee compensation, blockchain, western market developments, and federal legislative developments. Attendees also met with vendors in the Public Power Expo, and with their industry peers from around the country (the networking is first class!). The meeting closed with a breakfast session, where outgoing Board Chair Wally Haase turned over the gavel to incoming Board Chair Coleman Smoak. Then Joe Theismann sent attendees home with some shared wisdom gleaned from his storied sports career (like the fact that his last name was originally pronounced “Theesman,” not “Thighsman”--until the Coach at Notre Dame changed it by fiat to help in Joe’s quest for a Heisman Trophy!).
Each year, the Association’s CEO addresses the opening general session. This speech has been come to be called the “state of the public power union” by our staff. It is one of those moments that I prepare and prepare for, and then hope that I don’t go out on stage and bomb.
This year, I chose to close the speech by talking about three global trends beyond our own industry that are going to affect us as public power utilities — Amazon, connection, and socialization. Because I think they are so important, I decided to blog about them as well.
First, Amazon. Back in 1995, Amazon sold its first book online. A little over two decades later, Amazon is becoming the go-to source for everything from books, music, and movies, to toothpaste, chicken breasts, and even healthcare. Amazon Prime, with more than 100 million members, is fast becoming the indispensable tool that consumers use to meet their every possible commercial need. I cannot remember the last time my husband went to a brick and mortar store to stock up on necessities — and he is retired! His view is: “why bother to leave the house to shop when Amazon will bring us what we need?”
He’s not alone. Amazon shipped more than 5 billion items through Prime in 2017. But more than half of those items came from third-party sellers.
The Amazon way of life is possible because the empire has a strong ecosystem. Drones, warehouse robots, delivery to your car trunk in the parking lot at work — they are definitely thinking outside the cardboard box. Amazon is constantly innovating for absolute customer convenience.
I am not making a plug for where you should shop. But we need to think about Amazon and how the changes it has wrought will impact us as electric utilities.
One possible future could be utilities being a one-stop for all things energy, for extreme customer convenience. Customers could turn to your utility if they want to buy a smart thermostat, home battery system, electric vehicle, or rooftop solar panels.
We in public power have the t-shirt on collaboration — through our unique network of joint action agencies, state associations, and third-party providers. So, we can provide the platform for others to connect with our customers. We can vet and provide products and services from many sources.
Like Amazon, public power utilities have a platform that can support an ecosystem — the grid. We are putting out a new white paper that examines the role of the grid in supporting distributed energy resources and dealing with changing loads. This paper highlights the central role the grid can play in meeting evolving customer expectations.
Perhaps the most important value of the grid is reliability. Even high-use DER customers will likely remain connected to the grid as a reliable, convenient backup source of electricity. To fully unlock the potential of new DER technologies, we will need 360-degree resource planning and integration. We need targeted investments and continuous operational awareness. And no one is better positioned to do that than the local, community-owned, not-for-profit utility.
So, we need to think about what your retail customers might want and value if they sat down and thought about it. Consider how you can provide that product or service before they think of it. That’s what Amazon does.
The second global trend is increasing connections. Consider the Internet of Things. Almost any device with an on-off switch can be connected to the internet and to other devices. By some estimates, in 2020, there will be more than twenty-six billion connected devices.
As an article in Forbes put it, the new rule for the future is going to be, “Anything that can be connected, will be connected.”
Most of the products and services electric utilities provide will be embedded in the Internet of Things, if they are not already. Today, people can already turn on their lights on or control the thermostat at home using their smartphones, even if they are half way across the world.
And then there is blockchain — the technology that made bitcoin possible. Today, blockchain goes way beyond cryptocurrencies. Blockchain technology creates a new kind of payment system. It does not rely on third parties like governments, big banks, or credit card companies. Blockchain advocates think it could be a universal platform that allows people to transact directly with each other.
The Internet of Things and blockchain have big implications for utilities. Of course, none of this would be possible without electricity and the electric grid. Our members who are now dealing with cryptocurrency mining customers can certainly attest to that.
Some companies want to use blockchain to enable retail customers to sell excess distributed generation to each other. In theory, this eliminates the utility as a middleman. But if our wires are used to deliver this power, we definitely would be an interested party. The distribution grid is the platform that enables such transactions — the question is how it will be used, by whom, and who will pay for its use, upkeep, and improvement. We as public power utilities are going to have to figure this out, in a way that is fair to all of our customers.
The third global trend is socialization. By this, I mean the growth of social media and how that has changed the way people interact. The social media revolution impacts everyone — even those who are not active on social media.
For good or ill, social media has created a new sense of urgency in our lives. It has fostered a culture of instant news and instant response. It allows people to constantly update and share content with little effort. It has abbreviated communications and increased the appeal of the visual. As someone said, “If a picture is worth a thousand words, then a video is worth a million.”
Social media has fostered a shift back to relationships and community. But now, groupings are based on shared interests rather than geography. And increasingly, social media is encouraging shared problem solving and crowd sourcing. It’s easy to find like-minded people online — whether it’s nonprofit leaders, avid golfers, or barbecue brethren. I recently turned to You Tube to solve a knotty knitting problem I could not figure out, and found an instructional video on that very subject in one minute flat.
Social media can help us understand where our current and future customers are and where they are heading. First, we know that millennials have a strong sense of community and like to feel connected to the products they buy. They like to buy local and will consider buying more from the store down the street than from a large corporation or chain (despite the lure of Amazon).
They have a soft spot in their hearts for giving back to the community and for the underdog. They like to be a part of something. If they know their community-owned, not-for-profit utility supports local causes they care about, they could become loyal customers and advocates. They like sharing experiences. They can actually help you tell your story, if you can engage them.
We need to understand the social media habits and preferences of our future workforce and customers. Many of you are already tuned into these ideas because they represent the essence of public power — working for the community and giving back to it.
The role your utility can play in your community brings me to my last point: the Association’s upcoming national campaign to raise awareness of public power, launching later this summer. This will be a social media-based campaign that taps into these three evolving trends. It’s a campaign that we at the Association will support, but that every one of you can implement in your own communities, hopefully with active participation of your retail customers. It will show your commitment to your community and suggest ways you can build closer connections with your customers. I hope you will join us in this national effort. And stay tuned for more information as we roll this effort out.
So, we as public power utilities need to deal with three global trends — Amazon, connection, and socialization. You ignore these trends at your peril — but if you embrace them, your utility can build the future you want, together with your customers. And remember, we at the Association are here for you — advocating, educating, and helping you learn from each other as we deal with these profound changes.