From continuing to offer low rates and unmatched reliability to showcasing sustainability and providing best-in-class customer service, personalized data insights, and tailored options, utilities face increasing expectations from customers. For public power, delivering what customers want will become even more important as customer choices expand.
When it comes to energy choices, most public power customers might already feel somewhat limited based on where they live. Customers can’t choose their energy provider outside of retail choice states, and even within those states, options are limited or unavailable to most residential customers. Public power for the most part is exempted from or did not opt into retail choice. For many utilities, customer choice is about how the utility can educate customers about how an ever-expanding array of technology affects electric usage and rates, and how different programs and rate plans can best match their needs.
The Netflix effect
“Most recent research is showing that consumers increasingly want choices,” said Paul Zummo, director of policy research and analysis for the American Public Power Association. Zummo said part of this shift relates to people becoming accustomed to having products and services on demand. “My kids grew up with Netflix and having every show they’ve ever wanted at their fingertips,” he said. “I think we’re going to see more of that on-demand expectancy in the form of energy choices.”
Liz Jambor, Austin Energy’s manager of data analytics and business intelligence, agrees that societal changes have raised the bar on expectations. “It’s all about what people get used to,” she said. “We’re never returning to ‘normal’ after COVID-19. I can’t imagine my mother giving up the curbside service that cut her grocery trip down to 30 minutes instead of an hour and 30 minutes.”
Given our changing world and its impact on consumers, Jambor added, “The biggest challenge is getting ahead of customer expectations and trying to manage them. We may not always be able to meet them.”
A case in point: Jambor said some customers of the Texas utility want lower-priced or free power during summer months. “Our prices don’t change, but people use more electricity,” she explained. “We can’t meet that expectation, but there are easier ways to get through the summer. We can give customers budget billing, so they have relatively equal payments all year. Or we can help people better manage their energy use and lower costs overall. The question is, how can we better educate customers so that their expectations come more in line with the services we provide?”
That education includes making sure that customers understand they have more choices than they realize. “While people might not have the option to choose between one utility and another, they have a lot of choice within a utility,” Jambor continued. “Most public power utilities will give you the option to choose a rate program,” or some other options, like green power.
Getting the price right
Customer choice can also mean competing for customers in a deregulated or retail choice environment, or other policies that allow for customers to select their energy provider.
Low rates are a top consideration for commercial and industrial customers. For Marietta Power and Water, a utility serving a city of about 60,000 just north of Atlanta, the public power utility competes with other utilities — including an investor-owned utility — for customers with load of at least 900 kilowatts under a statewide program called Customer Choice.
Through the program, C&I customers get a discounted rate from the power provider for a certain number of years and then go on the utility’s general service rate, thereby bringing in steady revenue for the utility.
That means Heidi Dasinger, business development manager at Marietta Power, is on the lookout for upcoming development that fits this profile, such as large office buildings or data centers.
“Marietta is a good-size city, but we’re very built out,” Dasinger said. “We don’t have the physical land space for a lot of 50,000-plus-square-foot buildings to be built in our area, so there’s not a lot of organic growth that we can have within our territory. Customer Choice lets us reach outside of our territory to the rest of the county, and that gives us opportunity for a lot of growth at once.”
To find these opportunities, Dasinger combs through construction industry reports and looks for parts of the city that are being rezoned to commercial uses. Then, she starts hunting decision-makers, often people outside Georgia who don’t know that her state has a competitive market for accounts like theirs. Finally, she nurses these opportunities, generally for two or three years. Getting in the door, she said, is all about relationship-building. That’s what wins her the chance to bid for the job. What wins the account? Rates. “When I lose or win an opportunity, it sometimes comes down to a quarter of a cent per kilowatt-hour,” Dasinger said.
Greg Sherman, general manager for The Houlton Water Company in northern Maine, also recognizes the importance of rates. His utility serves about 6,000 residents on the power side with approximately 5,200 hookups. As a deregulated state, customers can choose their energy provider because the transmission and distribution cost is separate from the energy cost in Maine. While none of Houlton’s residential customers have stayed, business customers are more price sensitive. Keeping rates low is a priority for Houlton, and customer expectations led to recent transmission investments.
Utility choices from community desires
Houlton had been getting its generation via an IOU in northern Maine, where costs often fluctuated. “We were always challenging those costs with [the Federal Energy Regulatory Commission],” said Sherman.
The town is a 10-minute drive from the Canadian border, and there isn’t much generation in northern Maine. The state also has aggressive climate action plans, and Sherman was seeing that a push for wind power from environmentally conscious residents — plus transmission to carry that power to loads — would bring even more rate increases.
Determined to keep some of the lowest rates in New England, Sherman went to his board with a $6.2 million transmission project to connect Houlton with New Brunswick Power, a Canadian company. The project delivered savings of more than $1.5 million annually on transmission costs to the town. Along with lowering rates, the project increased utility reliability.
“The big thing we hear from our customers is they’re looking for a high quality of power — good voltages, few interruptions, very little flicker — and reliability,” Sherman said. “We have a backup agreement with Versant Power, so we now have two pathways to help us keep our grid reliable.”
Better yet, the connection to NB Power helps satisfy the increasingly green consumer. According to Sherman, the energy the utility buys from NB Power is 86% renewable, which is higher than state mandates and something he touts on the utility’s Facebook page. “We get good response from the community,” he said.
Planning for technology adoption
Customers are placing increased importance on environmental impact, both for the utility and for personal choices. The latter will bring more interest in adopting rooftop solar, electric vehicles, and other technologies.
In terms of when customers will widely adopt new energy technologies, “I think there’s a foundation, but I’m not sure that tomorrow, or even in the next five years, we’re going to see a drastic transformation,” noted Zummo. He predicted that “maybe there will be another precipitating event” that leads to a more sudden adoption of EVs or rooftop solar, but otherwise expects utilities to see gradual change in these areas.
Utilities must decide, in part, how much they want to be seen as shaping the future versus responding to actual needs.
“It becomes a bit of a ‘chicken and the egg’ problem,” noted Zummo. For example, with EVs, “Do you build the chargers and the expectation of building demand, or do you wait for demand to increase before you build the chargers?”
“What it really means is the utility has to reach out to its customer base,” he said. “Talk to them about what they’re interested in, what kind of technologies they’re interested in, and seeing if there’s a third party out there that can help them.”
In Austin, for instance, EVs are likely to gain a higher profile when Tesla finishes building its Austin-based factory later this year, and the city’s utility has recently responded to customer demand for more fast-charging stations. “Customers don’t want to sit around and wait for the car to charge. They’d rather spend 20 minutes charging than 40,” Jambor said.
She noted that Austin Energy is using analytics to match marketing messages with customer interests. For instance, “We know that people who are interested in EVs also like other gadgets,” she said, so when the utility learns that a customer has an EV, it might market smart thermostats to that customer.
Austin also supports customers’ green leanings with multiple efficiency programs, in addition to community solar and a rebate program for residential solar.
Rooftop solar adoption does not come without challenges. Sherman said Houlton has seen increased interest in rooftop solar and net metering and, while these additions have not yet affected the utility, it’s on his radar to ensure solar customers don’t lead to upward pressure on rates.
Sherman is also planning for the day when his team will need to spend more time evaluating circuits to handle additional load when he only has seven workers serving a distribution system for 5,200 customers.
Austin Energy is facing similar demands on a bigger scale, and Jambor maintains that part of the way to meet the challenge of new technologies is to continuously communicate with customers. “We can’t assume we have a captive market,” she said. “We need to engage in a continual conversation to build up a partnership with our customers and be seen as a trusted energy partner.”
This will be vital, she added, for the safety of the grid when people start adding self-generation resources to it because, in the end, it’s the utility that will need to manage the grid, not the photovoltaic installation company.
The public power advantage
Jambor said public power is in a great position to become that trusted energy advisor. “One thing public power overall does really well is keep the customer in mind, because most of us are a city entity. We’re also our own customers,” she said. In Austin, monitoring customer expectations happens through spontaneous customer feedback, a utility-run customer survey, and contracts with J.D. Power and Associates and eSource.
In Houlton, communication is more direct. “Here, customers get instant feedback,” Sherman said. “If you have an issue with a large utility, you aren’t going to get the general manager or the president of the company on the line. Here, if customers want to talk to me, they can talk to me.”
In the end, recent research conducted by Austin Energy found that the key to meeting customer expectations was delivering great customer service. The survey asked customers of unregulated utilities why they chose the utility they chose, and regardless of customer type — business or residential — customers picked customer service over price, reliability, and most other factors.
“As long as customers like the way they are treated, they are willing to stay with a utility through rate increases or even outages,” Jambor said. “That’s something all of us should remember: Keep putting that customer first and deliver a high level of customer service from every utility touch point. If we can do that, everything else falls in place because the customer can say, ‘Oh, they’re thinking about me.’”