Flat revenue from traditional electric sales means it’s no longer enough for utilities to only sell electricity from the grid to customers for the lowest possible price. Utilities must think creatively to determine new ways to grow, to fulfill customer needs, and to use all resources as efficiently as possible.
How utilities diversify revenue can vary as much as the utilities themselves, depending on factors such as how many customers the utility serves, what resources and system components the utilities have, and location. But they all have one thing in common: a commitment to improving their customers’ lives.
Here’s how three public power utilities have turned outside-the-box thinking into mutually beneficial solutions for the utility, customers, and the community.
In 2015, JEA, the public power utility that serves Jacksonville, Florida, began a program to incentivize large commercial and industrial, or C&I, customers to adopt electric end-use technologies and shift away from using equipment that runs on fossil fuels.
Equipment incentivized includes the most common technologies, such as forklifts, golf carts, welders, cranes, and truck refrigeration units. JEA offers customers who purchase this equipment incentives of $50 to $75,000, depending on the cost of the equipment.
“Electrification is a nexus of interests for public utilities,” said Dave McKee, program manager at JEA. He added that incentivizing electric equipment can encourage economic growth, create healthier workplaces, improve the environment, and increase utility revenue. The boost in revenue and economic growth, in turn, mitigate upward pressure on electric rates for the utility’s approximately 478,000 electric customers.
To ensure program success, JEA has dedicated engineering staff through its implementation partner ICF, a global advisory and digital services provider. Program field engineers meet with customers and equipment manufacturers in the area to facilitate adoption of the new technologies and accurately administer program incentives. Field engineers provide technical application and business case information that clarifies how companies in specific industries will benefit from the electrification program. In addition to the JEA incentives, proposals include life-cycle costing, efficiency, and environmental advantages associated with the new technologies.
“We approach companies and advise them on the technologies that may be valuable,” McKee said. “We work with staff to do engineering studies and develop specific business plans, monitor loads, obtain benchmarks and load profiles, then make a proposal outlining how we can benefit their business.”
If the proposal is accepted, then JEA staff help guide the company through installation and continue to monitor results once the equipment is online.
“An industrial revolution of sorts is emerging for new electrotechnologies coming online. We want to get behind them, advance them, and bring them to our market,” said Vicki Nichols, director of customer solutions and market development at JEA. “It has delivered an unprecedented opportunity for [us to focus on growth] following more than a decade of focus on traditional energy efficiency and resulting energy declines.”
Approximately 400 customers took advantage of the incentives under the first phase of the program. Much of the participation comes from the logistics industry, which uses the incentives to purchase equipment such as electric forklifts and truck refrigeration units. The Jacksonville Port Authority has added six electric super cranes and plans to add three more.
The program has been a success. Between 2015 and 2020, it generated 600 gigawatt-hours of sales, led to nearly $40 million in new sales, and prevented 400,000 tons of greenhouse gasses from entering the atmosphere. An added benefit is that 80% of the load consumed by the electric-powered equipment is off-peak, resulting in high levels of return on the utility’s investment.
JEA is now moving into phase two of the program, which expands the targeted electrotechnologies and introduces custom incentives. By 2030, Phase 2 will result in 1,500 GWh sales, in excess of 70 million revenue, and prevent 2 million tons of carbon dioxide from entering the atmosphere.
“This is a new revenue stream, but we’re not selling a new product, we’re selling electricity,” Nichols said. “That’s the discovery — when you have the same product, but an accelerated and modern way to introduce it to customers. We’re still selling electricity, but it’s packaged unlike anything that preceded it before. That’s the role of the utility in many ways.”
Set and reach high goals
Ripley is a small city in western Tennessee with a population of less than 10,000, but that doesn’t stop Ripley Power and Light from thinking big. In 2003, the utility installed a dark fiber network to increase communication among its electrical substations, breakers, and offices. Since then, the network has grown exponentially and connected to other nearby networks.
Installing fiber is a big investment for a rural utility, but it’s one with a strong return on investment. Shortly after installation, Ripley Power and Light began leasing out the network to C&I customers. Currently, more than 80 customers lease the fiber network, which generates more than $191,000 per year. Customers include banks, sewer plants, pumping stations and farm equipment distributors. Funds generated by leasing the network help the utility keep rates low for all customers.
“It’s a little expensive, so it’s important to watch the return on investment to make sure it’s still worth it, and that’s a challenge as a small utility,” said Mike Allmand, president and CEO of Ripley Power and Light. “But fiber lasts a long time, and we’ve had very few outages.”
To install fiber to each participating customer, Ripley Power and Light brings the network to the building, then works with local internet providers that handle service management with the customer. The internet providers pay the utility a certain amount per customer in addition to leasing dark fiber, so as the providers’ customer base grows, so does Ripley Power and Light’s return on investment.
Having access to such reliable communication benefits Ripley Power and Light as well. “We have a real-time voltage-control system that provides end-of-line voltage readings, which constantly adjust our system voltage. Fast and reliable communication helped us eliminate 99% of voltage complaints,” Allmand said. The utility was also able to increase security by installing more cameras. Allmand can reliably monitor what’s captured on 36 cameras on utility property by connecting cameras to the network.
Under his direction, Ripley Power and Light has made other decisions that benefit the utility financially and help keep rates low for its customers.
In 2004, the utility built an 8-megawatt generation plant and leased it to one of its industrial customers for 12 years. Leasing the generation plant allowed Ripley Power and Light to earn back the associated building cost in just five years. However, 5.5 years after construction of the plant, the industrial customer changed ownership, and the facility was closed.
Soon after closing the facility, the new owners bought out the remainder of the 12-year lease, which resulted in a buyout of more than $1 million for Ripley Power and Light. As the buyout was occurring, Allmand was simultaneously signing an agreement to lease the generation plant to another company for $40,000 per month for 20 years — a total of $9.6 million dollars.
During this same time, Ripley Power and Light was moving forward with plans to construct a building to meet environmental regulations for storing transformers, which was estimated to cost $600,000. Allmand approached the company that purchased the industrial facility, simply asking if the utility could have the closed plant. The company agreed.
Allmand’s request provided Ripley Power and Light with 20 acres of land and 259,000 square feet of buildings. The buildings included two environmental facilities that now store transformers, allowing Ripley Power and Light to avoid the $600,000 expense of a new building. The additional buildings were converted into a truck shop and a 20,000-square-foot operations center. The remaining 96,000 square feet of buildings contained leasable space, providing continuous and reliable income for the utility.
“Everything we needed and were about to build we got just for asking — a $3 million facility was given to us,” Allmand said. Giving the facility to Ripley Power and Light was beneficial to the original owner because it resulted in a large tax write-off and prevented the company from needing to maintain the facility during what was anticipated to be a long period on the real estate market, given the property’s size, condition, and location. The utility was also able to mitigate some environmental concerns with buildings on the property by getting a brownfield clearance from the Tennessee Department of Environment and Conservation.
In addition, the Tennessee Department of Economic and Community Development gave Ripley Power and Light a $500,000 grant to add a new roof and make other upgrades to one of the buildings it leases. Because of the environmental and other upgrades made on the property, it has been designated the No. 1 spec building in Lauderdale County by Tennessee economic development consultants.
Create solutions to common problems
More than 15 years ago, leadership at Easton Utilities in Easton, Maryland, noticed a major disconnect in processes that were common to most utilities: streamlining electric, water, and natural gas offerings with cable and internet. In 2005, these offerings ran on two completely different systems at Easton Utilities, with two sets of staff, two ways of monitoring use, and two bills on different billing cycles.
Leadership at Easton Utilities — under the direction of President and CEO Hugh E. Grunden — decided to solve the problem for good by hiring Fred Christie, who had an extensive background in software engineering, to create new software to combine and streamline the utility’s offerings into one holistic system.
“I knew we needed something and couldn’t buy it, so we had to develop special integration software to get all the different systems aggregated,” said Christie, who oversees Easton Utilities’ IT Professional Services Division.
The software began as a utility business portal that simply aggregated water, natural gas, electric, cable and internet services in one place. It wasn’t long before the software grew. Soon came a customer management platform, and then a portal to allow customers to manage their account information online. Next came an outage management system and then mobile apps.
The initiative was a success from the beginning, and Christie quickly realized other utilities needed the same software. Easton Utilities began selling the software to other utilities and businesses around the country. In 2008, the first two companies — Tri Gas and Oil on the eastern shore of Maryland and Newnan Utilities in Georgia — signed on to implement the software. Today, Easton Utilities has 120 customers nationwide.
“If we see a need, internally or externally, we put a solution together and assume we’re selling it to someone else,” Christie said. “Because we're a not-for-profit public utility, other utilities are quick to put their guard down when dealing with us. They trust us because we are a public utility just like they are. We understand their business.”
When creating new additions to the software suite, Christie said Easton Utilities has two key principles. The first is that everything it designs is very simple to use and does not require training. The second is that everything looks professional and attractive, which Christie said aids in user adoption and acceptance.
Creating and deploying a holistic suite of software to help utilities and other companies run a better business is no easy feat. The primary requirement is hiring the right IT talent to support customers, which is a challenge to companies like Easton Utilities that operate in rural areas. In response, the company relies on telecommuting to secure talent and has employees who live all around the country.
Since the utility brought on a staff of high-quality IT professionals, it realized an opportunity to help customers with their IT needs and created the IT Professional Services Division. This division now serves as the IT department for many local businesses.
“We’re on the eastern shore of Maryland, so for us to be able to get that kind of IT talent is a big plus. We can supply that for any businesses we support in the region, too,” Christie said. “So, if a business is having IT challenges, we’re fully customer service-oriented. We’re agile and deep enough to help customers in whatever way they need to be helped.”
The IT Professional Services Division and the software suite have been successful, generating more than $1 million per year. This revenue helps Easton Utilities keep its rates low.
“The main reason we can do this is because our CEO runs our business very entrepreneurially,” Christie said. “Anything we can do to help constituents or our local businesses perform better is great customer service. We will go to that extent — even if it’s a little out of the norm.”