Utilities can help re-ignite the economy by better serving the needs of large business customers

The COVID-19 pandemic has brought about a number of headaches to the utilities industry and the large business customers it serves. Large businesses across the country have seen a decrease in sales and revenue, increased inventory and storage needs, a switch to remote staffing where possible, potential product loss, and increasing layoffs.

By large business customers, we’re referring to manufacturers, office buildings, hospitals, data centers, or universities campuses, i.e. electricity utility customers with a demand of 500 kW or more. They would normally represent a third or more of a utility’s distribution load with associated quality load profiles and revenue. The impact of a large business customer deciding to reduce hours or close down is obvious. It causes revenue losses for utilities as well as community economic impacts.

Utilities can help kick-start the economy

Loyal and satisfied large business customers present an opportunity for utilities to help get the economy growing again, through creating capital investment and increasing revenue opportunities for a utility through business customer partnership. These opportunities could stem from recently failed businesses being acquired, businesses wanting to ramp back up to full capacity quickly and in the mid- to long-term a trend in increased domestic manufacturing and supply chains.

COVID-19 has also shown the risks of traditional fossil fuels and the need for reliability energy. This creates an opportunity for deployment of renewables, distributed energy resources (DER) or battery storage, carbon-friendly generation sources, and customer-owned generation as part of the economic recovery plan. Along with business opportunities and new technologies, customers will expect a higher level of customer service – and not meeting their needs can cause a longer ramp up time to an economy we once knew, including more stable utility revenue levels.

In order to address the needs of these customers, utilities are presented with an opportunity and a customer service growth challenge.  As the utility’s cost base remains largely the same with capital infrastructure already in place, the revenues to service the network still need to be collected from the existing reduced customer base, meaning a potential future raise in distribution rates and disharmony. Or, there is an opportunity to partner with businesses and protect revenue. 

We take the optimistic view that if utilities focus on addressing large customers’ specific needs, they can act in partnership to deliver the desired solutions that work for both parties. Outlined below are four key steps that utilities can take to enhance their relationship with large business customers and help bring their operations back to peak capacity, and utility revenue back to stable levels.

Partner to reduce energy costs and billing complexity

One of the major concerns for a large business customer who is trying to rebound will be the monthly expense of their utility bill, and they will look for ways to reduce their energy expenses moving forward.  Now would be the ideal time to help large business customers to re-imagine shift operations, align their own peak demand with periods of lower energy pricing, investigate energy efficient capital upgrades to replace aging equipment, and explore energy efficiency programs that give quick operating returns. Utilities can provide the proper guidance and information to help these customers make the best, lowest cost decisions in how they could operate more efficiently moving forward.

For some, the size and complexity of the bill will still be an issue.  Streamlined bills with interactive search, filter, and sort functions can greatly aid large business customers in understanding their bill, and how they are using their energy.  While there are third parties offering these services, there is a great opportunity for the utility to fill this gap with their own set of services and truly be a partner with their customers.  Streamlined and efficient payment options for large business customers is needed, such as higher caps for online payments or easier creation of ACH recurring transfers.  Reducing meter-to-cash time will allow these businesses to spend less time paying their monthly utility bill, less expense hiring a third party to manage bills, and more time producing economic value for the community and revenue for the utility.

Attract large business customers

Large business customers expect that their utility understands how energy delivery impacts their business. In the post COVID-19 environment, large customers can create opportunities for utility revenue growth through the business customer’s own post-COVID capital expansion, acquisition of a recently failed business, or luring of a large national customer from outside the territory. New tech companies such as data center operators or electric vehicle (EV) charging networks may use this recovery period as a time for business expansion, and they often make location decisions based on a combination of loose regional geography, available distribution capacity, reliability, and power quality.

If a utility has a strong reputation with large customers, others will want to move into the territory. The expansion of load due to these companies who rely on quality power delivery could lead to increased capital infrastructure investment programs and additional long-term revenue for utilities. 

It is essential to understand what is important to these customers. For an EV charging network or data center operation, they could be looking at the consistency of delivered power.  For manufacturers, power quality is key – they would not want to partner with a system where entire manufacturing lines must be shut down and restarted due to a voltage depression or momentary outage. For Life Safety customers, especially now and moving forward, they expect that their utility understands that when an unavoidable outage occurs, they need additional support to ensure the health of their patients. Utilities need to keep in mind their entire customer base when it comes to customer experience and customer service, including those customers who may be small in numbers, but are large in utility load.  This understanding is critical now to help aid businesses back to full or expanded operation, and the stabilization of commercial load and utility revenue.

Streamline clean energy purchases and focus on reliability

Clean, reliable, and consistent power delivered by their utility is a standard level of service large business customers expect. These customers want a simple way to purchase clean energy. They are looking for a clear and simple pathway to installing and integrating their own distributed energy generation. Whatever energy decisions business customers have made for their post-COVID future needs to be seamlessly integrated into their local utility provider process.  Less time spent by a business customer in purchasing energy how they want to, is more time dedicated to getting back to business as usual. 

Power quality is a newer issue for large customers who rely on a steady level of power for their business operations. Also, a utility’s level of reliability will sway some customers into staying in the territory, expanding, or locally acquiring. Now more than ever utilities need to be responsive to any outage and reliability issues, as well as potential power quality issues as a result of the deployment of more automated devices upon the distribution system and more dynamic customer load caused by new technology.  These power delivery issues require clear and consistent communications between the utility and the customer. Poor communication and information flow about outages and power quality issues could impact the utility’s reputation and lead to unhappy customers, customers deciding to expand in other utility territories, or vacate buildings.

Smartly serve large business customers

There are many factors that can influence how a utility will service their largest and most demanding customers.  For example, it could be based on a cluster of large commercial customers within the same sector such as hospitality services. They can all be served by utility representatives with knowledge of that specific business sector, what is important to customers in this sector, and what energy and delivery issues they face. 

Perhaps instead it’s based on the type of load served, such as customers with the same consistent daily peak time, or those customers who emphasize their load demand on weekends or overnights, such that utility reps knowledgeable with these types of customers can help guide their energy use.  Another way, with the transition to clean energy, is grouping large customers under what service they are looking for, such as carbon neutral energy generation, energy efficient capital investment programs, or those customers transitioning to self-generation and DERs, paired with utility reps who are experts in those fields. 

While these fixes seem simple, many utilities have room for improvement to meet their customer’s needs and help drive the economy to recovery.  We often hear that support from utility customer service reps are misaligned with what today’s business customers are looking for.  There are several ways a utility can service these large customers’ specific needs, and if they are successful, they could establish a flourishing partnership delivering stable long-term revenue and possible future growth for the utility, while gaining a strong customer partnership to accommodate whatever new industry changes that follow COVID. It is important that large customer’s needs are addressed now and not forgotten. Focusing on consistency and great customer service will aid in the recovery for both the utility and the customers they serve.

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Dennis Odegaard is an energy and utilities expert at PA Consulting. He has 19 years of industry experience, mostly focused on utility large business customers.  

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