Retail Choices Hinge on Technology
By John Boucher, Landis & Gyr Utilities Services Inc.
Market forecasters expect retail deregulation to spread across the country over the next five years, following closely on the heels of the wholesale trade. This trend`s impact on electric utilities will depend largely on the industry`s ability to adapt to a new environment. Profound changes such as these will continue to drive the development of new, cost-effective technologies, helping utilities achieve ever-increasing levels of information management and customer service.
The notion of lowering a utility`s operating costs while increasing customer services seems like conflicting objectives. However, remarkable developments in metering and communications technologies that are already in place for commercial and industrial applications are showing great promise toward improving the utility`s competitive position. The question is, will behavior patterns for residential customers show similar promise?
In a retail deregulated world, every individual will have the opportunity to establish a relationship with an energy service provider through a menu of informational and service options. As a result, the manufacturers serving the utility industry will be pressured to develop more practical technologies that can meet key criteria.
First, more innovative technologies are needed to help utilities reduce operating costs without sacrificing the quality of power delivery or customer services. In view of information technologies` growing complexity, solutions can often be as much a matter of product simplification as they are of product advancement.
Second, new technologies must continue to be introduced that enable utilities to offer greater customer choices, helping them not only attract new customers, but retain existing ones. In the metering technology area, for example, a number of manufacturers have introduced the modular meter concept, which is gaining wider acceptance as a vehicle for both cost reduction and increased flexibility in dealing with expanding customer choices. Utilities will require simplified, two-piece metering designs that allow instant and economical site modification, and can be easily distributed through established contractor channels for efficient sale to the homeowner.
Third, the relationship between the manufacturer and the utility must evolve into a strategic partnership. The net effect is that both organizations can work to improve the utility`s flexibility as it adapts to a radically changing environment. Flexibility improves the utility`s chances of increasing its competitive position and becoming more effective in resolving regulatory and political issues.
Utilities are already responding to demands for increased flexibility among mid-size and large commercial and industrial (C&I) customers. Energy service providers that are installing new systems, processes and disciplines are demonstrating their ability to offer exceptional services in a cost-efficient manner. These progressive companies are offering customized contracts that provide more frequent energy usage information to enable customers to better manage their own power requirements. Contracts often include interval energy usage data measurement, associated pricing or aggregate billing for multiple sites across various time zones.
Solid state metering technology to achieve these advanced services for the C&I customer is now in place and well established. For the residential and small commercial market, progress is being made, such as local and wide area network communications to allow meters to talk directly to the home. However, more work will be needed to build the communications infrastructure in order to deal effectively with a new business climate that is based on significantly higher numbers of customers with lower energy usages.
Other emerging innovations, such as payment systems and “smart cards,” can offer expanded service choices to the retail market. These options are most appealing to the Generation X consumers because they can interface with PCs and the homeowner`s meter. The demographics clearly show that this rising consumer population uses computer technology as an integral part of life. As a result, manufacturers must remain committed to developing and providing advanced technologies that best meet both the utility`s and the energy user`s needs.
John Boucher is Landis & Gyr Utilities Services Inc.`s vice president & general manager responsible for metering and customer management systems. Previously, he served in management positions with Harris Controls and Leeds & Northrup.