Customer Choice and the Emerging Utility Business Model

Jon Bertolino is the Superintendent, Renewable Generation for the Sacramento Municipal Utility District. He is also a member of the SEPA Board of Directors.

With the explosion in available information (and the technology to use it), the age of the customer is upon us. Conventional business models are being challenged in industries all around us.Consumers can now go to brick and mortar stores, test out a product, and then shop and purchase on-line, completely disconnecting the revenue stream. Similarly, in a matter of minutes, while in route, we can survey restaurant options and their reviews, phone a friend, and even find out what today’s special is before making a decision. Or we can simply order take out and pick it up on the way home. 

Technology that will transform the electric utility business is here today. While its market form is still evolving, smart and agile companies are testing the waters with products and business propositions at an accelerating rate. The traditional role of electric utilities (and their markets) in generating, transmitting, and distributing energy to its end use location to meet predicted load has worked quite well. However this leaves end-use customers will little control of their electric supply (and its source), and more importantly the resulting bill. Today, customers are becoming increasingly aware that they have options, and many are demanding choice. If these choices are not being offered by their electric service provider, they are using information (and technology) to find an alternative.

Case in point: The accelerated adoption of solar PV to meet onsite energy needs for both residential and commercial end users continues, with exponential year over year growth. While opponents argue that tax subsidies and unsustainable net metering policies are supporting this growth, ignoring the cost trajectory, and more importantly the role of customer choice, may be perilous. True, as of 2014 solar distributed generation still produces less than 1% of our nations’ electricity. However the percentage of all new capacity interconnecting to the grid that comes from solar is considerably higher. The train has left the station, so to speak, and it’s picking up steam.

So what does this mean to electric utilities?  Good question (or questions!).  And there are lots of proposed answers, many of which are being tested by investor-owned and municipal utilities across the nation.  Like most large and complex industries, the ultimate answer will depend on local or regional factors and one size will not fit all. SEPA, now entering its 22nd year, is dedicated to helping utilities integrate solar energy into their portfolio.The organization brings together the utility and solar industries (along with regulators and key stakeholders) to explore answers to these questions, envision what the utility of the future might look like, and how we will continue to meet the needs of our customers.

SEPA’s Utility Solar Conference (USC), now in its 6th year, will be held April 28-29 in Newport Beach, California. Having attended each of the previous conferences, I can honestly say that its value is unmatched. This is a premier forum attended by utility representatives who network, share lessons learned, and exchange ideas in an open and collaborative atmosphere. It’s also a chance to work with solar providers to find out how your business needs can match theirs, and vice versa. The learning opportunity is tremendous.

If you are a utility representative tasked with helping your organization find business models to succeed in a customer-driven future, you need to be there.