What electric utilities really talk about when reporters aren’t around

The Smart Electric Power Alliance (SEPA) Utility Conference is the one event we hold each year that is closed to journalists and open only to current utility personnel — and a small group of solar and other distributed energy technology firms. The intent is to allow open and frank conversations about the disruptions and transitions now occurring within the industry, and the complex, sensitive issues arising from these changes.

As SEPA’s communications manager, I’ve been going to this annual meeting — formerly called the Utility Solar Conference — since 2014, and over that time, what utilities have been talking about behind those closed doors has changed significantly.

In 2014, I remember, the focus was all about solar — the technological and operational challenges of procurement, interconnection and, yes, net metering. Many people were still figuring out how to do solar — the nuts-and-bolts stuff — and the mood, while generally positive, was laced with the cautious aversion to risk characteristic  of utilities’ approach to change.

This year — well, let’s start with breakfast on the first morning of the event, held April 24-26 in Tucson.  As one tends to do at such industry confabs, I sat down with someone I didn’t know — Harry Emerson, Director of Marketing at Oklahoma Gas & Electric (OG&E) — and found out all about his utility’s highly successful community solar and smart thermostat programs.

Heavy networking at the SEPA Utility Conference in Tucson.

Yup, in the middle of oil-rich Oklahoma, OG&E launched the first utility-owned, shared solar farm in the state, selling out the full 2.5-megawatts (MW) in three months. An online solar calculator helps the utility’s customers decide how much of the power from the project they might wish to buy for immediate and more long-term savings. Enrollment now stands at 942 customers, and 1,200 more are on a waiting list for another 10-MW project in development.

OG&E’s SmartHours program is equally popular. Customers get a free programmable thermostat and daily alerts on peak pricing that, together, allow them to shift their electric use to avoid higher peak-time rates. They save money, and OG&E has been able to shave its summertime peak demand by more than 150 MW.

Emerson was just starting to talk about electric vehicles (EVs) when, with near-perfect synchronicity, Gregg Kresge, Director of Renewable Energy Programs at Maui Electric, sat down and told us about his utility’s EV programs. The island of Maui already has 900 EVS on the road, Kresge said, and is planning for more as a key part of Hawaii’s efforts to run 100 percent on renewable energy by 2045.

Maui Electric is one of the three investor-owned utilities providing power to five of the state’s six main islands. Along with the Hawaiian Electric Company and Hawai’i Electric Light, Maui Electric has lower, off-peak time-of-use rates to encourage residential customers to use more electricity when the islands’ thousands of rooftop solar installations may be pumping out excess power.

EV owners, in particular, can choose from two different time-of-use rates available to them to charge their vehicles mid-day and save. Another pilot program underway across the islands is aimed at building a public network of direct current (DC) fast chargers, which can top up an EV battery in less than a half hour.

The immediate connection between Emerson and Kresge was not a one-off; similarly spontaneous and engrossing conversations continued throughout the conference. We did have one session on the ongoing debates around net metering, but overall what became clear in Tucson is that the industry’s focus has shifted, or rather, moved on.

Complex, lots of moving parts

Three years ago, solar was undoubtedly a disruptive wedge issue for many utilities, pushing the limits of century-old business models and assumptions about customer-utility relations. Some organizations took longer than others to understand the speed and full extent of the changes in technology, organizational culture and customer demand that lay ahead.

It is premature to say the industry is completely on the other side of that initial stage, even as solar has morphed into a whole portfolio of distributed energy resources (DERs) with a broad range of capabilities. Still, where you used to hear a sense of threat and hesitancy, the voices now talk more about new opportunities, and they are excited. The focus is on technologies and programs that provide benefit to customers and the grid.

Of course, the industry still has its flashpoints that make for difficult conversations between utilities, the solar industry and other stakeholders. But, as with most things in the energy sector, the emerging proactive dynamic is complex, with lots of moving parts.

First is the growing acceptance of solar across the utility industry as a competitive, mainstream power source that — in combination with other DERs — can power a cleaner, more reliable and more efficient grid. It’s also what their customers want and can be an economic engine for their communities.

Along with utility-owned solar in Oklahoma, one of the best stories coming out of the conference was about how a small electric cooperative in Arkansas kept its biggest commercial customer and hundreds of jobs in its community with a 12-MW solar project.

Mark Cayce of the Ouachita Electric Cooperative on the stage in Tucson.

Mark Cayce, the General Manager of the Ouachita Electric Cooperative in Camden, Arkansas, became the breakout star of the event with his presentation on the solar project the co-op helped develop for Aerojet Rocketdyne. The aerospace and defense manufacturer was the co-op’s largest customer — representing 10 percent of its load — and one of the region’s largest employers, so when the company came to Cayce with the idea for a solar project, he looked for a way to make it work.

Collaborating with the project developer, Silicon Ranch, and the co-op’s own electricity supplier, the Arkansas Electric Cooperative Corp (AECC)., Cayce came up with an unusual power purchase agreement that put the 12-MW project behind Aerojet Rocketdyne’s meter. The company buys as much of the solar power as it can use at its Camden plant, with any excess going to AECC at a competitive rate.

The project penciled out for Ouachita, Cayce said, because even though the co-op lost kilowatt-hour sales — and revenue — it was able to offset that loss with a drop in peak demand and demand charges. The way the contract was structured also ensured that the co-op didn’t have to get any outside regulatory approval, which speeded up the permitting and construction process, he said.

The largest solar project in Arkansas at the time it went online — the installation also earned Ouachita the No. 5 spot on SEPA’s Top 10 list of utilities that put the most new solar watts per customer on the grid in 2016.

The corporate customer conundrum

Ouachita’s success emerged as a counterpoint to the conference’s opening panel of corporate energy leaders talking frankly about their frustrations working with utilities on clean energy projects and challenging the audience to find new ways to work with them.

“You want to be an energy services company, working with customers behind meter, but you struggle with the idea of creating market exposure for customers,” said Brian Janous, Director of Energy Strategy at Microsoft. “Utilities think customers can’t handle risk levels in the wholesale market. Some can’t, but some can.”

John DeAngelis, Energy and Special Projects Manager at Steelcase, a major U.S. manufacturer of office furniture, was more willing to give utilities the benefit of doubt, given the regulatory constraints of the industry. But he thinks those limits should be pushed.

“Let’s test it,” DeAngelis said. “Let’s design something and offer it to the regulators, or talk about what legislative changes might be needed to have (energy) products like that. Most of the time, we don’t even get to discuss material issues. We don’t get to be creative together.”

While the session generated some pushback from attendees, the overall response was extremely positive — signalling a new level of openness and sophistication in how some utilities are approaching the industry’s pressure points. In the absence of federal energy policy, corporate demand for clean energy is driving both disruption and more cross-industry collaboration in the U.S. energy sector.

“For us, it’s really about the conversation,” said Carmine Tilghman, Senior Director of Energy Supply at Tucson Electric Power. “When a corporate customer comes to us, it’s not just — ‘I want this,’ and we say, ‘You can’t have that.’ They say, ‘Here are our corporate targets; this is what we’re hoping to achieve. How can you help us?’

“The idea is to work together to limit the bottom-line impact for either company and to increase the benefit to either company,” Tilghman said.

Lindsay Joye, Solar Program Manager at the City of Palo Alto Utilities, agreed that utilities need a shift in organizational culture “to put the customer first, and get out of the way of progress and partnership, so that — despite our regulatory and legal constraints — we can be transparent. Let’s not use those constraints as excuses. Let’s share the reality of how we are operating with the customers and work together as partners to capture these new opportunities.”

Young, visible, extremely tech-savvy

The U.S. energy transition is still in its early stages, and how it will unfold remains uncertain — especially the role that utilities will play. One of the most important factors here is the industry’s changing demographics.

In Tucson, and at many energy conferences, the presence of younger utility professionals in their 20s and 30s has passed the point of marginality. They are now a visible and active part of the conversation — sitting on panels, presenting case studies, networking with each other — and they can handle just about any new technology appearing on the scene, with or without a mobile app.

At another point during the Utility Conference, I was talking with Scott Scharli, 35, Senior Planning Analyst at Salt River Project, who walked me through the various time-of-use and demand management pricing plans the Arizona public utility offers its customers. Before too long, we were looking at the home energy management app on his phone, which he is using as part of a demand management pilot.

Even with a residential pricing plan with a demand charge — a contentious issue in the industry at present — Scharli said, he is able to manage his energy use in ways that save money and increase his personal comfort; for example, by precooling his house before peak hours.

The point is that smart, talented young professionals are seeing the utility industry as a place where they can have an impact on a critical transition in our society. Equally important, many of them are working with forward-looking utility executives, who are making sure this next generation is being challenged and mentored.

I don’t want to overgeneralize here; the attendees at the Utility Conference represent a small segment of the people at utilities across the country. Even so, they are significant. The energy narrative in the U.S. is changing — not only the stories we tell, but how we tell them.

SEPA runs the Utility Conference under the Chatham House rule, which means every person named in this article gave me express permission to quote them or was given the opportunity to review the material I wrote about them. Some of them asked for a few tweaks for accuracy, but no one said no.

Coming next week, a closer look at Mark Cayce and the Ouachita Electric Cooperative.