Reports reveal conflicting pressures on power providers

On one side, growing demand to provide cleaner electricity while enabling customers to reduce their energy use; on the other, a segmented market of consumers who are resistant to change and especially to control. Findings from two separate reports suggest that the nation’s power providers are caught in the middle of these seemingly conflicting pressures.

Focusing on trends in the electric utility industry, Navigant Consulting prepared “The 21st Century Electric Utility: Positioning for a Low-Carbon Future” for Ceres, a coalition of organizations that works with companies to address sustainability challenges. “Understanding Consumer Preferences in Energy Efficiency in the Utilities Industry” is a 17-country study that looks at consumer attitudes toward utility programs created to address those trends. Accenture, a consulting firm that offers business services to utilities, released the report on its survey last January.

New business model coming

The Navigant report identifies four key industry trends toward cleaner energy. Those include:

  • Growing imperatives to reduce greenhouse gas emissions
  • Increasing policy and regulatory momentum that will make coal-based generation less competitive
  • Increasing use and policy support for energy efficiency and Smart Grid technologies
  • Declining renewable energy costs

To succeed in the rapidly changing 21st century market place, the report advises utilities to:

  • Manage their carbon emissions based on existing and foreseeable carbon-reduction requirements
  • Pursue all cost-effective energy-efficiency measures
  • Integrate cost-effective renewable energy resources into the generation mix
  • Incorporate Smart Grid technologies
  • Conduct robust and transparent resource planning

Utilities that implement these practices with support from legislators and regulators will be more likely to attract low-cost capital, according to the report.

Old marketing strategy not working

“The 21st Century Utility” also identifies a number of obstacles preventing utilities from taking these steps, but does not mention program marketing strategies. The findings in the Accenture study suggest that consumer behaviors for energy-efficiency solutions are more complex than utilities suspect. The historical “mass marketing” approach is not likely to deliver the consumer support utilities need for their measures to succeed.

Greg Guthridge, managing director for Accenture’s retail and business services for utilities, told Intelligent Utility Daily that the survey was designed to learn more about the barriers to customers changing behavior and energy use, especially in North America. Survey results indicated that the one-size-fits-all strategy won’t work, and that utilities need to come up with services, options and messages tailored to different demographics.

A surprising finding was that consumers are averse to utility control of their residential data and appliances, due to a low level of trust in their utility. Guthridge noted that this was especially true in competitive markets where deregulation caused rates to fluctuate more.

The report suggested that consumer education was the key to gaining acceptance for conservation and energy-efficiency programs. Building relationships with receptive demographics, addressing children instead of adults and partnering with trusted organizations—environmental groups or even big-box retailers—could help raise program support.

As the Navigant report makes clear, the pressure from stakeholders on utilities to reduce energy use and clean up the supply is not going to let up anytime soon. At the same time, the roadblocks to change—legislative, regulatory, economic and technological—won’t be resolved quickly. The best way for a utility to find its way between the proverbial rock and a hard place may be to reach out to its consumers.

For Western’s customers—publicly-owned utilities—it may be a different story since, by their nature, municipalities and cooperatives often enjoy a closer relationship with their customers. Energy Services Bulletin has featured many stories about innovative programs our customers have introduced to help their consumers save energy and money. Use the comments section to share your experiences with getting customers to participate in energy-efficiency programs.