Maslow’s Hierarchy of Electricity Pricing

We had massive power outages recently here in Georgia, largely due to trees falling on power lines due to the tropical storm that came through. That shouldn’t have been a surprise to most of us because we have a lot of trees and the winds did seem pretty gusty.  But, what was different this time was the restoration time… it was much longer than normal. Some hypothesized it was due to local crews having been dispatched to the coast where damage was extreme.  Some came up with this or that other answers.

We in the power industry know the intent is to get the power back on as soon as possible for obvious business and customer satisfaction reasons.

So, I was a bit amused by a question we saw on one of our utility online calculators suggesting:  “How do you calculate a bill for the days the power is out due to these storms? Do we get a discount or credit?”

You can imagine my immediate impulse to write this person and tell them they did get a discount for the power they did not use, but the question of a credit for the incident struck me as timely.

After all, as we in this industry do move towards the future we will have to face questions like this more fully than we do now.  Might we charge a premium for perfect power reliability and build DC systems like the one TECO has proposed in Florida?  I think that is entirely possible and I for one would pay a premium for it.  I don’t want to have to go out and buy a generator … but I may after this last outage.

Perhaps we should rethink our position on pricing away from what things cost us to do and focus on what matters to customers.  What is important to them?  Do they really want to be prosumers or is that a result of us not thinking this through.

Maslow studied human behavior and created a way of thinking about what motivates us.  Food, shelter, and safety were so essential to those he studied he put that at the bottom of his famous triangle.  I have blogged before about two other factors that have now become even more important to the average American: battery and Wi-Fi.  No that is not just funny … it is true!

In like manner, I am starting to think our preoccupation with the engineering and financial elements of electricity may be the buggy whip of modern pricing strategies.  Sure, we can offer cost-aligned pricing for prosumers, giving them the benefit of potentially lower prices as they partner with us on the supply and demand challenges.  But, for most customers, I am beginning to think this is a fool’s errand for all the reasons we have seen.

We talk about the voice of the customer and customer journeys.  Maybe we really need to take a deeper dive into what matters to most of them.  I think we are going to be surprised.

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