Reddy or Not!?!?
No, that is not a misspelled word. It is a play on words and a good key thought for this blog. It reflects a serious question. Is this the right time to change an electric utility paradigm?
I was fortunate to be asked to facilitate and analyze a two day private meeting of 23 electric IOUs (and in some cases combination gas and electric) about a year ago. Setting aside all the politically correct positioning, the subject boiled down to how they could add back electricity marketing. Let’s just face it. IOUs need more sales to absorb the recent cost increases.
Being that blunt is no longer acceptable of course, so you have to posture this more carefully. You can’t call it beneficial electrification even though it is. No matter how obvious the benefit, many IOUs are forbidden from helping customers reduce costs and improve their operations by expanding beyond their demand response and energy efficiency agendas. Even professionals who manage electric and natural gas vehicle fleets inside these utilities were forbidden from talking to their customers who have large fleets of gasoline and diesel engines. I want you to think about how silly this is.
In fact, since these fleet owners are so concerned about their environmental footprints and committed to embracing natural gas and electric vehicles, they pay to go to centralized meetings in other parts of the country so that they can talk to their local electric utilities about their experiences with these vehicles. Please reread that again. Can’t you see the silliness of this?
It is now politically incorrect to promote the use of electricity, even when it is clearly in the best interests of the customer and the serving utility. It is OK for gas companies to do that (and they are) but electric utilities now have their hands tied behind their backs. When are we going to wake up and call a foul on this attitude? Isn’t there some middle ground here? Utilities are not asking to dial up the old electricity marketing programs. Is that what the regulators are so afraid of?
Perhaps it is helpful to look back a few years and see what we might learn from a time when things were different. Reddy Kilowatt is a brandingcharacter that acted as corporate spokesman for electricity generation in the United States and other countries for over seven decades. Reddy Kilowatt made his first public appearance on March 14, 1926 in an advertisement in The Birmingham News for the Alabama Power Company (APC). The character was the brainchild of the company’s 40-year old commercial manager, Ashton B. Collins, Sr.
Like other electric utilities of the period, APC was struggling with the need to grow the consumer demand for electrical power. site information . Commercially-viable generating stations had begun powering North American streets and homes by the end of the 19th century, but by the mid-1920s investor-owned utilities (IOUs) had achieved penetration in most North American urban centers. Ashton Collins was convinced that the best way to win over new customers, including frugal small business owners and skeptical farmers and rural dwellers, was to give his mostly invisible new commodity a more human face.
A human face. Is that what we now need? A new icon? General Electric was in the power generating business and decided that the best way it could build its business would be to invent and market things customers could buy from them that “brought good things to life.” What a lovely thought. Improving the wellbeing of people. How can you argue against that? GE now has wind and solar in its generation portfolio, but it hasn’t stopped bringing good things to life. They have moved on.
So, to support the regulatory agenda, it is probably a bad idea that we have all these modern conveniences. It would be better if we washed clothes by hand and dried them out on a clothes line. I grew up in that world and I do admit the clothes smelled fresh. But, they weren’t as soft, and certainly not as clean and neat. Has our energy efficiency agenda stymied the progress of our society? Have we defined success too heavily on never building another power plant?
The current energy strategy and planning dialogue is stuck in a polarized set of ruts. If you are in the global climate change rut you see everything as solar, wind and natural gas. You are not worried about how you keep the lights on with all these intermittent resources. You are only worried about how much carbon you release. If you are in the traditional electric utility rut, you are caught in a squeeze between accommodating all these new sources and paying for both their installation (through incentives) and operation (through preferential rate tariffs that shift the operating costs to others). This was fine when these costs were small, but they are no longer that way. In fact, they are now large enough to bankrupt several of the world’s largest IOUs.
Investor owned electric utilities are certainly stuck in their rut. Municipal and cooperative electric utilities may be stuck there as well. Can they break out of it? And, if so, what is their new game? Can they move on? In another blog I focused on the idea of moving towards a DC grid. Check that out if you haven’t seen it. Here I want to focus on another key idea Edison had. It was that he thought you would never be able to sell electricity. You would have to sell what customers wanted to get from it: heat, light, productivity, etc. My next blog is a much more controversial approach: declaring the emperor is nude because he and/or she is nude.
Hmmm. End use sales. That isn’t really all that new Joel. We have district heating and cooling plants that sell hot water, chilled water and steam. Are you suggesting selling light? Work with me.
Who really wants to worry about heating, cooling, lighting, or anything else in our homes and businesses? Apartments in New York City often come with “free” heat. Why not extend the traditional financing of homes to include comfort and simply “lease it to them?” When you do that, efficiency and technology are a way to increase earnings for the investor. Isn’t that what we really trying to do with market transformation anyway?
But some will immediately complain that people will abuse the freedom to set their own comfort levels. You can cover that by careful design of the system so that customers are permitted the freedom to do that in the area of the house they want to be in but only if they reduce the comfort in other areas where they are not occupying the house. If you are still arguing with me, please read the blog on Oh Vey because you are stuck in that terrible “we can’t do that” mode rather than the “how can we do that” mode that leads us out of this wilderness and to the promised land.
Plus as technology increases and costs continue to come down, think about how a home can automatically adjust. I watched my satellite receiver automatically turn off when it sensed I didn’t touch the remote for more than two hours! The NEST thermostat detects you are in the home as it considers how to adjust to your comfort target. Lights in public places turn off when no one is present. Can’t you see the trend here? We are marching towards an intelligent interactive home where your comfort is no longer costly and your willingness to pay for it is going up in value. This is the promised land.
But, just as in the Book of Exodus that describes the story of people wandering in the desert, the first views of the promised land. There are giants in this land. Is it time to truly dialogue with those giants?