Captain Obvious

We are all familiar with this quote from Mark Twain.  I open this article with it because it seems to capture the underlying feeling in the utility industry at this time.  While Jim Rogers, the past chairman of Duke Energy, has now come out and declared the traditional electric utility model dead, I am guessing that most in the electric utility industry are repeating Mark Twain’s words under their breath.

Jim Rogers is noted for pithy quotes.  One of my favorites is “If you are not at the table, you are on the menu!”  Since I have written extensively about customer engagement and key account strategies, I could not agree more.  Yet, at this time, utilities seem to be pulling away from that role and resorting to their age old tactic of trying to change the rules of the game to be more in their favor.

I am not surprised.  Today’s flat electric load growth and upward pressure on rates makes it very tempting to look for financial tweaks that move the operating financials in the right direction.  But these also tend to embitter customers who see them as combative and a sign of resistance to needed energy supply change.  Yes, these customers simply do not understand the issues and seem especially uninterested in looking at the realities of our energy future.  But, when you put these questions to a public vote, they tend to vote for the gradual pressure in upward rates to get these choices into the market!

And yes, all the engineers who know the details can easily criticize the reality of fuel cells.  After all, these were five years off back in 1985 when I was manager of machinery development at Mechanical Technology Incorporated (MTI) and were the first in the country to actually put them in cars. Now they are about five years off if you listen to some of today’s car companies.  MTI spun off that division which is now Plug Power.  We engineers love to point out why things don’t work.  But there are a few of us who can look past the reasons why things don’t work and see opportunities for new ideas that can be made to work.  Don’t tell me “no” … tell me “how.”  There is almost always a way to make an idea work.

I am reminded of the comparison between the way our space program and Russia’s space program solved the problem of designing a way to write in space.  Our scientists tried to come up with a ball point pen that would work in zero gravity.  The Russians simply chose to use a pencil.

In the beginning … the grid was Direct Current

I am going to bring us all back to one of these engineers who figured out “how.”  And, ironically it was out of a customer service glitch.  Thomas Edison shifted the emphasis at his research center to “get even” with his local utility because they were demanding payment of his overdue energy bills.  On one level Edison thought he did by inventing the electric light.  The gas industry (remember, lighting back then was done with natural gas) thought they were going to die.  So, they did what any free market company does … they thought they might as well invest in Edison’s company.  After all, at the time, the idea of using natural gas to make electricity wasn’t feasible.

Edison believed local electricity production and use should be direct current.  All of us in the utility industry know the legendary battles between his ideas and those of Tesla and Westinghouse.  Well, history teaches us that Edison lost the battle and we now have alternating current.

But, I want you to see how we may now have the perfect storm of ideas to bring Edison’s dream to reality.  Think about this for a bit with me.  Watch the difference between trying to accommodate the trends in energy technology today and how they get easier if we include a DC grid in with our current alternating current paradigm.

Solar and wind have grown significantly.  They may have received subsidies that are no longer “cost effective” but they have captured the attention and enthusiasm of the average American.  As this din of energy technology enthusiasm grows louder and louder and this just makes many incumbent energy providers cringe.  They were OK with solar and wind when they were small, but now want to change the rules given they are not so small.  Who pays for the transmission upgrades necessary to accommodate these new sources? Who pays for the balancing energy it is going to take to leave these resources in a must run status?  All of this puts upward pressure on electric rates.  Who pays?

Jim Rogers has recently said the traditional electric utility model is dead and that the future is a blank sheet of paper.  Well, I would like to suggest that there are three things the incumbents can do: watch things happen, wonder what happened or make things happen.  Perhaps it is time to make some things happen.

Think about all these new energy efficient technologies we now have. Light emitting diodes (LEDs) … DC.  Solar and wind … DC.  Electric vehicles … DC.   Variable speed drives … best and cheapest done with DC.  Electricity storage needs … best done with DC.  Distributed generation interconnection … best and cheapest when done with DC.  Microgrids and power reliability … best done with DC. The list goes on.

I am not suggesting we are going to do away with our transmission and distribution systems.  I am only suggesting that the “last mile of wire” might include … wait for it … think about it … DC.  And, I would suggest that the incumbent electric utilities start to think about how they can include DC in the last mile of wire to homes and businesses.

My boat has AC and DC circuits and an inverted to power the AC when the generator is off.  Power reliability is not a concern.  Why wouldn’t homes of the future have the same?  Wouldn’t this also make demand response at the home level incredibly easy to implement?

Transitioning to a Brighter Future

Obviously this is a very big idea.  There are lots of reasons it will not catch on right away.  There are a host of obstacles that preclude it from being a quick fix.  But, it clearly has legs.  Therefore, it deserves a demonstration project.

Yes, the devil is in the details.  Yes, this requires engineering.  But, some customers will pay for it.  Start there.  They will pay the freight.

Why not offer one to a big box retailer … say Walmart?  Why not try a model residential community that is all DC.  High end homeowners are looking for a way to be part of something truly new and exciting.  These are the same people who buy the EVs.

Who is going to be first here?  Who wants to go down in the history books?

I end with one more historic quote: “Things may come to those who wait … but only those things left by those who hustle!” … Abraham Lincoln

The cover of Time Magazine issue had an interesting article by Comedians Key and Peele titled “The Case for Mockery.” They claim we have changed our sense of openness in making fun of things and that has now thwarted a lot of creativity at the altar of political correctness. In a sense, their premise is that our inability to laugh at ourselves closes our minds to creative discussion and change. Their central premise is that certain groups are now bullying us into silence.

As I thought about this, it struck me that we have this bullying going on everywhere. I see it in our churches, politics, and even the energy industry. I believe the root to all of it is our tendency to be superficial. We are happy with our limited understanding just as long as the superficial sound bites satisfy our encapsulated dogmas and doctrines. Then, when we encounter others with different points of view, we become increasingly defensive about this and that. We have lost our sense of humor that perhaps, just maybe, we don’t know as much as we seem to think we know. Maybe new information might give us a bigger sense of the truth than the tiny portion of it we think we now own. As a result we become increasingly polarized and define ourselves by our unique perspectives.

I copied two of the most powerful quotes from the article into this blog to point out how obvious this is once you stop and think about it. Who can argue that we are now operating in a sea of political correctness where we can’t really call a spade a spade any longer?

Political correctness? Joel, are you kidding me? No, think about it. It has now become sacred to let energy zealots run the table on energy decisions in this country and, for that matter, around the world. Renewable energy is the new religion and they are on a crusade to replace the energy systems with solar and wind. Worse yet, the rampant inclusion of these sources without due consideration of the longer term financial and operational reliability impacts threaten the reliability and sustainability of the very system everyone in this country counts on. The bullying starts right here: People who think about this critically are called members of the flat earth society because their questions and concerns take the bloom off the energy zealot’s idealistic dreams. Sorry my zealot friends … that is bullying.

So, let me play Captain Obvious to anyone who truly knows anything about planning an energy supply system. You need both capacity and energy. You must have both and they must be there in balance. Disturb this balance and the lights go out. Sorry to destroy your simplistic energy doctrines and dogmas about renewables, but they are useless without real firm energy capacity … the kind provided by natural gas, nuclear, hydro and even coal.

Renewable energy sources are just that … energy sources. They are not capacity sources. They provide kWh but not kW. You need capacity sources to keep the lights on and you need an operational electrical grid to move the capacity sources to where the energy balance needs correction.

By the way, this grid was never designed with anticipation of these new sources and certainly not where they are being located. So, we don’t have the capacity resources located necessarily where we need them. Wind is often nowhere close to the load centers (population) and it is horribly intermittent. Solar sources can be located close to population centers but it is also often intermittent in many areas of the world. We need capacity to keep the lights on and the cost of that capacity has to be paid for by the users of the system in some equitable balance. And we need a transmission and distribution system that can accommodate the necessary flows while maintaining both voltage and frequency. By the way, the costs for this newly required capability is far from small and the existing ways these costs get recovered by no means charges the right people for the costs they are incurring.

So, as the article in Times Magazine points out, it is time to poke a bit of fun at the energy zealots for the obvious imbalance in their position. It is time to balance the electric rate making process to properly recover the true costs of including these new energy sources in the energy mix and from the right people.

But let me also point out that the conversational balance needs to also move away from the tone today which I would describe as a form of energy bullying. The energy zealots have not only gotten the microphone but they have dominated the agendas that result. They are also demeaning and failing to show respect for other points view. Tone it down please. Respect your elders.

Our society will not thrive if we continue to let this one point of view dominate the air waves. There is more to the story. There is more to keeping the grid reliable than what they are telling everyone.

If we fail to regain balance here, we are headed down a slippery slope of tragic energy decisions. We still have time in the United States.

Germany many have slipped into the abyss. Check it out if you are willing to face the complete truth:http://www.intelligentutility.com/article/14/02/2020-vision-look-european-electricity-market

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?

Is this the new “M.O.” for communications?

Ok, don’t read any further.  What did you think I meant by “M.O.?”  If you were thinking Modus Operandi you are dead wrong.  I want you to now think M.O. stands for Media Overload.

I have come to the sorry conclusion that, as a general rule for modern society, our current modus operandi is to filter out most of what gets thrown at us.  It seems like the only way you get people’s attention today is to have a headline sound bite with words that penetrate our deepest fears.  Any mention of the “C” word does that.

Take an inventory of your own life.  How many unwanted emails do you receive?  How much of the news do you really watch?  Aren’t you tired of the partisan bickering in our state and federal government and ready to throw all of them out and start over?  Do you record your favorite TV stations and then skip through all the commercials?  Aren’t you angered a bit by the number of them you see as you skip through them all?  And, aren’t the things being advertised to you a bit offensive as well?

I am now raising a teenage boy and I really don’t like what I am bombarded with.  There is a time and a place for all conversations, but … really … must I hear all about this during “prime time?”

Even though great books have been written about what we should do to prioritize our days and our life for that matter, we don’t read them.  Covey’s great book on The Seven Habits of Highly Effective People is a must read of course.  His son’s more recent book on The Speed of Trust is also appropriate here.

But, if you want to understand what is really going on right now, you must read Reeves and Read’s book Total Engagement to see just how many people would prefer games and virtual worlds over this one that you and I supposedly are in (unless you believe this is a The Matrix).  By the way, this is not a novel.  It is a Harvard Business School treatise on something we really should be learning about how people today want to work and what they want to work on.  But, since you and I are deeply invested in energy efficiency, technology, and the utility industry, perhaps the best one I can suggest is Berger’s book called “Contagious – Why things catch on.”

But, you won’t read any of these.  You now expect me to give you a Reader’s Digest summary of what you should know and think.

Let’s just face it.  We are getting lazier and lazier.  This media overload has made us filter more and more and we now live on a steady stream of sound bites rather that critically think about anything.  Our educational system is now almost entirely focused on “teaching to the test” and we are raising our children in a T Ball culture where everyone runs the bases.

Where is critical thinking?  Where is the search for excellence?  Where is the drive to truly make this world a better place having lived in it for whatever time we have?

Nope!  It is all about me!  What’s in it for me?  Oh, your life isn’t great?  Sucks for you!

Sure, we applaud individuals like Mother Theresa and Nelson Mandela. But where are ours in the energy industry?  When are we going to settle down and actually do things that make a difference rather than all hypothesize what might make a difference.

I remember when I decided to change the dominant demand response paradigm of the late 1990’s and tried to move it to a market model.  I was told “we can’t do that” and ridiculed for trying.  I anticipated market congestion was going to create an economic opportunity and worked with Elliot Boardman to organize a national meeting on the subject.  He had introduced me to Neil Wolkoff, the Chief Operating Officer at the New York Mercantile Exchange (NYMEX) who was trying to get electricity futures into the market.  Neil knew what I was doing was “directionally correct” and was willing to back the conference.

Well, it was not long after we organized the meeting that the first big electricity price spike showed up in the Midwest electricity markets … prices spiked to almost $5,000 per MWh. And, despite claims that it wouldn’t happen again, it did.  The meeting sold out in just days and that is what I used to launch what persists today: The Peak Load Management Alliance (www.peaklma.com).  I have never had any financial interest in that, and even though we at Apogee still provide the website for them, we derive no financial benefit from that.  Face it folks.  The intellectual and business acumen still resident in the energy industry has become sidelined and sleepy.  Just hoping to get a good night’s rest.  If it weren’t for the fact that many 401Ks are still 201Ks, even more might have retired.

Where is the spunk that got us here?  Why are national energy meetings so stale that people no longer want to go?  Where is the interest in wanting to do something truly new and creative?  Searching for some really new ideas?  Want to truly reinvent energy engagement?  Then check out my new book here for an example. www.itsthethermostatstupid.com.  Better yet, send me your name and address and I will send you a free copy.  There is only one catch.  You have to read it and post a comment about it once you do.

Let’s not simply stay the course and keep our heads down.  Let’s not just hope all of this will blow over and the dawn will break and the electric loads will start growing again. Let’s pursue the path of revolutionary thinking such as our forefathers in this industry.  And let’s stop thinking others are going to make this happen.  It’s our turn to make it happen in this critical arena of energy and sustainability for today and tomorrow.

And, just in case you are still waiting for the answer.  No, homework does not cause cancer.