Smart Utility: A Dumb Story

Marcus always heard that your entire life flashes in front of your eyes the second before you die. First of all, that one-second is not a second at all. It stretches on forever…like an ocean of time. For Marcus, it was standing across his country river watching the unending transmission lines extending over the crystal water and straying into the woods. The proud face of his father on his first day at job as a trouble man at Smart Utility…the hard hat and the yellow vest…the glinting goblet that he raised in support of gun rights…

Marcus could be pretty pissed off about what happened to him…he was perceived an intruder as he approached a customer’s premise and was shot by the customer. But he did not obtrude; - he was merely there to investigate a trouble ticket. The customer did not inform the outage, but her smart meter did. So, maybe, just maybe, it was fair on her part to get scared of the uncanny apparition in the middle of the inky darkness and shoot in self defense. But how fair is that? Let it go...it’s hard to stay mad when it’s so much beauty in the world…it’s time to sleep…he closed his eyes as all his thoughts converged into a tiny singular dot of infinite locus just like the transmission wires lost into the horizon over the endless corn fields…

[After the last words of Lester Burnham in American Beauty.]

The Shift in Energy Consumerism

Few years ago, I published an article titled “Utilities 2.0” in Public Utilities Fortnightly where I proposed some tangible value co-creation opportunities for power utilities through the lenses of DART (a framework devised by Prahlad and Ramaswami). I am pleasantly surprised to see how the term “Utilities 2.0” has caught on since then, and more amazingly, how rapidly the concept has been becoming a reality.

The 2012 “Actionable Insights for New Energy Consumer” report from Accenture reveals some really fascinating data that perfectly align with the evolution of Utility 2.0. The shift in energy consumerism is not vaporware, - it is real - “…from isolated to connected, from unaware to informed, from passive to active.” And this shift is transforming the stale business models for traditional utilities.

Below is an example of how different opportunities shape up for Dialogue, Access, Risk Assessment and Transparency (DART) and their intersections.

Some random bickering over AMI Investment Cases

For reasons not-so-difficult-to-understand, power utilities are extremely conservative when it comes to making their investment plans. AMI being the case in point, if you exclude the non-operational benefits from the equation, the Net Present Value comes out gravely negative for most business cases for most utilities. And for the non-operational benefits, which are primarily attainable through broader consumer load participation via market based demand response or direct load control, some of key enabling policy instruments are yet to be instituted owing to the lack of political will and organizational momentum.

It’s interesting to note that reliability gains are completely missed out from most AMI investment cases, with some notable exceptions (such as Connecticut Light & Power). In the base case, utilities can expect to save up to 10% of their outage restoration costs by leveraging the AMI events to reduce the average system interruption minutes (SAIDI). There are also achievable grid efficiencies delivered by business analytics with all the AMI and PMU (Phasor Measurement Unit) data.

At some point in the near future, utilities should sit back and perform a comprehensive value audit and recalibrate their transformation roadmaps. But, agreeably, that’s a broader subject.