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Electric companies are working to advance energy affordability for customers while simultaneously exploring the role customers play as a resource for mitigating future challenges on the nation’s power grid.
“It’s a transformative period right now in the energy sector. So much opportunity, so much excitement with a clean energy transition and electrification efforts — but this also comes with a set of new challenges,” said Adam Cooper, executive director of the Institute for Electric Innovation (IEI). “Customers are a critical piece to our success, and to get customers on the journey … we need innovative thinking, technology solutions and new regulatory and policy models.”
IEI on Nov. 28 hosted its 13th annual Powering the People conference, which provided an opportunity for electric companies, technology companies, policy makers, regulators, and other stakeholders to network and engage in key industry issues and policy discussions.
“As we make progress towards electrification, we need to ensure no communities or customers are left behind in this process,” said Cooper, noting that energy affordability is a key aspect of a successful clean energy transition.
During the event’s first session, panelists discussed the role of data and technology to better engage customers, particularly low-to-moderate-income (LMI) customers.
“LMI customers have always been a core constituency,” said panel moderator Bob Rowe, retired CEO of NorthWestern Energy. “We are committed to serve them, but there are challenges.”
For example, Rowe said LMI customers are difficult to reach and their housing conditions are often extremely limited.
“There’s this new wave of customers who we really haven’t worked with in the same way as in previous years: the low-to-moderate-income customers and moderate-income customers who are facing challenges really for the first time in many cases,” he explained. “But the good news is we have tools we didn’t have before.”
That includes resources made available through the Inflation Reduction Act and partnerships forged between the electric and technology industries that help utilities better understand what customers actually need, who requires assistance, and what kind of assistance will really move the needle, Rowe said.
The recent innovations in data analytics and technology, for instance, are transforming the way electric companies do business, work with customers broadly, and target their resources toward specific customers.
DTE Energy, the major electric provider in southeast Michigan, including Metro Detroit, currently counts about 30 percent of its customers as being at 200 percent of the federal poverty level or below, according to panelist Jonathan Hirte, director of federal affairs at DTE Energy.
“We have a large universe of customers that at some point may need energy assistance to help them meet that energy burden and maintain bill affordability,” Hirte said. “We are deeply committed to serving our LMI customers.”
To better understand their needs and how to connect with them, DTE Energy leveraged data analytics via its partner E Source, a solutions-based research, consulting, and data science firm.
“I think at the top it was a very valuable experience for us; it really reaffirmed a lot of our intuitions about the opportunity to leverage this sort of data analysis,” Hirte said during the panel discussion.
In fact, going forward, Hirte said the experience will “really shape how we design our customer service programs, how we think about customer engagement, and in my world in government affairs, how we think about where we need to make changes in the policy environment to address programs, whether it’s at the state level in Michigan or even at the federal level to to make sure these programs are effectively meeting the needs of customers.”
For example, rather than waiting for customers to be deep in arrearages or to get a disconnection notice, the power industry has to think beyond just helping customers when they’re in that moment of crisis, said Hirte.
DTE’s partnership with E Source helped the utility “think more comprehensively about being proactive in helping these customers sustainably manage their energy bills,” he said. “It was really about a first step in developing a deeper than income understanding of the LMI customer base.”
One pattern that emerged from the partnership was the extent to which consumption of energy was a key driver of arrearages.
“That may seem sort of intuitive but for these folks they historically were in the oldest homes in our service territory,” Hirte said. “They often had severe issues with the building, whether that was broken windows or a hole in the roof. There was a higher incident of folks that were renting and so they didn’t have a lot of incentive or ability to make energy efficiency investments.
“And then these are customers that, based on their limited income, didn’t have a lot of funds that they could put towards energy and efficiency investments,” he added. “That was a key sort of signifier when we looked at the data.”
Hirte also said that looking at federal poverty level data is another good indicator because it can allow a utility to get a better sense of what a family’s disposable income is and how they’re going to be able to sustainably manage their bills.
As DTE has pivoted out of its partnership with E Source, Hirte said the company determined that it needs more data and must continue to beef up its analytical capabilities, have a more robust internal process where it can leverage the information it collects, and use it to more efficiently to conduct outreach to customers, particularly the ones who would benefit the most from energy waste reduction (EWR) investments.
“As a company, we have always had teams that were dedicated to assisting low-income customers with energy assistance,” he said. “But we’re sort of pivoting our model and taking maybe a broader approach to say where can we have a dedicated low-income team that is not just helping when someone has a problem with bills, but is there when they are onboarding and having a conversation when they’re setting up their service to get a better sense of what the profile is of that user.”
Collecting data points from such a profile can be useful to then get a better sense about whether these customers are going to run into a challenge with continual arrearages, said Hirte.
“I think our North Star in this is an individualized approach in working one-on-one with customers,” he said, “and being able to build out an energy advocate team where they could develop an individualized relationship over time with a customer, have one-on-one conversations, be able to deliver information about EWR, information about demand side management program opportunities, and other resources in the community that can help them stay on top of their energy consumption and, ultimately, avoid building up that backlog of bills.”
More tech benefits
The second session of the IEI event focused on exploring the role of customers and the resources they may bear so that rapid increases in electricity demand, along with increased reliance on variable renewable energy generation, don’t pose unmitigated resource adequacy and system cost challenges.
In looking ahead to the next decade, Lee Evans, director of load flexibility and economics at the Southern Company, a leading energy provider serving nine million customers across the Southeast, addressed the importance of things like virtual power plants and flexible load, how their importance is growing, and what Southern Company is doing today to prepare for such changes.
“The electric industry has always had one dial, right? That was a supply dial. You ramped up supply, ramped it down based on that load,” Evans explained. “Then with energy efficiency, we started having another dial, which was how do we manage, reduce and flatten the overall profile? And then … we have more different types of resources coming in on that supply side and on that demand side behind the meter that might be a little more intermittent. That might require a little bit more flexibility on the supply side and the demand side.”
Southern Company, he said, is increasing that supply side flexibility a little bit with things like utility scale batteries and more flexible resources, and has plans to do the same on the demand side.
“And that’s where I think we all have a lot of work to do is increasing that load flexibility,” said Evans.
Like a lot of utilities, Southern Company is in the process of making huge investments in technology, he said, pointing out that the company is going through the RFP process for an enterprise-wide Durham system, advanced distribution management system (ADMS) upgrades, and billing system modernization.
“With that investment in technology, we have to marry that with what capabilities will unlock for future value streams of demand flexibility,” Evans said. “We’ve identified each one of those as bottlenecks along the way … and now we have the responsibility to, as those are getting upgraded, make sure they are unlocking all those value streams that we want them to.”
Evans also said that Southern Company has several mass market programs that are in various stages of either pilots or small scale programs, with the goal being that as the upgrades go live and roll out, that third-party partners and programs are ready as needed to help unlock any of the other value chains that remain locked in the current systems.
“It’s important to remember,” said panel moderator David Hutchens, president and CEO of Fortis Inc., and an IEI co-chair, “how much technology is needed behind the scenes to get these systems in place before you need them and to be able to do additional future programs.”