It’s the early evening in the dog days of summer in California on a warm Tuesday night. In the background I can hear the muffled sounds of the SF Giants baseball game playing on the tv. With each crack of the bat, my head pops for a momentary reprieve only to then sink back down into my laptop. This ritual continues until, suddenly, a familiar song starts to play, “This little light of mine…”.
This song is part of a California commercial (https://www.youtube.com/watch?v=8xHSCUhfdQA) that has become somewhat of an annoyance these last several months if only because it seems to be shown at least 10 times during each baseball game. However, the real reason I have an issue with this commercial is because of a larger issue it represents. The issue I’m speaking about is that customers must be at the center of how the electric industry moves forward. This isn’t a ground breaking revelation because over the last decade there have been plenty of arguments made for a customer-centric approach or a customer-centric future. However, a truly customer-centric future has everything to do with what is wrong with the “This Little Light of Mine” commercial. For those unaware of the commercial, the main claim is that here, in California, we can’t harness wind and solar energy all day long, so customers should conserve energy between 4pm and 9pm for a “Cleaner California”. This commercial is sponsored by a state initiative called Energy Upgrade California. The problem with this initiative, and others like it, is that they call for types of action that are often at odds with customers’ interests despite what the electric industry might think. In this commercial, there are two main issues that highlight the industry’s supply-side interpretation of “customer-centric”.
Issue #1: The Industry Is Disconnected From Reality
Ask any customer in California or Texas what they think about having their state, independent system operator or utility tell them to conserve energy between 4pm and 9pm and the response likely will be “Why should I? They are probably going to shut off my power anyway.” In the past 3 years this has been a common sentiment I have heard from friends and family or read on locally trending social media posts about utilities. And yet, the industry continues to produce these commercials/initiatives as if customer want to hear this. The idea that customers want to hear about what more they need to do when they are now regularly faced with threats of having their power being shut off because it’s going to be over 100 degrees for 3+ days in a row or when strong winds are expected during a dry week is absurd. Customers hear about a smart grid and yet they get better real time analytics from their favorite food delivery apps (ex: DoorDash). Customers understand that when unexpected and extreme weather events occur that their utility, and by extension regulator and Independent System Operator, likely has no way of being fully prepared to handle such an event (i.e., Hurricane or massive Earthquake). But when predictable weather patterns happen, particularly as it relates to Global Warming, customers have every right to expect that those responsible for providing electric service are prepared to meet the challenge.
Issue #2: The Industry Passes Their Own Failures Onto Customers
The electric industry is certainly at a cross roads where the public policymakers often aspire to goals like a 100% clean, distributed future or customers fully adopting electric cars and homes while the regulators, system operators and service providers are clinging to old deterministic, constraint-based paradigms. The issue is that the grid we currently have can’t handle the instability brought on by climate change as well as the significant change in the effective structure and use of the grid including things like very high levels of non-synchronous renewables, independent DERs, or fast-charging electric cars. These new challenges cannot be handled without a step change in the approach to planning and designing for a 21st electric system.
The institutional lag between policy goals and traditional regulatory driven methods of planning and investment has left customers with worse service than they had 10 years ago despite the available technology and business model innovation driven service improvements that have revolutionized other industries. And this is where we see that tacit electric industry failure with initiatives like conserve energy from 4pm to 9pm, especially as it relates to “Issue #1” above. The state of California is effectively requesting customers to – “Ask not what your utility can do for you – ask what you can do for your utility” so we can all do our share to make California a better place. But what is actually going on, and what the customer knows to be true, is that the electric industry (i.e., regulator, independent system operator and utility) has not planned correctly to meet the demand later in the day. Customers fundamentally do not exist as resources for the electric industry to manage in order to meet the industry’s needs. To put it another way, this industry’s “customer-centric” approach has turned their own supply volatility problem into a customer demand problem. No other service industry operates this way and most policy makers, regulators and industry economists are seemingly blind to this issue. As a counterpoint, unregulated services companies are countering with commercials such as Sunrun’s “Electricity Should Work for You” (https://www.ispot.tv/ad/nQvp/sunrun-electricity-that-works-for-you). Is this where we are heading? Those that can avoid the lower reliability and higher costs move to self-sufficiency leaving those less able to be exposed? The societal inequities of our electric system are widening as a result of questionable policies over the past decade and need to be viewed through a different lens.
Electricity has become as fundamental to daily life as running water and with each passing day it is only becoming more important. With technologies like Solar PV and battery storage, this industry is entering into a period of abundance not scarcity. Rather than pumping out commercials and programs designed to get customers to use less, we instead should focus on meeting the real time demand and increased resiliency expectations. In this era of abundance, the value the power system has is that the vast majority of customers either do not have the ability to upgrade their own service (i.e., rooftop solar, battery or back-up generator) or do not wish to own their own equipment and, therefore, will still rely on the legacy grid. The heart of customer-centric thinking should be that the existing electric industry ecosystem needs to be unconstrained to innovatively meet the new demands of an ever more demanding customer. This industry needs to be more flexible in order to navigate an uncertain path forward. If we want a more distributed future and extensive use of clean electricity to achieve our climate goals then we need to change our customer service proposition. This requires a fundamental realignment to stop asking customers to be a grid resource at the center of change but rather to ask ourselves how to change the industry in order to better meet customers’ needs.