I have been fascinated to track the rise of complex utility customer information systems (CIS) for many years. The two largest systems utilities operate—and the ones they traditionally have been most careful about and solicitous of—have been the grid (transmission and distribution) and their CIS. Utilities have proven to be difficult targets for outsourcers for the simple reason that they consider these two areas, the grid, and customer information/billing as core to their businesses. They are reluctant to pass control of these vital areas to others outside their enterprises. Both areas have evolved relatively slowly over the last 30 years (as the speed of technological evolution goes), but that is about to change dramatically.
The rise of demand response, distributed generation, advanced metering, the intermittent nature of renewable energy, remote RTUs, switches, capacitors and artificial intelligence all are about to bring about a dramatic change in the traditional operation of the grid. I’ll get more into that in later posts.
Similar dramatic new demands are about to be required in CIS, particularly with regard to residential customers. Very few, if any, CISs currently deployed at utilities can handle these demands. Very few of the CISs on the market can handle all these demands although vendors are beginning to envision what will be required in the future. Here are some examples of customer concerns utilities and their CISs will have to deal with in the future:
· As electricity becomes more scarce—something that is predicted by virtually everyone knowledgeable about the state of the industry—residential customers are going to have to deal with reduced supplies. This is what demand response is all about and it will have to extend to the residential level, which is what the push for AMI is all about. For now, demand response is designed to be voluntary. Utilities—or their surrogates in one evolving model—will sign up customers who volunteer to reduce load at certain times of the day. Tracking all this will have to be done in the CIS, or in an outboard system with linkages to CIS for customer care and billing.
· As the shortages become more acute as carbon constraints continue to drive out the 50% of U.S. electricity currently generated by coal, demand response likely will have to become mandatory. When it is mandatory, it becomes rationing. Utilities must be able to track in their CIS, or related systems, who is on what program, what their true billing will be when they are curtailed, how to collate all this information and get the right bill in the right amount to the right person.
· As more people generate their own electricity, through solar panels, generators, plug-in hybrid vehicles and other systems that draw electricity from the grid at times and put it back in at other times, utility CISs are going to have to track and bill accordingly. At times the customer will owe the utility money, at other times, the utility may owe the customer money. This is called “net billing” and must be handled in the CIS or associated systems. It will be enabled by a veritable flood of data from advanced meters—reading meters several times an hour rather than once a month to get the right accounting. All this information eventually will have to flow to the CIS/billing engine, even if meter data management (MDM) is handled elsewhere.
· As demand response/rationing takes hold, utilities are going to have to know a lot more about the lifestyles of their customers. Included will be such questions is what time of day will cause the least disruption if power is curtailed or cut off? Are there elderly, ill or handicapped in the home who could die without sufficient power? Does the resident work at home and have computers, printers, communications systems, etc., that will not work, or work poorly, if power voltage or current is reduced? Does a small farm have a small commercial chicken house where an entire crop could die if power was cut off or changed? Is there a new baby in the home with special health-care needs? Is there critical medicine or other products in the refrigerator that could spoil or become dangerous if its temperature level fluctuated during cycling of the appliance? All of this information will have to be available to the utility about virtually every customer and the CIS would seem to be the logical place for it to reside—or possibly a linked system.
· Are there going to be disturbances (possibly even riots) in certain parts of a major city if electricity is cut off in those sections during brownouts or blackouts which are likely to become more frequent as utilities (or their customers through skyrocketing electricity prices) run out of money trying to deal with all the problems assailing them at the same time? Can the CIS segment addresses in these danger-prone areas and alert authorities if a curtailment may create backlash?
The things that haven’t been thought through before the carbon-constraint political/regulatory push reduces the overall availability of electricity in the U.S. are legion. How utilities will handle all these issues with their customers is one of these unresolved issues.
Sierra Energy Group is predicting an upsurge in CIS replacements as utilities come to realize many of these new issues they are going to be dealing with in the very near future. That may be good news for vendors, but it’s going to be an expensive nightmare for utilities. And it’s increasingly looking like they may have to undertake it on a “crash” basis, excuse the term.
Right now, it isn’t even certain that they can find a CIS on the market that can handle all these things. The first vendor that can demonstrate the ability to deal with this myriad of issues is going to have a leg up on its competition.
www.sierraenergygroup.net
Great article! You have shown very clearly the need for the separation of the utility grid and the utility enterprise. The utility grid should become the new transportation only utility.
Your question "How utilities will handle all these issues with their customers?" which you say "is one of these unresolved issues," for the enterprise side is the source for the need of EWPC.
Customer care should be handle by a competition that develops business model innovations to offer rational rationing.
Regulators need to disappear as intermediaries between the market and the customers. Regulators are not prepared to make the big risks on CIS replacements.
Thank you for your comment and observations. However, philosophically, I style myself as a pragmatist. From a pragmatic viewpoint, regulators are not going to disappear, nor is their going to be a fundamental restructuring of of the model that has evolved over the last 60 years. The 60-year trend is for more regulation, not less, and the current model has far too many powerful stakeholders to ever be transformed voluntrily. However, when shortages/rationing really begins to bite at the residential level and the public becomes incensed, then perhaps some fundamental changes will take place. However, that will be too late to avoid potentially catastrophic upheavals in our economy and society.
Thanks Warren for you timely response.
Under EWPC regulators don't dissapear. They shrink their price controls job to the transportation utility, and shift from price controls to prudential regulation on the open market. My experience is from a country with a lot of irrational rationing at the circuit level. At the end-customer level, as you have explained, the business model of utilities just doesn't work. What works is service differentiation and innovation.
California is in the process to look once again at this problem. Please take a look at the EWPC article "High Leverage Shake-Up in California" and the comments in the link http://www.energyblogs.com/ewpc/index.cfm/2008/3/1...