Customer Service in the Brave New World of Today’s Utilities

A NEW GENERATION OF CUSTOMER

Today’s utility customers are energy dependant, information driven, technologically advanced, willing to change and environmentally friendly. Their grandparents prompted utilities to develop and offer levelized billing, and their parents created the need for online bill presentment and credit card payment. This new generation of customer is about to usher in a brave new world of utility customer service in which the real-time utility will conduct business 24 hours a day, seven days a week, 365 days a year, and Internet-savvy consumers will have all the capabilities of the current customer service representative. They’ll be able to receive pricing signals and control their utility usage via Internet portals, as well as shop among utilities for the best price and switch providers.

Expectations of system reliability are high today. Ten years ago, when the customer called to let you know their power was out, the call took 20 seconds; today, they expect you to already know that their power is out and be able to provide additional information about the nature and duration of that outage. What’s wrong? Are crews on the way? What’s the ETR? Can you text me when it’s back on? The call that includes these questions (and more) takes three times as long as that phone call 10 years ago. Thankfully, utility technology is coming of age just in time to meet the needs of evolving utility customers.

Many utilities already use automated circuit switchers to monitor lines for potential fault conditions and to react in real time to isolate faults and restore power. Automated metering systems send out “last gasp” outage notifications to outage management systems to predict the location of a problem for quicker restoration of service. Two-way communications systems send signals to smart appliances, system monitoring devices and customer messaging orbs to affect customer usage patterns. Fiber-to-the-home (FTTH) and wireless systems communicate meter usage in near real time to enable monitoring for abnormal consumption patterns. If customers have all of this data at their fingertips, what more will they expect from their utility service professionals? Advanced metering infrastructure (AMI) and two-way communications between customer and utility provider are essential to the future of these innovations. Figure 1 indicates the penetration of advanced metering by region.

A TOUCH OF ORWELL

This brave new world is not without risk. Tremendous amounts of data will be acquired and maintained. Monthly usage habits of consumers can provide incredible insight into customers’ lives – imagine the knowledge that real-time data can provide. As marketers begin to understand the powerful communications channels utilities possess, partnerships will emerge to maximize their value. Privacy laws and regulations defining proper use and misuse of data similar to Customer Private Network Information (CPNI) legislation will emerge just as they did in the telecommunications industry. Thus, it would be wise for the utility industry to take steps to limit use prior to legislative mandates being enacted that would create barriers to practical use.

EMERGING BUSINESSES CREATING VALUE FOR CUSTOMERS

Many of the technologies discussed in this paper already exist; the future will simply make their application more common – the interesting part will come in seeing how these products and services are bundled and who will provide them. Over the next 10 years, many new services (and a few new spins on old ones) will be offered to the consumer via this new infrastructure. The array of service offerings will be as broad as the capabilities that are created through the utilities infrastructure design. Utilities offering only one-way communication from the meter will be limited, while utilities with two-way communication riding their own fiber-optic systems will find a vast number of opportunities. Some of these services will fall within the core competency of the utility and be a natural fit in creating new revenue streams; others will require new partnerships to enable their existence. Some will span residential, commercial and industrial market segments, while others will be tailored to the residential customer only.

Energy management and consulting services will flourish during the initial period, especially in areas where time-of-use rates are incorporated in all market segments. Cable, Internet, telephone and security services will consolidate in areas where fiber-to-the-home is part of the infrastructure. Utilities’ ability to provide these services may be greatly effected by their legal and regulatory structures. Where limitations are imposed related to scope and type of services, partnerships will be formed to enable cost-effective service. Figure 2 shows what utilities reported to be the most common AMI system usages in a recent Federal Energy Regulatory Commission (FERC) survey.

As shown in Figure 2, load control, demand response monitoring and notification of price changes are already a part of the system capabilities. As an awareness of energy efficiency develops, a new focus on conservation will give rise to a newfound interest in smart appliances. Their operational characteristics will be more sophisticated than the predecessors of the “cycle and save” era, and they will meet customers’ demand for energy savings and environmental friendliness. This will not be limited to water heaters and heating, venting and air-conditioning (HVAC) units. The new initiatives will encompass refrigerators, freezers, washers, dryers and other second-order appliances, driving conservation derived from time-of-day use to a new level. And these initiatives will not be limited to electricity.

IMPACTS OF TECHNOLOGICAL CHANGE ON OTHER UTILITIES

Very few utility services will be exempt from the impact of changes in the electric industry. Natural gas and water usage, too, will be impacted as the nation focuses its attention on the efficient use of resources. Natural gas time-of-use rates will rise along with interruptible rates for residential consumers. This may take 10 to 15 years to occur, and a declining usage trend will need to be reversed; however, the same infrastructure restraints and concerns that plague the electric industry will be recognized in the natural gas industry as well. Thus, we can expect energy providers to adopt these rates in the future to stay competitive. If the electric systems are able to shift peak usage and levelize loads, the need for natural gas-fired generation will diminish. Natural gas-fired generation plants for system peaking would become unnecessary, and the decrease in demand would assist in stabilizing natural gas pricing.

Water availability issues are no longer limited to the Western United States, with areas such as Atlanta now beginning to experience water shortages as well. As a result, reverse-step rates that encourage water usage are being replaced with fixed and progressive step-rate structures to encourage water conservation. Automated metering can assist in eliminating waste, identifying excessive use during curtailment periods and creating a more efficient water distribution system. As energy time-of-use rates are implemented, water and wastewater treatment plants may find efficiencies in offering time-of-use rates as well in order to shape the usage characteristics of their customers without adding increased facilities. Even if this does not occur, time-of-use shifting of electrical load will have an impact on water usage patterns and effectively change water and wastewater operational characteristics.

In a world of increasing environmental vulnerability, the ability to monitor backflow in water metering will be essential in our efforts to be environmentally safe and monitor domestic threats to the water supply. Although technology’s ability to identify such threats will not prevent their occurrence, it will help utilities evaluate events and respond in order to isolate and diminish possible future threats.

IMPLICATIONS FOR UTILITIES

The above-described technological innovations don’t come without an impact to the service side of utilities. It will be difficult at best for utilities to modify legacy systems to take advantage of the benefits found in new technologies. More robust computer systems implemented in preparation for Y2K will be capable of some modifications; however, new software offerings are being designed today to address the vast opportunities that will soon exist. Processes for data management, storage and retrieval and use will need to be developed. And a new breed of customer service representative will begin to evolve. New technologies, near realtime information available to the consumer, unique customer and appliance configurations, and partnerships and services that go beyond the core competencies of the current workforce will create a short-term gap in trained customer service professionals. Billing departments will expand as rates become more complex. And the increased flexibility of customer information systems will require extensive checks and verifications to ensure accuracy.

Figure 3 (created by Robert Pratt of Pacific Northwest National Laboratory) provides a picture of the new landscape being created by the technologies utilities are implementing and the implications they have for customers.

Utilities with completely integrated systems will be the biggest winners in the future. Network management; geographic information systems; customer information systems; work order systems; supervisory control and data acquisition (SCADA) systems; and financial systems that communicate openly will be positioned to recognize the early wins that will spark the next decade of innovation. Cost-to-serve models continue to resonate as a popular topic among utility providers, and the impact of new technology will assist in making this integral to financial success.

The processes underlying current policies and procedures were designed for the way utilities traditionally operated – which is precisely why today’s utilities must take a systematic approach to re-evaluating their business processes if they’re to take advantage of new technology. They’ll even need to consider the cost of providing a detailed bill and mail delivery. The existence of real-time readings may bring dramatic changes in payment processing. Prepay accounts may eliminate the need to require deposits or assume risk for uncollectible accounts. Daily, weekly and semi-monthly payments may bring added cost (as may allowing customers to choose their due dates in the traditional arrears billing model); thus, utilities must consider the implications of these actions on cash fl ow and risk before implementing them. Advance notice of service interruption due to planned maintenance or construction can be communicated electronically over two-way automated meter reading (AMR) systems to orbs, communication panels, computers or other means. These same capabilities will dramatically change credit and collections efforts over the next 10 years. Electronic notification of past due accounts, shut-off and reconnection can all be done remotely at little cost to the utility.

IMPLICATIONS FOR CONSUMERS

Customers and commercial marketing efforts will be the driving forces for much of the innovation we’ll witness in coming years. No longer are customers simply comparing utilities against each other; today, they’re comparing utility customer service with their best and worst customer experiences regardless of industry. This means that customers are comparing a utility’s website capabilities with Amazon. com and its service response with the Ritz Carlton, Holiday Inn or Marriott they might frequent. Service reliability is measured against FedEx. Customer service expectations are raised with every initiative of competitive enterprise – a fact utilities will have to come to terms with if they’re to succeed.

All customers are not created equal. Technologically advanced customers will find the future exciting, while customers who view their utility as just another service provider will find it complicated and at times overwhelming. Utilities must communicate with customers at all levels to adequately prepare them for a future that’s already arrived.

Microsoft Helps Utilities Use IT to Create Winning Relationships

The utilities industry worldwide is experiencing growing energy demand in a world with shifting fuel availability, increasing costs, a shrinking workforce and mounting global environmental pressures. Rate case filings and government regulations, especially those regarding environmental health and safety, require utilities to streamline reporting and operate safely enterprise-wide. At the same time, increasing competition and costs drive the need for service reliability and better customer service. Each issue causes utilities to depend more and more on information technology (IT).

The Microsoft Utility team works with industry partners to create and deploy industry-specific solutions that help utilities transform challenges into opportunities and empower utilities workers to thrive in today’s market-driven environment. Solutions are based on the world’s most cost-effective, functionally rich, and secure IT platform. The Microsoft platform is interoperable with a wide variety of systems and proven to improve people’s abilities to access information and work with others across boundaries. Together, they help utilities optimize operations in each line of business.

Customer care. Whether a utility needs to modernize a call center, add customer self-service or respond to new business requirements such as green power, Microsoft and its partners provide solutions for turning the customer experience into a powerful competitive advantage with increased cost efficiencies, enhanced customer service and improved financial performance.

Transmission and distribution. Growing energy demand makes it critical to effectively address safe, reliable and efficient power delivery worldwide. To help utilities meet these needs, Microsoft and its partners offer EMS, DMS and SCADA systems; mobile workforce management solutions; project intelligence; geographic information systems; smart metering/grid; and work/asset/document management tools that streamline business processes and offer connectivity across the enterprise and beyond.

Generation. Microsoft and its partners provide utilities with a view across and into their generation operations that enables them to make better decisions to improve cycle times, output and overall effectiveness while reducing the carbon footprint. With advanced software solutions from Microsoft and its partners, utilities can monitor equipment to catch early failure warnings, measure fleets’ economic performance and reduce operational and environment risk.

Energy trading and risk management. Market conditions require utilities to optimize energy supply performance. Microsoft and its partners’ enterprise risk management and trading solutions help utilities feed the relentless energy demands in a resource-constrained world.

Regulatory compliance. Microsoft and its partners offer solutions to address the compliance requirements of the European Union; Federal Energy Regulatory Commission; North American Reliability Council; Sarbanes-Oxley Act of 2000; Environmental, Health and Safety; and other regional jurisdiction regulations and rate case issues. With solutions from Microsoft partners, utilities have a proactive approach to compliance, the most effective way to manage operational risk across the enterprise.

Enterprise. To optimize their businesses, utility executives need real-time visibility across the enterprise. Microsoft and its partners provide integrated e-business solutions that help utilities optimize their interactions with customers, vendors and partners. These enterprise applications address business intelligence and reporting, customer relationship management, collaborative workspaces, human resources and financial management.