Last week, I had the pleasure of attending an invitation-only roundtable discussion with utility CEOs and other executive leaders arranged by the Edison Foundation’s Institute for Electric Efficiency (IEE). This was a group of approximately 20 utility industry CEOs that was co-chaired by Michael Yackira, president and CEO, NV Energy, Inc., and Peter Delaney, chairman and CEO, OGE Energy Corporation.

Representing DNV KEMA, I was able to share some insightful dialogue with these senior executives on three strategic topics, along with about 15 other leading technology and service-based firms. The topics outlined in the agenda included (1) Grid Modernization, as led by Susan Story, president and CEO, Southern Company Services, Inc.; (2) Energy Efficiency & Customer Energy Management, led by Joseph Rigby, chairman, president, and CEO, Pepco Holdings, Inc.; and (3) Demand Response, facilitated by Kevin Burke, chairman, president, & CEO, Consolidated Edison, Inc.

Among a number of interesting points of view, one theme that emerged was the focus on consumer engagement in driving utility strategic decisions for investing in these three topical areas. Without a doubt, each of the utility leaders that spoke in this session brought home the point that success hinges on successful consumer engagement, as well as using more refined methods to segment their consumer base and target their needs more effectively. In fact, one could say that the tenor of the dialogue has transformed from one of utility CEOs serving ratepayers to one of CEOs meeting the needs of their chief executive consumers (and the term “consumers” was widely used in this session, relative to “customers” or “ratepayers,” albeit mostly in the residential sense).

It took me only a few minutes to realize that given these conversations and the likelihood they represent a considerable common voice in the utility industry, utility CEOs may finally be embracing the notion that their business model is undergoing considerable transformation. The regulated utility model is not likely to completely dissipate any time soon, but at least there is a common awareness that utility consumers have choices, seek more real-time feedback on the impact of their energy choices, and will rely on providers like their utility to better inform those choices in the future. However, we may still have a considerable chasm when it comes to meeting all these information needs of today’s energy consumers, for as one industry participant pointed out in this session, today’s energy consumer spends less than an average of six minutes annually focusing on their energy expenses and pursuing the means to reduce them. Again, this conversation was mostly focused on the residential or mass market consumer perspective.

One critical shortcoming that was observed with this group of U.S.-based utility CEOs is that only one of them, Jim Rogers, chairman, president, and CEO, Duke Energy Corporation, made the key point that decisions by the top officers in this room will impact, and be impacted by, utilities in the global marketplace. As Rogers further elaborated, we need to pay attention to the needs of less developed nations, in particular, as they seek to also implement these technologies, particularly with a clean slate, and how they can benefit from our own experiences. Jim Rogers went on further to explain how the traditional electric and gas value chain in the United States will be challenged with the concept of microgrid installations, both overseas as well as domestically, with savvy commercial and industrial customers seeking smart energy investments. In this regard, the larger commercial and institutional consumers will likely emerge as the chief executive consumers, rather than the residential. What is your view?

By: Rob Wilhite, Management & Operations Consulting, DNV KEMA Energy & Sustainability