by Guerry Waters, Oracle Utilities

A recent poll by analyst firm Sierra Energy Group asked utility executives to name the applications they viewed as the most important systems for the successful implementation of a smart grid.

Responses included outage management, supervisory control and data acquisition (SCADA), automatic meter reading (AMR), advanced metering infrastructure (AMI) and meter data management.

These grid- and meter-related applications are necessary, but where are the customers?

The smart grid is not simply about sensors and meters; it is about increasing the efficiency of electricity use, reducing peaks and minimizing costs.

None is possible without active cooperation from those who use the system.

Unless we place customers at the center of the smart grid, all we have is infrastructure.

But let’s take a second look at the key smart grid applications Sierra Energy Group identified.

Customers may not be as invisible as they initially appear.

One easily could argue that outage management has, in the past decade, become an active link between grids and individual customers that provides an outstanding precursor to the workings of a future smart grid.

The 20th Century Customer, Grid Link

Throughout the 20th century, grid managers regularly responded to the individual needs of the largest commercial and industrial customers.

Because of their size and power profile, individual large customers—crucial to a community’s economy—could request and receive grid extensions, advanced equipment or special distribution considerations.

The key account manager played an important role in bringing utility engineering resources to bear on large customers’ unique problems.

But cooperation was far from one-way. Large customers regularly helped grid engineers solve emerging problems or emergencies by, for instance, changing start-up hours or turning to on-site generation to ease peak usage.

With rare exceptions for the homes of people with life-and-death power needs, however, grid managers could not afford the time to respond to the needs of individual residential customers.

Nor was there much need to. Just keeping the power on was good enough for residential and small business customers. It is not surprising, then, that within the utility, organizational boundaries largely separated grid engineers from the business people handling call centers and residential billing.

The two groups spent most of their professional lives with only superficial knowledge of each other’s activities.

Lack of Communication Equals Lack of Satisfaction

By the mid-1990s, many utilities recognized that the divide between residential customers and grid managers was becoming increasingly dysfunctional.

Complaints about the frequency and duration of outages created serious issues for utilities and their regulators.

An example is Northern Ireland Electricity (NIE), where hurricane-force winds on the day after Christmas 1998 created damage more extensive than the utility had ever seen: 4,000 faults and more than 160,000 customers without electricity. Most customers were back online within 24 hours, but some remained without power until New Year’s Day.

Exacerbating the situation were customer difficulties in contacting NIE. High call volume overwhelmed the contact center, and even when customers got through, call handlers had little information on restoration times.

The Christmas-to-New Year’s power outages resulted in personal hardship and millions of pounds of economic losses to the region.

Just as troubling were customer perceptions that NIE provided inaccurate and inconsistent information.

Public confidence in the utility sank, and a storm of negative publicity erupted.

Outage Management Equals Outage Communication

To solve these problems, NIE put customer concerns at the heart of its implementation of a new outage management system. The utility implemented:

• Customer call analysis. This resulted in better predictions of the location, cause and extent of outages,
• Primary and contingency call-handling systems to handle 7,000 calls per hour,
• Direct call-system access to the outage management system. This enabled outage management to respond to customers immediately with updated and accurate information, including predicted restoration times, and
• Restoration prioritization based on safety, critical customer needs and customer standards.

These and other outage management improvements resulted in a 30 percent drop in customer minutes lost and system payback within five years. Equally important was a strong resurgence in public trust.

Just four years after the 1998 disaster, a government report showed that NIE’s customer service performance was “better than the aggregated performance of electricity companies in Great Britain when compared against each of the eleven Guaranteed Standards.”

Complaints fell 58 percent to 25 in one year. And the annual complaint rate—3.5 per 100,000 tariff customers—beat the average for British companies (84 complaints per 100,000 customers).

Complaints fell further the following year.

“That NIE should only have 17 official complaints recorded against it from a customer base of 720,000 is a credit to all the staff at NIE in its role as Northern Ireland’s public electricity supplier,” said Gerry Donnelly, then head of consumer affairs at the U.K.’s Office of Electricity Regulation (Ofreg). “The excellent approach to customer service over the past number of years has seen complaints decline rapidly, making NIE one of the best customer-facing electricity companies in the United Kingdom.”

Such lessons have not been lost on other utilities. Nova Scotia Power, for instance, has ensured that its outage management system can handle up to 13,000 calls per hour—3 percent of its entire customer base.

Hawaiian Electric’s use of customer communication from its outage management system has halved its number of incoming calls during outages.

Positive stories abound.

New Technologies

Moving communication from inbound callers to all outage-affected customers has evolved as a second wave in better customer and grid interaction.

Between 2004 and 2006, the number of utilities using outbound outage calls more than tripled from 9 to 30 percent, according to research firm Chartwell.

Next, many utilities are moving outage communication to the Web by displaying outage maps. Doing so initially seemed counterintuitive given the suspicion that few people experiencing power outages could access the Internet.

Today, however, an increasing number of mobile phones and similar devices can provide access even when power is out in the immediate vicinity.

Utilities that have taken this step generally report that displaying outage maps reduces call center volume. It also improves relationships with the media by giving all news outlets equal—and equally up-to-date—information they can report.

Broadening outage communication is not without problems, of course. Utilities report grappling with such issues as:

• When should reporting start? A fallen tree that eliminates power at a mountain vacation home scarcely seems worthy of an Internet map. What about 500 residences in Chicago? Or 500 residences in a town of 700?
• How frequently should information be updated? Every hour? That is probably too little. Every minute? Probably too much. Somewhere, there is a happy medium.
• How detailed should maps and related information be? If we give a homeowner at work information about her own residence, how do we deny it to a thief searching for potentially nonworking burglar alarms? What is the right level of information for police? For adult children needing information on aging parents? For the mayor? To what extent should we be influenced by studies like a 2007 J.D. Power and Associates survey of Canadian utility customers that found that, using a 1,000-point scale, overall satisfaction was 55 points higher for customers who received at least four items of information about outages than for customers receiving only one?
• Should utilities include the causes of outages—something customers frequently want to know—or might that lead to unwanted sightseers at sites of accidents or fires?
• Will outage displays and estimated restoration times create legal issues if they prove inaccurate?

Those questions can become more complex as utilities link outage management and customers through messaging systems like e-mail and Short Message Service (SMS). Under what conditions do customers want outage messages? Should messages be individual or general? How frequently should messages be updated?

Leading Toward the Smart Grid

We should applaud executives who have identified outage management as a key application in the move toward the smart grid. Implementing outage management and using it to link small business and residential customers with outage issues paves the way toward increased customer and grid interactions.

• Displaying outage maps on the Internet, for instance, gives utilities significant experience in using public Web sites to communicate information with specific impact on individuals. It is also a forum through which grid managers and customer service staff can work toward mutual understandings about what information is available, in what detail and how often it changes.
• Grappling with privacy and safety issues that stem from outage map display can lead to an initial step toward limited-access and individualized customer Web portals. Advertising portal availability and logging customer response can be an initial indication of what efforts might be needed before customers will use smart grid information displayed on a Web portal for purposes like energy conservation.
• Moving to e-mail and SMS outage notification helps utilities overcome address collection, storage and updating requirements needed for electronic communications that reach their intended destinations.

Utilities’ ability to communicate grid managers’ concerns to customers and vice versa will determine the outcome of smart grid programs.

An updated, robust outage management system built with customers as a central concern is an ideal starting point for linking groups that will be key to smart grid success.

Author

Guerry Waters is vice president of industry strategy with the Oracle Utilities Global Business Unit. He joined the Oracle Utilities Global Business Unit in 2000. His previous positions include vice president of energy information strategy at META Group (now Gartner) and CTO and director of technology strategy and engineering at Southern Co.