The customer reigns supreme for investor-owned electric companies

ORLANDO — The power industry is transitioning to a more customer-centric focus fueled by distributed energy resources (DER) that are being added to the grid, sources said during the Edison Electric Institute’s (EEI) Financial Conference held here earlier this week.

As electric companies spend billions to upgrade their infrastructures to support DER interaction with the grid, their focus on customer needs now shares equal billing alongside a focus on their businesses’ bottom lines.

For example, the investment strategy at the Public Service Electric and Gas Co. (PSE&G) “is aligned with public policy and customer needs,” said Ralph Izzo, chairman, president and CEO of New Jersey’s largest electric and gas delivery and transmission company, which had 2016 assets of $26 billion.

“Customer expectations and public policy objectives drive the need for continued and increasing distribution investments,” along with investments in the core infrastructure system, Izzo told attendees Nov. 7 during a session releasing PSE&G’s latest financials during an EEI conference session.

Giving customers what they want includes ongoing or newly planned PSE&G investments in solar, energy efficiency and automation, among others. Programs such as the company’s Energy Strong and its Gas System Modernization Program aim to build resiliency into its systems, creating better, cost-effective products and services for customers, he said.

And further into the future, Izzo added, PSE&G at some point plans to travel into areas including electric vehicle charging and distributed resources like batteries and fuel cells.

PSE&G’s mission, Izzo said, is to ensure that its customers have reliable and affordable services, so capital investments will be deployed to make sure that happens.

Toward that end, PSE&G has invested approximately $2.1 billion as of Sept. 30 in electric and gas transmission and distribution capital projects “designed to provide more reliable, safe and resilient service to our 2.2 million customers,” he said, and for the year, the utility currently expects to invest $3.1 billion of capital in its infrastructure.

Likewise, transmission and distribution are now all about how the customer views his or her interaction with them, said Nicholas “Nick” Akins, chairman, president and chief executive of American Electric Power (AEP), during his EEI financial presentation the same day.

“We’re at the nascent stage in how we do business this way,” said Akins, who added that AEP’s strategic vision for 2022 includes transforming the customer experience with a focus on innovative technologies along with grid and resources development.

AEP investments in its distribution and transmission systems will “give customers significant benefits as rebuild and enhance aging infrastructure, add advanced, more efficient technologies, and create a more robust and resilient system,” Akins said.

In fact, going forward, he added, AEP’s customers will benefit from its provision of renewable energy. “There’s no question we’re moving toward a clean energy future; our customers and investors expect it,” Akins said.

AEP plans to invest roughly $1.8 billion on solar and wind power between 2018 and 2020 as part of an overall move away from coal-generated electricity. That’s in addition to the 2 GW Wind Catcher site AEP owns in Oklahoma. Since 2005, when AEP’s generation capacity from coal was 70 percent, it has been reduced to 47 percent today.

Overall, AEP intends to spend $18.2 billion in capital from 2018 through 2020, with 72 percent earmarked for its transmission and distribution operations.

“We are solely focused on making the right investments to be the energy company of the future including modern, smarter infrastructure, advanced technologies and cleaner generation,” said Akins, whose utility operates in 11 states.

At the same time, Akins said state regulators may be more favorable to proposals from electric companies that approach proceedings with a customer-centric focus.

“Highlight your relationships with your customers,” he said. “Explain the benefits of a project to consumers” and tell a story about what positive impact a project could have on customers.