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Pamela’s Blog:
The Energy Utility - re-imagined, re-invented

“Customer” or “Customer Base”?

May 27, 2012

The last decade of the energy utility industry has brought new, or in some cases renewed, focus to the customer.  It is not uncommon to find someone in the officer or high-level manager ranks at utilities with the “word” customer” in their title.  Customer surveying is frequent and ubiquitous.  Commissions occasionally join in, looking at the customer survey information in making regulatory decisions.  But let’s be precise here. This is not a focus on customers, on the individuals that live or work behind an electricity or natural gas meter.  This is a focus on the “customer base,” that set of electric or gas meter locations the occupancy or ownership of which may freely and frequently trade with no consequence to the utility beyond changing the name on the account.  “Customer” and “customer base” are not the same.

When I think of an energy utility customer, I first and foremost think of a person.  It may be a person in some type of unit of people – a family, an organization, an institution of government – and that unit may be engaged in the activities, using the equipment, that produces measurable and billable energy use.  The person’s presence in a unit complicates the interaction, but does not change its fundamental nature.  So, for now, let’s talk about a person.  This person has activities he or she does, and has beliefs about those activities and the ways in which those activities interact with the rest of the world, from the smallest community level to the largest global level.  The beliefs may include concerns, perceptions of risk or unwanted consequences; they may include wants, perceptions of reward or desired consequences; they may be largely unexpressed and unacknowledged, but none the less powerful.  This person also has budgets: a financial budget and a budget of attention.  The latter, much like beliefs and indeed probably stemming from the operative belief set, is allocated unconsciously or subconsciously to what seems to be important at the time.  In short, this person has activities, beliefs, and budgets, and all combine to a unique and dynamic customer profile.

Customer base, on the other hand, first and foremost means electricity or natural gas load.  Load is the term by which energy utility insiders refer to use of their systems within the area they serve.  Load doesn’t care who is using the energy or for what, let alone what beliefs or budgets they have.  Next, customer base typically refers to a set of interchangeable people, grouped according to the purpose of the structure to which the energy meter is attached: a “residence”, a “commercial” building, an “industrial site.”  Sometimes these groupings (or sub-groupings within them) also carry a dimension of size of energy use, but much reporting concerning the customer base simply uses these three groupings.

The energy utility sector makes numerous and frequently unstated assumptions about the customer base and its primary groupings.  Often we base these assumptions on an ad hoc experience: we are a residential customer so all residential customers think and behave like we do or we know a small retail store owner and he thinks “x” so all commercial customers must think “x.”  Occasionally, we reverse the effect of the ad hoc story: judging that the experience we are aware of is an aberration, we decide that the customer base grouping behaves, believes, and wants the opposite.

Customer base is an inside-out view of the world.  It is what you see from the perspective of the utility, or its regulators, or the stakeholders that commonly participate in the utility’s regulatory proceedings.  From this perspective, a customer/person doesn’t matter, except as a basis from which to argue that the customer base is/is not a certain way.  Customer is an outside-in view of the world.  It is what you see as a person who has activities for which you requires energy, using equipment or appliances in a structure regarding which you may or may not have had a say in the design, construction or acquisition.  You believe certain things; you have concerns and wants; you have budgets of money and attention within which you need to address your concern and wants.

To get to the next frontier in energy use – the space in which humanity applies energy at a pace with nature’s creation of it, through means that create no more waste than nature can render harmless and that strengthen our connection to place and each other  — we will have to cross out of the “customer base” and into the “customer.”  This is no trivial barrier.  It is thick with assumptions and beliefs about the most economic and efficient way to get people (load) energy; with old business models and equally old regulatory models; with legacy physical assets from which we want to get every last possible drop of use because they are so “cheap.”  Moreover, we have to cross this barrier with due care because reliability of energy service is – broadly speaking – very important, even life-sustaining at times.  We need an idea what the new space looks like, we need to send some exploratory voyages, we need to take chances where the consequences of things not going as planned are probably manageable.  But most of all, we need to START.

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