Every interaction with customers is a communications opportunity. Utilities show what they value—positively and negatively—when they communicate with customers. That includes verbal communications, such as advertisements and newsletters, as well as non-verbal communications like customer programs.

Indeed, the nearby pie chart, based on research conducted by psychologist Albert Mehrabian, shows that more than 90% of the meaning in a conversation is conveyed through non-verbal means. For companies than cannot communicate individually with each of their customers, this means actions, like offering programs, counts for way more than the words is an ad or a press release.

Utility communicators and marketers have a unique challenge: connecting with (mainly residential) customers about a vital service that can’t be seen, touched, tasted, or otherwise experienced—except when the lights go out.

Consumers in restructured markets like Texas have one way—price—to assess the relative value of electric service. Utilities inside and outside restructured markets have offered “green” electricity for years. But for utilities and their regulators, the programs are generally, if not universally, unsatisfying.

Many utilities are using—or planning to use—price as both a carrot and stick in their efforts to change the way their customers use electricity. Lower your usage, or shift usage to off-peak periods, and you could lower your electric bill. Fail to do that and your electric bill will rise.

Positioning electric service as something painful to be minimized puts utilities—and their communicators—in a lose-lose situation. Option A: Do things your way and get hammered. Option B: Do things our way and get hammered somewhat less.

That’s what happens when you position your service on price for a century. But there’s another approach that offers potentially high paybacks and low costs. It involves putting the “public” back in “public service.”

Recently, I spoke at a utility-industry conference session on “Making Energy Real.” Here are five programs that utilities are, or could, use to demystify electric service and build bridges to their residential customers:

•  Free walk-through energy audits
• In-home displays (perhaps loaned on a short-term basis)
• Direct-installation of energy-conservation measures
• Pre-pay metering
• Employee ambassador programs

Utility executives are depending on their communicators and marketers to achieve certain levels of success in various customer-facing programs like time-differentiated rates, energy efficiency, and demand response. Real dollars – often a lot of them – are at stake. Penalties too. And potentially even additional profits.

Having been a utility communicator, and now as an adviser to utility communicators, I know that customer interactions can be awkward or difficult. Utilities are technical, analytic, legal, and precise. They think about the long term. They are anxious about setting precedents.

Typically, customers are none of those things: They don’t know what they want—but they know they want it now. They want the services they consume to be have high value. Sometimes that means low costs. Sometimes it means added features and benefits. Most times, it means convenience and customization.

The five programs listed above are all high-touch, but not necessarily high cost. They focus on non-price ways to make energy real without being punitive. It invites them to learn more about electricity and energy by meeting them where they live—literally and figuratively.

And if they have no desire to learn about how electricity is generated, transmitted, distributed, and consumed, that’s fine too. They have a problem and they want it fixed. They’ll think better of you if you can quickly fix their problem so that both of you can go on your separate ways.

At the utility conference where I spoke, no attendee said their utility was doing all five programs. Some said they were doing one. Many said they were doing none of them.

Failing to develop non-price ways to connect with customers carries significant risks. It keeps utilities in the “lose-lose” proposition, vulnerable to criticism when prices increase and completely exposed to customer wrath when a once-a-century weather event turns out the lights for days at a time.

Is that a risk you want to take?  Reduce that risk by following these utilities communications tips.

If you would like to automatically receive new EEC postings on utility communications issues, we invite you to sign up for free email updates on the EEC homepage.

Many utilities are turning to energy communications consultants to fill the gap between what needs to be done and what can be done with existing staff.

There are many energy communications consultants in the market – how do you select the right one for you? In my experience, these factors play a critical role:

1. Industry expertise: Utilities prefer to work with consultants who are experts in the utility business. If a communications consultant works on potato chips on Tuesday and computer chips on Thursday, why do you think they would have any useful insights about utility issues on Friday?

2. Cultural Fit: Clients and consultants need to interview each other to see if they would enjoy working together. What works for one client might not work for another client. During an interview, both sides should actively probe for “elephants in the room,” i.e., issues that are difficult or awkward. If you don’t surface these issues at the beginning, they will surface on their own down the road – when it is more difficult, time-consuming, and expensive to fix them.

3. Due Diligence: Like any important decision, you will need to invest time in identifying, selecting, and backgrounding a communications consultant. Whether it’s a strategic engagement or a specific deliverable, each side needs to do its due diligence. That requires time, phone calls, and possibly a site visit. Skimp on this and one of you will look back with remorse.

If you’ve made it this far, and you think I could help you, perhaps you’d like to review some of my energy communications work samples.

You may also want to know that for a limited time I am offering prospective clients a complimentary, confidential, energy communications consultation. I have found this is a great way for us to get to know each other better.

Lastly, if you’re not in the market for an energy communications consultant today, but would like to stay in touch, I invite you to sign up for free email updates on the EEC homepage.

Some utilities are having trouble implementing Smart Grid or Smart Meter projects that rely on customers changing the way they use energy. Reaching customers and getting them to consider changing their behavior requires a long-term, integrated, campaign that includes customer communications, media relations, and public relations, among other tools.

There are plenty of ways to do this right–and many ways to miss the boat. As a utility, your legacy precedes you: in many ways, it predetermines whether you will succeed or fail.

Pacific Gas & Electric is one utility that ran into trouble with its Smart Grid communications. Whether those problems have been fully resolved, as PG&E officials claim, only will become clear in time.

But another, higher profile clash has erupted over Xcel Energy’s Smart Grid program in Boulder, Colorado. Matters have deteriorated to the point where the City of Boulder is trying to municipalize Xcel Energy’s electric system in the city, in part because of the way the utility implemented its Smart Grid plan there. Losing Boulder as a customer would mean losing an annual revenue stream of about $100 million.

In talking with people who are participating in Xcel Energy’s “SmartGrid City” project in Boulder, I was struck by how often they said poor communications was the root of their frustration and anger.

When customers and other stakeholders don’t feel they have been communicated with honestly and completely, there can be startling, even fatal, consequences. Here I discuss some instances where utilities suffered after they lost sight of their customers and other stakeholders.

If you want to avoid repeating the communications difficulties associated with Xcel’s Smart Grid program, perhaps I can help. I have found the adage, “an ounce of prevention is worth a pound of cure,” particularly applicable to utility Smart Grid communications.

I offer prospective clients a complimentary, confidential, communications consultation, including an in-depth review of up to 10 pages of your Smart Grid/Smart Meter communications plan. I have found this is a great way for us to get to know each other better. Successful Smart Grid programs require a solid foundation of utility communications.

No, that wasn’t a line from Dennis Hopper in the movie, Speed. In fact, I was asked that question during an interview to become a spokesman at Salt River Project, a Phoenix-based electric and water utility.

I got the job, so I suppose I answered the question satisfactorily. That long-ago interview question surfaced as I read a New York Times about about how poorly some utilities were communicating with customers and elected officials about power restoration efforts in the wake of Hurricane Irene.

A week after Hurricane Irene dissipated, tens of thousands of homes and businesses in Connecticut, New York and New Jersey were still without power.

According to the Times article, New York Governor Andrew Cuomo was “frustrated by the difficulty he encountered in getting some utilities to communicate.” Utility customers also were frustrated by a “lack of solid information about how long their plight would last.”

And what did Jeff Butler, president of Connecticut Light & Power, say when the bright lights of the news media were shining on him?  That the utility’s rates would have to increase to recover the estimated $75 million it was spending on power restoration.

Wow – talk about the wrong message to the wrong audience at precisely the wrong time … that was a real trifecta!

It’s too late for CL&P to benefit from my outage communication recommendations.  But I share them with you in the hope that they can prevent unnecessary pain and suffering the next time severe weather plunges your customers into darkness.

If he were my client, I would recommend Mr. Butler meet with work crews, customers, and elected officials wearing a logoed windbreaker and a hardhat. He would be photographed walking through darkened neighborhoods, meeting with customers, assuring them that crews were working diligently, 24/7, to get their power back on.

I also would recommend he “get his hands dirty” by helping hand out food, water, and supplies at local emergency stations. He’d be filmed meeting with employees and customers at outage sites, touring the damage and looking engaged with all of the utility’s stakeholders.  

When Mr. Butler stepped to the microphones, he would limit his comments to saying that CL&P is working around-the-clock to restore power in a safe manner. He would provide an estimate as to when the lights in a given neighborhood would be back on.

If pressed by reporters, as he would be, Mr. Butler would be counseled to say, “We’re not thinking about the costs of restoring power. That’s tomorrow’s issue. Today’s issue is safely restoring power as quickly as possible, so you can get on with your lives. That’s all we’re focused on.”

After stepping away from the microphones, he would provide emergency service officials with a check from CL&P to help pay for the costs associated with relief efforts. 

Because our 24/7 news cycle never ends, I would counsel Mr. Butler to go back into the field, interacting with customers and employees to continue fighting for control of the story. 

Price increases, both large and small, are or soon will be a reality for many utilities across North America, and someone must break that news to residential customers. This report provides strategic advice on properly communicating price increases. Drawing from interviews with professionals in marketing, media relations, customer communications, advertising, community relations, and customer service, it provides general principles and specific examples of what to do and what not to do from those who have recently gone through the process.

Energy issues currently occupy a more-prominent place in the minds of your customers than they have in years. As a result, the communications plan that worked last time you had a price increase may not cut it this time. The foundation of any new approach must be basic messages that have tested well in market research. Many popular price-increase messages that seem intuitive to industry professionals fall flat when shown to consumers. For instance, customers have almost no interest in how their utility prices compare to the national average or how many years it has been since their utility last raised its prices. However, messages emphasizing improved reliability consistently test well with focus groups of residents.

In addition to effective messaging, utilities must demonstrate that they are doing everything possible to keep bills low and to improve the value of service. Moreover,research has consistently shown that customers are more satisfied when they feel empowered to control energy costs, and they grow even more satisfied when they actually participate in a utility-sponsored program. These facts make it crucial that price-increase communications emphasize collaboration between utilities and customers through effective consumer education and energy-efficiency programs to keep customer utility bills down. As Paul Bony of Delta Montrose Electric Association, a western Colorado co-op, put it, “You can’t win if you hide in the bunker. If people feel you are trying to help them, they’re going to be less angry.”

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As regulators and utility executives confront expensive capital programs and looming carbon-dioxide reduction goals, efficiency and conservation are gaining more prominence as the low-cost, instantly-available alternative to building new power plants or gas distribution lines.

For too long, utilities have been financially penalized if they helped their customers lower their utility bills by using energy more efficiently.  But what is known as “regulatory decoupling” removes institutional disincentives to energy efficiency programs, freeing utilities to achieve meaningful reductions in customer energy use.

Regulatory decoupling will better align financial incentives for utilities, regulators, shareholders, and customers.  That means that utility executives can:

• preserve existing revenue and margins
• create opportunities to increase earnings
•  meet or exceed regulatory expectations on conservation and efficiency
• respond to customer requests for help in lowering their energy use
• maintain and enhance customer satisfaction

Typical utility rates are based on the amount of energy commodities—electricity or natural gas—delivered to customers via the utility’s wires or pipes.  Customers that succeed in lowering their energy usage generally cause utilities to lose revenue and income.  The more successful customers become at using less energy, the greater the toll on the utility’s financials.

Regulatory decoupling has eliminated the financial disincentives associated with utilities helping their customers lower their energy use.  Ralph Cavanagh, co-director of the national energy program at the Natural Resources Defense Council (NRDC), is a longtime champion of regulatory decoupling.  Ralph not only advocates removing longstanding regulatory disincentives to energy efficiency, but also to actually create opportunities to increase earnings if utilities effectively implement cost-effective efficiency programs.

“It’s good not to lose money automatically when you help your customers save energy, but it’s even better from the perspectives of both shareholder and society if management has a financial incentive to succeed,” Cavanagh wrote in the Fall 2009 issue of the MIT journal Innovations.

Regulatory decoupling has been implemented in about 20 states (see map), and several more state utility commissions are currently considering decoupling measures.  About a dozen of those states have included incremental earnings opportunities as part of their decoupling activities.

“A decoupled state regulatory environment that includes an opportunity to create incremental earnings from well-implemented energy efficiency programs, provides a huge benefit to utilities seeking to increase customer participation in efficiency programs,” said Jan Moore, president and chief executive at Direct Options.

“In our experience, when utility executives have clear a target, and are given meaningful rewards for exceeding that target, utilities will work hard to exceed that target, which benefits everyone once decoupling is implemented.”

Headquartered in Cincinnati, Direct Options has worked with utilities for over 20 years to achieve high enrollment levels in customer energy-efficiency programs.  To discuss how Direct Options could boost customer program enrollments, increase customer satisfaction, and support a positive dynamic with your state regulators, contact Harlan Jackson at 513-779-4416 or hjackson@directoptions.com.

Lakers coach Phil Jackson, who has coached teams to 11 NBA championships, was the event’s keynote speaker. He fondly recalled his years as a child in Montana and said the area’s natural beauty was the reason he chose to live there as an adult.  The coach, who recently agreed to return to coach the Lakers in the 2010-11 season, urged the governors to take the steps necessary to preserving the West’s natural beauty: “We call this the last best place on earth, but we don’t know how long it will last.”

Turning from basketball to energy, the governors explored ways to fast-track the siting and construction of interstate transmission lines to bring energy from remote areas to urban centers across the region.  Siting transmission lines and building renewable generation are inextricably linked, the governors said.  “We don’t develop any of the alternative energy sources until we get transmission,” said Montana Gov. Brian Schweitzer (D), who chairs the nonpartisan WGA.  “You can’t put electricity in a bottle and send it down the river.”

His comments were echoed by Washington Governor Chris Grenoire (D): “If we can’t get it anywhere, what good does (windpower) do?”

Because much of the land in the West is owned by federal government agencies and Native American tribes, proposed transmission lines must go through a lengthy public comment process.  New lines are often opposed by environmentalists and some property owners, who are prepared to file suit to block construction of new lines.

Venture capitalist Vinod Khosla, who has made several alternative-energy investments, said, “Environmentalists are pretty good at finding problems, but they are pretty terrible at funding solutions,” according to the Associated Press.

Nine Western states have renewable portfolio standards (RPS), and several states have enacted limits on carbon dioxide emissions or set up renewable energy zones (REZs).  But experts agree that few states will be able to meet their RPS requirements or fulfill the goals of their REZs without major additions and operational changes to the West’s interstate transmission system.

WGA and the Western Electricity Coordinating Council, the organization overseeing the region’s transmission system, have been awarded $26 million in federal grants to plan for new transmission infrastructure to meet the goals of future electricity demand, resource diversity, environmental concerns, and energy efficiency.

To speed the development and approval of renewable energy projects and interstate transmission projects, the WGA released the “Renewable Energy Transmission Roadmap” during the group’s three-day conference.  “One of the most frustrating issues that developers can face is the daunting process of understanding how to facilitate and expedite transmission siting and permitting,” Gov. Schweitzer says in the preface to the roadmap.  “By providing even this basic information, especially to small and medium developers, we can bridge the disconnect between project conception and delivery of critical power to load centers.”

The 13-page roadmap, which will be updated as needed and is available at the WGA website, www.westgov.org, notes that renewable energy “is becoming an increasingly large part of state energy portfolios in the West.  However, the continued expansion of renewable energy is primarily dependent on the availability of transmission.  Development of a renewable energy project in the Western United States is formidable and requires interested parties to navigate a path of complex federal, state and local regulatory approvals and permits.”

Though difficult, the WGA report says that well planned renewable energy and transmission projects “can achieve licensing and permitting on schedule and on budget.”  Building adequate lead time into a project proposal, and conducting and updating fatal-flaw and critical-path analyses, are essential to project success.

The WGA roadmap concludes that “communication, communication, communication” lies at the heart of successful renewable energy and transmission projects in the West.  “Developers should engage in preliminary dialogues with the environmental community early during the project planning process, before the start of any formal study process,” the roadmap says.  “An early public/stakeholder/community/landowner outreach process will also provide the developer with information regarding key issues of concern, which may not be self-evident or obvious, but are nonetheless powerful drivers of the content and timing of environmental permitting and licensing processes.  Early outreach and identification of community concerns may avoid costly delays due to community opposition.”

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR’s quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what’s happening now, while constantly keeping track of future opportunities.

“I operate in a Regional Greenhouse Gas Initiative (RGGI) state, which means I have to buy carbon-dioxide emissions allowances to stay in business,” said a Maryland-based representative of AES Corporation (NYSE:AES) (Arlington, Virginia). “RGGI’s allowance auction sets carbon prices at about $2 per ton. Right now, carbon is my second-largest cost after fuel. We’re already operating in the red because of the RGGI mandate. If carbon costs go much above $2 a ton, I am out of business.”

This statement, and others like it, proved difficult for panelists to answer. One panelist from Schlumberger Limited (NYSE:SLB) (Houston, Texas) said the industry “still hasn’t fundamentally answered the question, ‘Do we really need to do CCS?’ ” The Schlumberger representative made it clear that he and his company believed the answer is “Yes,” but he also recognized that the answer was not nearly as clear for the general public–and a healthy percentage of the electricity business.

Another Electric Power panelist, an executive at Marshall Miller & Associates (Bluefield, Virginia), voiced no doubts about the need for these projects: “CCS is not a question of ‘if,’ but ‘when.’ Coal is here to stay. The industry has a lot to do in a very short amount of time. There is no silver bullet. We’re seeking good legislation and working to avoid bad regulation.”

The Obama administration is seeking mass deployment of CCS by 2020, but recognizes that the industry is on a “steep learning curve to get there,” said Traci Rodosta, an official with the U.S. Department of Energy’s National Energy Technology Laboratory (NETL).

Carbon prices are gradually coming into focus as various pre-commercial CCS projects ramp up, legislation is drafted, and carbon markets continue to operate. Unfortunately, the price signals sent by the different sources are wildly different, which makes economically sound decision-making about CCS especially difficult.

The panelist from Schlumberger noted that one vendor–not his company–has estimated that it could capture carbon-dioxide emissions from coal-fired power plants for about $37 per ton. Adding in another $5 to $10 per ton for transportation costs brings all-in costs to nearly $50 per ton, which is the upper range contained in the recently introduced American Power Act, drafted by Senators John Kerry (D-Mass.) and Joseph Lieberman (I-Conn.).

But utilities operating in the Mid-Atlantic area, which is part of RGGI, buy emissions allowances for $2 per ton. And carbon is trading for between 50 cents and $8 per ton in European markets, according to Steve Carpenter, the panelist from Marshall Miller & Associates. These kinds of prices prompted the audience member from AES to ask, “Why would I build a CCS project at a cost of $50 a ton, if I could buy carbon for $2 a ton?”

Questions like this are becoming more frequent and more difficult to answer, panelists and audience members agreed. One audience member who does public outreach on CCS projects said members of the general public are starting to ask difficult questions about why the U.S. is rapidly traveling down the CCS road when there are unanswered questions about whether CCS will do anything meaningful to slow the global rise in carbon-dioxide emissions.

“These are the kinds of questions being asked by educated members of the general public, like dentists, lawyers, and accountants,” said an audience member who works for a major utility-industry equipment supplier. “You can’t blow them off with platitudes.”

Rodosta, the DoE NETL official, acknowledged that CCS poses significant communications challenges: “The public doesn’t understand CCS. People are anxious about the potential for a catastrophic failure. However, once the technology and the safety issues are explained, people seem to accept that it is safe.”

To amplify Rodosta’s point about the public not understanding CCS, the Schlumberger speaker shared newspaper articles and reader comments about local opposition to CCS projects. An article in an Ohio newspaper carried the headline, “700 Protest Against Carbon Dioxide Plan.” The article quoted a local judge commenting on a proposed CCS project: “Folks, if it was a good thing, it wouldn’t be coming here.” One reader made the statement that carbon dioxide in a super-critical state was akin to mercury, which the Schlumberger speaker said was not even close to being factually accurate. Another reader posted a comment confusing carbon dioxide with carbon monoxide.

To underscore the magnitude of the communications challenges facing CCS projects, speakers shared recently coined acronyms that are variations on the well-known NIMBY (Not in My Backyard) phenomenon. One new CCS-related acronym was NUMBY–Not Under My Backyard. Another was NOPE–Not on Planet Earth. A third was BANANA–Built Absolutely Nothing Anywhere Near Anyone.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR’s quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what’s happening now, while constantly keeping track of future opportunities.

DENVER, COLORADO–March 8, 2010–Written by John Egan for Industrial Info Resources (Sugar Land, Texas)–State and federal renewable electric standards (RES) cannot be met without the construction of new transmission lines to connect often remote renewable generation sources to far-off load centers, speakers told a wind and transmission workshop sponsored by the American Wind Energy Association (AWEA) (Washington, D.C.). Getting these transmission lines built will happen only if there is a broad, sustained effort to engage all stakeholders that are involved with or affected by a transmission project, agreed speakers at the workshop, held in Denver March 2-3.

“Strong stakeholder engagement is the key to turning potential transmission lines into actual transmission lines,” said Bob Anderson, a former Montana utility regulator who is now directing the Western Grid Group. “Broader public acceptance is needed. The public generally accepts renewable sources of electricity. They need to be persuaded that transmission is a necessary part of that.”

Pam Eaton, deputy vice president for public lands for The Wilderness Society, told about 350 attendees at the AWEA event, “You can’t site transmission towers in empty places anymore, because there are no more empty places left–every place has someone who loves it and wants to protect and preserve it.”

Justin Ray, a wind energy consultant with Black & Veatch, told the conference that it takes about 10 years to develop a transmission project once a need is identified. By contrast, developing a wind energy project takes about three to four years. Ray said that a Black & Veatch study predicted an additional 163,000 megawatts of transmission capacity must be built by 2030 to accommodate the proposed federal RES of 20%.

Wind energy generating capacity has increased dramatically in recent years, but an inability to expeditiously site and construct transmission lines is keeping that resource from attaining its full commercial potential, speakers agreed. Across the U.S., close to 300,000 megawatts of proposed wind power projects in seeking to connect with the electric grid, according to AWEA.

“The renewable project pipeline in the U.S. is huge, and it is growing,” said Shane Mullins, Industrial Info’s vice president of product development for the power industry. “The majority of these projects are in remote locations where the best resources are. If we are going to continue to develop renewable energy at the pace we have seen recently and revitalize our economy, we will have to put forward a competitive transmission development system that crosses state lines and is developed system wide.”

Transmission lines are particularly controversial and difficult to site, because most of them cross state boundaries, triggering review by multiple federal, tribal, state and local agencies. A welter of federal and state environmental laws govern transmission-siting decisions, and environmental impact assessments often take years to complete. Parties unhappy with the results of environmental assessments often file suits, which further delay the siting and construction process.

One transmission manager at the conference told Industrial Info that members of the public typically see transmission lines as “an eyesore to be opposed, while public officials see them as a cash cow to be milked.”

The state of Wyoming is home to six separate proposed interstate transmission projects that would bring wind energy to Colorado, New Mexico, Arizona, Nevada, Utah and Idaho. The six proposed projects have a total capacity of more than 16,000 megawatts, Steve Ellenbecker, executive director of the Wyoming Infrastructure Authority told the AWEA event. But it is unlikely all six lines will be built, he said, ticking off a familiar litany of reasons, including environmental siting, landowner resistance, and conflicts among federal agencies with overlapping jurisdictions.

Several speakers at the AWEA event expressed optimism that a federally-funded transmission planning effort, which included funds for stakeholder engagement efforts, could shorten the transmission permitting and siting process. Last year’s American Recovery & Reinvestment Act (ARRA) included $60 million to support long-term transmission planning in the Western Interconnection, Eastern Interconnection and the Electric Reliability Council of Texas (ERCOT). An additional $20 million will support a transmission analysis to be performed by the U.S. Department of Energy and the North American Electric Reliability Council (NERC).

The Wilderness Society’s Eaton said, “The traditional top-down transmission planning process is being informed by bottom-up stakeholder input, which should lead to better outcomes. Engaging in transmission planning is a big step for people in the wildlife and land-use community. We want to get to a low-carbon future. Right now, we’re changing the tires on a car that is already moving.”

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.