EPB Chattanooga: customers at the center of the Smart Grid’s future

With: Harold DePriest, President and CEO, Electric Power Board of Chattanooga (EPB) • Issue: Will we merely survive…or thrive? Anticipating the success essentials for Smart Grid’s future • Category: Customer View

As the Smart Grid revolution plays out over the next 15 to 20 years, customers are likely to be the driving force and chief beneficiaries of new energy-centric applications that will fundamentally change their lifestyles.

“These days we’re used to instant information, to quick response, and to having control over a lot more things in our homes and our lives, but that hasn’t been true for electricity, says Harold DePriest, President and CEO, Electric Power Board of Chattanooga (EPB). “The Smart Grid is changing that reality, bringing electric systems into the 21st Century.”

DePriest should know. EPB has been rolling out a gigabit passive optical fiber-to-the-home (FTTH) network to its entire service area of more than 170,000 customers, with 90,000 smart meters already installed. A model for what much of the world can expect in the years to come, it is the fastest fiber-based Smart Grid in North America that manages electrical usage information in real time, giving customers unprecedented levels of convenience and control. It also offers the community additional advanced communications services such as virtual local area networks for businesses and schools, and “triple play” services that include Internet, phone and television.

“Whether it’s providing advanced services or dealing with outages, we’re going to be able to do it quicker, with customers communicating interactively with the electric system through mobile devices and other platforms,” says DePriest. “It’s going to make us a more relevant and convenient part of people’s lives.”

Anticipating the Future

DePriest believes that enhanced customer communication and convenience made possible by wireless technology, mobile platforms, rich media, interactive apps and well-thought-out interfaces will be essential to ensuring Smart Grid success in the future.

“We see the Smart Grid as integrating utilities like ours much more into the lives of our residential customers and businesses. The communications network overlaid on top of the Smart Grid will provide people with options they haven’t had before,” he says.

“We are working on customer interfaces – web and IPTV – and we’re getting ready to do a 5,000-home pilot where people will be able to see their usage, choose rates and learn to control their use of energy better,” he notes. “With IPTV, you will basically be able to punch a button on your TV remote control and see your usage in dollars and cents on a real-time basis, along with a way to predict what your monthly bill is going to be at the current rate of use.”

Wireless technology will be another great enabler for the Smart Grid’s customers. “Wireless means more instant access, more convenience,” says DePriest, “so customers are going to expect to control consumption, communicate with the utility, view bills and more wirelessly. They’re going to be interacting with appliances in their homes wirelessly, which should reduce energy use. We’re already using Facebook and Twitter, and in a few months we should start turning our smartphone apps loose.”

DePriest also notes that the Smart Grid can become a strategic tool for cities looking to increase their standing and attractiveness in an increasingly competitive world. “Our deployment has had a big impact on community pride, and we’re showcasing Chattanooga as a place for high-tech industries. It is very much a part of how the community sees its future,” he notes.

Creating More Value for Customers

In the next decade Smart Grid technology combined with fast, high-bandwidth fiber will allow the world’s leading utilities to follow EPB’s lead – enhancing energy management and reliability to keep costs down, while diversifying their conventional energy supply business to offer advanced communication services and other innovations to their customers.

This integrated approach will create competitive advantages and create more business value for all stakeholders, as indicated by EPB’s own results:

• More Efficiency: “The amount we pay for our wholesale power from the Tennessee Valley Authority has been $30 million to $40 million each month, but thanks to Smart Grid technology, we’re already seeing savings of $200,000 to $400,000 for that same time period,” DePriest notes. “We probably can take that to the neighborhood of $1 million per month, which means we’ll be able to curb rate increases for our customers.”
• Better Reliability: DePriest notes that Department of Energy and TVA algorithms show that outages caused by storms have recently cost EPB business customers $100 million a year. “With smart technology we’ve already reduced those costly outages by a third, and we think we can get that to over 40 percent,” he says.
• Additional Services: Further leveraging the grid’s fiber infrastructure, EPB’s advanced voice, video, data and interactive communications services are generating new revenue that pays for the FTTH deployment. “In an era of rising energy costs it was clear that we simply couldn’t afford to not build a Smart Grid based on a fiber optic network,” DePriest states. “We needed it for the Smart Grid, but we figured that it also would provide superior services that people would buy in quantity sufficient to pay for the investment. That has proven to be the case.”

Overall, the Electric Power Research Institute has estimated the value to EPB’s customers in the form of reduced outages, energy conservation and other efficiencies at roughly $300 million over 10 years, while several economists at the University of Tennessee at Chattanooga have projected the service area’s total economic and social benefits from the fiber project at $600 million during the same period – results that will help drive the customer-based value proposition for utilities in the years ahead.

Education a Major Challenge

DePriest believes that customer education will be among the foremost challenges facing utilities in the next 10 to 15 years. “We’re headed for a much more complicated rate structure,” he notes. “Making full use of the interactive tools becoming available to us, we’re going to have to teach residential customers how to understand and respond to that. Our business customers are already in that world of time-of-use rates, including several large industries that are able to change their operations to take advantage of that for pretty large savings.”

Ensuring customers’ privacy is another major challenge. “With all of the deep, unprecedented usage data that will be collected, customers will have to feel secure that their privacy is being protected,” DePriest says. He also notes that a lack of understanding can create laws or regulations that amount to hurdles for the system, such as legislation in some states that cast smart meters as privacy threats, allowing people to opt out. “We’re going to have to do a better job as utilities earning the trust of our customers,” he states.

Comfort and Convenience Will Drive Acceptance

“Twenty years ago when everybody started putting PCs on their desks, they knew it was going to lead to big changes, but nobody really understood the depth of the change,” DePriest states. “You need to ‘future proof’ your technology decisions, and that’s why we chose the fiber for our network. Once you put in that super-fast communications, all of the other things begin to come together – allowing all of your smart devices to interact with one another that much easier.”

DePriest sees information technology and new approaches to managing customer relationships as the key to managing energy costs and environmental impacts in the future. “In the end, how this rolls out is going to be like everything else we do – it’s going to be driven by our customers,” he states. “People everywhere typically are looking for more comfort or more convenience in every product they buy. I don’t see that changing. The Smart Grid gives us the ability to interact with our customers in a way that addresses those goals.”

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