EMI Consulting Announcements
  • Posted 1.10.19 by Emily Rich, Consultant
    Year in Review: 5 Takeaways from 2018

    In my last post, I took a look at the midterm elections and their impact on the energy industry. But the November election results were just one part of a suite of energy industry trends that emerged in 2018. In this article, I review my top five takeaways from 2018.

    Aggressive carbon reduction goals swept the nation

    Across the country—at state, municipality, utility, and corporate levels—decision makers set aggressive carbon reduction goals in 2018. As usual, California led the charge, passing a particularly ambitious policy in September that calls for 100% clean electricity by 2045. DC followed suit in December, with a Renewable Portfolio Standard of 100% by 2032.

    And it’s not just government policies—utilities are also setting their own aggressive targets, independent of state policy. Most notably, in December, Xcel Energy set a goal to provide 100% renewable energy by 2050, showing real leadership and building on its legacy of clean energy investment. All across the country, utilities are setting deep carbon reduction goals—a trend I expect will continue in 2019.

    Companies, too, continued to build brands around sustainability and clean energy. 2018 broke the record for corporate renewable procurement. This continues a clean business trend from recent years—in 2017, the Climate Group announced that companies with combined annual consumption of 150 terawatt-hours had signed onto 100% clean energy by 2020 commitments.

    Customer relationships increased in importance

    The utility business model is becoming increasingly threatened by customer defection from the grid—whether through rooftop solar, third-party energy procurement, or community-choice aggregation (CCA) participation. In California, where CCAs have been most prolific, the California Public Utility Commission expected that, by the end of 2018, customers who moved away from 100% reliance on investor-owned utilities for electricity would make up 25% of retail load. This suggests that utilities can no longer rely on all customers in their service territory to buy all their power from them, putting utility cost recovery at risk.

    As utilities grapple with customer choice in the market, the importance of their relationships with customers only increases. In 2018, we saw the nature of utilities’ customer relationships continue to change. Utilities took a variety of different steps to cement their customer relationships based on their unique circumstances. Some utilities began to adopt a platform model where they serve as a hub for clean energy, some provided customer-centric offerings that go beyond energy to provide additional value to the customer, and some began to build offerings that integrate services across different parts of the utility.

    Coal consumption continued to decline

    In 2018, the Energy Information Administration expected a 4% decline in coal consumption from 2017—setting the record low annual coal consumption since 1979. This decline began in 2007, when coal consumption peaked in the US. Relatedly, the US closed more coal-fired generation capacity in 2018 than in any other year in history, with an expected 15.4 GW shut down in 2018.

    Alternative regulatory models began to emerge

    The utility business model is changing, and we’re starting to see the regulatory environment change, too. In 2018, it became even more clear that the traditional cost-of-service regulatory model, which allows utilities to recover the costs of service plus a return, no longer meets all the needs of utilities. The traditional regulatory model favors infrastructure investment and limits utilities’ abilities to invest in new products and services like clean energy and transportation electrification. As utilities become cleaner, more distributed, and more customer-focused, the traditional model will no longer be able to meet all utility needs.

    As pointed out in Rocky Mountain Institute's Navigating Utility Business Reform, there are many facets of regulatory reform, from performance incentives to changes in treatment of expenditures, to incorporation of new value-add services. Commissions across the country (e.g., Pennsylvania, Vermont, and Hawaii) opened dockets in 2018 that tackle some aspect of alternative utility regulation. This trend will continue into 2019, as states wrestle with how best to regulate utilities in a changing environment. 

    Electrification was central to the deep decarbonization discussion

    As outlined in a great 2018 Regulatory Assistance Project paper, beneficial electrification is good for both customers and utilities—and the planet! It saves customers money in the long run and reduces negative environmental impacts. In 2018, we saw utilities contend with how to implement beneficial electrification in their service territories. The concept of electrification is simple—convert historically-fossil-powered end uses (like cars and hot-water heaters) to electricity, which will only grow cleaner with time. As utilities face stagnant sales forecasts, electrification has the added benefit of increasing sales for utilities, which can decrease the cost burden for customers. 

    Electric transportation has emerged as a clear strategy for success. According to Advanced Energy Economy, $880 million in EV infrastructure programs were approved in 2018, with $1.5 million still pending. This number is up from $58 million in 2017 (over 15 times more investment). As electric vehicle adoption continues to accelerate in the US, utilities that invest in transportation electrification infrastructure will be well-positioned for the transformation. Building electrification, which encompasses space and water heating, is a slightly tougher nut to crack, but we’re seeing utilities consider plans to tackle that sector, too.

  • Posted 11.21.18 by Julie Scrivner, Consultant
    Five Ways to Tackle Utility Engagement in the Electric Vehicle Space

    Held on November 14 at the Georgia Tech campus, the ACEEE 2018 National Convening on Utilities and Electric Vehicles was an opportunity for a variety of stakeholders in the transportation electrification sector (including the Georgia Public Service Commission, Greenlots, ChargePoint, Kansas City Power & Light, Rocky Mountain Institute, Nissan, and Lyft) to come together and discuss the rapidly-evolving electric vehicle (EV) space. During all-day discussions on the opportunities and challenges for different actors, five pressing actions emerged as opportunities for utility engagement. These actions included:

    • Educating customers
    • Modifying rates
    • Optimizing the grid
    • Building infrastructure
    • Creating partnerships

    First, utilities can support EV adoption by educating and engaging customers with simple and easy messaging on EVs to raise awareness across all customer groups. Utilities already have experience in customer outreach through outage updates and energy efficiency program marketing—experience they can leverage to take advantage of the opportunity to market EVs and build a stronger customer relationship that goes beyond a customer’s electricity bill. Transportation electrification can benefit all customers from decreased emissions, decreased maintenance costs, decreased fueling costs, and more. Various organizations at the National Convening discussed best practices for how to market EVs to customers, including:

    1. Butts in Seats – Offer test drives or short-term (at least one week) leases.
    2. Lead by Example – Electrify and brand fleets.
    3. Give EVs a Broad Appeal – Cater EV messaging to customer and politicians’ interests in the area, moving beyond “green” messaging when needed.

    For example, Tim Echols from the Georgia Public Service Commission shared the difference between the state’s positive response to solar, which benefited counties across Georgia, compared to the state’s extremely negative response to EVs, which are perceived to only benefit certain counties and politicians.

    Second, utilities should develop usable, understandable, and predictable rates for public EV chargers. Right now, demand charges make up a significant portion of public charging costs for both charger owners and users. The EV market will have a hard time driving (pun intended) ‘early majority’ adoption if it is more expensive to fuel an EV outside of the home than a gas car. Modifying rates to make the cost of fueling EVs competitive with the cost of gas will enable EV adoption by customers who need to charge publicly (e.g., residents at multifamily properties without home or work charging options, customers who are driving long distances). Utilities in California, New Jersey, and Minnesota have proposed a variety of rates that focus on right-sizing demand charges with charging station utilization, upon which other utilities can build.  Rocky Mountain Institute (RMI) recommends a rate structure that starts the demand charges at zero and then increases the amount as charging station use increases.

    A third action is for utilities to use EVs as a grid asset to balance demand and increase grid utilization. Right now, the majority of EV drivers charge their car at home after work during ‘peak hours’ when the demand for energy from the grid is the highest. Smart EV charging management is a unique opportunity for utilities to balance demand for electricity across the day which can lead to additional revenue, lower the cost of electricity for customers, and mitigate the impact of carbon-intensive plants that go online during peak times of demand. That being said, it is important for utilities to manage charging behavior in a manner that makes sense for their customers, which may or may not include a time-of-use rate (TOU). Kansas City Power and Light (KCP&L) pointed out that TOU pricing only lasted in the cell phone industry for five years. Whatever approach utilities choose to use should always include a focus on education and ease. For example, one stakeholder found that customers responded well to ‘happy hour pricing.’ Most importantly, utilities should implement these smart charging management strategies now, as the ‘early majority’ adopts EVs, to embed behaviors from day one.

    A fourth action is for utilities to update buildings so that they are ‘EV-ready’ and/or own EV charging stations. As of now, there is no business model for profitable private investment in charging stations. Utilities have been making power plant investments that impact the next 50 years, not just the near future, and have the opportunity to do the same with charging infrastructure. Utilities can provide ‘patient capital’ while utilization rates are low and then allow the private market to take over once use of charging stations increases to a profitable rate. Furthermore, now and in the future, utilities can help serve low-income communities by building out and owning infrastructure for communities that cannot afford to purchase and install charging units.

    Finally, utilities should seek to create partnerships with a variety of stakeholders to drive adoption efforts. There is an opportunity to take advantage of the nascent market now, building important partnerships with a commitment to long-term engagement. For example, when KCP&L found through their research that dealers were not selling EVs because they didn’t have customer-facing materials or encouraging commission incentives, the utility created educational materials and gave out EV incentives to dealers. Greenlots partnered with the City of Los Angeles to help the city figure out what infrastructure would be needed for city vehicles like refuse trucks and pursuit vehicles, and they have held discussions about how they might prepare for evacuation via EVs during natural disasters. Lyft partnered with Georgia Power to give an incentive ‘cash boost’ to EV owners to encourage them to join the platform as a driver in an effort to electrify the rideshare network.  

    Stakeholders at the conference all agreed utilities should play a role in EV adoption. Even if a utility isn’t ready or able to take all five actions outlined above, they can make huge strides by taking two steps: (1) educating customers across their service territory about EVs, as all utility customers can benefit from EVs, and (2) modifying demand charges to reflect actual charging impact on grid. As with any new technology, utilities should create space to support and allow this market to grow without defining how the market will look in the future.

  • Posted 10.5.18 by Brett Close, Managing Consultant
    Market Transformation off to a Healthy Start with RPP

    As energy efficiency compliance goals continue to increase and savings opportunities for some technologies are increasingly harder to capture cost-effectively, utilities have begun shifting their focus to longer-term market transformation programs.

    These programs seek to transform how markets operate to increase adoption of efficient practices, rather than changing individual purchase or design decisions. The ENERGY STAR Retail Products Platform (RPP) program, a nationally-coordinated effort between participating utility sponsors and US EPA ENERGY STAR, is one of the most promising market transformation programs being implemented today.
    EMI Consulting is excited to have the opportunity to work with RPP program administrators across the country and to have completed one of the first evaluations of an RPP program with our report for Consolidated Edison’s program. EMI Consulting’s evaluation approach applied a variety of methods, including shelf surveys, model-level sales data, and combining in-depth interviews with the results of national retailer interviews to develop a comprehensive picture of the program’s operation and its effect on the retail market in Con Edison territory. We found that the Con Edison RPP Program, even though relatively new, is already starting to increase sales of some types of efficient products.

    EMI Consulting is undertaking similar efforts for other utility clients, where we provide evaluation, adoption modeling, and regulatory support services. This reflects another example of how EMI Consulting is on the cutting edge of examining market opportunities for its clients.

    The full report for Con Edison, can be found here.

  • Posted 6.6.18 by Emily Rich, Consultant
    Utility of the Present: Observations from the Efficiency Exchange Conference 2018

    I recently attended the Efficiency Exchange conference in Tacoma, WA along with three of my EMI Consulting colleagues. The conference brings together energy professionals across the Northwest to discuss the evolving world of energy efficiency. The phrase “Utility of the Future” has become commonplace in the industry, and this conference was no exception. The theme was woven throughout the sessions at the conference and popped up in the conversations in between. Professionals in the region are grappling with an industry that’s changing rapidly in terms of technology, policy, finance, and customer preference.

     

    Yet, the big takeaway from this conference is that the Utility of the Future is here now. Utilities are already making strides along the path to a new utility future, and each step is reshaping the industry, making the transformation that has been talked about as if it were on the horizon a tangible reality.

     

    At EMI Consulting, we’ve been taking a deep look at the shifts taking place as utilities transform their business models to meet customer needs in this new context. Below, we cover a few of the examples brought up at the conference that indicate an industry in transition. Innovative utilities are taking these steps as they transition—not all at once, and not all to the same degree—but each one is a clear signal to the industry of a new norm developing.

     

    Transitioning to an Energy Platform

     

    As Val Jenson, Senior Vice President of Customer Operations at Commonwealth Edison (ComEd), mentioned in his keynote address that ComEd is embracing the transition by serving as an energy platform. Rather than generate and distribute its own resources, ComEd envisions itself operating as a network that enables customers to connect with each other through a modern grid. In this future, ComEd would measure value by customer touches through its platform rather than through kWh sold to customers. This paradigm shift reflects ComEd’s circumstances as a utility serving a large customer base with no remaining generation assets.  

     

    Rolling out EV Fast Charging in Seattle

     

    Seattle City Light presented on their electric vehicle (EV) strategy, which includes investment in public charging infrastructure. City Light research found vehicle charging investment to provide a net benefit to all customers and to satisfy strong customer demand for charging infrastructure. By implementing this strategy, City Light provides customers additional touchpoints with their utility around the city, creating, as a result, a new value stream for the utility. Seattle City Light is making this transformation equitably, and in a way that works with their unique urban context.

     

    Using Data to Target Program Offerings

     

    Every customer has distinct needs, and data is now allowing utilities to provide offerings that feel more relevant and personalized to the customer. Two representatives from Tacoma Power talked about how they are using data to segment their customers at a more granular level to better target program offerings to the people most likely to use them. For their weatherization program, for example, Tacoma Power used compiled data sources to map customers and geotargeted accounts most likely to be eligible for the program. This is one example of how Tacoma Power is leveraging customer data to replace one-size-fits-all marketing of program offerings with a more personalized scheme.  

     

    Overcoming Barriers to DR-Capable EV Charging

     

    A Flathead Electric spokesperson talked about the obstacles his electric co-op faced in rolling out an EV program in Montana, including figuring out how to deploy public chargers with demand response (DR) capabilities. This deployment has the potential to change the customer relationship by allowing customers to participate in two-way transactions, where the customer plays a part in demand-side management through EV charging. To do this, Flathead put together a cross-functional team that brought a diversity of perspectives from across utility departments—from engineering to demand-side management to customer service. The integrated nature of this team was crucial in creating a viable program offering that enhances the customer experience.  

     

    While none of these examples alone is a silver bullet capable of transforming a utility, each is an important step in a transformation pathway that is happening right now. We are excited to be part of the Northwest’s current transition to the Utility of the Future.

     

  • Posted 4.17.18 by EMI Consulting
    EMI Consulting Names Wil Marquardt Director of Finance & Operations

    Seattle, WA (April 17, 2018) – EMI Consulting is pleased to announce the appointment of Wil Marquardt as Director of Finance and Operations. He will be
    responsible for driving financial strategy, planning, and processes, as well as business operations as an integral part of the company’s growth strategy.

    Prior to joining EMI Consulting, Wil held senior consulting positions at SumBridge, Strong-Bridge, and Two Degrees consulting firms, and he’s worked with companies as varied as Starbucks and T-Mobile. While the common thread in these engagements was primarily finance and operational management, Wil has also applied his skillset to the leadership of customer experience and technology initiatives. He also held tenure as Vice President at Washington Mutual, where he was charged with several business-imperative directives, including operational excellence and long-term forecasting.

    “Wil’s deep and varied background creates the perfect blend of financial acumen and operational experience needed to help grow and sustain our firm,” explained EMI Consulting President Julie Rey. “His experience as a consultant also brings an understanding of the unique pressures of the space, which I believe is vital for this role.”

    Julie added, “Wil is also an approachable and well-respected person, who has a passion for the environment, which aligns well with our desire to cultivate a Utility of Future initiative.”

    In fact, Wil chose the University of Washington for his MBA specifically for their concentration in environmental management. He explained, "I chose my MBA concentration because environmental sustainability is important to me, and I genuinely believed my career would eventually intersect.”

    “EMI Consulting is in a really strong position – there is significant change stirring in the industry, great business opportunities, and this very committed and talented group of people I get to work alongside will help to realize the goals of a sustainable, clean energy future for utilities and their customers,” said Wil. “I am thrilled to use my background and experience to help drive important growth goals and set the company on course for long-term financial success.”