Electric companies make delivering power look easy because the juice is there almost all the times that consumers need it. Electric generation and distribution is a complex business, though, so kudos for the companies that do it. As the industry business model changes, a challenge lies in the simplicity of electric rates for consumers and small organizations. Get from A to B in a straight line. A scan of headlines across the nation doesn’t provide clear trends on rates, or that setting them is without some effort. Take a look at headlines from just the past few weeks:
- Electric rates in Missouri will drop next month.
- DTE proposes rate increases, electric vehicle plan. (Michigan)
- Think shopping for electric rates is confusing? So does the chair of the PUC (Texas)
- Energy Analyst Urges Performance-Based Rates For Wisconsin Electric Utilities.
- Delmarva Power customers get electric rate decrease instead of hikes.
- New state law gives utilities options in charging consumers for energy use. (Oklahoma)
- Agency to consider electric rate cut following judge signoff. (Seattle)
- Electric rates up 8 percent. (Vermont)
- Palo Alto approves electric rate increase.
Making and delivering electricity from multiple sources, to mass energy users and customers who just sip, at any given notice, is not a piece of cake. Smart technical people make it happen, and sharp financial people are in the background. Increasingly, lawmakers, along with traditional utility regulators, have a say.
A challenge for energy companies and regulators that Energy Consumers of the Carolinas sees is: Simplicity, ease of use in the technical system and in the home or small business budget. Understanding how electricity charges are computed should be as effortless as flipping the switch on the wall for consumers.
Certainly, it is easy to write this from an air-conditioned room using the electricity provided by my power provider. Arm-chair electric coach; not the person at the plant, maintaining the lines or at the operations center balancing the grid. Understood. Costs that go into each kilowatt seem as complex as the process to make and deliver the power: Fixed and variable components, usage charges, demand charges, taxes, riders. People, too. There is a lot involved.
As the energy industry runs headlong into a more competitive environment – including competition for distributed, customer-generated energy – a message from a vintage Harvard Business Review story is worth keeping in mind: To Keep Your Customers, Keep It Simple. Among other nuggets the article says that savvy consumers jump ship more easily than ever, brand loyalty vanishes easily.
Ease of use is a competitive advantage. CEO Magazine hits this idea squarely in Simplicity as Strategy, saying that, “Simplification as a strategy doesn’t actually mean doing less. Rather it means clearing away the clutter and reducing the complexity.” That can be a tough sell in the organizational life for companies or bureaucracies. In some organizations, complexity and the accompanying levels of activity is the job.
Complexity is ultimately a self-correcting issue, however. Managing complexity is a liability – time, labor, money, confusion. Failure eventually catches up. CEO Magazine said, “… running races with this kind of inefficiency is not sustainable.” Already knowing this is a gift.
When it comes to complexity and its inherent problems, get from A to B in a direct line. Simply. Electric companies have smart engineers and finance people. State and local watchers have a public obligation to drive common sense, accountability and good service for citizens. Both groups, industry people well-trained on financial formulas and people in layered political processes can turn their talents toward developing and maintaining the simplest possible electric rate structures. And should, too. Strive for efficiency, not process, not show, to benefit electric consumers.
14 Reasons Why Things Are Hard To Use. Interesting ideas on simplicity and ease of use.
Cisco Chief Executive’s New Mantra: Simplify Computer Networks. Recent news item that notes how established companies need to stay current on customer needs; be flexible.
Simplicity as Strategy. Referenced above.
Box opens up about the company’s approach to innovation. High tech success story that notes customer orientation and ease of use.