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More than flipping a switch: balancing customer demands
By Julia Jones on September 11, 2013
You know the old saying, “You can’t please all the people all the time”? Well, that’s the perpetual reality for a utility.
In this fourth in our Energy Enlightenment series, which seeks to simplify the very complicated energy business, I’m going to explain how public utilities balance competing interests.
First, though, a quick primer on the differences between a public utility, like CPS Energy, and investor-owned utilities like TXU.
Investor-owned utilities answer to shareholders, are driven by profits and are regulated by public utility commissions. Public utilities can be owned by cities, like CPS Energy and Austin Energy; work as co-ops like Guadalupe Valley Electric Cooperative (GVEC); or as state agencies like the Salt River Project (SRP); or, they can be federally backed, like the Tennessee Valley Authority (TVA).
Rather than going to shareholders as profits, revenues from publicly-owned utilities flow back to their owners — in CPS Energy’s case the City of San Antonio, which uses that money to pay for police, fire, street maintenance or other City services.
Areas where investor-owned utilities operate are deregulated, meaning there’s more than one utility from which to choose — so you can always voice your displeasure by switching carriers. But if you’re someone who values clean energy or renewables, you’ll likely have to pay a significant premium, if you can get it at all. It’s all about the profit.
It’s not a coincidence that public utilities like CPS Energy and Austin Energy have invested more in clean renewable energy than their investor owned counterparts. Free from the pressure of delivering quarterly profits to investors, public utilities have the freedom to make long term decisions.
But public utilities still must answer to many different constituents. First and foremost? Customers.
And therein lies a challenge: customers do not think alike. Just like we all have differences of opinion on social and political issues, we have different ideas about what we want our utility to do and be.
The one thing everyone seems to agree on is that we all want to pay as little as possible. No surprise there. There are things in life that just are not “fun” to spend money on. Like a new roof. Or tires. Or an appendectomy. That doesn’t mean they’re not valuable, they’re just not fun.
Electricity is often viewed in that light, pardon the pun. It’s a basic necessity — no sexiness whatsoever — only truly appreciated when we don’t have it.
So, once we accept that everyone wants cheap electricity (me, included, by the way), then it becomes an analysis of relativity: how important is cheap relative to everything else different constituents want?
Some folks just want the cheapest power possible, period. Others want more renewable energy and cleaner air; others think energy efficiency is important, and want the utility to offer rebates to incentivize that. Some want service expanded into an area; others don’t want a substation in theirs, and so on.
Then there’s the community involvement. Many people believe a publicly-owned utility has a responsibility to give back to the community, by investing in education, community service, charitable assistance and economic development.
Others believe the utility should focus on one thing: being a utility. But what exactly does that mean?
Just as different opinions exist among customers and stakeholders outside an organization, people with the same differences of opinion work inside.
That means a great deal of research, analysis and discussion must take place before any strategic decisions are made. CPS Energy has a basic guiding philosophy it uses when analyzing any particular decision: will it increase reliability, safety and affordability?
Ultimately, public utilities like CPS Energy strive to come up with the best solutions for as many perspectives as possible — and that means lots of compromise. No single interest group can have it all, but hopefully everyone can be happy about something.
We have to accept that we can’t make everyone happy all the time and just keep trying to get as close as we can.