Edison believed the “value of an idea lies in the using of it.” At Hydro Ottawa, the initial thought was smart meters were a good idea simply because of promised future cost savings. But just how much value this new technology ultimately would bring to the utility and its customers turned out to be a huge surprise.
Other utilities will likely encounter this same surprise now that the push is on to adopt smart meters around the world. According to a report released by Telefónica Digital and Navigant Research, Europe will reach 85% smart meter penetration by 2020, Asia-Pacific will achieve 68% by 2022, and North America will attain 91% by 2022. The U.S. alone will install more than 132 million devices by then.
Hydro Ottawa’s journey toward discovering the full value of smart meters began 10 years ago, which has given the utility a head start. Along the way, the utility has learned some important lessons and gained key knowledge about new customers. This may help other utilities to better understand the implications of what lies ahead, avoid some of the pain and, more importantly, fully exploit the opportunities the future will certainly bring.
The Electricity Market
Hydro Ottawa is a provincially regulated for-profit utility that serves Ottawa, the capital city of Canada. Ottawa is home to the government and parliament of Canada, about 130 embassies and consulates, 1,900 technology companies and, in total, more than 25,000 employers. Once known as the Silicon Valley of the North, Ottawa still boasts the highest number of residents with a post-secondary education in Canada. There also are more engineers, scientists and PhDs per capita than any other city in the country.
In the province of Ontario, Hydro Ottawa is the third-largest local electricity distribution utility, serving more than 320,000 customers across a service area of 425 sq miles (1,100 sq km). As a distribution utility, it is responsible for delivering electricity and billing for it. In effect, Hydro Ottawa is both a network operator and a retailer.
Why Smart Meters?
In 2004, the government of the province of Ontario introduced a smart meter initiative. The following year, the regulator — the Ontario Energy Board — released its plan for the rollout of smart meters across the province. In addition to setting implementation targets, the plan addressed competitiveness in the new market and the introduction of time-of-use (TOU) rates.
By the end of 2010, Hydro Ottawa had replaced all its old meters with new smart meters from Elster, linked together through a mesh network controlled by Elster’s EnergyAxis management system. That same year, TOU rates were introduced.
These innovations dramatically changed the way the utility did business — from how and how much data was collected about electricity usage, to how service was billed and the electric system was managed, monitored and repaired. Most importantly, this revolutionized the utility’s relationships with its customers, creating new opportunities not anticipated when the first steps down this path were taken.
The meter-to-cash processes were retooled from start to finish. Before smart meters and TOU rates, each customer’s meter was manually read every two months. Then these readings were manually input into the customer information system to produce the bills that were mailed to customers. This is essentially how most utilities have operated for 100 years. Now the process is much more complicated.
Today, smart meters collect 750 readings from each customer every month. This data is sent to one of 1,000 collectors on the mesh network, which then sends hourly consumption and meter reading data to the report database and operational data store. Almost immediately, this data is transmitted to the province’s meter data management and repository system. This centralized system validates the data, determines the billing and produces reports.
The TOU usage and billing reports are then fed into the utility’s customer care and billing system and its web portal. In other words, this current system not only produces and mails (or emails) monthly bills to customers, it provides online data to customers about their individual consumption and accounts the next day.
The web portal is now the most visited area of the utility’s website, and more than 38% of customers have signed up for online access. The portal allows customers to customize dashboards according to their own interests. For example, they can choose to view the following information:
- How their electricity use varies from hour to hour on any particular day
- The cost of their usage over one year according to each of the three TOU periods (off-peak, mid-peak and on-peak)
- How their off-peak, mid-peak and on-peak usage changes on a month-to-month basis.
Customers today want fast, efficient service, whether it is on the phone or online. They want more self-serve options, more information and more tools to make informed decisions. Although smart meters did not create these expectations, they definitely added octane to the mix.
To better understand the evolving needs and wants of customers, Hydro Ottawa conducted survey and focus group research. The research revealed that about 11% of customers will not change and will not accept rate increases. Another 16% of customers have money worries and expect more incentives to save on their electric bills. And 14% of customers simply want the utility to help make their lives easier.
Other customers, however, indicated they were open to building a deeper relationship with the utility. These included the 17% who want more information about saving energy and green options. Another 10% indicated they have all the latest gadgets, so they want real-time information and personalized services.
To meet these growing needs for more information, simplicity and cost savings, automating the experience of customers became a top priority for Hydro Ottawa. A customer service strategy was developed based on this research and ongoing customer feedback. In addition to electronic billing and next-day consumption and billing information, customers are now offered more features:
- Customized alerts for consumption, dollars spent, bill prediction, and payment or collection reminders
- A mobile website
- Credit card payment
- Online payment history and profile management
- The ability to make both move-in and move-out requests online
- Preauthorized payment options.
In addition, an enhanced interactive voice-response service was introduced that automatically links customers to specialized call center agents based on the reason they are calling. It also enables customer satisfaction to be gauged in an instant through six short questions.
Continuing to enhance customers’ experiences is critical for Hydro Ottawa, just as it is for most other electrical utilities. There are significant challenges with rapidly advancing technologies on both sides of the meter, which has added an unprecedented complexity to the way the utility does business. Given the trends, it is absolutely essential to improve customer engagement.
In the Harvard Business Review, Michael E. Porter and James E. Heppelmann wrote that the third wave of game-changing innovation driven by information technology (IT) is now underway. Often called the “Internet of Things,” this wave will embed IT and connectivity in products, “driving dramatic improvements in functionality and performance,” according to Porter and Heppelmann.
Already, it is clear the electricity sector, one of the last bastions of largely protected markets, will be affected by this third wave. For example, huge players with deep pockets like Apple and Google are getting into the home automation business. This could diminish, and even eliminate, the direct relationship between a utility and its customers.
In anticipation of these new challenges, Hydro Ottawa is upgrading its network with more intelligence. More monitoring devices are being installed in the field, fault detectors are being implemented to improve the dispatch of on-call crews, and the crew call process has been automated. Now each crew has an in-vehicle laptop, and its status is monitored by a GPS.
A supervisory control and data acquisition (SCADA) system continuously communicates with the monitoring and control devices installed throughout the distribution network and in substations. SCADA instantaneously alerts control room operators when problems occur with the larger sections of the utility’s power grid.
The outage management system also can predict the exact locations of smaller power interruptions as more and more customers call about outages. Then it looks for and dispatches the nearest repair crew. Simultaneously, it posts messages to a power outage line about the location of current outages, number of customers affected, status of repair crews and estimated time to restore power.
At the same time, this system updates an outage map online when an outage affects 10 or more customers. Customers can quickly see the area of the outage and number of customers affected. They can even zoom in to see the specific streets impacted by an outage.
In the near future, a host of new customer services will be offered, including text-to-speech capability, customized outage alerts and restoration updates, and customized alerts for planned outages. Soon meters will be capable of providing last-gasp alerts for individual homes or businesses in real time.
The implementation of the customer information and billing system enabled the utility to fully integrate its meter-to-cash system.
Results So Far
The utility has had positive results to date. For example, with the improvements to outage communications, the average duration of an outage call dropped by 83%, from 3 minutes to 30 seconds. The number of blocked calls, as a result of a busy signal on the outage communications line, has been reduced to 0.45%.
Overall, Hydro Ottawa has earned positive customer feedback about the easy, fast access to outage information and online outage maps. Customers also have been receptive to many of the utility’s new services:
- 38% are signed up for the online portal, MyHydroLink
- 27% receive electronic bills
- 25% of customer moves are completed either online or automated
- 14% use auto pay, where bill payments are automatically deducted from a bank or credit card account.
Over the past 10 years, call volumes have decreased significantly, even as the number of customers has increased. The number of customer complaints requiring management attention has plummeted from about 2,200 annually to fewer than 100. And customer satisfaction rates have increased from 75% to 90%. Along the way, Hydro Ottawa became the proud winner of several national and international awards for customer service and operational excellence.
Charting New Territory
Hydro Ottawa is proud of what it has accomplished so far, but the journey has not been a smooth one. To paraphrase Edison, it has been more of a case of 1% inspiration and 99% perspiration.
The utility made some mistakes that could have been avoided. For example, at times, customer outreach was too proactive. This heightened customer expectations when, in some cases, the utility was just not ready to solve a particular issue. With more tools, there was a desire to do more. The utility learned it is important to be careful and cautious. Once an innovation is introduced to customers, it is not possible to withdraw it.
Above all, it is critical to put the goal of improving customer experience at the front end of every decision. Customer satisfaction is more fragile now and has the potential to weaken even more, especially in the face of growing competition. Customers are not passive, patient and silent anymore. Rather, they are sophisticated, demanding and vocal in expressing their concerns, especially through social media.
The challenge of managing change in this brave new world, while engaging savvy and connected customers, cannot be underestimated. From Hydro Ottawa’s experience so
far, meeting this challenge has not been about predicting a distant future, but about doing what a utility can right now. The journey continues.
Norm Fraser ([email protected]) has served as a member of the executive management team of Hydro Ottawa since 2000 and was appointed to the Hydro Ottawa Limited board on Dec. 1, 2014. As COO of distribution and customer service, Fraser is responsible for all distribution and customer operations including distribution planning, system operations, distribution design and construction, field operations, billing, metering and customer services. Fraser has more than 36 years of experience in the electricity industry in the areas of power system planning, design and operations.