Electricity:

NorthWestern Energy's Rowe says technology blurring line between consumers, operators

How can electric utility operators advance the adoption of innovative and efficient technologies? During today's OnPoint, Bob Rowe, co-chairman of IEE, an institute of the Edison Foundation, and president and CEO of NorthWestern Energy, discusses technological advancements in the utility sector and the role consumers will play in the future of utility operations.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint, I'm Monica Trauzzi. Joining me today is Bob Rowe, co-chair of IEE, an institute of the Edison Foundation. Bob is also president and CEO of NorthWestern Energy. Bob, thanks for coming on the show.

Bob Rowe: Thank you very much.

Monica Trauzzi: Bob, IEE is broadening its mission to focus on advancing the adoption of innovative and efficient technologies. Why aren't electric utilities fully up to speed at this point about the technologies that are available?

Bob Rowe: Great question, and what all of us are trying to do is understand what the value proposition is for various technologies both on the customer side of the meter and on our side of the meter. This morning when we were visiting at a really lively session, each of us around the table were at different stages in deployment, were using different technologies. I'd like to talk about deployment at the speed of value. So in our service territory, which is relatively rural, the mountains of Montana, the plains of South Dakota, we're focusing on investing in the basic infrastructure, and without doing that, the newer technologies really don't make much sense. So you've got to have poles, lines, substations, underground, overhead, all in good repair, and then at the same time you're deploying new technologies as they make sense in that particular business. A couple of points that I'd like to make are, first of all, as we think about the core infrastructure, which continues to be essential, design it in such a way that it doesn't create a barrier to the new technology, so it is basically forwardly upgradeable. And secondly, make investments about which you will have no regrets going forward. What we're doing at Northwestern is participating in a regional pilot within the Pacific Northwest to understand all of the different technologies, customer side, company side, how they work together, ultimately what makes sense, where the value proposition is on both sides of the meter.

Monica Trauzzi: And you've said that new technology has blurred the distinction between end user and utility operations. What does that mean, explain that.

Bob Rowe: I think the day when anyone, whether a policymaker or a utility, can think of a passive ratepayer as opposed to an active customer is long gone. And even in the traditional energy efficiency programs, that notion of the passive ratepayer really doesn't make sense. You need to have the customer participate in energy management. On our side of the meter I think we need to broaden our thinking about what we do rather than simply being a provider of a commodity delivered over our infrastructure, to being a provider of energy services. Consistent with that, think perhaps more about energy productivity and less about simple energy efficiency. So we continue to have the responsibility to provide the infrastructure to move power to our customers, but also to work with our customers to understand what their particular needs are and the best way for them to meet those needs.

Monica Trauzzi: How is the current regulatory framework shaping the future of electric utilities?

Bob Rowe: It is terribly important both as to basic infrastructure, supply portfolio choices, policies around energy efficiency programs, policies around deployment of new technology and new infrastructure. Utilities are regulated soup to nuts by state public utility commissions, by the Federal Energy Regulatory Commission, as well as obviously by security regulators and others. So effectively, policymakers and regulators create the environment in which we make our investment decisions and ultimately determine whether or not we're able to recover on particular investments, determine really more than anything else whether or not investors of both debt and equity are comfortable in trusting us with their money so that we can invest in serving our customers. We absolutely have to have regulators who are thoughtful and engaged with us and are focused on ultimately serving our customers.

Monica Trauzzi: So does that mean that up until this point they perhaps haven't been? Is there more that you'd like to see from the regulators? Or is there a general understanding of what investors need in order to feel good about the money they're putting forward?

Bob Rowe: I think it really spans the spectrum. I think we have a responsibility on the utility side to talk to policymakers and regulators to make sure that they have every opportunity to understand our business models, understand our financing constraints and needs, understand operationally what's involved in providing service to our customers and the citizens that they also serve. So we have a real responsibility to work with them and to identify as many ways as we can where we can bring our interests and their interests together over the long term.

Monica Trauzzi: When you're talking about some of these unused technologies, you're putting a lot of control in the hands of consumers. Are there risks associated with handing over some control to your consumers?

Bob Rowe: Certainly, and again, different utilities are at different stages of deployment using different technologies, and we don't really know ultimately what the customers will want. So kind of this period of experimentation that we're in right now is really very exciting to simply learn what technologies are more appealing than others to customers. Do customers respond to price signals or ultimately do they find it's terribly inconvenient to have to do your laundry in the middle of the night, for example. Or ultimately are customers more interested in having smart appliances that are almost like on cruise control in management systems around energy use in the home that are almost invisible to a customer? But those are all the kinds of things that we're sorting through right now.

Monica Trauzzi: A lot to learn here for sure.

Bob Rowe: Absolutely.

Monica Trauzzi: Thank you for coming on the show.

Bob Rowe: Thank you very much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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