Lessons from the rural smart grid

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By Bob Saint, IEEE, NRECA

Bob Saint, IEEE, NRECA

In many ways, rural electric cooperatives are smart grid trendsetters. Cooperatives are ahead of the curve when it comes to maintaining relationships with their customers. Cooperatives are also technology innovators and these small, rural utilities have helped lead the industry's adoption of AMI, interoperability and cybersecurity solutions. As the industry continues its evolution toward smart grid, utilities can learn and benefit from the experiences of rural electric cooperatives.

Cultivate trust

Electric cooperatives need to cultivate the trust of their customers. The cooperative business structure requires that they have more direct and better relationships with their customers than investor-owned utilities need to have. However, investor-owned utilities are now recognizing that they too must develop stronger customer relationships, particularly if they want to gain market acceptance of smart grid technologies and services. Investor-owned utilities will look to cooperatives for guidance on customer relationships wherever it is applicable and relevant as they begin to build new smart grid programs. 

For an electric cooperative, communication with consumers is a natural process because the cooperative's customers are considered a part of the company. A cooperative's members elect a board of directors every year and the process requires effective communication with the membership. Company employees feel more personally accountable to customers and the company's management is typically more engaged at a local level. The CEO is often involved in the local Chamber of Commerce or the Rotary Club and is accessible to members through these venues. 

Cooperatives also tend to invite their members to participate in key initiatives and decisions. Cooperatives often hold member meetings throughout the year, establish member committees to work on company projects and rely on their members to help make decisions. Research has shown that people who are involved in a decision-making process feel a sense of ownership in the outcome and are more inclined to support it.

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IOUs will look to cooperatives for guidance on customer relationships as they begin to build new smart grid programs.
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There are examples of what happens when customers do not trust their utility provider like the pushback against smart meters. Of course, cooperatives haven't completely avoided resistance to smart meters. But they have enjoyed a better response compared to other segments because of a higher level of customer trust.

Foster innovation and customer service

The decision-making structure and culture within cooperatives can facilitate technology adoption and better customer service. Investor-owned utilities should strive to learn from these business approaches and find ways to incorporate these practices into their own business models.

For example, small companies can move efficiently on new initiatives because they tend to have short chains of command, which can speed up decision making. Small companies know they must aggressively innovate if they want to remain competitive with larger utilities and make the best use of smaller staffs.

Engineers at cooperatives are more likely to look deliberately for ways to improve customer service and member satisfaction. The business environment facilitates this. If an engineer finds a way to better serve the customer with a new technology, the CEO will likely suggest that the engineer propose it at the next board meeting. Projects can move forward without losing momentum. 

These important business characteristics explain how and why rural electric cooperatives and small utilities were able to deploy advanced metering infrastructure and other automation techniques at a faster pace than larger, investor-owned utilities. Of course, investor-owned utilities have begun catching up with cooperatives in these deployments, thanks in large part to federal funding. Smaller organizations have found it easier to justify these smart grid projects because the payback can be easier to establish for a rural AMI system than it might be for more urban utilities.

For example, AMI lowers the cost of meter reading, which is particularly expensive for rural electric cooperatives that serve broad geographic areas. AMI's ability to verify an outage at a particular meter, monitor the system during outages and, in some cases, automatically reconnect customers all contribute to minimizing the need to dispatch personnel across a broad service area to perform these tasks.

The business models in these smaller organizations provide an impetus for early adoption and the business culture tends to offer a friendly environment for technology adoption. These traits have helped cooperatives advance not only AMI technology but interoperability, cybersecurity and distribution generation technologies.