IEEE Power & Energy Magazine - September/October 2016 - 60

Equally important is the impact of aging infrastructure
spending on rates. infrastructure spending for load growth
basically pays for itself through increased energy sales.
replacing aging infrastructure is simply a cost that must
eventually be recovered through higher rates. if the economy
was booming, this would be less of a problem. but regulators
are under intense pressure to keep rate increases to a minimum due to sluggish economic conditions.
there are many risks associated with aging infrastructure, such as increasing maintenance costs, increases in
equipment failures, a potential "tidal wave" of equipment
that all needs to be replaced in a short period of time, and
less-than-full rate recovery as regulators try to lessen or protract rate increases. opportunities also abound. instead of
one-for-one replacement, a coordinated infrastructure rejuvenation plan could transform the system from what was
appropriate in the past to what is appropriate for the future.
by taking advantage of new materials, technologies, and
system designs, addressing equipment that already needs to
be replaced can allow for utility transformation faster that
what otherwise would be possible.

Customer Expectations
customer expectations have been changing and continue to
change. Primarily, these changes in expectations relate
to reliability, resiliency, and engagement. in the past, customers were much more tolerant of supply interruptions.
a momentary interruption of a few minutes was a mere
nuisance, and an interruption of a few hours was a slight
irritation. today, electronics-laden homes are paralyzed by
interruptions. momentary interruptions now cause computers to crash. sustained interruptions now prevent homeoffice employees from working. other than cost, reliability
is typically the most important factor related to utility customer satisfaction.
customers see things a bit differently when a major weather event strikes and generally understand that their power
might go out. however, gone are the days when restoration
efforts could last a week or more without customer complaints.
today, any storm restoration effort that is perceived as too
long will result in the utility being persecuted by the local
press and will likely result in regulatory action of some kind.
customers are expecting utilities to "harden" their system so
that less damage occurs during major events, have a "resilient" system that can be quickly reconfigured to restore as
many customers as quickly as possible, and have a flawless
storm restoration process, including the ability to predict
when each customer will be restored days ahead of time.
in addition to major weather events, customers and other
stakeholders are expecting utilities to effectively manage the
risk of intentional attacks on physical and cyberassets. they
expect the utility of the future to have secure physical perimeters around critical infrastructure, secure cybersystems,
effective security monitoring, and the resilience to recover
quickly from both physical and cyberattacks.
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Finally, customers no longer see themselves as passive consumers of electric power. they want detailed consumption data
to help optimize electricity usage and rate choices that allow
for savings to result from shifts in usage patterns. they want
to own generation that can feed power back to the grid and bid
on demand-side resources into wholesale markets. customers
want the ability to choose the type of generation that they pay
for and potentially pay a premium for "green electrons"; they
don't just want to use electricity and pay the monthly bill.
changing customer expectations presents a host of risks.
will customers be willing to pay for reliability-related
investments to receive higher levels of reliability? will customers be willing to pay for system hardening to have faster
restoration after a major storm that might never occur? will
customers think about leaving the utility entirely?
the last question deserves some more attention. a common utility view is that mass disconnection from the utility
grid is nonsense. customers simply cannot achieve gridlevel reliability without dramatically increasing costs. however, consider the following scenario, where more and more
customers install solar rooftop systems that produce about
as much energy over a month that is used at the customer
site. utility revenue plummets. utilities go to their commissions to align rates in a way that fixed costs can be recovered. customers now pay huge bills for a utility connection
even though they are producing, net, all of their own energy.
as battery costs come down, many of these customers will
choose to install storage systems and disconnect, triggering
a death spiral. this is not a prediction, just one possible scenario that is within the realm of possibilities.
of course, changing customer expectations present an
equally provocative array of opportunities for utilities, that
should be asking, "how can we better provide value to our
customers?" maybe this involves differentiated reliability,
with customers paying more for high reliability and less for
low reliability. maybe utilities can let each community choose
(and pay for) its own approach and extent of system hardening. maybe utilities and regulators can creatively design
tariffs that both provide value to customers and incentivize
utilities to invest in ways that align with customer value,
while keeping the utility in good financial health.

New Technologies
the last 15 years have seen significant changes in the underlying technologies supporting most utilities, some visible to
the consumer and others less so. beginning with the most
visible, generation technologies have obviously been shifting toward renewables, and it would now be unusual to take
a drive through the countryside and not see wind turbines,
either singularly or clustered into farms. while the modern
wind-energy era began slowly as a response to the 1970's oil
crisis, it has recently been transformed by a highly supportive
regulatory and tax environment, substantial improvements
in wind forecasting and prediction, and tremendous materials and technology improvements enabling ever-greater
september/october 2016

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2016