A Look Back 100 Years Could Provide Utility Marketing Strategy

You might have done a double-take when you saw this issue’s cover. PennWell Corp., the owner of PowerGrid International, is celebrating its 100 year anniversary this year, and we our commemorating that anniversary with a cover that reflects the electricity industry 100 years ago.

The electric utility industry, which evolved from the gas and electric carbon-arc commercial and street lighting system, began around 1880 when Thomas Edison’s Pearl Street power station started generating electricity in lower Manhattan. Its main purpose was to provide power for one of Edison’s most famous inventions: the light bulb. That first station provided electricity to 59 customers. But the industry was slow to grow, and in 1910 it was still in its infancy. Electricity was a luxury enjoyed by less than 2 percent of the population. By that time, however, electric products in addition to the light bulb had been created by innovative companies. These products included toasters, washing machines, vacuum cleaners and irons.

While researching to determine what to include on the centennial cover, I found several advertisements from early utilities featuring these new, innovative products aimed at making individuals’ lives easier. It struck me that the marketing techniques used by these utilities 100 years ago are still applicable today. In 1910, few people understood electricity and most were clueless about what it could do for them. The advertisements I discovered clearly illustrate that utilities understood they needed to sell potential customers on the value of the electric products that were being introduced into the market. Even though, in most cases, the companies providing electricity were not the same as the companies providing the products, with the exception of illumination. But, utilities understood that these products were the secret to selling electricity. They were willing to let other companies profit so that they could profit too.

Fast forward 100 years when almost all U.S. homes are electrified, and the value that electricity has brought to our society is no doubt far beyond anything those early entrepreneurs and inventors, including Thomas Edison himself, imagined.

Could we be on the verge of something similar? Could smart grid be the next life-changing technological breakthrough offered by utilities? I’ve heard many industry experts predict that development and adoption of smart grid will result in an explosion in devices and services that will improve our quality of life, conserve our resources and mitigate our impact on the environment. The one part of the formula, however, that could make or break the smart grid’s success is customer acceptance. That’s where a marketing lesson from 1910 could be beneficial.

Utilities must help consumers understand not how smart grid works and how great the technologies are for the utility, but instead how products and services created around the smart grid will make their lives easier. Utility marketing 100 years ago showed how the electric iron allowed the woman of the house to move away from the hot wood stove and enjoy the cool breeze on the porch while she ironed her family’s clothes. Advertisements explained how an electric toaster browned the bread evenly and consistently without constant attention. This marketing convinced consumers to buy the products and, in turn, the electricity needed to operate them.

Utilities should work with today’s entrepreneurs and innovators to develop unique smart grid applications. They should create a marketing campaign around these products that convinces consumers that their lives will be enriched if they purchase these applications. Just like 100 years ago, consumers are interested in what’s available to make their lives easier. And, I suspect that will be the same 100 years from now when PennWell celebrates its bicentennial.

Editor in chief
TERESA HANSEN

TO THE EDITOR

Sent: Wednesday, May 5
Subject: On the May issue article “Toward a Global Smart Grid—The U.S. vs. Europe”

I read the article and while I can’t comment on the overall quality of it, there is one request that is really dear to our heart: The article states the IEC being the European equivalent of ANSI. That is completely false. The EU equivalent is CENELEC. IEC is the global developer of international electrotechnical standards and a sister organization to ISO and ITU. [We’d like] to substitute our name with the one for CENELEC in this article.

As background info, 162 countries participate in the IEC. ANSI hosts the USNC, which is a member of the IEC. NIST and IEC cooperate in the smart grid and NIST has adopted many IEC International Standards in its smart grid road map. The IEC has also just published the wireless Hart standard as an International Standard, taking it from the U.S. level to the global level.

Please do not hesitate if you wish to get insights of one or the other global industry expert on issues you would like to publish. I would gladly put you in contact.

Many thanks in advance and kind regards,

Gabriela Ehrlich
head of communications
International Electrotechnical Commission (IEC)

Sent: Thursday, May 6

Subject: So-called “smart grid” and transmission

It seems to me that most of this talk of smart grids is coming from the likes of unemployed defense manufacturers who can’t even give us a smart fence on the Arizona-Mexico border.

Any grid, with energy flowing in some places and out others, will carry the energy in the most efficient manner—i.e., to minimize I-squared x R losses and, therefore, generation costs if they all reflect equal marginal production costs, which is how we used to dispatch generation, using some fairly primitive analog controls. Why? It’s a combination of Ohm’s and Kirchoff’s laws. Any tampering with the flows—[by] well-intentioned power systems engineers or merely greedy capitalist management trying to maximize the profits of balkanized interconnected utility parts—will absolutely cause the wasting of more energy in the transmission grid, and thus excessive marginal consumption of carbon-based fuels as long as any remain to be burned—with the resulting negative consequences for the environment.

A little tinkering to unload really inefficient plants and load up more efficient ones should help the environment, reduce operating costs, reduce consumer costs, and/or raise profits; but the proper way to do that, it seems to me, is by tinkering with generation levels, not trying to control line flows artificially—just because we can but despite the great capital expenses to do so.

The only other reason I can see for such control is system stability, which should militate against large flows over weak ties unable to sustain inevitable sudden load swings caused by lightning or other uncontrollably induced line outages, overload of lines or generators, rattlesnakes crawling from one bare-copper busbar to another (cf. Trinidad 5 in Texas back in the ’50s). But, as we’ve seen in some recent blackouts, the utilities won’t follow the guidelines to prevent such failures unless somebody with a gun is standing over them.

(The writer is a retired EE with long experience doing computer modeling of systems and economics in the power biz with utilities and consultants, including studying the Great Northeast Blackout before it occurred and doing some early work in building digital system controls.)

Stonewall J. McMurray, III
retired computer applications engineer
Brooklyn, N.Y.

Sent: Sunday, May 2

Subject: good letters from the editor

I am a retired utility worker, and I enjoy reading POWERGRID International, including your editorials. Part of my career was working on SCADA RTUs in the field and later on a large mainframe computer that talked to the field. Things progress rapidly in that field, and, from what I hear, that mainframe computer that I worked on, is now gone. Your articles about the smart grid (March and April issues) were well-written and brought to light some of the players and their interests. I do not think it will be pain-free, as you stated, but it will open the door to lots of opportunities for the consumer. I like the idea of using household appliances at certain times of the day for better rates. Watching utilities selling bulk power to one another and planning outages and storm trouble are always pretty interesting. The idea of the average business or homeowner being able to do some of this is also pretty interesting, and I am looking forward to being able to do some of that.

Smart appliances are coming, and I can picture a washer or dryer negotiating directly with the grid and recommending the best or most economical time, or possibly being able to insert a credit or debit card into the appliance and pay the utility whatever the cost for the energy used, kind of a pay-as-you-go, almost like putting gas into a car. I think smart grid interface standards will be customer-driven by applications such as this. Anyway, even though I am pursing another career, I like your magazine, and keep up the good work.

John Gustafson
retired utility worker
Rockford, Ill.