Contributed by Brad Langley, Vice President of Marketing, GridX
There is a reason they call them complex rates. Comprehending modern, i.e. complex, rate structures can take up to trillions of calculations. And the resulting rates must then be marketed to customers clearly and in a way that ensures a positive experience.
Then there is the billing of those rates, which can’t be done in the utility’s existing CIS without millions of dollars in system customizations that can take a long time to implement. It’s no easy task. So why does the success of designing, marketing and billing complex rates today rely on antiquated tools and that amazing piece of technology known as… the spreadsheet?
I know. That sounds crazy. But that’s the way many utilities are still implementing the modern rate structures we need to decarbonize. Everything is done in disparate systems across different departments with no real handoff, forcing people to work in silos. It’s done like this because for a long time this was the only way, but that’s not the case anymore.
Like so many other industries, utilities can now adopt a digitized approach that streamlines workflows, allows for increased, seamless communication, reduces errors, and maximizes efficiency. Welcome to the age of the digitized rate.
What is a digitized rate?
Digitizing a rate provides a sole source of rate truth. When a rate is digitized, it means the DNA of the rate is componentized, shareable and reusable. When you create a digitized rate it’s always on, it’s always available, and it’s always shareable.
Think of it like a TikTok video. Someone creates a video. But before they share it, they can save it as a draft to iterate and make it just right. Once shared with the world, other people can view and comment on that video, they can use it to produce their own, and they can share with people for a reaction. It allows for the creation of one thing to be so much more, and it gives space to the people interacting with it to be creative and inventive themselves, all based on that one singular digital video.
When we think of digitized rate, much like that video, it becomes shareable, it becomes malleable, and it’s easier for lots of different people to engage with what’s been created. Anyone can touch the rate and use the rate, without compromising the quality of the product.
For example, when an East Coast utility used GridX to create digitized rates for their Time of Use (TOU) pilot, it allowed them to bring almost 20 different departments together in analyzing, marketing and billing those new rates. That’s a lot more effective than emailing a spreadsheet to multiple different people and having them download it and use their own pivot tables and calculations. As a result, this utility was able to maintain version control and vastly reduce errors.
This approach allowed them to enroll more than 14,000 customers in the program, doubling their original goal. In addition, 90% of customers said they were successful to very successful in shifting load and saved an average of 10% off their bills. The huge success of this pilot is reflective of the power of digitizing rates.
How do you successfully create a digitized rate?
You must know how to design rates, including all the tariffs and regulatory and policy implications. Typically, this knowledge lived with utilities alone, but now there’s a segment of the industry that has evolved into rates experts and partners with utilities to do a lot of the heavy lifting in creating their digitized rate.
Another area partners can help with is to bring the full lifecycle of the rate together on a single platform. When you do this, you can analyze the rate, you can then go and devise your marketing campaign, feed all of that into billing when the time comes, and all points in between.
While building a great rate is priority one, it also needs to deliver a great user experience. It’s the adage; if a tree falls in the woods and no one is there to hear it, does it still make a sound? If you’re offering time varying rates and you’ve spent a ton of time and money developing and implementing them, but you only have 8% of your population on them, you have to ask yourself where you went wrong.
Being able to take something like an incredibly complex set of rates and make them compelling and understandable is something that’s still relatively new. But if done right, the experience can be made very user friendly for the customer and, dare I say, enjoyable.
Why adopt a digitized rate NOW?
Rate structures are only going to get more complex as time goes on. Rates are going to have to be designed for dynamic pricing, EV charging and virtual power plants (VPPs), just to name a few. There is almost nothing in our energy future that can’t be served by a digitized rate, and the ability to have that at the ready will make adjusting to new technologies that much more seamless and scalable.
Being able to get a digitized rate platform in place now and learn how to use it will make the inevitable rate considerations of the future much easier to successfully create and implement. When it comes to rates, we can’t bank on what we have now is good enough. We have to provide customers with products they not just use but love using. Good enough isn’t good enough. It needs to be great. It needs to be damn near perfect.
Existing systems and spreadsheets have many functions and can be incredibly useful for certain applications. Creating complex rates is just not one of them. Utilities and their customers all deserve the benefits that can come from adopting and implementing digitized rates.
