Editor’s Note: This is the second of a series of executive exchanges.
Utilities are dealing with an unprecedented stream of data as they rush to identify new business models. To better understand how executives perceive and deal with such disruptive threats and opportunities, The Energy Times recently convened a discussion with industry executives. We will present their insights, edited for style and length, in coming weeks. The series is sponsored by Oracle.
The comments of Bryce Conrad, Hydro Ottawa president and chief executive, follow.
Energy Times: Your company has said it has 1,500 times the amount of information on each customer that it had prior to installing smart technology. What’s next?
Conrad: We now have smart meters in every household and at every business in Ontario. That gives us unparalleled information about the use of the product by our consumers. We’re still struggling to figure out what to do with all that. It’s like someone turned the tap into a fire hose. If anyone says otherwise, they’re lying. We’re at the cusp of it. We can try to figure out patterns and
behaviors. There’s no end to smart people out there with ideas of how we can make better use of it. Trying to figure out what the business prospect is - we’re all struggling with that. The investment in smart meters is fantastic. It will pay itself off going forward. We’re still struggling as an industry, particularly in Ontario, with what to do with all this data.
Energy Times: How are regulatory policies affecting Ontario Hydro?
Conrad: Our regulators are moving to decouple revenues within the next two years. We’re already starting to see some of the blowback attached to that. It’s confusing for customers.
Energy Times: Hydro Ottawa is government-owned.
Conrad: We’re owned by the city of Ottawa.
Energy Times: What changes are on the horizon?
Conrad: In Ontario, we’re considered large. Ontario has about 9 million people and we have 72 utilities ranging in size from 1.2 million customers down to 3,000. The government has made it very clear that consolidation needs to occur, and they’re incenting it through tax incentives.
Energy Times: So who’s going to pull it together?
Conrad: Hydro One, which is the largest utility in Ontario, is being taken public. They’ll go IPO sometime this year. They’ll have an opportunity to start to be a purchaser and acquirer - a very vigorous one. From an M&A perspective we are very much an acquirer and a purchaser. The investments required in the grid in Ontario are such that you can’t do it on the backs of 72 small utilities. You can do it on the backs of five.
Energy Times: What is unique about your generation mix?
Conrad: Our provincial government decided that they’re going to get off coal all together. We shut down our last coal-fired plant last year. To generate the renewable demand there was a heavy subsidization. Prices were dramatically high. Over the past 10 years those prices have come down now. With the advent of storage we’ll probably see more solar. From the utility side, it’s not posing much of a challenge for us at this time. If 30 percent of our load moved to solar that might start to cause us some issues. But with current rates we don’t see that in the near future.
Energy Times: What major trends are you tracking, and how do Canadian utilities compare to American utilities?
Conrad: In some cases, U.S. utilities are ahead of us. In other areas, we’re maybe a little bit further ahead. We don’t seem to have the same knee-jerk reaction from a regulatory perspective. Our regulatory regime tends to be a bit more predictable. The utility of the future is something that we have to define. What does the customer look like five years from now? Maybe we can finally harness big data and say, ‘This is what our customer’s going to want in five years.’ Grid security will remain a concern. The demographics of our industry are changing fundamentally. The workforce is aging as rapidly as our infrastructure. Replacing that aging workforce is going to be as challenging as replacing the infrastructure.
Read more of this series of articles: