Exelon, based in Chicago, a year ago snapped up the century-old Pepco Holdings, leaving it to Dave Velazquez to be the face of the company to its 2 million customers in the District of Columbia, Maryland, Delaware and New Jersey.
He is focused on power reliability, innovation, new services and improved harvesting of data to run a better ship.
Velazquez, Pepco president and CEO, is responsible for $16.1 billion in assets and an enterprise bringing in $4.8 billion in annual revenues. The Energy Times recently discussed the future of the company with Velazquez in a wide-ranging chat. His comments, edited for style and length, follow.
ENERGY TIMES: Since you’ve taken the helm at Pepco Holdings, how is the utility business model changing?
VELAZQUEZ: We have been part of Exelon for about a year and it’s been a great transition. Our priorities really haven’t changed. The merger with Exelon is going to help us be able to drive some of the results we’ve always wanted to drive, more quickly. But we’ve always been very focused on safety for both our customers and our employees and continuing to improve our reliability and operational excellence. We continue to be very much focused on customers and the communities that we live in and serve.
ENERGY TIMES: Now you’re part of a family of utilities headquartered in Chicago. How free are you to chart your own course versus having Exelon help you fashion a new approach to your business model?
VELAZQUEZ: Pepco Holdings is still controlled locally. The model that Exelon uses for the utility businesses are that each of the utilities is led by a CEO who has the control locally to drive the business. The leverage that Exelon helps bring to us is that if we’re working on a specific problem, I now have colleagues in other large urban areas I can reach out to figure out the best way to approach it.
ENERGY TIMES: How do you view energy efficiency – which is, after all, a threat to utility revenue?
VELAZQUEZ: I actually see it as an opportunity for us. I’ve been in business a long time and one thing I’ve learned is that in a business your primary focus is to serve your customer’s needs and wants, and this business is no different. Our customers are clearly signaling to us that through the use of smart grid and smart meters, we have a unique opportunity for technology advancements and to change the paradigm that utilities have operated under for so long. We need to fully engage our customers and figure out ways to give our customers more information so they can make more informed choices. We’re trying to constructively reach out in all of our jurisdictions to our regulators and other stakeholders to be able to insure that as a utility we’re able to continue to remain healthy and make the investments we need to make.
ENERGY TIMES: Are you rolling out any new services that you are proud of?
VELAZQUEZ: Yes. The smart meters that we’ve rolled out have provided a lot of internal operation improvements that help save our customers money. But they have also allowed us to come up with electric vehicle rates and pilot different types of rates to meet customer needs.The smart grid is enabling solar and distributed energy resources in a way that could not happen before. We’re actively participating with some partners in some microgrid opportunities and we are looking to continue to expand that. We are discussing ways to implement community solar to help bring renewable energy to customers that otherwise may not have access to it. There’s a host of opportunities out there.
ENERGY TIMES: Where do you think the greatest growth might be in the next year or two?
VELAZQUEZ: The growth will come in a couple areas. As we continue to use the information from the smart grid and provide that information to customers, they’ll continue to embrace creative ways to save energy. In our service territories we are seeing a rapid expansion of distributed energy resources, primarily solar. We actually receive over 2,000 applications a month from residential customers to add solar. We’ve revamped our processes in order to allow customers to interconnect and put more information on our website for them. We work with the solar development community. In each of our regions we have created a solar advisory council to help us understand what customers need, what developers need, and how we can better supply those needs.
ENERGY TIMES: How is solar rolling out across your service territory?
VELAZQUEZ: New Jersey has the greatest penetration of solar. The District of Columbia and Maryland are also growing rapidly, and some of that has been driven by state policy, some of it’s been driven by the pricing of the renewable energy credits, but a lot of it’s been driven by customers’ growing concern over the environment. Technology is allowing them to make choices that they can personally make at a very micro level.
ENERGY TIMES: How do you view smart cities and the role of utilities in smart cities?
VELAZQUEZ: The smart city is a broad term that encompasses a lot of different initiatives. Looking across our service territory, except in New Jersey, we have completed the roll out of the smart grid. So if we think about our infrastructure in the cities that we serve, we have a very smart grid to serve the smart city. But for now, what it allows customers to do is have much more information about their energy usage and the control of that usage. It also allows us as a utility to have much more visibility into our grid, which allows us to see when customers are out of service and to respond more quickly when they are outages.
ENERGY TIMES: How can Pepco best minimize outages and respond and bring back service more quickly than you’ve been able to do in the past?
VELAZQUEZ: That is clearly a major area of focus for us. I would make a slight distinction between reliability and resiliency. We have a whole host of programs in place that are addressing both of those issues. Reliability reflects the day to day performance of our system. Resiliency is what happens when hurricanes hit. On the reliability front, a lot of effort is going to strengthen our system and provide ways for the system to heal itself. On the resiliency side, we are providing a hardened infrastructure that is able to withstand the worst events. One major initiative we have underway is a public/private partnership with the District of Columbia city to underground 50 to 60 of our overhead feeders.
ENERGY TIMES: Has Pepco’s reliability and resiliency has improved?
VELAZQUEZ: In 2016, we had the lowest frequency of outages we’ve had across Pepco Holdings in the last 15 years. Our reliability in the District plus some of the Maryland counties, has improved about 40 percent over the last five to six years both in less frequent outages and shorter duration outages, which is a tremendous improvement. However, we recognize that we still need to do better and we’re continuing to work to drive the reliability up for the next four or five years.
ENERGY TIMES: Where would you like to steer Pepco’s corporate culture?
VELAZQUEZ: As we go forward, as new technology comes out, we need to continue to stress innovation and how to drive innovation among all of our employees.