Hi I am Regina Mayor and welcome to part 1 of our Network Integrator Journey.  We realize the utilities are facing a vast array changes that are going to disrupt how they are going to provide services and how they interface with their customers. There are 4 in particular that I will highlight in the onset.

1. The first external investment.  There are lots of companies both large and small that are investing in creating new products, new services, new technologies that will change the way electricity is generated, distributed and consumed. Large investments from the military and other technological providers are changing the landscape.  Grid scale storage is potentially a real live option now.

2. To keep up with this rapidly technological environment.  The regulators and the regulations are going to have to keep pace. The renewable portfolio standards are have actually played their role in creating 60% additional renewable generation since 2000 that is a positive impact we have seen. The clean power plan which is not yet approved has helped contribute to accelerating some the coal to gas generation we have seen.  The states are dealing with the challenges of difference respects California, Ohio, New York lots of different types regulations in place to meet the needs of the very of the regional requirements that many of the utilities serve with their local and regional customer bases.

We will continue to see rapidly evolutions on the regulatory front some positive and some potential challenges to comply with regulators to meet the needs to the regional requirements that many of these utilities serve but all of that will need to come together with the regulators to provide the right level of services to meet the customer demands.

3. With these disruptive trends and the rapidly changing regulatory environment how will utility business models have adapt in order to compete?  Well that is where the concept of the NI integrator that KPMG is putting forward as a solution that comes into play.  Utilities will have to take this rapidly changing ecosystem and figure out how to manage, generation, distribution and interface with the customer to be successful going forward.

We see changes in the supply change efforts  and see change in the operative, how you manage base load, grid stability and how you let people opt in opt out of the grid which you still make the provision for the electricity economic for all of the customers will be a key consideration.  How you manage the market and the whole sale of electricity prices into the different isos that are around the country and how we price those products to understand the carbon foot print for the generation that is creating that and are those products priced competitively over the long term to make sure the utilities recuperate the investment they are going to have to make and lastly the interface of the customer.  What relationship will the Network Integrator, the utility of the future want to have with their customer? Are they priced competitively that people can make the investments?

Lastly the interface of the customer.  Somewhat relationship they want to have with that customer. Some progressive utilities are talking about getting behind the meter and having more multiple services to come into the home to create a more of a relationship or stickiness with their customers over the long term.

A successful utility will have to change their overall operative model to figure out how it is going to compete as these major challenges arise with generation requirements and the interface with their customers along the array with the regulatory requirements, entry market and the interface with their customers along the way.

What foundational capabilities do we at KPMG suggest our utilities clients as they start to develop.  The first is the ability to innovate. We are seeing many of our client’s develop centers of innovation.  That are resident off campus to their normal activities tied to academic universities. They are building new technologies or experimenting with existing technologies. Many executives I know own electric vehicles or advance Teslas and they understand what these technologies bring to the market is the integration they are bringing to the market is the innovation with people’s smart phones and the technological platform they are more interested in now. Also with the consideration is it environmentally sound? Although that is still an important consideration but how does making my life easier? But how does my car and phone make my life easier.  Better management of innovation, better management of technology trends and partnering with some of the investor making an investment in this space with next generation solar, Grid stability solutions, battery cell storage is building successful foundational capabilities to identify and get ahead of these technological changes.

View all the videos in The Network Integrator Journey series.