Utility Week

12 | 2ND - 8TH NOVEMBER 2018 | UTILITY WEEK Policy & Regulation Roundtable Beyond Utilities: New and Emerging Business Models, Le Pont de la Tour, London Utilities and beyond Suzanne Heneghan heard what industry leaders think the future may hold. T he traditional world of utilities is evolv- ing in response to rapid transformation driven by digitalisation. Against this backdrop, utility companies are taking land- mark decisions on several fronts by review- ing business models and finding new ways of engaging with consumers. At this critical time for the sector, it is vital that utilities of all kinds retain their identities and remain relevant – especially as some observers question if the term "util- ity" is even fit for purpose any more. These issues were explored at a recent roundtable dinner hosted by Utility Week and IBM. The event, at Le Pont de la Tour restaurant in London, was chaired by Utility Week publishing director Ellen Bennett and saw industry leaders from across the sector gather to discuss the theme: "Beyond Utili- ties: New and Emerging Business Models". Views differed in certain areas, but the consensus was that the old-fashioned idea of utilities has gone. Today's modern utilities are about service provision, although there remain many positive connotations around the word utility, which still endures as repre- senting something special. One energy supplier revealed they no longer thought of themselves as a utility, but a service provider – albeit a provider of a critical service. Meanwhile, a networks speaker said hav- ing physical assets perhaps made the label still feel relevant, although they hesitated to accept it was to do with being a monopoly. "I think whatever you call us, the job for us is to provide the best service we can. That will always be at the bedrock of what we need to deliver." A fellow speaker said one of the things about being a network utility is that it is an "expected service", while consumers may view suppliers differently because they rec- ognise their brands. And a water company delegate said the work of a utility, and what customers look for now, goes way beyond sewerage and drinking water. It includes catchments, agriculture and biodiversity. Another speaker pointed out that even if the word was starting to become old-fash- ioned, there was still "brand value" in it around certainty, familiarity, necessity and comfort. "I think it still resonates with cus- tomers. They understand it." That value now is around service, it was suggested. "Utilities have become 'super services' providers for consumers. There has been a transition in the way they look at you." "The relationship as people connect to the electricity network will become much more interactive," predicted one representa- tive. "We'll be expecting to use the network to trade energy, services and generate rev- enues. At that point maybe the label of utility starts to become a little bit limiting." Degrees of separation Are we moving towards the disaggregation of the value chain then, the group was asked, with someone looking aer the pipes and someone else the customers? One speaker said the telecommunications industry was a good analogy, with phone companies no longer viewed as just fixed phone line installers, but providers of all ser- vices, including data. "I suspect there will be increasing disag- gregation," said one speaker, "between the physical asset and the services the asset ena- bles for the consumer/prosumer." An ongoing issue for traditional monop- oly utilities is that the "one size fits all" model must change – although that's not the way they are currently regulated and struc- tured, said one delegate. A water sector representative reminded the group of the difference between water and power in terms of resource scarcity. "If you take that and the usage issue, then sud- denly in water you've got a different conver- sation with your customers." Others felt this was likely to change, with flexibility in the energy system and potential demand-side response programmes. "This type of scarcity of resource is something that all utilities will struggle with in the future," they believed. "And that will create new technologies that we cannot even imagine at this point." Another question was whether the cus- tomer, competition, or the regulator drives investment. "The customer, 100 per cent," was the general view, although one speaker said that value-added services were nothing if the basics were not perfect. So how are utilities responding, the group was asked? Are current systems fit for digi- tal transformation or are they, as one chief executive of a big six utility recently put it to Utility Week, "building on sand"? The latter was not a view these delegates recognised. "Retailers have invested almost unprecedented levels in getting up to speed," said one. "Do I think we're building on sand – no. From a retailer perspective, there's still a huge amount to gain from creating a really valid digital presence. It's down to invest- ment and capability." The direction of travel is clear, said a fellow delegate. There is no doubt that the threat of competition is starting to build. Reacting quickly to digital demands is key. On this point, one of the group high- lighted that while some businesses were comfortable with internal, innovative, digi- tal projects, data issues remain common. "We've done a lot, but how do we deploy this at an operational scale?" Collaboration was raised as potentially holding some answers. With huge opportu- nities for using data and emerging technolo- gies, the group was asked whether there is scope for working together towards stand- ardisation. Although one delegate ques- tioned if integration might stifle innovation, another said there was a debate to be had. In closing, many agreed with the delegate who said "utilities have still to inhabit multi- ple worlds". It does appear they will still be around for a long time to come.

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