Power Lines Blog

The state of public power leadership

nc17-blog4_700x400

When we met at the National Conference in Phoenix last year, I shared some surprising research findings. Only one in five public power customers under the age of 55 know they get their electricity from a public power utility. This shows the need to raise awareness of public power — both in your own communities and at the national level. That’s why we developed a new brand for the Association — so we could be a better face and voice for you in Washington, D.C. and beyond.

Our new brand is less about us and more about you and the work you do every day to power strong communities — although I like to think our Association plays a vital part in helping you do that. One of the ways we help is by bringing you all together. The National Conference is the largest gathering of public power — more than 1,500 attendees are here. Welcome also to those of you who are joining us through Facebook live video.

We’re here to learn from each other and find solutions to common challenges. Over the next three days, we will hear from nationally recognized experts like Nina Easton, Amy Myers Jaffee, Thomas Barnett, and Kirk Lippold. But equally important, we will share successes and lessons learned from fellow public power utilities and others in our industry — knowledge that we can take home and use to improve our utilities.

Welcome to the sunshine state and to Orlando — home to the happiest place on earth and served by one of our own members, the Orlando Utilities Commission. OUC goes by “The Reliable One”— and it has a proud history of community service since 1923. I want to thank Greg Lee, President of OUC’s Board of Commissioners, for his warm welcome this morning. I am always glad when we can meet, and spend our dollars, in a public power community. Many thanks to our Local Arrangements Committee, headed by Amy Zubaly of the Florida Municipal Electric Association. The other committee members are listed in the Conference app. And please join me in thanking our partners — the sponsors, exhibitors, and corporate associate members without whose support we could not bring you this Conference. All our supporters are listed in the Conference app as well.

Finally, I want to extend a special shout-out to all you fathers out there. Thank you for choosing to spend Fathers’ Day with us here in Orlando.

Since we met in Phoenix, a lot has happened. We survived a downright crazy presidential election, the outcome of which was a shock to many — no matter what your political party. We have witnessed the first few months of an unconventional Administration at work.

We are not dealing with the same issues in DC that we would have if the election had gone the other way. But that does not mean we are idle. Far from it.

We are defending the tax-exempt status of municipal bonds as Congress and the Administration consider tax reform. Bonds are the primary tool public power utilities use to finance new infrastructure. Eliminating or undercutting the tax-exempt status of these bonds would increase our borrowing costs. That would be reflected in the electric rates all customers pay, regardless of their income level. In effect, it is a regressive tax. We are working with other public power groups and larger coalitions of bond issuers and their allies, like Municipal Bonds for America, to get our message out to Congress and the Administration. Even if we are spared in the initial proposals, that does not mean we won’t be put on the table later. We have to keep hammering on our core message — you cannot be for infrastructure and against tax-exempt bonds.

We are also advocating for the Power Marketing Administrations and the customers they serve. President Trump’s Fiscal Year 2018 budget request proposes to divest the transmission assets of three PMAs — SWPA, WAPA and BPA. This would threaten their ability to provide reliable, cost-based power to public power utilities and rural electric cooperatives in 34 states. We have urged Congress to reject this misguided proposal.

We are advocating for local decision making on distributed generation. We want to support DG, but need to make sure that all customers who benefit from the distribution grid help maintain it. We are explaining to federal policymakers that DG and rate design issues are state and local matters and should remain so.

We are highlighting your needs and key role in keeping the grid resilient and safe against cyber and physical attacks. We are building strong industry-government partnerships that will help us be better prepared. You should know that the Association has a three-year cooperative agreement funded by the Department of Energy to help us help you improve your cyber and physical security. We are using that money to work with you, conducting table-top exercises, on-site evaluations, and developing tools and technologies to help you. The Trump Administration’s 2018 budget proposes to cut the funding for this agreement, but we are working to keep it.

While we are on the topic of cybersecurity, I want to give a shout out to Burlington Electric Department in Vermont. Last December, it detected suspicious internet traffic on an isolated laptop. It promptly reported its discovery to the federal government in the spirit of the industry-government cyber partnership. That information was leaked and then misreported in the media as a hacking of the grid. Burlington worked tirelessly to correct these false reports. They did not rest until media and policymakers got the story right. And when it was over, Burlington said it would continue to cooperate with the federal government because it is the right thing to do. All I can say is, Burlington one, Washington Post zero.

Finally, we are keeping up the drumbeat against the restrictions that Regional Transmission Organizations with mandatory capacity markets have imposed on public power utilities — restrictions that undermine your ability to supply or buy your own capacity resources.

Of course, we cannot do this alone. Many of you have been working with us — visiting and writing to your elected representatives, stirring up action on social media, and educating your communities and decision makers on key issues. We need all of you at the barricades. Your voice matters.

As Senator Everett Dirksen, a true lion of the Senate, once said, “When I feel the heat, I see the light.” Good leaders turn up the heat so our lawmakers will see the light. We may not have the legions of lobbyists and funds that big corporations and industries do to throw at key policy issues. However, we in public power have something that others do not. At a forum this spring, I heard four Congressional staffers talk about tax reform. They said that everything, including tax-exempt bonds, might be at risk in a tax reform package. One of them added, “But I don’t want a hundred mayors in my office.” I took note of that. That is what we do have: the ability to bring mayors, city council members, and utility managers to the offices of our elected officials, to turn up the heat and help them see the light.

Of course, no discussion of the current hot issues in Washington that affect public power utilities can leave out environmental issues. There has been an 180 degree turn on environmental policy between the Obama and Trump administrations. We at the Association have continued to try to hew the middle path, supporting common-sense environmental regulatory reform in Congress and at the EPA. We have been explaining to policymakers that public power utilities across the country have reduced their air emissions, including greenhouse gases. And we will continue to be environmentally responsible and work to develop sustainable resource portfolios, because doing so benefits the communities we live in and serve. I was even quoted in April on the NPR show Here and Now, explaining that public power utilities have to look at longer term trends, not specific policy pronouncements, when we develop our resource portfolios.

There is one example of this right here in Orlando. OUC recently installed a unique floating solar array on a large pond next to its operations center. The facility floats on the water and sends electricity directly into the grid. The reflection of the water increases the capacity of the 100 solar panels. OUC hopes to inspire developers to add solar to properties with ponds and small lakes. Such floating arrays are common in Europe and Asia but rare in the U.S. OUC is also installing a 12-MW community solar farm on the top of a closed coal ash landfill — a great way to reuse that property. The facility will open this fall.

One predictable outcome of the change in course on environmental policy in Washington will be increased activity at the state and local level. Some states and large city mayors are vowing to lead on the issue of climate change, to address the vacuum they perceive at the federal level. Even individual retail customers are taking notice. We will continue to advocate for common-sense environmental regulation in Washington, but you should be prepared for more activity on these issues at the state and local level.

The political world continues to turn, and as long as it does, we will work to make sure your interests are represented when the sausage is being made. But at the same time, even more important things are happening outside the Beltway.

Our economy, indeed, our entire society, is experiencing rapid technological change. This is giving people, including our retail customers, many more choices. How can public power utilities keep up, much less be strong leaders, in such an environment? We need to recalibrate our thinking, especially when it comes to the relationships we as public power utilities have with our retail customers — who after all, we exist to serve.

As we consider the new relationships we need to forge with our retail customers, parenthood can be instructive. Being here in Orlando, ground zero for family vacations, and right after Father’s Day — I have been thinking a lot about parenting. My husband and I raised our daughter and his two daughters. I don’t know about you, but raising children has made me a better manager and leader.

When I had my daughter, who is now 28, she came without an instruction manual. I was totally at sea. So I did what my mother had done before me. I bought a copy of Dr. Benjamin Spock’s “Baby and Child Care,” the parenting manual that the Baby Boomer generation was raised on. I moved through each day in a sleep-deprived haze, barely able to think straight. Dr. Spock told me, “Your baby could care less if it’s night or day, so long as he’s fed, cuddled, and kept warm and dry.”

The utility analogy to keeping the baby fed, warm, and dry is providing basic electric service. Over my years in public power, I have heard more times than I can count that our job is “to keep the lights on and the beer cold.” The polite way to say that is — our job is to provide reliable and affordable electric service. While this level of service might have been enough in the past, it no longer will be. We cannot go on with business as usual while the world around us is turning upside down. We are witnessing the birth and evolution of new technologies, new competitors, and new ways of living. Consider just a few examples:

Advances in battery storage — both at the utility and customer scale — are making it feasible to store electricity, expand renewable portfolios, and better align supply and demand. Are we ready to incorporate storage into our utility operations? Some public power utilities are already doing this.

Sterling Municipal Light commissioned an award-winning two-megawatt battery storage system — the first of its kind in Massachusetts. The project went from groundbreaking to commissioning in just three months. Sterling is using the system to shave peak demand charges.

The Imperial Irrigation District in California recently demonstrated the emergency black start capability of its new battery energy storage system. The system supplied the electricity needed to start a 44-MW combined-cycle natural gas turbine. Then it stabilized the power plant by converting to load. That is a big deal in the utility world.

Electricity demand for traditional uses is flattening, if not declining. People use more efficient lights and appliances, build more energy efficient houses, generate some of their own power, and shave their daily peaks with the help of new technologies. Are we ready for flat and even decreasing demand for our product? Have you considered new rate designs to meet the financial challenges that come with increased levels of distributed generation?

Sacramento Municipal Utility District has installed smart meters throughout its service territory. It uses the data from those meters to study — and predict — load and usage patterns. SMUD will use the meters to implement utility-wide time-of-use rates in 2019. Time-of-use rates can better align rates to utility costs to serve customers at different times of the day.

Several public power utilities have also begun to address the shortcomings of net energy metering by implementing two-metered rates for customer-owned DG. This approach distinguishes between power supplied by the utility and power supplied by the customer’s own DG. The approach helps reduce the subsidy between customer classes that classic net metering can cause.

On the other hand, some are predicting increased electrification in sectors such as transport and heating. The price of electric cars is falling, and more fast charging stations are being installed. The Brattle Group predicts that a steady conversion of vehicles and heating to electricity could possibly lead to a one hundred and five percent increase in electricity demand by 2050. If these new loads start to appear, are we ready to support them?

Seattle City Light is working to do that. It is developing a pilot program to install fast charging stations throughout the city. These stations can charge an electric car in thirty minutes. The utility is also working with retail customers to offer affordable monthly pricing for at-home charging.

And my personal favorite electric vehicle story: Missouri River Energy Services, a joint action agency in the Upper Midwest, is working with its distribution utilities to electrify Zamboni machines used at local hockey arenas to maintain the ice. Talk about meeting a specific regional need!

Tesla, Mercedes-Benz, Apple, Google, Facebook, Walmart and other large corporations want green and sustainable energy supplies. Recently, Disney CEO Bob Iger said “Protecting our planet and driving economic growth are critical to our future, and they aren’t mutually exclusive.” More and more industrial and commercial customers are following the lead of these large companies, talking about aggregating their demand to purchase renewables. If we as public power utilities do not help our customers meet these goals, they can do it themselves.

I urge you to come to the Tuesday afternoon general session to hear more about what such retail customers want and how public power utilities are responding. The Omaha Public Power District’s CEO, Tim Burke, will talk about how OPPD developed an innovative rate design option and committed to increasing renewables to help bring a new Facebook data center to its service territory.

All this is to say that many of our retail customers are no longer going to be content with being kept fed, warm, and dry. Over time, more and more of them are going to want to use technology that monitors and controls their electric usage. They’ll want to tell Siri or Alexa to pay their electric bill. They’ll invest in their own on-site power and storage facilities so they never experience an outage. To keep up, we as utilities are going to have to up our game. And to do this, we will need new business partners and new skills.

Again, I think back to the lessons of parenthood. My husband and I did not raise our kids by ourselves — far from it. We had caregivers, teachers, baby sitters, camp counselors, fellow parents — a whole network of help from the right people at the right time. We in public power are going to need help from others, from both inside and outside our ranks, to develop the skills and services we need to meet our customers’ rising expectations.

This is no easy task. Our workforce is changing. We are already putting millennials in new positions to keep abreast of changing customer behaviors and expectations. Ten years ago, how many of you had employees whose job it was to keep up with social media and respond instantly when you had outages? Now, if you don’t do this, you can expect your utility’s reputation to suffer. When I went to the Iowa Association of Municipal Utilities annual meeting last December, I sat in on a session on social media. I heard utility managers talk about how outages in their community were a hot topic on Facebook and Twitter. They realized they must quickly engage with their customers to avoid a hit to their reputations.

I am happy to report that an increasing number of public power utilities are learning how to make social media work for them. The Oklahoma Municipal Power Authority was taken by surprise last year when a last-minute bill was introduced in the state legislature. It would have required OMPA and other non-appropriated state agencies to contribute one percent of their revenue to offset state budget shortfalls. OMPA rallied the troops by using Nextdoor, an app that helps neighbors connect with each other. The agency encouraged people to call and tell their legislators that the levy would be an unfair tax on their electric bills. Legislators came around when constituents started to blow up their phones. OMPA applied the social media heat and in the end, the legislature saw the light.

In addition to hiring new employees with new skills, we are going to have to partner with others to provide the services retail customers want. Increasingly, joint action agencies and state associations are helping utility members provide new retail services. They are offering their members energy efficiency, distributed generation, and turnkey AMI and billing solutions. Public power utilities are also leveraging outside vendors to develop services they cannot put together in-house. Picking such vendors requires careful scrutiny and contracting, but these partnerships can add valuable expertise. Just go over to the Expo, and many of them will be waiting to meet you.

And don’t forget our Association as a partner you can work with to improve service to your retail customers. There are many ways we can assist. We host conferences and summits like this one, where you can network with your peers, learn about new trends and technologies, and take home new ideas to try. We offer training, around the country, online, and even in your own offices. We publish the Safety Manual. We recognize the best of you in reliability and safety and help you benchmark your performance in those areas against your peers. We help your lineworkers hone their skills. We coordinate mutual aid in times of need. We bring you DG and rate design toolkits and case studies to help you prepare your utility for the future. We host cyber and physical security tabletop exercises to help you assess and address your vulnerabilities. We give you communications tools and resources to promote public power in your community. We support your research and development projects and fund internships at your utility. Take full advantage of all these services to leverage your membership dollars.

As public power utilities roll out new service options to retail customers, we must remember that our job is not to tell our customers what to do. After all, they own us, not the other way around. And they are not all alike. Some will want new services while others will struggle simply to pay their bills. So we have to be prepared to provide options and to explain the pros and cons of each option. Our goal should be to become our customers’ trusted energy advisors.

But we also have to be prepared for blow back. Increasingly we are seeing retail customers who want to cut the cord with their utility — or think they want to. Our role as their utility service provider is to help them explore their options, but to continue to educate, engage, and explain to them the full consequences of their actions. Because most retail customers are not ready to go completely off the grid. And a distribution grid is truly a “commons” — a shared public good which must be maintained for the benefit of all in the community. Without the grid, everyone will suffer. Everyone who depends on it must contribute to its upkeep. Retail customers using the distribution grid to sell excess power generated at their homes or businesses back to their utility or a third party are going to have to help pay for that grid. These customers have not cut the cord — rather, they have made their connections to the grid two-way.

If you have built a good relationship with your retail customers by providing attractive and affordable service options, strong customer service, and supporting the community and its values, chances are they will not want to cut the cord. But for that to happen, public power utilities must be out in their communities, getting to know their customers, and building real connections.

You can’t run a public power utility from your desk. You need to talk to your neighbors, strike up conversations at the grocery store, go to the local ball game, support the science fair, speak to community groups, join the Fourth of July parade, and invite the community to come and visit you during Public Power Week. Or better yet, go visit them. To power strong communities, we must be out in our communities. I would point you to a local example — Kissimmee Utility Authority right down the road from here hosts an annual Public Power Career Fair to tell young people about jobs in the industry. KUA also continues to draw capacity crowds to its free movie in the park every year. The more we connect, the more our customers will see the value of their local public power utility.

Large corporations like Starbucks and Facebook spend lots of PR and advertising dollars touting their connections to the community and their shared values. But we in public power already have those shared values. We know and internalize the values of our communities because we are part of them. Our actions are all out in the public view. We are subject to scrutiny in the local media at every council and board meeting. As leaders and policymakers, we must be guided by the values our communities share and reflect them in everything we say and do.

We in public power have much to be proud of and many experts and peers to learn from. That is why we are here. In a tribute to our host city, I’ll close with the words of Walt Disney — “Our heritage and ideals, our codes and standards, the things we live by and teach our children, are preserved or diminished by how freely we exchange ideas and feelings.”

Over the next three days, I hope you will make the most of your time here to exchange ideas and feelings freely, meet new people, and be inspired. Our goal is to send you home recharged to continue your work powering strong communities. Thank you for coming and enjoy the conference.

Sue Kelly

Sue Kelly

President and CEO

2 Comments

  1. Sue, I’m sorry I missed hearing you in person. What a great message!

Comment

Your email address will not be published. Required fields are marked *