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PALM DESERT, Calif.—"This was a really good business for a century," Steve Collier said of electric utilities. For the most part, the formula has stayed the same: generate electricity and send it over wires to consumers.
"That is the basic model. But that model is on the verge of changing profoundly forever."
Collier is vice president of business development at Milsoft Utility Solutions, a Texas firm that provides engineering, operations and customer service software to electric utilities. He came to CEO Close-Up to talk about the new realities—and new opportunities—for co-ops.
"We're now seeing electricity demand begin to taper off. The kilowatt hours per customer in this country is now in decline," said Collier.
"We use about as much electricity as you could possibly use in a developed country."
But as load declines, costs are rising, leading to what Collier called a "vicious circle."
"If you raise rates, what does that do to a customer who now has options for conservation, energy efficiency and distributed energy resources? It incentivizes them even more than it did before."
So now what?
"You've got to find new revenue streams," Collier told the CEOs Jan. 8, urging them to consider embracing disruptive new technologies.
"Wind, solar, fuel cells, combined heat and power, and electric vehicles—which represent the equivalent of a house driving around," said Collier. "An electric vehicle on fast charge has the demand of a typical residence."
Collier also said battery prices are decreasing, which is likely to bring down the cost of EVs. And he noted that projections from major automakers show they'll have a smaller market share "because more and more of the market is going to be in electric vehicles."
"How many of you have a charging station?" he asked the CEOs. "It represents a good opportunity to sell some electricity."
Been to a hardware store lately? There are plenty of LEDs available there, not to mention the many others for commercial applications. Collier noted that in the days when incandescent bulbs ruled, a quarter of the electricity sold in the U.S. used to be for lighting.
"A fourth of the load is well on its way to being reduced to 20 percent of that," he said. "How do we make that up?" And then he answered with another question.
"How many of you are selling LEDs?" Collier asked. To the CEOs with raised hands he said, "Good for you, hitching your wagon to the future."
As solar prices fall, and panels increasingly appear on members' roofs, Collier urged distribution co-ops to reconsider their businesses.
"If customers are producing electricity, they still need our wires. So, we have to begin to think about how we meet our revenue requirements as a wires company," he said. And thinking differently is the key.
"These disruptive technologies for us represent an opportunity to do new things for our customers and increase our revenues."