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CLIENT LOGOCOULD GO IN THIS SQUARE
Julie RyanSeptember 20, 2018
Lessons We Can Learn from Past Monopolistic Upheavals
www.aetheradvisors.com2
SPEAKER BIOGRAPHY
Based in: Seattle, WA
Affiliations: APPA Affiliate Member
NWPPA Affiliate Member andInstructor
Willamette University “UMC” ProgramDirector
KEY FACTS
Julia M. RyanManaging Partner
Agile work flow
Aether is a management consulting firm
Founded in 2008
Strategy and risk management services
Utility clients
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www.aetheradvisors.com
Learning From Others’ Mistakes and Successes
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MonopolyUtilities
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Several Historical Examples
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US Steel
Standard Oil
American Tobacco
International Harvester
Sears & Roebuck
“Ma Bell” AT&T
Often Monopolies are often ‘first mover’ companies, getting largest market share
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United States Steel (US Steel) Was Large, But Lacked Efficiency and Innovation
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Founded by JP Morgan in 1901 After its founding, 67% of world
market share Prospered during WWII with
government contracts Today, only 8% of per domestic
steel consumption Smaller competitors were more
efficient and innovative Chequered labor history De-listed from the DJI in 1999
and the S&P 500 in 2014
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Sears & Roebuck Was the Pre-Eminent Retailer
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Rural communities Late 1800s - catalogue
sales 1930s - opened retail stores Developed quality brands
like Craftsman Tools™ Exclusive retail
relationships like Whirlpool Appliances™
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What Happened to Sears & Roebuck?
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Failed to update Shopping malls were aging Couldn’t compete with big
box stores Acquired by another
struggling retailer, K-Mart Sold off best subsidiaries, to
prop up failing core Shut most stores in 2017
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Demise of a Regulated Service –Landline Telecomm
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Cellphone-only households include:
71 percent of millennials
55 percent of members of Generation X
40 percent of baby boomers
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AT&T’s Early History
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Telephones popularized in early1900s
AT&T controlled 79% of national market by 1932
In 1985, AT&T had to divest of regional Bell carriers
Retained long distance Forced to offer the right to
freely connect devices to its network
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Growing Mobile Market
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Mobile Data Usage by Subscriber (2010-2016)
http://scientists4wiredtech.com/2017/10/2017-fcc-wireless-competition-report/
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AT&T Holding Its Own
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Market Share by Carrier
http://scientists4wiredtech.com/2017/10/2017-fcc-wireless-competition-report/
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AT&T Adapts
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In 2001, AT&T Wireless spins off then merged with a former Bell subsidiary
Becomes huge media entity
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Technology Giants’Common Characteristics
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Constant innovation and adaptation Developing products and services
customers feel they must have Focus on the “customer experience” Diversification Large investment in R&D and
development Acquisition of smaller innovative
firms with new technologies Focus on internal culture and
workforce Strong brands
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How is Your Utility Monopoly Different?
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Defined physical territory Government support Community-owned utilities have no
profit motive Providing a critical (not optional)
service to customers Safety is a key issue Members of the community have
oversight
While these elements partly shield you from upheaval, you still must be “relevant”, mindful of changing technology and alert to customer preferences
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Lessons Learned From Monopolistic Upheaval
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Changing Landscape Innovation Customer
Engagement People Government
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Changing Landscape
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“Disruption”… or Transformation?
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Emerging Issues – Utilities
External Environment
Market dynamics
New technologies
Increasing regulation
Cyber and physical threats
Customers
“Internet of Things”/ Energy
usageLooking for a
positive experience
Self-generation
“Smart Cities”
Utility - Internal
Changing workforce
Revenue flat or declining
Increasing costs/ Rate pressure
Aging assets
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2018 Outlook Power and Utilities
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Changing Generation Fuel Mix
Declining power prices off-set other cost increases in customer bills
DER penetration
Public generally support renewable energies and it is dropping in cost
Natural disasters have put utility infrastructure in the spotlight
Increase focus on cyber and physical security
Source: https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/power-and-utilities-industry-outlook.html
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Solar, Wind and Energy Storage Growth
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Bright Opportunities on the Horizon
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Additional electrification
Digital transformation
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Digital Transformation & Modern Grid
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Electrification New load (home heating, water, transportation)
Reducing carbon footprint (hydro/renewable rich region)
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Innovation
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Green Mountain Power
Green Mountain Power is the first publicly-traded energy company to become a “B Corp”
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Austin Energy
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Austin Energy
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SMUD
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SMUD Residential “Go Green”
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Customer Engagement
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Don’t Be On the “Wall of Shame”
Comcast
Bank of America
Wells Fargo
Sprint
AT&T
DirectTV
DISH Network
Cox Communications
Spirit Airlines
United Airlines
Verizon Fios
T-Mobile
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Consider What “Wall of Fame” Companies Do Well
Amazon
Apple
Costco
Netflix
You Tube
FedEx
UPS
American Express
Chick-Fil-A
Marriott
Publix
Hilton
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Exceptional Customer Service
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Employees are empowered to help you
Multiple options to get assistance –no waiting
Customer service rep greets youby name
Quick resolution of your problem
You never hear “we can’t do that”
You can tell employees like their job
You are smiling, not frowning, after the call
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Customers’ Perceptions
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Customers have a value equation in mind:
Value of the service Vs. the Cost
Ex: Customers may be angrywith cable company bills andlove Netflix
Scandal and public relationsdisasters can haunt a company
Customer satisfaction tied to expectations being met and experience with the product or service
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People
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Technology Impact In Telecomm
Operators at the Roseburg Telephone and Telegraph Co. in Oregon, c. 1910
AT&T’s Global Network Operations Center in Bedminster NJ
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Our Industry Will Always Requires People
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OperationsSafetyRestorationConstructionRepairsService Reliability
Customer EngagementService requests
Billing questions
Energy savings ideas
Connection to the grid
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Utility Dive Article on Energy Jobs
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Changing Utility Jobs
Information technology Low carbon generation
and emissions Electric vehicle charging
infrastructure Energy efficiency Energy advisors to
customers Finance/ regulatory
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With the increasing customer data and “IoT” connectivity, jobs will expand or be added in other areas:
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New Training Tools Emerging
Data in the field
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Augmented Reality
Virtual Reality
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Government
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Smart Communities
Municipal and grass-roots initiatives: Transportation Energy and water usage Reducing carbon footprint Smart adaptive street lighting Public safety communications Complex telecommunications Data management
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Utility Customers Unaware of Public Power’s Roots Utility retail customers
are diverse
Few customers remember the rural electrification act
Few customers (or employees) know what makes public power different
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Opportunities for Public Power Raise awareness of public power
Stay relevant to your customers
Monitor trends elsewhere
Be an energy services provider
Be innovative Discover new electrification
opportunities Explore “IoT” and your system Review vendors/products for customers Consider a ‘smarter’ grid system
Invest in your people
Wrap-Up
Change is coming to the utility sector
Community owned utilities have a unique position
Prior monopolistic failures illustrate the need for: Innovation Efficiency Awareness of changing technology and customer
needs
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