Over the course of my career folks have asked me, ‘How do I know how to speak to my electric or natural gas utility?’, or ‘I’ve tried and tried to speak to my electric utility about an issue and I can’t get anywhere, how can I get the electric utility to understand?’ Have you experienced the communication breakdown and or just a failure to communicate properly to any one of the utilities, energy providers and others? Well here’s a hard truth. It’s one of the most complicated things out there to accomplish and this article will not solve the problem. Sorry to disappoint right out of the gate. However I will attempt to give you first some definitions of the entities involved, who they are, what they do, and what is important to them. Then I will provide some ‘tips’ to understand when speaking to utilities and to help you become more of an effective communicator to these types of companies in the energy world. First, here is a flow chart of how it works, then definitions, then tips. Here we go:
This chart shows the flow of electricity from a power generation facility to a home and everywhere in between. It’s important to understand this flow as I will be discussing the entities that are responsible for generating, transmitting and distributing electricity to consumers. Keep in mind, for example, in some areas of the US providing electricity to consumers is done by one single entity where they own and operate all of these responsibilities. In some areas of the US, the generation, transmission and distribution can be done by multiple parties as I will explain. Now onto the definitions:
Electricity utility: A corporation, person, agency, authority, or other legal entity or instrumentality aligned with distribution facilities for delivery of electric energy for use primarily by the public. Included are investor-owned electric utilities, municipal and State utilities, Federal electric utilities, and rural electric cooperatives. A few entities that are tariff based and corporately aligned with companies that own distribution facilities are also included.
Comment: I generally agree here. Essentially an electric utility can own a generation asset that generates electricity OR NOT. Some make their own distribution network to step down the voltage.
IPP- independent power producer- A corporation, person, agency, authority, or other legal entity or instrumentality that owns or operates facilities for the generation of electricity for use primarily by the public, and that is not an electric utility.
Vertically integrated utility-The combination within a firm or business enterprise of one or more stages of production or distribution. In the electric industry, it refers to the historical arrangement whereby a utility owns its own generating plants, transmission system, and distribution lines to provide all aspects of electric service.
Co-op- An electric utility legally established to be owned by and operated for the benefit of those using its service. The utility company will generate, transmit, and/or distribute supplies of electric energy to a specified area not being serviced by another utility. Such ventures are generally exempt from Federal income tax laws. Most electric cooperatives have been initially financed by the Rural Utilities Service (prior Rural Electrification Administration), U.S. Department of Agriculture.
Municipality- A village town, city, county, or other political subdivision of a State. Services as a vertically integrated utility where all of the energy flow is owned and operated by one entity.
PUC’s- Public utility commissions (PUCs) regulate electric, gas, telecommunications, water and wastewater utilities. In most states a single agency will regulate these sectors; however, in some states these functions may be split between more than one agency.
REP’s– An energy provider is a business or entity that sells power, such as electricity and natural gas, to consumers. Retail energy providers may buy energy at wholesale from producers, or they may operate their own power plants such as nuclear generators, or wind and solar farms.
QSE’s– Qualified scheduling entities (QSEs) submit bids and offers on behalf of resource entities (REs) or load serving entities (LSEs) such as retail electric providers (REPs). QSEs are able to submit offers to sell and/or bids to buy energy in the Day-Ahead Market and the Real-Time Market.
LSE’s– any entity, including a load aggregator or power marketer, that serves end-users within a control area and has been granted the authority or has an obligation pursuant to state or local law, regulation, or franchise to sell electric energy to end-users located within the control area.
Curtailment service providers- are businesses that sponsor demand response programs and that recruit and contract with end users, selling the aggregated demand response to utilities, RTOs and ISOs. A Curtailment Service Provider is sometimes called an Aggregator and is not necessarily a load‐serving entity.
Regional Transmission Organization– A regional transmission organization (RTO) in the United States is an electric power transmission system operator (TSO) that coordinates, controls, and monitors a multi-state electric grid.
Regulated electricity supply market– Utilities in traditionally regulated regions operate as a monopoly in their territories, which means that customers only have the option to buy power from them. To keep electricity rates reasonable for customers, state regulators oversee how these electric utilities set electricity prices.
Deregulated electricity supply market- This trend is called deregulation or restructuring. Utilities in deregulated markets are prohibited from generation and transmission ownership and are only responsible for distribution, operations, maintenance from the point of grid interconnection to the meter, and billing ratepayer
Now that you have the definitions there is something else you will need to understand. Although all of these entities are playing their own specific role in the electricity landscape, they all speak their own unique language. Some speak in kilowatts, some speak in kilowatt hours, some speak in megawatt hours and some just speak in a language that is surrounded by safety and reliability. But don’t fret readers. Here are some very general tips on how to have an effective conversation:
Don’t sound technical in the beginning, you’ll run into a wall
Most of these entities are indeed technical in conversation however when you first engage with them, I usually tell folks to sound dumb in the beginning. The reason for this is because you need to do more listening first and then comprehend how they are responding to your questions. If you come firing questions at them in the beginning with highly technical adjectives and nuanced descriptions along with abbreviations, you will lose most folks and won’t really get anywhere. Be a person to them and talk to them in a very basic way. Just because you’re talking about electricity does not mean that you need assume that everyone is as technical as you. Just know that everything will go slow when speaking to folks in the energy industry, and therefore just speak simple and direct in the beginning. Develop the relationship first, it will go a long way then to try to validate that you’re the ‘grand master’ of electricity.
Nothing will go fast, get over it
Most entities don’t really move fast like some city folk. Especially in the vertically integrated utility world, it’s important to know that you’re operating on their timeline in the beginning. For any questions that you need answered, just layer in another couple of days and sometimes weeks until you actually get the answer you need (not to mention it may not be the correct answer to begin with haha). Whether it is a utility project upgrade, a rate classification question, or just a new electric service request, nothing, ever, goes according to your timeline. The only thing, as an example, that moves electric distribution utilities quickly is when there is a maintenance or service issue. An electric utility’s primary goal is to deliver electricity to consumers in a reliable way. If you want to discuss rates with them, take a number and get in line.
Proper communication is key
When you speak, you want to speak in a way that you want the other person (or sometimes computer) to understand either the question or the statement that you are trying to make. You might say, well no crap Bass…now what? Well you may need to think again. Talking with any of these folks is really difficult for one because they are dealing with one of the most complicated industries to manage (electricity in this example). One could assume then ALL of the representatives that are affiliated with the entities are above.
Smile when your on the phone with them because it will be funny
Have an open mind when you talk to any of the entities mentioned above. They are humans that are doing a job. Smile! Don’t forget your on a recorded line for quality and training purposes.. You may as well have some fun while talking with these folks or else you could bang your head into the wall (speaking from experience).
Regarding billing, as for a sample invoice
When referring to pricing for your electric utility, I would highly recommend asking if they have a rate calculator OR a sample invoice to see what all the line item coefficients that would be available to you. Even if you’re talking to a retail electric provider, I would ask them for a sample invoice also to get further clarity. This industry there are a lot of line items to consider, take a GOOD look. Get someone else involved and dont be shy to ask.
Who cares about what?
Electric Utilities- they care mostly about delivering electricity to the consumers inside of their distribution network safely and reliably. They will focus on providing ongoing maintenance to the distribution network. If you are in a monopolized electricity utility where the generation, transmission and distribution all are provided by the same entity then you have almost 0 way to negotiate on the price of that electricity and that is just the fact. In fact the PUC and the electricity utility have rate base filings in the court system to approve rates for the consumers. You are a rate payer to the utility.
Electric Utility that is a co-operative- They care in the same way the electric utility companies care however they are not under significant federal guidelines. They have electricity and natural gas tariffs for you to see what the pricing looks like, however if you develop a relationship with them, they may be able to negotiate prices with you. This is a unicorn situation but it can be done. Some may own the generation and transmission, some may not. You are a rate payer to the electric co-op.
PUCs- Public Utility Commission. They are supposed to care about the consumers, hence why they were created in the first place. The PUC’s are supposed to stand in the middle between the utility and the consumer. They also do care about the utilities, and sometimes are more weighted on the utility side at times.
REP’s/QSE’s- Retail Electricity Provider, Qualified Scheduling Entity. in a deregulated electricity supply market, most of these entities exist inside of those walls. They 100% care about negotiation, especially in markets like ERCOT and PJM as an example. Knowing HOW to negotiate will take years however it can be done if you dedicate yourself and if electricity is important to your operation. Here you are considered as a customer simply because you are a customer of the REP for supply and because of electric choice, the customer has the choice which REP they want to deal with. REP and QSE also do a level of KYC to understand their credit exposure to the electricity consumer and also to ERCOT. Since they have the ability to negotiate in an open and free market, let freedom ring then.
If you have trouble just ask someone who has energy experience
If you’re having trouble or you’re scared to talk to these people, there are people that can give you some guidelines. Every utility bills differently, speaks differently, and almost everyone is unique from Washington state to Maine to Florida to Texas. Reading tariffs are really hard, but people do them. There are good folks out there that are positioned in a way to help you navigate the wild west of electricity. There is no reason for anyone to fall victim to improper charges or rates. Think about this, every utility has their rates published especially if the rate was determined by a rate case filing in the court system. It’s technically open source! However reading one will cause you to fall asleep and or stare at the thing for hours.
I could write about 10 papers on each individual electricity entity, what they do, what’s important to them, how they operate, why they operate the way they do, and so much more. This will be the first step and hopefully this article can bring some information to you that is meaningful and can get you on the right path. Remember, there are humans that can help with this also.
*ALL views and opinions are my own. All compiled data can simply be looked up by a simple search engine.