Powerful Trends: Public Power Utilities Meet the Reliability, Cost, And Service Needs Of Demanding Customers
By offering great rates, reliable service, energy-efficiency measures, and attentive service, public power companies are creating a win-win situation for their customers as well as the communities they serve.
Steve Stackhouse-Kaelble, Staff Editor, Area Development (Q1 / Winter 2013)
{{RELATEDLINKS}}Electricity is electricity, right? Well, not exactly. Your basic light bulb might not know the difference between one community’s electric utility and the utility that’s powering another town. But the needs of today’s industrial customer are a lot more complicated than the 60 watts of juice that bulb is craving.

Consider the demands facing the Omaha Public Power District. “One of the things we’re working on is attraction of data centers to our service territory,” says Roger Christianson, OPPD’s manager of economic development. That quest has been going well. In fact, last fall Fidelity Investments picked the metropolitan Omaha community of Papillion for a $200 million data center. Yahoo!, Cabela’s, and CoSentry have chosen the area, too. And it’s easy to see why such projects are attractive to economic development officials. As Christianson notes, “They’ve been great customers — 24/7, large amounts of power, including significant amounts of power in off-hours, allowing us to keep costs down for all customers.”

Great Rates and Reliability, Too

Of course, such customers want great rates, and Christianson says OPPD’s are 26 percent below the national average. But equally important, data centers absolutely must have power that’s reliable. It has to be clean, uninterrupted power, or the sensitive equipment of a data center could be toast. For OPPD, reliability is a clincher. “We have a great record of reliability, 99.98 percent,” Christianson says.

Attentive customer service is icing on the cake. Christianson boasts that the utility has a dozen J.D. Power and Associates awards for customer service. Indeed, when the Fidelity deal was announced, the local chamber CEO told the Omaha World-Herald, “OPPD’s nationally competitive rate structure and recognized quality of service were crucial in our combined efforts to attract this project.”

Here’s the interesting thing — check that first “P” in “OPPD.” It’s short for “public.” OPPD is a public power utility, not a private-sector, for-profit utility owned by investors. Though it has for years been politically fashionable to believe that the public sector can’t deliver when it comes to quality, service, and cost, who can argue with J.D. Power or Yahoo! or Fidelity Investments?

A Message from the APPA Chair 2012

Phyllis Public power utilities offer their customers the best of both worlds: the latest in sustainable energy advancements and technology; and reliable, low-cost electric service that few others can match. Combined with our longstanding principals of customer accountability and responsiveness, it is no wonder that across America, public power communities remain the first choice for businesses looking to thrive and grow.

As we have seen in recent years, a community’s economic stability is directly linked to the vibrancy and strength of its local business sector. This is why each year, public power utilities and the American Public Power Association (APPA) work hard to bring forward programs and policies that will support local business development.

Businesses large and small benefit from our competitive rate structures that give them access to affordable, reliable power. We also work hand-in-hand with new businesses coming into our communities, assisting them in the planning and development process by providing energy-usage projections and cost-saving recommendations.

For members of the APPA, the work we do is not just a job, but also a passion. We are passionate about your success because it is integral to the future of the communities we serve. We value our business partnerships and remain committed to providing all of our customers with exceptional, reliable electric service at the lowest rate possible.

Phyllis Currie

Phyllis E. Currie

Chair, American Public Power Association Board of Directors
General Manager, Pasadena Water and Power

America’s public power utilities are out there on the forefront when it comes to meeting the precise and demanding technological needs of customers, as well as keeping up with other industry trends. “In recent years we have seen increased interest by organizations in not just the low-cost energy commodity, but also high-quality power requirements and significant redundancy in their electric supply,” says Rick Nelsen, economic development manager for the Nebraska Public Power District (NPPD). “A good example of this would be the needs of a data center when compared to a more traditional industrial customer.” Ed Grant, economic development project manager for power and water provider Salt River Project in Arizona, has also found that reliability is of paramount importance for customers such as data centers. Some seek enhanced services such as dual feeds, and “in some cases we are able to provide multiple feeds from different sources,” he says. Meanwhile, some customers install their own diesel backup generators to enhance reliability even further.

Tony Cannon, general manager and CEO of Greenville Utilities in North Carolina, agrees that for many companies seeking sites these days, “Power quality and reliability are the top issue.” But he adds that the customers concerned with such things aren’t just the obvious high-tech users. “There has been a shift over the past 10 years to more sensitive equipment, even in manufacturing operations. It’s much more sensitive to power fluctuations,” he explains.

The utility responds not only by striving to deliver that reliability, but also by delivering information to help customers stay informed about the quality of the power. Cannon notes, “We measure performance indicators directly related to power quality and reliability, and we’re able to provide them with real-time information. They analyze the information to make sure the power is meeting their requirements.”

And, Cannon’s utility can assist customers that require emergency backup power. “We’ve done some onsite generation installations ourselves, where we own and operate the generation facility,” he says.

Rodney Gonzales, deputy director in the Office of Economic Growth and Redevelopment Services for the city of Austin, Texas, has also found that power quality and reliability questions are not just for data centers. Samsung, for example, has invested large sums to develop manufacturing in the area. “With regard to Samsung, [the company was] looking for redundant power; it needs it for its high-tech manufacturing.”

“We have two Prime Power Parks, one in Gastonia and one in Albemarle, offering redundant power for sensitive operations,” adds Brenda Daniels, manager of economic development for ElectriCities in North Carolina. “The Prime Power Parks are ideal for manufacturers that have a critical need for continuous power supply.”

Green and Efficient
Low rates are, of course, an obvious way to keep energy costs under control. But customers are also turning to these public power providers to help them use less power, and are finding their services helpful.

“NPPD and its wholesale partners work with all classes of customers as it relates to using energy efficiently and effectively,” Nelsen explains. “We have a dedicated staff that are technically competent in the most current energy-efficiency applications and many times can offer incentive programs to our customers who utilize these practices, so their payback is accelerated.” “Many businesses have shown an interest in energy-efficiency measures, which often provide a positive return on investment (ROI) in as little as two years,” says Susan Borries Reed, manager of economic development for the Indiana Municipal Power Agency (IMPA). IMPA’s manager of energy efficiency walks customers through various programs and connects them with rebates that help pay for energy-efficiency improvements, she explains. It’s a win-win situation. “Businesses are able to use technology to produce the same end product while reducing their energy consumption, while IMPA is able to delay our need to build additional generation,” she points out. “Often, it’s more cost-effective to invest in energy efficiency than to build generation.”

“For every kilowatt-hour that they don’t use, that’s a kilowatt-hour that we don’t have to generate,” Cannon concurs. “It helps with long-term capital planning, because the generation we have now is cheaper than generation we have to build.”

The planet is a winner, too. Using less energy reduces the customer’s carbon footprint — and such environmental concerns are also increasingly high on the list of customer demands that utilities are working hard to meet. Take the data centers, for example. Christianson points out that those data centers looking in the Omaha area are often part of companies based on the West Coast, where green is an especially popular color of business. That makes them eager to be earth-conscious even when they’re picking sites away from home.

Public power utilities across the country are responding to the trend. “We have a goal of having 10 percent of our generation in wind by 2020, and we have a number of wind farms we’re participating in,” Christianson says. “Nebraska has very high wind potential in the central parts of the state; we have three wind farms in central Nebraska, and we’re partners in another in the southeast tip of the state.” The utility also has a power generation plant fueled by a landfill, churning out 6.2 megawatts of power from the methane venting off the decaying garbage.

“The concept of reducing an organization’s carbon footprint comes up with increasing frequency when meeting with our business customers,” Nelsen adds. “From that respect, NPPD is fortunate to have a highly diversified generation fleet, and in 2011 more than 40 percent of NPPD’s generating resources were carbon-free. Additionally, we are well over halfway to our corporate goal of 10 percent renewable generation by 2020.”

“We offer renewable energy options for those interested in reducing their carbon footprint,” says Lisa Lewis, vice president of corporate communications and media relations for CPS Energy in San Antonio, Texas. “And we have a rebate program in place that aids businesses in replacing older technology with newer, more efficient options.”

In a unique “green” arrangement, “We can allow [customers] to buy into a solar farm — they can buy shares in that,” says Grant of Salt River Project. But just how green are customers becoming? It all depends on their priorities. As Grant points out, though green power pricing is becoming more competitive all the time, there are still usually cheaper ways to go. “The concept of keeping a low total cost of ownership is balanced with the need to be green. In a perfect world, you would be able to be green and cost-efficient, but they’re very much independent of one another.”

Grant has observed that among data center users, the ones most interested in environmental issues are those building their own centers. Collocation customers, those using some of the capacity of a shared data center, are often particularly keen on minimizing costs, while “enterprise customers are going to place a higher premium on being green and are looking for the associated public-relations benefit.”

Next: Public Utilities Differentiate Themselves in Two Key Areas: Customer Service and Cost

{{RELATEDLINKS}}Attentive Service
The customer-service angle is another area where public power utilities are trying to set themselves apart. It actually comes rather naturally, as they can legitimately argue that customers really are king — because they’re not-for-profit, owned directly or indirectly by the communities they serve, and don’t have shareholders to please — just their customers.

In fact, large industrial customers expect and receive a lot of attention. “We have key account reps who are assigned to our larger customers,” Christianson explains. The economic development operation at OPPD tries to attract businesses, help them in their site search, and find them the location assistance they need. Once they’re on their way, “we turn them over to a key account executive who is responsible for getting the service in. And then if they have a problem, they have a single point of contact available 24/7. That really helps in our customer service,” and helps the utility earn awards.

OPPD is not alone when it comes to award-winning service. Salt River Project has been a J.D. Power winner, too. In the rating company’s 2012 “Electric Utility Business Customer Satisfaction Study,” Salt River Project’s overall customer-satisfaction index was 741 of a possible 1,000, according to Grant. And it was highest in the nation in five of the six customer-satisfaction factors: power quality and reliability, billing and payment, corporate citizenship, price, and customer service.

The key account manager concept is important at Salt River Project, too, Grant says. “When a prospect walks in the door and wants to engage SRP, once they start to nail down their parameters, we start to transition to the key account manager process.”

Borries Reed points out that responsive service also stems from the fact that the control is totally local, the management is local, and the employees are local. “Public power employees are your neighbors, people who are in the community,” she says. “They’re invested in making sure your company is doing well.”

Price Is Right

Then there’s the matter of energy rates. Without a profit to make, public power utilities can price their product based more closely on the cost. Also, any extra revenues can be pumped right back into improving service and technology. “Because we’re a not-for-profit utility, whatever we’re able to generate in margins, we are able to reinvest in the system and create jobs,” Cannon says.

“Cost-based electric rates generate revenues that are used strictly to keep rates low, while allowing for investments in necessary maintenance, construction, and upgrades to power plants, substations, and transmission lines,” Nelson explains. Grant adds, “We’re not profit maximizers, we’re cost minimizers.”

Nelson says there are a lot of things public power utilities can do to build advantages into the rate structure. For example, major users such as data centers can plug into NPPD’s economic development rate for large customers. “This incentive allows for a discounted retail electrical rate for up to five years if the site achieves certain consumption, load factor, and certification requirements.”

Additionally, because of the direct or close ties to local government, the economic development departments of public power utilities tend to be especially connected with others involved in local development. NPPD, for example, has aided in the site searches of numerous companies, according to Nelsen. “Services range from supplying requested information to guiding firms through the entire site-selection process. This can include gathering community proposals, identifying informational and financial resources, or facilitating final negotiations at the local level,” he says.

In many cases, public power utilities are also tied in directly with other utility services — municipalities that own their own electric systems also are often the local providers of water, natural gas, sewer, and sometimes even phone and data communications services. “We’re able to help [customers] with a lot of other things,” Cannon says of Greenville Utilities, provider of not only electricity but also natural gas, water, and wastewater treatment. “We’re a one-stop shop for all of their utilities; we can help with the permitting process, zoning issues, and other issues that they come across.”