Current Affairs

Issue 68 - August 2024

The Canadian Customer

The electricity sector in Canada is constantly innovating, and customers expect more from their local utility because of it. Electricity Canada’s new report “A 360-degree customer view : an industry looking to empower the customer” describes how to use available data to build on customer interactions and build trust. Current Affairs sits down with Dan Gent, Director of Transmission and Reliability lead to discuss.

Hi Dan, thanks for joining us. What is a 360-customer view and why is it so important for the electricity sector to adopt?

The 360-degree customer view is a tool with the idea that it's going to give you a look at the customer and focus on them, from the first time they sign up with the utility, to the end. With the complete picture of the customer, it gives the utility information about their initial service or connection, the amount of outages they experience, or the invoices they receive or the programs they sign up for like energy efficiency programs.

It also gives you a good understanding of where they sit in the market. Are they educated or are they high income? Do what size of house do they have? Are they a business owner, do they have multiple locations?

All of that also comes into play. With this information, utilities can break the customer down into different segments.

Tell us a little bit about who was involved in creating this report.

In June of last year, Electricity Canada’s Customer Council and Technology Committee got together at ENMAX in Calgary. They discussed, presented and had open conversations regarding what is customer solutions of the future going to be and the 360-degree customer view was really the focus of that conversation and how to go about building it.

After copious amounts of note taking, the information was given to the Data Strategy Group to put together a model and framework that made the tool come to life.

What challenges do utilities face when trying to connect with their customers and what kind of technology can help with this?

Utilities have a lot of data already! We have all the technical stuff like usage data, voltage levels, how often they lose power etc. Those are customer touch points, but we need to take a deeper look into those things to understand the sentiment of the customer. And quite often, the sentiment data is hiding behind all of the technical insights. By breaking things down and analyzing things from a marketing perspective, you can really create an accurate profile of who is using your services and what they need.

If you think about it, someone who already owns an electric vehicle will most likely be interested in electrification in other ways around their home, so that customer is someone you can target with programming or products that can help with that. Artificial intelligence is going to be a big tool in how to organize all that data and automate that decision making.

In this industry, our idea of the customer really has changed over the years. Why do you think that Canadian’s are so connected to where their electricity comes from and how that process works?

There's a change of mindset in the customer base for sure in the electricity sector. More people are concerned of where their electricity is coming from and want to make sure their footprint is not that big. More and more people are becoming educated on that aspect because of the changing climate.

The other aspect that's also moving along is digitization or digital technology. People want customized and personalized solutions like they have in other industries, and if the utility can the helpful energy advisor to their customers and provide tools that are personalized to them, that's great.

Where do you think customer interactions will go in the future?

I think it's going to be much more personalized. It's going to be more digitized, and I think that the utility is going to get more empathetic. By the time you pick up the phone and call the call centre, the person on the line will probably already know who you are and what you need and will have a better understanding of your situation so they can help you.

Customer interactions will go beyond what’s in the invoice. With more information available to them, they want energy efficiency solutions and behind-the-meter solutions, and integrated solutions with the latest digital capabilities.

What is the most important take away from the report?

Well, there are a lot of recommendations in the report that utilities can act on. But I think what goes beyond and what's really important is that, with the 360-degree customer view the company must become even more customer centric. That customer service and customer focused culture needs to be enhanced even further. And that is probably the most important aspect of the of the whole report.

The 360-Customer View report is available here . The accompanying blog Changing customer needs and how to find them discusses the key recommendations of maintaining a positive customer relationship in the changing world.

Electricity Canada releases new report “Always On”

It is no secret that the Canadian electricity grid is going through big changes, faster than ever before. Electricity Canada’s new publication “Electricity in Canada: Always On” discusses the new age definition of ‘reliability’ and how it will affect the energy transition from electrification to aging infrastructure. Joe McKinnon, Manager, Economic Regulations & Standards at Electricity Canada sits down with Current Affairs to explain.

Why is reliability so important?

Reliability is one part of “energy trilemma” as we call it. As we pursue a decarbonized and expanded grid to meet our net zero goals, we must consider how to achieve reliability, affordability, and sustainability - the trilemma.

In recent years, sustainability has become the larger buzzword of the three for policy impacting the electricity sector. Even so, electricity providers have not forgotten the importance of reliability. It's a pressing issue that is consistently integrated into modelling and investment planning for service providers. However there are diverging priorities between utilities, regulators, and policymakers. That, and the rapidly shifting energy landscape, has led to the relegation of reliability considerations. Ultimately, everyone needs to understand that fundamental priority for electricity providers is ensuring that the lights are “Always on”!

Tell us about who was involved to create this report and why?

Tom Chapmen and Dr. Kathleen Spees from the Brattle group developed the report though primary research gathered from our membership. The substance of the report was developed though the industry expertise of Electricity Canada’s network. Thanks to the practical knowledge of our membership, the authors at the Brattle group were able to bring theoretical concepts to a practical level.

What do utilities need regulators to do most when it comes to making the grid ready for net zero?

Net zero is a huge challenge. Policy is driving this massive shift in our economy which is changing the energy landscape dramatically. This requires major investment and innovation from the electricity sector, but change can't be facilitated at the rate required through outdated and rigid regulatory frameworks.

Regulators across the country need to provide utilities with greater flexibility when it comes to rate submissions and rate design, as well as hold a progressive understanding of what should be considered reasonable investment for cost recovery through the rate base. While the principles behind rate design in Canada aren't outdated, interpretations of these principles can be.

Clean energy investments often require incremental reliability investment beyond typical replacement capacity cost. So, we need flexible application periods for utilities to manage evolving trends in supply and demand. And we need forward-looking, multi-year revenue plans with profit and loss sharing mechanisms that would provide utilities with greater ability to manage the considerable risks associated with investing to meet uncertain future needs.

In addition to flexibility, we need clarity. Regulators need to provide clear guidance for those utilities seeking to invest in grid modernization and develop distributed system operator capability.

What were the big recommendations made in "Always On"?

Always On makes the case for the importance for prioritizing reliability as the central consideration of planning our energy future.

Some of the big takeaways include:

· That we need greater coordination between utilities, policy makers, and regulators to set a strategic direction that optimizes the utility business model. Enhanced industry engagement for policy planning and implementation is required. There needs to be opportunities to engage in greater regional planning. Early and active industry engagement in policy development not only orients policy and planning goals towards achievable targets, it reduces inefficient regulatory burden.

· We need to meet energy needs across all hours – and not just peak times. In order to determine full resource adequacy needs, new assessments will be required to ensure that all potential grid disturbances are captured.

· Regulators need to develop more flexible financing mechanisms that allow utilities to seek approval for and recover prudently incurred net zero transition costs.

· Regulators and utilities need to proactively mitigate extreme weather risk by facilitating grid hardening investment. This needs to be based on long-term future projections, rather than historical events.

· Targeted funding is needed to address utility capital constraints, facilitate investments in infrastructure, and support the most impacted provincial economies. The current financing frameworks, which focuses on incenting efficiency and maximizing asset utilization, have recently had an impact on utilities access to capital for long term reliability investments. Targeted public funded can bridge this gap in capital.

Where should we start?

Regulators and policy makers need to provide more opportunities for regulatory innovation, experimentation, and flexibility. This can be done by establishing regulatory working groups and innovation sandboxes that look to coordinate policy preferences, regulation, and needs to utilities.

Across all jurisdictions regulators and policymakers should establish rate frameworks that acknowledge that reliability investments are “used and useful” allowing easier cost recovery for utilities.

Target funding from governments needs to be available to utilities given the capital constraints for these net zero investments. An expanded and decarbonized grid, pushed for by government policy, needs to be supported through ample government incentives.

Click here to read the report.

Introducing the Faces of the Industry

On Monday April 29^th, Electricity Canada welcomed the six winners of the inaugural Faces of the Industry award to a reception in downtown Ottawa. Chosen by an independent panel of judges these individuals were from all regions of Canada and represented every areas of the electricity industry. Electricity Canada’s Director of Communications Graeme Burk, sits down with Current Affairs to discuss where it all fits into National Electricity Month.

Hi Graeme, thank you for talking with us. Tell us how the Faces of the Industry award came about and how is it unlike than anything Electricity Canada has done before?

We have a lot of great awards that Electricity Canada gives out every year for sustainability, reliability, and for occupational health and safety to name a few. When we were looking at those awards we noted that they're all corporate: they're mostly about things our members have accomplished as an organization. We saw a gap there because the electricity sector as a whole is full of really talented people. And we wanted to celebrate that.

We work in an industry that encompasses everything from engineers to people who work with customers, to people who innovate in science and biology, to people who do communications - all these things are a part of the work. We thought an award that celebrated individual achievement in the electricity sector would be a really good thing.

Who are this year’s Faces of the Industry and what makes them special?

We have such a huge breadth of people!

We have Executive Vice President of Innovation – Gary Smith from Fortis Inc. with 40 years experience in the business.

We have Kim Griffin, the Manager of Sustainability in Communications at Maritime Electric who was the face and voice during Hurricane Fiona.

Lara Ludwig, who works in Stakeholder Relations at SaskPower - her and her team helped engaged about 60,000 people in terms of helping SaskPower determine what to do next in terms of the energy transition.

Keyra Hawley is our self-proclaimed bird nerd, and she works at ATCO as an Environmental Specialist, making sure that power lines are safe for wildlife and in turn, for people.

Then there is Rick Putman, who is something of a legend. He has worked for Hydro One for many years and is one of the architects behind mutual assistance in Canada.

We also have a network engineer from Hydro Quebec, Barmak Khosravi, who innovated the telecommunications part of the electricity sector.

There were over 50 applications, is this what you were expecting?

I think at the time we did this, we were hoping that maybe we get 12 applications and so that at least there was a one in two chance of winning! We were really overwhelmed by how many applications we got. I think it speaks to how enthusiastic people in the electricity sector were about the idea of an award that celebrated an individual achievement.

The independent judging panel for this had such a hard job because all 50 of those applications were so great. We have so much to celebrate in the sector and it was just amazing to read all the stories. After carefully thinking through each application, our panel made it down to six.

What inspires you the most about the winners of the Faces of the Industry award?

I'm inspired most by their attitude. All of them are very focused on the best possible experience for customers, and for the electricity sector to do the best possible work. Basically, it's the innovation and it's the commitment to making the electricity sector the best it can possibly be for everyone.

What can Canadians expect to see from this year’s National Electricity Month campaign?

Well, this is going to be the biggest social media campaign Electricity Canada has done in quite some time. We’ll be posting content every day during National Electricity Month on Instagram, LinkedIn, Facebook and YouTube. We were very grateful to every single recipient of the award for taking the time to come to Ottawa and meeting with us and they gave really great and thoughtful interviews. We’re also putting together a short documentary about it!

National Electricity Month is something I think we should really celebrate. And what Faces of the Industry has done is reminded us that the electricity sector in Canada is made up of people. Our hashtag is “We Are Electricity” and we want people to understand that people are behind everything when it comes to electricity. You don't just turn on a light switch— electricity happens through the genius and through the talent of the people you see here in our Faces of the Industry.

For more on National Electricity Month and Faces of the Industry, stay tuned to Electricity Canada’s Instagram and LinkedIn.

Electricity Canada comments on the 2024 Federal Budget

On April 16^th, the 2024 Federal Budget, Fairness for every generation was released. There were important announcements for the electricity sector, including the Indigenous Loan Guarantee program, Investment Tax Credits and improving the process for getting approvals. Current Affairs sits down with Manager of Government Relations Will Greene to discuss what this means for our clean energy future.

Hi Will, thanks for joining us. What were the big wins in budget 2024 for the electricity sector?
There were a couple notable inclusions for the sector in Budget 2024. First of all, we saw the announcement of $5 billion towards an Indigenous Loan Guarantee for energy and natural resource projects. This will be instrumental in the development of Indigenous-built and Indigenous-owned electricity infrastructure and will ensure that Indigenous Communities are an equity partner in the transition to a net zero economy.

Second, we saw a suite of measures to help clarify and reduce timelines for major projects, in particular establishing a new Federal Permitting Coordinator, which Electricity Canada identified as a critical element of its Build Things Faster report. The Budget included timelines and targets to ensure the federal government is being transparent and accountable when it comes to major projects that will be crucial to achieve net zero.

Third, we got further details regarding the Investment Tax Credits, with the most notable being an update on the conditionality for the Clean Electricity ITC. None of the ITCs have begun to benefit projects yet, so it’ll be important for the government to be surgical in their creation and consultation. The primary goal of each ITC should be to get money out to projects that need it now to realize the affordability and clean energy benefits.

How does this year's budget compare to last year?

Although this budget wasn’t as big for us as a sector as last year, there were some important developments for the electricity sector. Budget 2023 was a foundational step for the federal government’s electricity agenda. We saw $1 out of every $8 dollars earmarked to clean energy. While we continue to wait for much of that funding to make its way through legislation, regulation and eventually deployment, we continue to push hard for clarity, conditionality, and speed that favours building major projects.

That’s not to discount Budget 2024, as every federal budget can’t always mean tens of billions for the sector- although I certainly wish it would! Instead, this year’s focus was more geared towards regulatory streamlining for within government departments and fine-tuning details on many of the things that have been previously announced.

That’s not to discount Budget 2024, as every federal budget can’t always mean tens of billions for the sector- although I certainly wish it would! Instead, this year’s focus was more geared towards regulatory streamlining for within government departments and fine-tuning details on many of the things that have been previously announced.

What announcement could make the biggest impact to the electricity sector?

I think both the Indigenous Loan Guarantee and streamlining measures both have the potential to be game changers. It will come down to how quickly these things can be implemented to make sure that projects are providing benefits as soon as possible. We have a lot of timelines to meet.

What are you most concerned about when looking at this year's Federal Budget?

One of the major concerns we have is the absence of an exemption for regulated utilities when it comes to Interest Deductibility Limits. To put a very complicated tax measure in simple terms, without an exemption for regulated utilities (in Bill C-59), tens of millions of extra dollars will be passed on to electricity customers depending on where you live – without any direct benefit to those customers or their electricity services. Budget 2024 did grant an exemption on the same public benefit rationale the electricity sector has been promoting… but it was given for the development of purpose-built rental housing.

We think that the decision not to exempt regulated utilities is at odds with the goals of this government. Instead of addressing affordability challenges and making it easier to build good projects, these measures will add costs to Canadians and make building clean electricity infrastructure even harder.

Overall, does this this budget get us further along when it comes to getting to net zero?

I’m going to give the cop-out answer here and say that we’ll have to wait and see. Does Budget 2024 say the right things in terms of economic reconciliation, advancing ITCs and making it easier to build things faster? Yes. However, we won’t know if they will advance net zero until they are implemented, and we see shovels in the ground.

At the same time, measures like the Interest Deductibility Limits for regulated utilities almost certainly will make net zero harder, as it will lead to less money in the pockets of Canadians and less money at the disposal of utilities to build major projects.

It's time to get to yes

Despite massive gains over the past year, the electricity sector still faces an enormous challenge with a culture of “no”. Electricity projects are being delayed, or held up in approvals. There are simple solutions that can help make our grid cleaner, more reliable and affordable.

As part of this, Electricity Canada’s newest publication the State of the Industry publication is called “Getting to yes”. This document showcases the challenges and opportunities facing the electricity industry to date. Current Affairs sits down with the co-editor of the report, Graeme Burk, Director of Communications at Electricity Canada to learn more.

Hi Graeme, thanks for joining us. So, what is the State of the Industry?

Every year, Electricity Canada produces a document that where is the electricity industry at? It's something that we use in our lobbying efforts, when we're working with government and stakeholders. It gives a sense of what are the key priorities that are facing the sector right now. It's like a State of the Union, but it's for the electricity sector in Canada.

Why is this report called “Getting to yes”?

When I first started Electricity Canada in 2022, the theme of the state of the industry was ‘Accelerating Net Zero’ because we have a lot to get done, and we have to get moving if we want to make the grid carbon neutral by either 2035 or 2050. Last year, we called it ‘Build It’ because we felt that getting the grid built was a big thing and we were worried that we were losing the daylight, so to speak, and needed to get moving and get building.

This year we decided to not go with these ‘we need to get building’ metaphors and thought, ‘what is it that is keeping us from actually getting moving?’ So we called it ‘Getting to Yes’, because we felt that there are certain things that are just holding us up: Things that are holding us up in terms of regulation. Things that are holding us up in terms of legislation. Things that are holding us up in terms of procedure.

There are a whole variety of things out there that keep us from moving forward and we wanted to explain that a bit more. Our speed at achieving deadlines like 2035 or 2050 are not ramping up like it should.

How is the electricity sector in Canada doing right now?

It was a big year for electricity last year. That's the thing that I think is really important to understand. We made real steps forward towards building a bigger, more reliable and more affordable electricity grid for 2050. The federal budget had almost one dollar out of every eight go to clean electricity projects. It’s a scope for building that has been unseen since the Second World War.

At the same time, since that budget we have had to deal with a great deal of uncertainty. The Clean Electricity Regulations came out in August. They were only the first draft and there are revisions on the way, but there was a lot of frustrations about what was in the draft and how much can be realistically done in the time frames they're asking with the resources that are being allowed.

And then, there's big areas for investment that were announced in the last budget like capital tax credits and carbon capture for difference and neither of those have progressed very far either. So, on the one hand, we have in the big picture a really great situation for electricity that's never been better for the sector. But on the other hand, it's just all these little details that we need to get ironed out so that we can get to that big picture.

What are the things Electricity Canada are most concerned about in this year’s State of the Electricity Industry?

We have concerns getting to build of course. One thing I keep going back to is that in this year's RBC Climate Action Institute report, they charted massive growth for the electricity sector that took into account electric vehicles, home heating and more. But when they actually took a look at our sector specificly, their word of the year for electricity in Canada was moratorium. A lot of projects just keep on getting held up. The Atlantic Loop is probably the biggest example. That was a huge project that I think would have made all kinds of big advances for building infrastructure but it’s been placed on hold indefinitely. And in Alberta, they had a temporary kind of suspension of renewables.

We are concerned about the pace overall. If you look at from the time the first notion of the Clean Electricity Regulations happened, to when first put out, to now, when we're still figuring out what happens next, that was a really long time. And the process of finalizing the CERs is nowhere nearbeing been done. There are lot of long-term projects that are held in the balance as a result.

There's also big tug of war between federal policies and provincial and territorial regulators, and that's one of the biggest problems we noted with over and over was that you've got a federal mandate to decarbonize, and at the same time, you've got regulators who are often kind of working from the rulebook that was devised in the 1960s. This is going to create real problems for large scale interprovincial projects.

What are top concerns going into 2024?

I think reliability and resiliency is the biggest of them. When you look at last year, about 40 to 50% of outages were due to weather related incidents and normally temperate places like Kamloops, British Columbia had recorded 62 hot days over 30 degrees Celsius. In spite of everything that was thrown at the grid, it worked. The equipment had to be closely monitored, and we have definitely pushed ourselves to our operational limit. We’ve got to work hard in 2024 to make sure that we can keep doing that.

Affordability is probably the other big concern we need to make sure the capital costs of building don't wind up being put on electricity bills. I think there's lots of things that we need to do to make sure that building the grid overall is borne by the taxpayer and not by the individual ratepayer.

What surprised you the most when you were writing the report?

I think the thing that surprised me the most was the section on regulation and all the kind of complicated complications in trying to get something built. I mean, on the whole, regulation is quite necessary: we need the government to make sure that companies aren't going to pollute or aren't going to damage the public trust. But at the same time the unnecessarily complicated nature of the Impact Assessment process just boggled my mind! I was astounded that because of project size, it can take forever to get anything through Impact Assessment. In our research, we decided to go look at how many projects went through Impact Assessment and then suspended going through the process for whatever reason. There's at least six such projects and a couple of them were big electricity projects. Which is sobering because no company will start going through that process and all the hurdles that you must get through, unless they're serious about it and want to make a serious investment.

I think government needs to streamline that process so that it becomes easier to move forward because unless we do, people are not going to feel confident enough to invest because they're going to be worried that things are going to get held up again and again and again.

If there is one chapter in the report that you think everybody who works in the electricity sector should read, what chapter would that be?

I really like the chapter on social license. Social license was something I knew nothing about, and our Vice President of Communications and Sustainability, Julia Muggeridge wrote it in a brilliantly accessible way that easily explained the process. We had a case study on SaskPower, and how they have gone about about trying to get people to accept things like Small Modular Reactors and other energy builds, and its really community engagement at its finest. It’s about going to a hockey rink and meeting with people and taking their questions. During COVID they held huge community Zoom calls and the engagement they achieved was just inspiring.

But my main takeaway while I was reading that was: That's the way that we're going to get to yes. It comes from people just figuring out how to talk to each other and getting on with figuring out how to work together. I think that's true for big regulatory things and big interprovincial electricity projects as much as it is about figuring out where the best place to put a Small Modular Reactor is in Estavan, Saskatchewan. It all starts with talking to people.

Read “Getting to Yes : the State of the Canadian Electricity Industry.

Understanding members customers with Diana Dominique

Members customers are always top of mind in the electricity sector. Every year, Electricity Canada conducts a nation-wide customer satisfaction survey on behalf of our utility members to crunch the numbers and learn first-hand, how they can continue to make electricity safe, sustainable and affordable for Canadians. To learn more about the results of the 2023 National Customer Survey, Current Affairs sits down with Electricity Canada’s Senior Director of Customer Solutions and Sustainability,  Diana Dominique. 

Hi Diana, thank you for joining us. Can you talk to us a little bit about how this survey came to be and why it’s so important for our members and Electricity Canada? 

We’ve been conducting this national customer survey since 1988 and it's largely focused on the residential customer segment and members find value in the national perspective regarding customer satisfaction.

We've inserted some actionable insights into the survey, so seeing those areas that we need to focus on, members find that valuable, and the regional insights as well.

The results are in, take us through some of the key trends that were found, is there anything surprising? 

The key trends that we saw from this year's research are that largely the general satisfaction and Customer Satisfaction Index is largely stable, which is really great to hear! In terms of general satisfaction, 72% of customers say they are satisfied with their electricity distributors and this percentage is higher among those who have familiarity with the system. Generally, people feel that they get good service and that their electricity is reliable.

It's an overall good news story for the industry and in my work with the Customer Council and the Sustainability Committee, members have been working hard on these things that matter most to customers. It's really good to see that the work we've been doing over the last number of years is reflected in the data.

When we talk about those things that are important for us to focus on, its corporate social responsibility and customer focus. Those are two measures that are connected with brand trust. A ‘customer focus’ includes things like caring about the customer and being transparent, while ‘corporate social responsibility’ includes those metrics like operating in an environmentally responsible manner and protecting public safety.

The surprise is that price and value have held steady this year. That's really encouraging for the industry and we think that a reason for this could be that electricity rates have not increased at the level of inflation like let's say, gas and groceries. People generally are satisfied with the prices that they're paying and the value of electricity that they're getting. However, compared to other tested metrics, it is still a bit weaker, so we have work to do on this in the future.

Another surprise is that compared to last year, the satisfaction for all reliability and power quality attributes has declined, even though the number of power outages that customers have been experiencing have stayed the same.

This last one isn’t really a surprise to us because we’ve seen it before, but people are just not engaged when it comes to the energy transition even though we're seeing more extreme weather events. Canadians care about climate change, but when it hits their pocketbook, they’re not as concerned.

What is most important for Canadian electricity customer and why? 

I think not only this year, but going back to what we just said, price has always been the number one important factor for customers. Inflation has a major impact on household finances. And that we saw that 67% of customers stated that making electricity prices more affordable was a top priority. This was followed by strengthening the electricity grid to make it more resilient to severe weather events and grid modernization, so that customers had more choice around technology.
 
Based off of these results, how do you anticipate the results coming through for 2024? 
 
In 2024 things can change quickly, but I think it will largely remain around inflation and affordability. Thats going to be the key thing for our sector. I think the results will reflect that sense in terms of what I mentioned before, mortgages will come due in the next few years, and they'll be more pressure on people in terms of affordability for those low income and vulnerable customers, and even for middle class Canadians. We will be monitoring this.

We’ve also found that customers don’t really think about electricity that much until there's a power outage or when they get their bill. As an industry, we need to make sure that we really do a better job of communicating the value of electricity to our customers.

The Canadian Customer

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