Why utility CEOs are asking the wrong question (and what they should ask instead)

By Jesse Berst

Electronomics is an ongoing series on the economics of the future electric power industry. Over the last decade, I have had the chance to talk about that future one-on-one with many utility CEOs. And to hear many of them discuss their views on panels at industry events.

When it comes to the smart grid, I think many of them are asking themselves the wrong question. This small mistake could have devastating consequences.

We all know the analogy of a space launch. Aim a rocket 1/2 inch to the side as it takes off and it will be millions of miles off target when it finally reaches its destination. Likewise, many utility CEOs are focused just a little off center. Over time, that small diversion will drag their utilities terribly off course.

What they are asking: How can my utility survive the smart grid revolution? (In place of survive, you can substitute words such as navigate, withstand, make it through, stay on keel, etc.)

What they should be asking: How can my utility prosper from the smart grid revolution?

What they should be asking: How can my utility prosper from the smart grid revolution?

Aim for survival and that is the best you will get. And it may be survival as a much smaller entity. Or as a subsidiary of another utility with a better long-term vision.

Here's why they must make this change (and I wish more CEOs got this): the smart grid's profound technology changes will be followed by profound business model changes. Unless a utility is working hard to profit and prosper from those changes, other companies will snatch them away. Ironically, utility CEOs understand how technology change has turned other industries upside down -- telecommunications, retailing, bookselling, music, newspapers, stock trading, financial services, banking, photography, etc., etc. Yet they seem to feel the electric power industry is somehow immune.