One step toward success is ignoring what you like and observing what others like, and how things change with time – I mean, really change! With that note, changes and likes brought about by millennials are a threat, and an opportunity for utilities.
My Way
I may have been destined for engineering as I rode in the humongous Ford LTD sedan with my parents. I would notice how the automatic transmission would “shift gears” with no apparent action from my parents. I would watch what they were doing just to make sure I wasn’t missing something. Were they clicking a button on the floor or was it the slightest adjustment on the gas pedal?
A few years later, I learned to drive a truck – a big truck with a clutch and gears. That was awesome. I would never own a car with an automatic transmission again. I’ve owned six cars since high school, three today and they all have manual transmissions.
Why do I like manual transmissions? Because they give me what I want when I want it – control! I don’t have to listen while the car engine is going weeee, waaaaw, weeee, waaaaw, weeee, as it climbs long hills. Do people not want control? Oh, but it’s such a hassle to drive in traffic. Pah leeese!
In my day, kids “cruised” with their cars on Friday and Saturday nights. I think this started in the 1950s. What could be more fun than driving back and forth on a street for a couple hours?
I would guess millennials are not fond of this bizarre behavior. Millennials instead use cars for transportation only, not a time-passer.
The Opportunity
Millennials are more fascinated by the Elon Musks and electric cars. To paraphrase Charlton Heston, you will have to pull my cold dead body away from my 3.4 liter, flat-six Porsche and six-speed manual transmission. The sound of the engine, and the engine itself, is pure awesomeness.
The internal combustion engine is analogous to the old mechanical electric meters – the “dumb” meters. The fact that electromechanical meters measure real power, accounting for power factor is not short of amazing. There is easily as much creative ingenuity in that design as there is in a “smart” meter.
The opportunity: Millennials are not into gassers. They more appreciate autonomous electric vehicles. Just think of all the melted transformers and new distribution lines that will be required to charge all these neighborhood EVs! That is rate base, man!
The Threat
I recently participated in a round table of small-business executives. The subject included relationships between employers and employees. Like relationships with cars, employee relationships with employers have evolved. The 1950s cruisers (people) were company lifers. They were loyal to their employer and vice versa. Late gen-xers and millennials experienced their parents losing long-term jobs late in their careers. That had a permanent effect on those kids, who are now adults in the workforce.
Let’s give the codgers reading this, including the author, a break. What were our alternatives for entertainment back in the day? Three channels of crap on TV and AM radio; life before cable and VCR. Do you know what a VCR is?
This leads to the millennial threat to utilities.
Alternatives
Ten years ago, or thereabouts, there were two satellite radio providers: Sirius and XM. They decided it would be best to merge rather than compete with each other. The Federal Trade Commission threw sand into those gears. They argued it would reduce competition; bad for consumers. On the other hand, (1) these companies didn’t exist just a few years prior, (2) they have plenty of competition with dozens of other delivery channels, and (3) there is economy of scale and cost savings available through merger. The deal went through. They are holding their own, but they must compete on content and service.
The regulated utility has guaranteed rights to customers, but it does not have guaranteed customers. Millennials, like everyone else, are irrational. I alluded to this a couple weeks ago in Powering Lives at the Lowest Possible Cost. Specifically, the biggest threat to the cable companies is cutting the cord. We can live without cable, but we can’t live without electricity. While we can’t live without electricity, we can live without the utility.
The crux: ignoring the hue and cry of captive customers first accelerates development of alternatives, and second, competition for alternatives will drive costs down fast, to utility-competitive levels. Imagine a utility call center getting a few dozen calls a day from customers who want to cut the cord. Newspapers anyone?
Bigger is no Longer Stronger
Lastly, in the 1950s cruising world of three-network television, money dominated dispersion of information. You had to buy expensive air time. That dominance has almost completely disappeared with the internet and social media. With an explosion of television and radio alternatives, it’s easy to avoid political commercials paid by big money from big donors, who typically control big companies and big energy users. Millennials, and even codgers like me, take to alternative media, avoiding this claptrap and making our lives more enjoyable and productive.
It isn’t just technology breathing down the necks of utilities. Technology is putting 20-somethings on keel with the all-important largest customers.
The Good Guys
Forty years ago, we were on the verge of running out of natural gas. Today we have more than ever. This, and other rapid development of technology, has made 20-year load forecasting a waste of time. Today, utilities have the opportunity to be energy experts; to be something like Sirius XM or Amazon.com – things I would never leave for the price and value provided.
