by Mark Carter
Posted 12/2/2013 12:00 am
Updated 10 months ago
As technology quickly evolves, the energy industry, in particular, must adapt to meet the future needs of its customers. But what will that future hold?
Entergy Arkansas was thinking of that future when it decided to leave the Entergy System Agreement eight years ago. Its roughly 700,000 customers in 63 Arkansas counties won’t notice a difference when they wake up and flick on the lights the morning of Dec. 19, but ultimately they’ll notice a difference on their bills.
Entergy Arkansas officially leaves the Entergy System Agreement and joins the Midcontinent Independent Transmission System Operator (MISO) at 11:01 p.m. CST Dec. 18. The move will mean autonomy, greater access to more electricity markets, and a savings of more than $250 million the first decade, company officials estimate. Those savings will be passed on to Entergy Arkansas customers.
The historic move comes 100 years after Entergy’s founding and represents just one way that Entergy Arkansas is preparing for the future. It is investing in new technology and in its grid infrastructure.
Since 2008, Entergy Arkansas has purchased two power plants — one near Malvern and one in northern Louisiana — to help ensure it would have adequate power generation resources after the move to MISO. Existing plants cost around $200-300 million; new ones can cost $600-700 million to build.
Plus, new technology is helping reduce voltage losses on transmission lines, accounting for more accurate weather forecasts to help plan for major weather events, helping to better gage operating characteristics and reduce congestion on the grid, and more efficiently deploy capital.
Entergy Arkansas president Hugh McDonald foresees more decentralization in the industry, more localization and more customization to individual customers.
“Where technology is going, there are more opportunities for companies to communicate with customers and understand their energy needs much more efficiently than we’re doing today,” he said. “Our customers are changing. That’s what’s exciting about where the industry is going.”
McDonald knows the industry’s future could see more people getting “off the grid.”
“Rooftop solar panels are getting much more efficient,” he said. “Fifty years from now, will everybody be off the grid? The grid could be there just for backup. How do we prepare ourselves for that future? How do we compete? Do we get into the rooftop solar panel business ourselves?”
McDonald believes the existing regulatory structure that has been in place for 100 years has to change to address this new reality. For now, he sees the new norm, post-recession, as one that includes smaller and more energy efficient homes and people using less energy on a per-customer basis.
McDonald said the cost to provide service would see year-over-year growth when the country was in the middle of its “electrification,” with revenue from that growth offsetting costs. But since 2007, revenue for Entergy Arkansas has been flat. Still, the company has to invest in new technology and in aging infrastructure. Challenges ahead include continued slower growth, infrastructure needs and cyber security issues.
“Today, the growth’s just not there,” McDonald said. “We haven’t seen the individual kilowatt hour sales bounce back to pre-recession levels.”
So, the recession made penny pinchers and energy efficiency buffs of us all. What does that mean for companies like Entergy Arkansas?
“Our customers’ expectations have changed because we’re all connected now,” McDonald said, noting that customers now feel the pinch of power outages much sooner than they used to because people are accustomed to being connected through the Internet and social media.
Through its move to MISO, McDonald believes Entergy Arkansas is in good position to meet the energy needs of its customers for the next 20 years. But, “eventually, we’ll have to build that next new power plant.”
Looking ahead 20 years, it all comes back to technology.
“When you start installing smart grid meters and you’re able to see what 700,000 customers are using at a given moment, and when customers can see that as well, we’ll assimilate that data to create information that we can use and our customers can use,” McDonald said. “That’s where the industry has got to get to in the next 10 to 20 years. Houses will be built that are smart houses. You’ll be able to remotely control your appliances. The technology is here today, but how do you get it all built and deployed?”
Technology will help companies like Entergy Arkansas make more sense out of data, he believes.
“Rather than a customer calling in to tell us about a problem, the smart meter will tell us.”