Monday, August 16, 2010

How Much Is This Going to Cost Me? (A Utility’s Dilemma)

Today’s utilities are scrambling to upgrade critical power delivery systems. Whether it’s smart meters or major transmission lines, the current electricity grid needs a face-lift. For customers, the front of mind question as the recession continues to linger is, “how much is this going to cost me this time?” Talk about a communications challenge.

For large-scale electricity transmission projects this challenge is further complicated by cost socialization schemes built on the theory that many benefit from each project constructed. The utility building a given line will often provide power to multiple utilities along its path. Each new line also provides other intrinsic benefits to the entire system that only an engineer could explain. Because of these socialized benefits, the cost is often socialized as well. This is the case for the PJM Interconnection where several new high-voltage electricity transmission lines are now being proposed.

In this month’s Public Utilities Fortnightly the notion of socialization is challenged revealing a growing chorus of people who support eliminating this scheme and asking those most directly benefiting from a project to bear the cost of these lines. Their position – Ohio residents shouldn’t pay the cost of a transmission line in New Jersey.

This internal fight highlights something Potomac Communications Group continues to see as we conduct focus groups about this issue and other utility upgrades. Notably, the cost of power is difficult to explain and even socialized payment methods don’t make customers feel better about rising bills. So what’s a utility to do?

It’s important to focus on the benefits of upgrades and reinforce that old message point of building greater reliability (this continues to be one of the most believable messages after all these years). So, the next time you find yourself lost in the weeds trying to explain the costs of these complex projects, remember that a deep and logical discussion of who pays for the upgrades will never spark warm feelings between customers and their utilities. Just stick to the benefits that will have an immediate positive effect on your customers’ lives and make these messages the core of your campaign.

-- Potomac Communications Group

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