Energy information transparency… When in doubt, talk it out.
The Megawatt Hour just participated in two panel discussions that raised questions about the products and services we provide. While our articles usually focus on energy technology and markets, we thought it made sense to answer some questions that are often raised about information, transparency and MWh products and services.
First, bear with me here while I use an analogy to describe the benefits of more transparent customer information.
When I was in the sixth grade my mother worked at a School that I did not attend. As a favor, she offered to get a record out of her School library for my school project. Yes, a vinyl record. I did not have fantastic organizational skills at the time. After I completed the project, I left the record out in my bedroom, shoved in a corner near a window.
When the time came to return the record to the School library, the sun had melted the vinyl. The record was ruined. I panicked, knowing my conversation with my Mom about the care of the record would be unpleasant, to say the very least. Instead of coming clean with her, I squeezed the warped record back into the album cover and clumsily attempted to tape the gaping cover closed. I handed it off to my Mom, and hoped that she wouldn’t take notice.
So what does this story have to do with energy information?
Needless to say, the conversation after that failed attempt at returning the record to the library was far more painful than the initial one would have been. The lesson from those moments of horrendous judgement have stuck with me. When in doubt, talk it out. (I just came up with that . . . ) We owe the same level of honesty and clarity to our energy customers. Sometimes people in the industry will say something like “transparent information like what the MWh provides is a double-edged sword.” We think that what they mean by this is that it may lead to more and more difficult conversations, and customers and clients who are more challenging and costly to serve. To this attitude we simply say: not if you manage the information and communication properly. Not if you are having the right kinds of conversations early and often.
How does this technology seek to benefit end-user customers?
MWh technology significantly reduces the inefficiency and heavy lifting associated with accessing energy data. Data access under our platform is entirely automated — the MWh software does all the work. In addition, once software users see the big picture in the software’s analytics, they gain the peace of mind and confidence that comes with control over their energy information. Users can clearly see the impacts of their energy decisions. They can demonstrate their expertise to internal constituencies and deliver better business outcomes for their companies. They can quantify and explain the tradeoffs between risk and cost that inevitably arise in financial management. As a result, customers report a new confidence in their approach to previously difficult energy decisions.
Empowered with access to and analysis of their own energy information, executives can manage through shifting priorities, dynamic markets and changing circumstances (for example, a global pandemic). In addition, the effort required to reach a decision is drastically reduced, freeing up resources for other priorities.
How does this technology help retail brokerage firms or retail suppliers serve customers?
Our industry has consistently over-promised and under-delivered when it comes to customer savings and risk management. Once a customer can review data and analyze how their decisions have translated into risk management and/or savings, their skepticism about the value of competition disappears. Their confidence in their partners increases. Market players wonder how clients respond to information comparing potential outcomes/risk-reward tradeoffs. Pictures and graphics tell a story that supports customer engagement and competitive markets.
The Megawatt Hour helps brokers and suppliers visually describe and explain the pros and cons of different procurement strategies. The arms-length nature of our software services brings greater credibility to the supplier/broker and customer conversation. After a transaction or investment, The Megawatt Hour continues to track the performance of the customer’s decision. In addition to adding transparency and credibility to the reporting process, the software automates and streamlines reporting for brokers and suppliers, lowering the cost of service.
What were the key takeaways from the conversations with consultants, advisors and suppliers in the energy industry?
Key takeaways include:
- Data automation and access. Utility data access continues to be challenging for businesses all through the energy supply chain. The Megawatt Hour’s founders have expertise in retail markets. We know what information suppliers, brokers, and customers need in order to make informed decisions. There is a role for suppliers, customers and vendors to advocate for more complete, streamlined access to utility data across the supply chain and across all geographies.
- What size customer is appropriate for this level of reporting? Because the software automates data access and reporting, there is no customer that is too small to analyze. Often smaller customers with less time and capacity benefit the most from MWh software. Brokers and consultants who find medium to smaller customers too time consuming to serve can streamline and automate service to small-medium businesses. Larger customers with multiple accounts and complex contracts will end up using the software to get a clear picture of all their facilities. And they may access the software services with greater frequency.
- “Information as double-edged sword.” Do we really want arm’s length, transparent reporting for clients? While brokers, consultants and suppliers can choose the level of reporting they desire for their customers, The Megawatt Hour would advocate for more information and transparency, not less. Customers benefit from understanding the risk-reward tradeoffs between different strategies.
Bottom line for suppliers, providers and customers.
Customers are ultimately grateful to the partners, consultants and brokers who engage in a conversation about risk-reward tradeoffs. The Megawatt Hour finds that customers value information that tracks the success of certain strategies and/or makes the case to change course. The industry benefits when we improve reporting and transparency. We have only to look at the impact of improved access to information about asset pricing (take, for example, the Bloomberg terminal) in wholesale financial services to understand where the energy industry is heading.