Placing customer preferences, small-scale technology, and emergent business model trends at the heart of energy forecasting
The Strategic Asset Management model (SAM) has been at the heart of thinking inside regulated network asset businesses for decades. The model acknowledges the role of three key functions inside these businesses: Owner, Manager, and Service Provider. The uses of this model have been numerous, including in organisational design to create appropriate role separation and tension; management governance of investment planning and approvals; and in risk management.
But the fundamentals of the electricity industry have changed. Small customers have more options for satisfying their energy needs than ever before, and they are using them in large numbers. As a result, the industry has observed that its historically-effective approaches to energy forecasting have become inadequate.
The real challenge here is that regulated network businesses, and their asset managers who commonly lead the forecasting process, are expert at planning assets to support linear growth in energy demand, but inexperienced in understanding what drives their customers’ new investment and usage behaviour; indeed, too many have focused only on the behaviour of their regulator. Relatively recent changes by the AER to call for network companies to engage with their customers as part of the determination process are laudable, but fall short of what a customer-centric network business should see as customer intimacy.
CASAM – MHC’s Customer and Strategic Asset Management Model places the customer at the centre of forecasting and planning, as well as operations. It links demand forecasts to customer-deployed technology options (and their costs and trends), innovative business models being advanced by typically new entrants (e.g. fixed price offers, leased PV), as well as broader economic trends.
CASAM advances the language and needs of the customer in a regulated business, across all the functions of asset ownership, management and service provision.
CASAM is not a rigid doctrine for how to organise a network business. Rather, it is a series of questions and conceptual models which allow a Board or an executive to check how well the business is oriented to their customers.
The role of the network is changing, and rapidly. Is your organisation design sending all the right messages and beating the path to being customer centric?
