Consistent and Transparent Communication a Win-Win For Sacramento Municipal Utility District

Consumer awareness of carbon-mitigation initiatives undertaken by utilities continues to be very low, despite the growing national attention on climate change and the environment. This realization, based on recent research from J.D. Power, is prompting a growing number of leaders in the utility sector to reexamine their communication strategies around sustainability objectives. 

It is a perception that is not matched by realities in the field. The fact is that quite a bit of progress has been made toward carbon-zero objectives by many utilities. The awareness gap is very likely a byproduct of utility providers’ traditional focus on operational or engineering aspects of their business. Only recently have we seen leading utilities acknowledge the strategic importance of elevating customer engagement in general, and around sustainability initiatives in particular. It is an area of activity that will have to rise since most clean energy plans inevitably require some level of customer support to make big changes in infrastructure happen.

The current lack of awareness of utility sustainability efforts raises a critical question: Why? There are, of course, many reasons, but three key misconceptions — or myths — are behind many of them.

● Myth No. 1: Nothing is being done. The belief that utility providers are doing nothing — or are only in the early planning stages of rolling out sustainability programs— is simply not true. In fact, 60% of electricity generation in the United States is currently subject to clean energy legislation, regulations or goals that mandate zero-carbon power delivery over the next few decades. The industry has made significant strides, with several utilities well on their way to meeting key objectives within the next decade. This achievement is notable considering energy providers were the top producer of carbon emissions in America just a few years ago, which is no longer the case.

● Myth No. 2: Customers don’t care. Supposedly, most customers harbor a nonchalant attitude toward climate change. J.D. Power data tells a different story. When surveyed, most customers say that climate change is a serious issue. Only a small portion of customers believe it is not a major issue, a percentage that has fallen every year since J.D. Power started measuring how utility customers perceive this issue.

● Myth No. 3: Keeping quiet is the safest approach. Concerns about political sensitivities surrounding climate change discussions have prompted some utilities to keep communications about sustainability initiatives low-key. They want to avoid stirring the pot. The data, however, shows that most consumers want to play a role in business-like climate change conversation. When presented with reasonable and actionable options to become a part of sustainability solutions, many consumers are willing to advocate and endorse utility efforts to reduce carbon emissions. Keeping customers in the dark obstructs the path to compliance with mandates to which utilities are ultimately accountable.

More importantly, most clean energy plans require behavior changes from customers. This could be as direct as encouraging customers to use electric vehicles, or it could be more subtle such as encouraging people to use electric at different times of the day when there are more renewable resources available. Electric utilities need to support their customers to make these changes a reality.

It Takes Two to Tango, But One to Lead

Utilities would do well to ignore these myths, while recognizing that a nuanced approach will be required to engage and harness their customers in the effort to achieve sustainability objectives. Strong leadership will be needed to develop a deeper understanding of different audiences. Ideally, utilities will segment and tailor outreach about climate change initiatives because all customers do not react to — or engage with — messages in the same way. That is why Voice of the Customer (VoC) initiatives will be a critical success factor for achieving sustainability objectives.

It would be a mistake to view sustainability messaging solely as a goodwill effort with so many business benefits for improving customer engagement. A growing segment of the investment community now focuses on environmental, social and governance (ESG) parameters to guide their capital allocation strategies. As investment firms evaluate utilities that have announced aggressive sustainability initiatives, analysts are correlating customer awareness of sustainability efforts with a utility’s strategic commitment to ESG principles.

More importantly, when complex, capital-intensive construction projects associated with environmentally friendly plant upgrades are not clearly explained, it can significantly impair customer receptiveness. This often has the effect of reducing the ability of utility providers to build the necessary infrastructure to support renewable sources of energy. Poor engagement with business and residential customers on this issue can even open the door to strong resistance.

The good news is that we are beginning to see progress.

A Case in Point

The Sacramento Municipal Utility District (SMUD) — a community-owned utility in California and one of the 10 largest public utilities in the United States — is a terrific case in point. The company recently completed and passed the J.D. Power Operational Performance Assessment based on performance against these best practices with an overall sustainability leadership score of 85.5 (on a 100-point scale). This performance, combined with one of the strongest responses from their customers, allowed the team at J. D. Power to recognize SMUD as a Certified Sustainability Leader.

The utility’s 2030 zero-carbon plan — the earliest target set by any large utility in North America — has set the company apart as an industry leader in climate change. The company is already on target to meet its emissions reductions goals ahead of schedule.

This progress reflects a disciplined commitment throughout its operation. SMUD has integrated climate change metrics and considerations throughout its management structures by designating a zero-carbon officer on the executive team to ensure a climate-change focus on internal and external operations. Indeed, SMUD has included all its suppliers in its carbon disclosure reports.

Energy providers that aspire to achieve the same level of progress will need to establish the required research and communication discipline to ensure a climate-change focus on internal and external audiences. Utility companies announcing ambitious plans to mitigate climate change trends will have to engage more effectively with business and residential customers to reach their goals.

About the Author

Dr. Andrew Heath is the managing director of the Utility Practice and senior director of utilities intelligence at J.D. Power. He is responsible for J.D. Power’s water, natural gas, and electric customer satisfaction studies in the United States and Canada, as well as the company’s Utility Digital Experience Study. Dr. Heath has more than 30 years of experience working within the utility and infrastructure sectors in both the United States and the U.K.