Navigant Research Blog

Why Electric Utilities Have an Image Problem

Richelle Elberg — April 23, 2014

Those of us involved in the cleantech industry have a tendency to roll our eyes and smirk when we hear about the backlash against smart meters or see an inflammatory, anti-utility meme on social media.  Health concerns?  What about that cell phone attached to your ear?  Profits?  Well, yes, that’s why the utilities are in business.  We’re smug in our superior understanding — and that could very well bite us in the long run.

The public is uninformed when it comes to electric utilities and how they function, and therein lies the problem.  How are utilities regulated and how does a rate of return model work?  How do different generation fuels affect the price customers pay to keep the lights on?  These are not things the average consumer thinks about.  But they understand the concept of a monopoly, and they don’t like it.  Unlike 100 years ago, when people stood in awe of their new electric lights, customers today grouse at the fact that they can’t just cut the cord when they’re unhappy with their electric utility.

Lawsuits are filed over service interruption — even when it’s caused by an event like Tropical Cyclone Sandy.  Social media campaigns espouse reliance upon solar and other renewables:  “Germany now gets 26% of its energy from solar!”   The implication is, “Why don’t we?”  But what consumers don’t realize is that Germany has some of the most expensive electric rates in all of Europe due in part to its high solar penetration.

According to an annual poll conducted by Gallup, the electric and gas utility industry had a net -1 public opinion score in August 2013.  38% of respondents had a favorable view of the industry, but 39% had a negative view (23% had a neutral view).

Electric and Gas Utility Industry Public Opinion: 2001-2013

(Source: Gallup Annual Poll on Work and Education, August 2013)

That was up 3 points from 2012, but electric and gas utilities ranked just 18th out of 25 industries, beating only such public villains as oil & gas, the federal government, banking, and healthcare.

The electric utility industry is facing some of the greatest challenges in its history, but poor public perception doesn’t have to be one of them.  As the industry evolves, effective consumer education and engagement is critical to keeping those customers as deregulation spreads and alternative energy sources become increasingly affordable.  In my next blog, I’ll discuss some of the tools available for effective consumer engagement and also point out ways that utilities can avoid shooting themselves in the foot.

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