The idea of saving money by bundling electricity and gas from the same retailer has been around for some time. Some companies can even add telephone and internet services to your bill.
But what if Google or Apple or one of the other tech giants was the sole retailer for all the utility services to your home?
Here’s what this might look like.
The multi-utility retailer
Utility retailers don’t need to own the generation (power plant for electricity) or distribution (copper and cable for phone and internet) assets.
Their role is simply to buy utility resources from asset owners, and then sell them to a customer at an agreed price.
So imagine if you could bundle in several utilities from the one multi-utility retailer.
Tech giants Google, Apple, Facebook and Amazon have shown how they can exploit valuable business opportunities by having a direct relationship with their customers.
With access to information from their online searches, purchases, social media likes and shares, they can suggest other services based on their previous behaviour.
So what if a multi-utility retailer could collect data from all of a customer’s utilities and use that to get a better deal from providers?
This concept is not too far away. Digital metering, advanced communications and big data analytics pave the way for the creation of a global multi-utility retailer.
Who gets to benefit?
A company that could integrate such technologies would be able access mass markets not bounded by the typical city, state or country limits of traditional utility providers. It could service millions, if not billions, of customers.
The primary benefit to a multi-utility retailer is access to big data from customers. This would allow them to create innovative tariff structures and offer conservation products and rebates.
Other benefits include:
- using customer demand data analytics to optimise utility grids
- reducing peak demand and thus prices through timely feedback of data and/or appliance control
- offering a range of new services such as more efficient devices and equipment such as solar cells, battery storage, rainwater tanks, etc.
What about the customers?
Customers would have access to all their utility billing and usage information in one place, through a single web portal or phone app.
With near real-time access to all of their data, they would feel they had far greater control over their combined household bills.
They would get detailed reports on when (time of day, day, month, seasons, etc.) and where they used a particular utility resource.
They would then be able to monitor their consumption against budgets, and take advantage of any conservation products and rebates.
The overall aim would be that customers should benefit from lower utility bills.
What are the challenges?
While feasible, several challenges would slow the introduction of a multi-utility retailer.
The foremost is the traditional natural monopoly arrangement of the utility sector. This is often government-owned (for example, Sydney Water, Energex), extensively regulated and mostly protected from private sector competition.
But given that utility retail functions mainly involve only the monitoring and billing of demand, this is relatively easy to open to private companies.
Governments undoubtedly hold the keys to unlocking the potential of multi-utility retailer business models. This would force traditional utility operators to negotiate with retailers on alternative wholesale pricing models.
Governments would also need to introduce some monopoly safeguards, to make sure no single multi-utility provider stifled any competition.
Too much information
Beyond these regulatory challenges, there are a number of other barriers to the entry of a multi-utility retailer. Privacy is understandably a major community concern for people in the digital age.
Digital metering captures extensive demand information on customers.
Customers would need to feel confident that any multi-utility retailer had sufficient ethical and cyber security obligations to be a trustworthy custodian of their data. There is already some good advice available on this issue.
Digital metering technology and information systems are becoming affordable and reliable to implement. But a number of technical challenges still detract from their widespread implementation, such as the reliability of any communications network.
While these and other challenges are significant, they are not insurmountable.
They can be overcome with appropriate government championing and regulation, targeted research and development, pilot trials, robust software engineering and passionate business entrepreneurship.
So don’t be surprised in the next decade if Google, Amazon or some new technology behemoth sends you an offer to take advantage of their new multi-utility service.