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NARUC participants explore how energy industry can catch up to the 'cloud'

Utilitiesoperate extensive, interconnected networks and are collecting more data about howtheir networks perform and how their customers use their services, but neither theynor regulators quite know what to do with all of that information.

Otherindustries rely on the "cloud" to communicate with their customers — thinkof the notification you receive on your smart phone when you've used your creditcard — but the energy sector is running behind, panelists said July 26 in the day'sopening general session at the National Association of Regulatory Utility Commissionerssummer meeting in Nashville, Tenn.

The objectivefor making better use of available data is two-fold, said American Water CFO LindaSullivan. One, "How can we provide customers better and more meaningful informationabout their usage?" she asked. Two is for the company itself. How can it getbetter information about its operations, especially when most of its infrastructureis underground?

Energycompanies are not completely ignoring the data they collect. Opower Inc. President Alex Laskey said his company, whichprovides customer engagement services to utilities through the cloud, can, for example,alert customers that current usage patterns indicate their bill for the month willbe higher than average, and then work with the customer to better manage consumption.Eric Dresselhuys, executive vice president of global development at , which providesnetworking services to utilities, said the industry was among the first to adoptthe "Internet of Things" approach, which sees everything as interconnected.(Think of your Apple Watch syncing with the iPhone in your pocket.)

However,Dresselhuys said, innovation is occurring much more rapidly than both utilitiesand their regulators can adapt.

The panel'smoderator, Illinois Commerce Commission Chairman Brien Sheahan, asked about strandedcosts resulting from cloud technology purchases. Dresselhuys said regulators needto understand that utilities will be buying platforms and solutions that will evolveover time. EnerNOC Inc.Chairman and CEO Tim Healy, whose company, now publicly traded, started out providingdemand response solutions, said regulators and utilities will want to ask if thesoftware being acquired is open and adaptable. "I want to know if other thingsare going to work with it," he said.

Withutilities investing more in computer software and potentially less in physical assets,Laskey said regulators are going to have to rethink how they treat capital and allowutilities to earn revenues on their efficient use of resources. He also advocatedfor performance-based incentives. Sullivan said accounting rules may have to bechanged as well. David Kolata, executive director of the Citizens Utility Boardof Illinois, said regulators will have to figure out cost/benefit assessments ofsoftware acquisitions.

Promptedby Sheahan to look into the future, Sullivan said the utility's overarching goalwill still remain providing safe, reliable and affordable service. Dresselhuys andLaskey both see much more of a back-and-forth relationship between utilities andtheir customers, with Laskey saying utilities will become "conductors"of the grid.

"Theutility will be perceived by the customer as a cloud," Dresselhuys said.