Podcast (localenergyrules): Play in new window | Download | Embed
Subscribe: RSS
I wanna start by reading a quote from a story that was published in Midwest Energy News today, January 19th, that I think gives some excellent background on why it is that we want to talk with Mary from Green Mountain Power. So I quote, “since Mary Powell became the president and CEO of Vermont Green Mountain Power in 2008, the utility has made Vermont a regional leader in solar energy, installed the state’s largest wind farm, launched various smart grid and distributed energy programs, and became the first utility in the world to achieve a B corporation certification.” And I would add a few more accomplishments to that list from my own background, that it was that your company has set a value of solar higher than net metering rates, supported an increase in net metering capacity, has implemented solar sharing, has worked on microgrids. You know, frankly, this list of accomplishments, Mary reads an awful lot like a utility industry list of threats to the business model. So why does Green Mountain Power think the distributed power can work for a system that’s historically so centralized? And so we really found, and it’s proven out to be true because we’ve actually lowered rates, or bills three times in the last four years, where we’ve been able to dramatically ramp up renewable energy and do it in an extremely cost effective way. So at the same time that we’re doing it in a cost effective way. And some of that has included much more classic large scale utility type of renewable energy projects like you cited at the beginning of the program in terms of our building Vermont’s largest wind farm. But, one of the things we’re really excited about is how we can help communities, homes, and businesses over the next probably decade or two, transform to a system that is not so dependent on the bulk system, but is one that is really fostering community home and business based energy solutions. So we are leaning in heavy to that and we are creating through all different partnerships and methods ways that then through delivering that, we call it energy as a service model, that we’re creating new value streams that come back into the company. And new, you know, with that also comes new and different types of investment opportunities. So in my mind it’s very compatible with the traditional business. It’s just really innovating around what does that new value proposition look like and how, as an energy company of the future, energy services company of the future, can we add value to the homes and businesses we serve? And in that, of course, find where your value stream comes back to the organization. So the really neat thing for me about this as an example was that, we did it in the home of the father, it’s a mother and father who have two small children. He’s a bus driver, she’s a special ed teacher. We did it in a way that was cost effective for them. It was gonna drive down their energy consumption over time, made their home more comfortable, gave them technology to be able to control their home. And in that whole suite of products and services, we are creating value streams and opportunities to bring value back to Green Mountain Power as part of that transformation. So it could be as simple as we’re gonna help you with air source heating and cooling, or it could be as simple as we are going to leverage storage in your home and help you through our leasing program. Or it can be the ultimate of what we’re going after, which is really comprehensive and complete energy transformation. But if we could do, learn how to do it in a way that was, again, fast, fun and effective, because your typical experience, at least mine before joining the industry was things took a really long time. You had to talk to a number of people thinking it was not an industry that seemed poised, certainly poised for reinvention, but even poised to sort of keep up with the demands of the modern world. So much of it was about transforming the culture, and then that really led, as I became the CEO to saying, How do we take those same attributes and really tie it more to where we’re going strategically and how we think about our power portfolio and how we supply energy to Vermonters. So that’s, I feel very fortunate to operate in Vermont for many reasons. I mean, we are a smaller state, so, I think that the important thing is to find the points of commonality. And when I first came here, I had in one of my many stints, I’ve done, I actually had worked for state government for a few years. And so when I got to Green Mountain Power and there was kind of this attitude of the regulators, almost the enemy, I was like, Oh my gosh. Like there, like there are people there that are like smarter than you, like <laugh>, and they want the same thing, right? They want what’s in the interest of the customer. Like we should all, like what we all getting back to customer obsession, the thing, whether you’re a legislator, you’re a regulator or you’re an executive, really, I mean, really at the core, we should all be really focused on the customer and being focused on what is in the best interest of the customer over time, and with a world that’s rapidly changing, again, I think that we have ways to think about this and I’m really appreciative of the creative environment I operate in where the legislature did pass a law that actually encourages the other utilities as well as Green Mountain to move into innovative programs and services on behalf of Vermonters. Because that is ultimately one possible path towards really ensuring that we do not have the death spiral, which would be bad for society. I mean, it would be bad for everybody if we’re dealing with large, major important parts of infrastructure going belly up or getting so expensive that we almost wish they did go belly up, right? So this, this leaning into this kind of a model and saying that by playing in both the new world and the old world, we have a chance I think to keep costs very, very competitive and also be an innovative leader. So I think that is available to any executive, legislator, or regulator that really wants to embrace thinking about the model from a very different perspective.
Mary Powell:
You know, what I think it really drives home is that when you focus on the customer, the community, and the broader suite of stakeholders, that is where you find the real opportunities to think differently about how you serve society, how you serve your customers. It’s what breeds a lot of innovation in your thinking. And ultimately, my view is, you know, whoever your ultimate stakeholders or investors, you ultimately also become a stronger financial entity as a result of that type of focus. So yeah, from my perspective, as we were looking to the future and we were looking at that next level of transformation that we wanted to be a part of, we really were excited to join the B Corp community and to go through a very rigorous process of being certified.
John Farrell:
You’re doing community solar, offering energy storage to your customers, making an all solar microgrid. What kind of investor-owned utility do you think you are at Green Mountain Power? Unlike any other investor-owned utility in the nation, Green Mountain Power is registered as a benefit corporation. It’s a designation that allows the company to pursue sustainable goals alongside their bottom line. That means, unlike almost any other investor-owned utility in the nation, customer empowerment and renewable energy are key to the business. Mary Powell, CEO and president of Green Mountain Power talked with John Farrell back in January about what it means to make energy into a service and how utility can transform itself into societal good. This is Local Energy Rules, a podcast sharing powerful stories about local renewable energy.
Mary Powell:
Oh, great question. So, yes, I would say you’re right. It does read like a list of the threats to the industry and, you know, that probably really sums up why we as a company that really sees ourself working hard to become the energy company of the future, are actually leaning into those very threats. So, you know in my experience, you can view disruption as a threat in your industry space, whatever industry you’re in. Or you can look at it as an incredible opportunity to start to think differently about your business model and to embrace innovation around your business model. And, you know, for us, embracing of innovation of the model, which then really gets back to that list, is really, really based in one, really strong cultural attribute of our organization, which is that we really are customer obsessed and we operate in a state where our customers are really interested and obsessed with moving forward in a way that is low cost, but also low carbon, incredibly comfortable and incredibly reliable. So yeah, we have really taken a position of leaning in to some real disruptions in the space and thinking about how we can leverage those disruptions in a way that benefits all of our customers and also really creates a platform for innovation for the future.
John Farrell:
So, a lot of utilities have historically made their money, or supported the business by building very large scale power plants that capture economies of scale, very often, although changing more recently, the more energy they sold, the more money they made, but especially shareholder owned companies made a return on investment when they made big investments in infrastructure. So high voltage power lines and new power plants. So how can Green Mountain Power, you know, encouraging its customers to invest in these things like distributed solar or electric vehicles, how can it make money in the 21st century doing something so very different from what utilities have done for decades?
Mary Powell:
Yeah, so again, my view is, when change is gonna happen, the best way is to embrace it and focus on how you can create a new and different value proposition for yourself and your company and for your customers as you look to the future. So, on many levels we’re excited about the disruption that’s happened in solar. You know, going back to you referenced, 2008 and the energy vision that I launched, as well as the fact that we actually led the discussion around valuing solar in our state by creating a solar adder that we gave our customers that wanted to put rooftop solar on their homes. And we came to that through really aggressively analyzing how can we go in this direction that we know our customers wanna go in, but do it in a way that creates value for all of the customers that we serve.
John Farrell:
So, you know, I would love for our listeners, are there a couple of things, I’ve read about some of the stuff that you offer. You know, there’s the power wall battery pack that folks could purchase, and then you allow people to finance that on their electric bill. Is that an example of something that you’re talking about, electricity as a service or energy as a service?
Mary Powell:
Absolutely. That’s a great example. I would say a way to now double click that and look at a bigger example is really doing it in the context of we’ve now completed about 112 what we’re calling energy homes of the future. So not just are we doing, we’re gonna be adding storage as a possibility in that energy home of the future. But the basic of it that Secretary Manese came to see was that we went in and we utilized on on bill financing to do dramatic weatherization, efficiency retrofits of the home, as well as to completely convert to air source heating and cooling systems, air source hot water. We did, we worked with a solar company to get solar panels on the roof, and we also created technology capabilities for the customer where they can be controlling their heating and their cooling, which is the biggest driver of energy costs, off of their iPhone.
John Farrell:
So I think one thing that’s an important background piece that I mentioned in the intro, it was in the article for Midwest Energy News is that Green Mountain Powers stands out as being the only electric utility in the United States to be registered as a B corporation. And as a bit of background for the listeners, that means, as I understand it, that Green Mountain power is required to consider the impact of their decisions not only on shareholders, but also on society and the environment. And I’m curious, is that sort of solve the problem for, or that that tension that for many utilities, that tension between their own financial wellbeing and their customers, is that a key piece of this? Is it a part of this? Where do you see that being?
Mary Powell:
Yeah, I was just so, so pleased when we made that that move and it was really a tremendous day to have Ben and Jerry of Ben and Jerry’s here in here in Vermont, celebrating with us as we made that amazing announcement. You know, from my perspective, I’m actually amazed there are not more organizations, whether they’re utilities or non-utilities, that are not actively pursuing something like a benefit corporation status. And the reason I say that is because, in my business experience, which is of course, you know, I’ve been in this business for quite a while, but I’ve been in many other industries, what I think it really drives home is that when you focus on the customer, the community, and the broader suite of stakeholders, that is where you find the real opportunities to think differently about how you serve society, how you serve your customers. It’s what breeds a lot of innovation in your thinking. And ultimately my view is, whoever your ultimate stakeholders or investors, you ultimately also become a stronger financial entity as a result of that type of focus. So yeah, from my perspective, as we were looking to the future and we were looking at that next level of transformation that we wanted to be a part of, we really were excited to join the B Corp community and to go through a very rigorous process of being certified.
John Farrell:
So I was curious, you know, this feeds beautifully into the next question, although maybe that’s cuz I wrote it. That given so that so many utilities are publicly granted monopolies, and are facing many of the same challenges that Green Mountain power is dealing with so successfully, you’ve sort of already answered this, do you anticipate other utilities becoming B Corporations? You know, if you were to go head up a different utility, would you recommend it to the board and do you think that it would be wise for other utilities to consider this as well?
Mary Powell:
Yeah, absolutely. I mean, just because as I said, I fundamentally believe that it is a model that works. It’s a model that, I’m obviously, as you can tell, a firm believer in, pushing boundaries, creating a culture of innovation and collaboration. And I think that through innovation and collaboration, no matter what industry space you’re in, you get to better and different solutions and you’re sort of guaranteed to always be forward looking and forward moving. So to me, being a benefit corporation really ties in very well with that. And I think particularly in a business where you’re providing, at the end of the day, a really critical essential product and service to society, to say that you want to go about doing that in a way that is providing benefits to multiple stakeholders and to the communities that you serve and the environment. I mean, my gosh, it’s very, very intuitive that any business would wanna do that, but certainly that a utility would.
John Farrell:
I’m interested in what you talked about there about it sort of a culture change at Green Mountain Power when you came on in 2008, and it, because it made me think of an experience I had last year. I was visiting some folks in Tucson, or I had been invited there by some folks in Tucson who were really focused on expanding solar power and felt like they had been fighting with their utility there, Tucson Electric Power. And I remember one of the meetings that I was at was with some county and city officials and there was a utility representative there, and they had invited him there to kind of offer comment on some of the remarks that I made about the shift to solar and the opportunities there. And he had some critiques of the things I said, but ultimately what he said I thought was very interesting was that we are a very conservative institution that we come to work every day to do what we did yesterday. We have this whole warehouse full of things that we experimented with that didn’t work out. And we weren’t rewarded for that. And so our management is essentially telling us, don’t experiment. Don’t think out of the box, don’t try to innovate, just do what you’re good at. And so I’m curious, how did you bring about that culture change at Green Mountain Power? Did you feel like there were other allies within the utility? Did you feel like it was really a hard slog? Because that story just made me think that, this isn’t so much just a matter of changing policies, but it really is about a cultural shift that’s going to have to take place for a lot of these utility companies that are very fixed in the way of doing things that, and fixed in part by the rules that we created for them.
Mary Powell:
Yeah, for sure. I couldn’t agree more with your comment on the importance of culture. I, one of the many lines I like is culture eats strategy for breakfast every day, <laugh>, so, and that is, and really the work that started here really did start to that point as a cultural transformation. And I’m sitting talking to you from what looks like, you know, I call it a colorful Costco, if you’ve ever been to a Costco big box store, it’s a big wide open space, and I work at the same desk as everybody else in the organization, and I operate out of a standup desk in the busiest part of the building. And that’s no matter where I am in the state, that’s what I operate from. You know, so a huge part of how this all started was in really, and actually I called it becoming the un-utility. The whole goal was to really become an organization that was customer obsessed, that was really fast, fun and effective, was the credo. How do we become fast, fun and effective? Because in my experience coming into the industry, and again, I don’t mean to, it’s like many industries, right? It’s a vistage of decades and decades of a certain approach being kind of solidified and codified over the years and reinforced from many different directions. But as an outsider, when I came into it, my view was, oh my gosh, we could just be accomplishing so much more and delivering so much more value to Vermonters if we could learn how to do all those really important critical, basic things we have to do.
John Farrell:
You know, what’s interesting to me about the utility sector is that unlike so many other businesses that might have that kind of conservative culture, the utility sector is heavily regulated. And in fact, in many states like mine, Minnesota, the utility company is a monopoly, and they’re the only game in town. And there were many great reasons that they did that. And as you mentioned, things are changing really fast for the utility company, , and yet they have that culture that’s such a challenge. So I’m curious, given that they’re heavily regulated, you have legislators, you have utility regulators, and public service commissions, that are dealing with this struggle between, in some ways between utilities and customers, for those utilities that kind of haven’t figured out how to align the two, what’s the best piece of advice you could give those legislators or utility regulators as they’re trying to write the rules of the 21st century grid and to deal with these culturally conservative institutions?
Mary Powell:
Mm-hmm. <affirmative> Yeah, that’s a great question. So as you probably know, I mean, we’re in the same situation. We’re a monopoly regulated utility. And one of the things that really revealed to me was what an incredible opportunity we actually have. I actually think those that are operating, those legislators, those regulators, those executives that are operating in those states, I actually think we have an incredible leg up actually in innovating to a much more consumer oriented model in the future than some of the states that have now created an incredibly complex system through deregulation. So I’m a contrarian in many ways, and that probably surprises you to hear me say that again in this space. I actually think that we, those who did not deregulate have a competitive advantage to creating a new model in a way that is most cost effective for customers.
John Farrell:
I think that’s really interesting about this notion of the competitive advantage in the states that have the more heavily regulated industries. And it’s not entirely surprising because we’ve found, or I find that, I’ve read that in many of these states with deregulation, sort of the entire focus was on the notion of lowering rates for people and lowering costs and not so much focused on the wide breadth of things that you’ve talked about in terms of being customer oriented and customer service. I’m interested, can you say a little bit more about what you see as the competitive advantage in the regulated environment? Is it that you are insulated to some extent from sort of making a bad bet in innovation? Is it because the regulators can work with the utilities and there’s kind of that more, much more intellectual capital? What is it that, that you see as being an advantage?
Mary Powell:
Yeah, I was for the latter. I mean, I think it comes, really would depend on the jurisdiction you’re in. So I can really speak obviously, the best of Vermont, but I think it gives us an advantage on innovation, I should say, because it’s easier to get your arms around the different parts and pieces of the system and to figure out how to do it in a way where all boats rise and you’re still creating incredible opportunity for the solar companies, for the distributors of air source heating and cooling technology, for, So again, it’s, I think it provides a leg up because we have no complexified our system as much as where we have in some of the other states where we have really created so many silos and mouths that need to be fed <laugh> in a system where really I think the competitive advantages, the intellectual focus can really go much more towards innovation.
John Farrell:
That was Mary Powell, president and CEO of Green Mountain Power, talking with John Farrell, ILSR’s Director of Energy Democracy. More information on benefit corporations and other policies and practices can be found on ilsr.org, where you can also find 35 more Local Energy Rules podcasts. Until next time, keep your energy local and thanks for listening.
“We just need to become the Ben and Jerry’s of the utility world!”
So said Mary Powell (pictured left), CEO and president of Green Mountain Power, as she announced in 2014 that her electric utility had just earned B Corp certification, making it one of more than 1,700 companies in the world committed to rigorous standards for sustainability, accountability and transparency.
Nonprofit B Lab administers the B Corp designation, which has drawn companies spanning 50 countries and a range of industries to expand their commitments beyond traditional shareholder returns — though Green Mountain remains the lone utility in the bunch.
The movement toward corporate social consciousness has led to legislation in 31 states that allows businesses to classify themselves as “benefit corporations,” a structure whose priorities align with the B Corp philosophy.
For an electric utility, that means moving from just selling energy, toward “energy as a service.” We’ve written about them before. Back in January, Powell talked with John Farrell about what it means to make energy into a service, and how a utility can transform itself into a societal good.
Just B-Cause
Green Mountain Power does some cool things. They once helped expand net metering in the state. They retrofit homes with solar and energy efficiency products through on-bill financing, saving one household more than $500 a year on their energy bill. They built one of the nation’s first all-solar microgrids. They’re offering energy storage to customers. They’ve mapped out their distribution circuits (shown below) to help solar developers see where’s there’s room to grow. Even while adding more renewable energy to their fuel mix, they’ve lowered their electric rates three times in the past four years. The list could go on.
It begs the question: why aren’t all electric utilities designated as benefit corporations or B Corps?
To Powell, it’s a no-brainer. “It’s very very intuitive that any business would do that,” she says, “but certainly that a utility would.” Because electric utilities provide essential services, they must realize that they serve multiple stakeholders in society. The community. The environment. And the customer, first and foremost.
Though the strategy picked up momentum when Powell took the reins in 2008, it traces through Green Mountain’s history. The utility was able to nail down B Corp certification without changing much about how it operates.
Separate from keepings rates low for its customers, Green Mountain shapes its business in part around another goal — delivering healthy and stable returns for Gaz Metro, the Canadian energy company that bought it in 2006. Green Mountain net income hasn’t dropped since it became a B Corp, showing environmental and social responsibility don’t necessarily cut into cash flows.
Green Mountain Power leans into what are usually perceived as threats to the utility business model. The utility, a regulated monopoly, believes it has a foot up over more complex, deregulated states. The utility can easily find points of commonality with the state and communities. It can play in the world of centralized generation while moving toward distributed, renewable, flexible energy. It can innovate and encourage others to.
“The goal is to create a new value proposition,” Powell says.
Culture Shift
The electric utility industry has built large power plants and long power lines for years. Things are done like they’ve always been done — slowly, talking to a number of people, moving through the motions of regulation. “Like many industries, it’s a visage of decades and decades of a certain approach,” says Powell.
But Green Mountain Power, with a gift of monopoly control, sought to become the “un-utility,” says Powell, “really become an organization that was fast, fun, and effective.” It was a culture shift that enabled it all. Powell works in the same “colorful Costco” of an office as everyone else. People can come and go as they please. Everyone understands that the customer is at the core of the business model.
“One of the many lines I like is that culture eats strategy for breakfast every day,” says Powell.
For more on Green Mountain Power and utility B Corporations, see this ILSR post from October 2015, asking whether there should be a Plan B for every monopoly utility.
This is the 38th edition of Local Energy Rules, an ILSR podcast with Director of Democratic Energy John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies.
Local Energy Rules is published intermittently on ilsr.org, but you can Click to subscribe to the podcast: iTunes or RSS/XML.
This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.
Photo Credit: Pixabay via CCO/Public Domain License
