By Jill Feblowitz and Kate Rowland

WELCOME TO THE THIRD ANNUAL UTILIQ RANKING

of U.S. electric utilities - a list of the top 25 intelligent utilities based on a detailed analysis by IDC Energy Insights and Intelligent Utility magazine. The UtiliQ analysis provides utilities a way to benchmark progress against a set of metrics that are consistent, but also provide room to accommodate changes in this dynamic industry. The aim is to provide a fact-based analysis based on disciplined studies. For the third year in a row, San Diego Gas & Electric has taken the top position on the UtiliQ list. The company has worked hard to develop and deploy a well-planned road map and business plan for smart grid initiatives, supported by farsighted IT spending. This is what has ensured its place at the top of the list. Pacific Gas & Electric Corp. and Austin Energy follow in second and third place. This year, Arizona Public Service has emerged in the top five utilities, along with Southern California Edison.

What is an intelligent utility?

An intelligent utility is one that is productive, uses resources wisely, deploys information and technology to the best advantage, provides options to its customers, maintains reliability, and runs a sustainable business. The intelligent utility is steadfastly and thoughtfully re-aligning its objectives, business processes and technology to prepare for the future. Becoming a more intelligent utility requires more than technology investments; it requires a real investment in people and processes, too. It is our intent to provide a way for utilities to benchmark their intelligence and measure progress against their stated goals and objectives. Even after three years, we view the UtiliQ ranking as an ongoing effort that will continue to evolve over time, as it has every year since its inception.

What has changed in 2011?

Every year, due to the diligent efforts of many organizations within the industry, the quality and consistency of data available has improved. With better data, we are able to do a more thorough analysis. We have also seen a shift in what is getting attention. Now that many foundational technologies have been implemented, utilities will see demand response as the top initiative for the next three to five years. Utility executive leadership will need to learn as much as possible about how to deploy technology to maintain reliability, affordability and efficiency. In this respect, utilities have a lot to learn from peers that have years of experience with traditional load control programs. Much can be learned as well from new programs such as critical peak pricing, critical pricing with load control, demand bidding buyback, real-time pricing and peak time rebates.

UtiliQ methodology

The UtiliQ ranks utilities using an intelligence quotient (IQ). Companies with IQs over 120, in this analysis, exhibit very superior intelligence compared with other U.S. electric utilities. Companies with IQs over 140 are at neargenius level compared with the rest of the industry. The current ranking is based on a company’s performance using five quantifiable intelligence metrics:

Productivity An intelligent utility is a productive utility, measured by revenue per employee.
Renewable energy An intelligent utility has a commitment to renewable energy as part of its resource portfolio (measured by renewable energy sales, renewable energy customers and renewable capacity defined as wind, solar and biomass, not including large hydro).
Smart grid initiatives An intelligent utility makes investments in developing smarter grids. (Smart grid intelligence is based on the level of investments in smart metering, as well as smart grid initiatives.)
Demand response/energy efficiency (DR/EE) An intelligent utility allows consumers to manage their energy usage and costs. (In addition to energy efficiency programs, we made the decision to include participation in all types of demand response programs, whether these are the more traditional programs, such as load control, or newer programs.)
IT investment An intelligent utility invests in information technology to enable business process improvement (measured by IT spending as a percentage of revenue and on a per-employee basis).

This year, we applied a factor to the entire score for sustainability based on whether a utility has senior-level sustainability or corporate social responsibility officers and an annual sustainability report. We also decided to drop power authorities that serve a wholesale function, as these companies have few retail customers, which makes a comparative analysis different. (That said, both TVA and Bonneville Power Authority are exemplary for investment in energy efficiency.) Finally, we decided not to include penetration of newer technology, such as electric vehicle incentive programs, as these programs are in the very early stages of development.

This year, too, UtiliQ benefited from more comprehensive sources of data than in previous years. We strive to use published studies based on a consistent methodology wherever possible. Data sources included SNL Energy, AWEA, SEPA, NREL, FERC, the Consortium of Energy Efficiency and the IDC Energy Insights Worldwide Quarterly Smart Meter tracker. Where studies are not available, we supplement data using utility Web sites and annual reports. As a result, the 2011 analysis is based on better data on renewable generation, as well as energy efficiency, demand response, and smart meter implementations at the utilities.

There were some changes since last year, besides having more comprehensive data upon which to draw. It is clear that some utilities rose in the ranks based on better information—renewables as a percentage of generation, energy efficiency budgets, smart meter deployments and demand response. Changes in position can also be attributed to inclusion of traditional demand response programs.

UtiliQ ranking breakdown - 2011

2010 Ranking	2011 Ranking	Company Name	IQ	Productivity IQ	Renewable Score	Smart Grid IQ	DR, EE Pricing IQ	IT Spending IQ
1	1	San Diego Gas & Electric	169.3	115	134	231	149	166
3	2	PG&E Corporation	157.6	118	162	187	152	120
2	3	Austin Energy	153.2	100	123	225	171	125
29	4	Pinnacle West Capital Corporation	147.1	112	110	164	205	118
8	5	Southern California Edison	145.3	116	158	166	161	119
10	6	IDAC ORP, Inc.	141.5	113	100	193	148	127
15	7	Sacramento Municipal Utility Distirict	139.6	116	172	157	131	119
14	8	Portland General Electric Company	139.4	117	114	220	113	220
6	9	Salt River Project	137.3	116	100	191	120	119
26	10	JEA	136.3	116	100	221	112	115
4	11	NextEra	135.6	126	138	132	152	112
12	12	Alliant Energy Corporation	134.4	118	117	189	127	112
14	13	Black Hills Corporation	130.8	115	113	200	103	115
13	14	Southern Company	130.1	117	100	185	112	116
7	15	Pepco Holdings, Inc.	130.0	135	116	130	135	116
38	16	Hawaiian Electric Industries, Inc.	128.4	119	159	105	134	123
70	17	Nebraska Public Power District	128.2	110	121	154	103	115
19	18	Xcel Energy Inc.	126.9	123	130	103	148	110
5	19	NV Energy, Inc.	126.1	128	100	120	130	119
23	20	DTE Energy Company	125.5	122	100	125	132	138
42	21	Ameren Corporation	124.3	120	100	161	116	126
20	22	Duke Energy Corporation	124.3	120	110	111	125	118
27	23	CenterPoint Energy, Inc.	124.3	125	100	165	103	122
60	24	Public Service Enterprise Group Incorporated	123.8	130	101	102	133	122
21	25	Constellation Energy Group, Inc.	123.1	149	104	108	103	128

Ratings
90-109	Normal intelligence
110-119	Superior intelligence
120-140	Very superior intelligence
Over 140	Near genius

Note: Overall IQ is an average of the IQs for Productivity; Renewable energy; Smart initiatives; DR/EE/Pricing; and IT investment.

Looking ahead

With the development of a price on carbon, higher costs for energy supply, and the FERC mandate that demand response be considered a supply resource, utilities that follow the path of highly intelligent utilities will stand to gain in the long run. Companies that want to make the list or improve their position should focus on the following strategies and investments:

Offer your customers more options and build processes and systems to support those options. Even if your company is in a regulated environment, there are multiple options that a utility can provide to their customers such as targeted energy efficiency programs, pricing options and green power. Customers in some regions will want to exercise their options to purchase electric vehicles or sell electricity that they produce on site back to the utility. Stay one step ahead by fully exploring future scenarios and understanding what processes and systems need to be in place to accommodate changes.
Make intelligent technology investments. Find ways to get the best return from your technology investments by ensuring that spending on information, communications and energy technologies is in line with business objectives. Evaluate technologies based on maturity and how well the technology scales. Get advice from others on whether technologies are expected to decrease in price or cost in the near future.

Jill Feblowitz is vice president, utilities and oil and gas, IDC Energy Insights.
Kate Rowland is Editor-in-Chief, Intelligent Utility magazine.