Nathan: It was quite the surprise. But at the end of the day, I think it worked out very well for myself. I learned a tremendous amount about the different planning areas and the challenges that they face, the timing requirements they have, et cetera. But the end goal was to ensure that we were planning on a coordinated timeline that allowed us to utilize the same assumptions, align on planning criteria, align on long- and short-term goals, and then work together to solve one another's challenges. The idea there is that we're continually putting a process in place that'll allow us to optimize our planning efforts over time.
David: I'm not sure about you guys, but I'm not familiar with any other utility having done similar efforts. What was the genesis like of who was behind that? It was pretty insightful to do that, but how did that come about?
Executing on goals through collaboration
Nathan: To be honest with you, I don't know the exact genesis, but my theory is, a year and a half prior, SRP implemented an entire series of sustainability goals. It's 20 goals in total. Four of them land on my plate, but it was a very large set of sustainability goals that SRP was going to hold itself accountable to. And you may or may not know SRP is a public utility, so we're not regulated by the local utility commission. So, it's up to us and our board to establish and execute on some of these longer-term sustainability goals. So, in 2019, we've published our 2035 sustainability goals and within it, there's a whole section on customer and grid enablement. And that's where my team comes into play. My particular team owns four of the five goals, the other goal is a joint ownership between customer programs and distribution planning.
But I think the idea there is that we just had to prepare our grid to accommodate the customer activity, distributed energy resources that shift away from carbon-intensive generation sources to carbon-free resources. And just so many shifting dynamics that asking each planning area to solve them on their own would be next to impossible. My assumption is that our CEO, Mike Hummel, he wants everything we do at SRP to be strategy-led. I'm assuming it was a combination of his decision along with our associate general managers, the executives that report to him across the various areas. I'm assuming they all came together and decided this was the right way to go and looked down the organizational structures and found the right people to put in the room.
David: That's awesome. So, what was something that stood out to you as a lesson learned from the whole thing? And then a follow-up to that would be, what things have you learned or been able to leverage in how you and your team run your programs and your business today? Have you adopted new approaches or outlooks because of that experience?
Nathan: Yeah. So personally, I think the thing that opened my eyes the most was just the transmission planning. That was one part of the organization I wasn't all that familiar with. We worked pretty heavily with the resource planning, folks in years past and had been working with the distribution planning team more recently. But just the coordination efforts that have to take place between our transmission planners and the others in our region to make sure that we can get all of the resources to our customers. And that was the part that sort of opened my eyes a bit. And one of the more challenging things to fit into the end product of what we were put in the room to do, and that was to develop an end-to-end process. And that process, like I said, the intent was that we aligned on assumptions and criteria and forecast outputs, et cetera.
So, we designed the process in such a way that it could be readily adapted to our annual planning processes that ultimately led up to our financial plan reviews and approvals. That same process could be adapted to the special studies that we carry out throughout the year that help inform our assumptions and our forward-looking strategy. The same process could be adapted to what we foresaw as our public integrated system planning process (ISP)—that would replace the integrated resource plans (IRPs) that we had done historically. So, that process was developed and adapted to everything we do from a planning perspective within SRP. And to sort of hold true to that, we recognized early on that we needed a great deal of oversight to make sure that the various planning organizations stayed in alignment with the process and received the assistance they needed to coordinate throughout that process.
So, we spooled up at an integrated system planning and support team that oversees and coordinates a lot of that activity—the annual planning processes, the special studies, and the public ISPs—and then established some governance structure around that. You mentioned at the beginning that I'm a member of SRP's planning leadership team and that is one level of governance that oversees a lot of the efforts that go on throughout the year to ensure everything's in alignment and coordinated. There's another group above that called the Planning Coordination Council that was established for that very purpose, too, to just provide that next level of review and approval for some of the larger projects that had to take place.
Joan: I love hearing that it's tied to the annual planning. It sounds like it's integrated and not just something that's happening kind of over here. That's really good to hear. And that it's being governed by a couple of groups. It's just really interesting. And what a commitment to meeting those goals.
Nathan: And to be honest, we're still early in this. This will be our third year through the annual planning process. We're in the middle of our first public ISP right now, so it's an iterative process. Like I said, we put the framework in place to allow us to optimize our planning efforts over time. So, we have to take it one step at a time. We're going through and optimizing what we can today, figuring out where there are other synergies or crossover points that we can optimize further in the future, and we'll go from there. But certainly, a learning process for myself and most others at SRP.
David: That's awesome. If I can shift gears a little bit on you, I know that you're involved with the design and development of a lot of different programs at SRP, so you must see a lot of interesting new technologies and companies pitching their solutions to you. What are some of the more exciting things that you've seen or come across lately?
Advancing customer technology adoption
Nathan: That's a good question. The name of my department is product development, and so you would think that we'd have a lot of new things come across our desk and to some degree, we do. I think the more interesting stuff for us are how do we take the proven technologies and find unique ways of getting them in customers hands en masse so that we can make a larger impact? But a couple of things that our innovation team is looking at right now, there's sort of an AI-driven building management system for commercial properties that's basically a software overlay on their control system to better optimize and track occupancy and adjust set points and those types of things.
That has some interesting promise. We're looking at new ways to manage demand for our customers, particularly the customers that are on a couple of our price plans that have demand charges involved—this is on the residential side. But identifying and testing new systems that can help customers establish max demand limits and priority scheduling and load shifting to help make sure that they don't exceed a particular demand threshold in their home—to help manage their utility bills. And obviously that's good for SRP and its system too.
On the electric vehicle side, I think that's where things are really exciting for us. There’s just so much happening in that space. You mentioned the IRA earlier and we also have the infrastructure bill that's going to impact the EV space. And that'll be really interesting to see how customers not only adopt the EVs, but adopt charging patterns and leverage price plans and other things to manage their load in a cost-effective manner for themselves, but also in a manner that does not negatively impact the utility system. So, we are piling a couple things today that look at managing charging, both through the EVSE or the charger on the wall, if you will, and through telematics just to see what's possible there from a demand management perspective, but also from a grid asset management perspective. So, it may be less about managing load over our system peak and more about managing a local transformer to make sure it doesn't extend beyond its limits.
David: That makes perfect sense. I was going to add quickly, what about smart home technology? You mentioned AI for the C&I [commercial and industrial] space, but anything on the residential?
Nathan: We do have a couple of pilots in that space. In our mass market programs, we're primarily focused on thermostats right now because that gets both the customer and SRP the biggest bang for the buck, if you will.
Nathan: But yeah, so that smart home, the demand management system that I was talking about—there's sort of a brute force approach to demand management, and then there's a smart home application to it where you are leveraging other assets within the home to help manage that as well beyond just your high load appliances on the home. So, we're looking at a lot of that stuff. SRP is lucky. We have a research lab and test facility where we get to—it's not my team, unfortunately—but the innovation team gets to look at a lot of the new products that come out onto the market and play around with control algorithms and run small pilots here and there to test the overall impact to the customer and to SRP.
David: That's awesome.
Joan: I love when those labs are set up.
David: I was going to say, I cut you off. Go ahead.
Joan: No, no. I was just curious before we're going to move on to—I can't believe we're already there—to ask you the last question that we like to ask all our guests. But I was just curious, the balance between the proven en masse, right? That's really what's interesting right now. What is the balance though of when you're approached by a lot of different software and services companies? What's the balance of that? How many do you select—and maybe this is a difficult question to answer, but I was just curious—between the approaches on the more proven technologies versus the new, bright, shiny ones to pilot?
Testing new measures to improve programs
Nathan: And that's a good question. I think at any utility, you have to manage risk in some ways. And that risk could be customer set, could be capacity, it could be technology, proven-ness if you will. So, a lot of times, within our existing programs, we will take the proven measures and have the core offering built around that. But then within that core program, we are leveraging new measures, testing out what they can and cannot do for us and our customers. And a prime example, and this had been in place for a couple of years now, but variable capacity, residential HVAC systems started at the market a few years back. We had an inkling that they would help us over our peak hours and save customers a tremendous amount of energy and cost as well. So, we put those into the portfolio without having been tested, so to speak.
Obviously, they're an air-conditioned unit in Arizona, so they're going to consume and save energy. So that has worked out really well for us. We've done some other things. You mentioned a marketplace in your intro, Joan, and...
Nathan: We launched our marketplace back in 2018 or so I think. You talked about consumer preferences shifting to those marketplaces and we did it exactly for the feedback that you shared there, that customers look to us to help because most of the things we put in market are designed to help them save energy and money. And I think they recognize that, they understand that. So, they do like coming to our marketplace and purchasing thermostats and LEDs and EV chargers and all that good stuff. And I would love to say it's just because of the SRP brand at the top of the page. But at the end of the day, when we can apply rebates to those products on top of manufactured discounts and everything else, it becomes a very cost-effective shopping experience for them. So, I think that's probably what describes a lot of the shift, personally.
Joan: That's great. Thank you. Okay, so again, I feel like we could go an hour or more. But just to close, we always like to ask our guests, if there's one thing that you could change in the industry, no limits. What would it be?
Design thinking for utilities
Nathan: I think from my perspective, you mentioned early on that I came to the utility industry from the architecture world, and in that world, you are always building a prototype. You have to look at challenges from a different perspective each time. And I do feel that the utility industry could use just some greater focus on creative problem solving through design-thinking techniques, some shared experience. That two-month period that I spent with the other planning organizations opened my eyes to their challenges and vice versa. So, I think it's just, it's important to encourage staff to cross-pollinate. Encourage staff to explore, create problem-solving exercises. And there's always going to be risk to manage within the utility industry, but that risk is on a spectrum depending on what you're doing. And approaching it with a fresh perspective and with some creative solutions I think can go a long way to help ensure that utilities can adapt to the changing needs of our customers in the future.
David: That actually sounds doable. I mean, you're doing it. So that's awesome. Yeah. But great advice for our listeners. Nathan, I really hate to wrap this up, but we've hit our time already and so it's been an amazing conversation. For listeners, if you've been enjoying this podcast and want to learn more about SRP and the programs that they're doing, you can visit srpnet.com. And again, Nathan, thank you so much for joining Joan and I and sharing what you're doing, your team and SRP, tackling some of the big policy changes that the utility industry is facing. It’s just been fascinating. Thank you so much.
Nathan: Well, thank you. It's been a great pleasure.
David: Well, if you've enjoyed this conversation as much as we have, we'd sure appreciate you liking, sharing, and even subscribing to our podcast.
Joan: But I'm really looking forward also to our next episode as well. As you know, David, when I was in Ireland this summer after hearing about their incredibly aggressive aims to decarbonize—I think they have an 80% goal by 2030—it made me want to bring in some global perspectives. So, thanks to you, we've reached out to some global colleagues and hope to be bringing in some international perspective soon, even as early as maybe our next episode here. So, if you're listening, make sure to look to October and tune into our next Energy in 30.