September 10, 2018

We sat down with Meghan Beringer, director, Emerging Technologies Strategy, and Randy Frame, director, Emerging Technologies Programs, to discuss how FirstEnergy plans to leverage new technologies to benefit customers and enhance our service.

Employee Update: Tell me about your new roles in Emerging Technologies (EmT).

Meghan: Our groups were developed to align the strategy of emerging technologies with the implementation. In the EmT Strategy group, we want to better understand the voice of our customers: What they want, are willing to pay for and how we can leverage technology to meet those needs. We want to identify where there is an appetite on the part of regulators to support investment in new technologies. Finally, we need to determine whether these projects fit within our existing rate structures or if there is potential to enhance our rate plans to support them to recover our investments through a regulated mechanism.

Randy: As we begin making investments to upgrade the distribution system to accommodate and include smart technologies, we’ll need to coordinate those efforts across our system. EmT Programs will be the group that provides that support, coordination and consistent approach. The key is finding the right programs and projects – ones customers value and are willing to pay for, and regulators are willing to support – and ensuring cost recovery in rates. That’s the key part of our customer-focused strategy growth.

EU: We’ve talked about Emerging Technologies for several years. What is different about this approach?

M: The concept of emerging technologies has existed in pockets in our organization for many years. In centralizing these functions in the EmT Strategy and EmT Programs groups, we can work across the company – Operations, Market Policy, External Governmental Affairs, Rates and other groups – to see what’s worked in one state, gauge the interest in other states and use those best practices to determine how to move forward. With services like Uber and Airbnb, customers have come to expect more choices in industries that have offered traditional services for years.

R: Customers are asking for new technologies and expecting better reliability. They want a grid that’s smarter. The want more ways to communicate with us using their smart phones. Local governments want smart LED street lighting that will do more than traditional lighting.

EU: Can you define your short-term strategy?

R: First, we need to build our teams. We’re going to start small, with the intention of finding ways to enhance customer reliability and improve service in ways that can be reflected in rates. We need to be innovative – do things differently. We are going to have to address technologies such as solar, microgrids and battery storage that today may seem like they’re taking revenue away from us. We have to figure out how to turn those into revenue opportunities. We’re focused on areas where there is policy leading the way.

M: We want to tap into our collective wisdom and build on existing efforts of our Rates team and our Market Policy team. We want to build diverse teams of people who know how to connect the dots.

R: One of the biggest opportunities right now is through the Volkswagen emission-mitigation settlement (see sidebar). As a part of the settlement for emissions test-reporting fraud, Volkswagen is providing funding to support vehicle-emission reductions in all 50 states. As an example, Ohio received $76 million, and 15 percent will go toward building electric vehicle infrastructure. In addition, Volkswagen has a $2 billion initiative called Electrify America that also focuses on electric-vehicle charging.

EU: How do you see Emerging Technologies contributing to FirstEnergy’s long-term goals?

M: We have a goal to achieve a 6-8 percent regulated compounded growth rate through additional capital spend on transmission, decreasing operations and maintenance spending through FE Tomorrow, and rate cases in New Jersey and other states. We’re looking for additional revenue opportunities – to partially offset the impact of energy efficiency and slow load growth in our region. Leveraging electric technologies is part of that.

R: It’s important to remember that all the things we’re doing are designed to improve reliability for our customers. We have seen reliability improvements with our transmission investment. We want to do the same thing on the distribution side. Investing in our distribution platform to make it capable of integrating smart technologies is the first step.

Volkswagen Settlement Payout – What Does it Mean to Us? Volkswagen (VW) is making more than $14 billion available to support emission reductions as part of a 2016 settlement in their emission testing fraud scandal. States in our service area will receive payments totaling more than $350 million, and 15 percent could go toward building electric vehicle infrastructure. Each state has a different process to apply for funds. In the FirstEnergy service territory, agencies that will administer the funds include: Ohio Environmental Protection Agency Pennsylvania Department of Environmental Protection Maryland Department of the Environment New Jersey Department of Environmental Protection West Virginia Department of Transportation’s Division of Highways In 2015, the U.S. Environmental Protection Agency learned that VWs sold in the United States had devices installed that would produce inaccurate emissions test results. The German car manufacturer admitted cheating emissions tests in the U.S., resulting in the settlement. The Story Began Right in Our Mon Power Service Area A group of scientists at West Virginia University (WVU) – in our Mon Power service area – discovered the VW emission issue. Research assistant professor Arvind Thiruvengadam and his colleagues assisted the International Council on Clean Transportation to do standard emissions tests on diesel cars in the U.S. Although Volkswagen was promoting its diesel cars as environmentally friendly and fuel efficient, the researchers disproved the claims of low emissions.

EU: What are some quick hits we can accomplish relatively easily?

R: The first thing we’re trying to do is leverage the VW settlement money. We need to do everything we can to build a case that our footprint is a good place to invest. The second quick hit is our Smart Cities/Smart LEDs program because our cities want LED street lights. Dimmable street lights that can be brighter in areas that have higher crime rates and be dimmed to save energy when there are no pedestrians. Apps to let drivers know where there is available parking can reduce emissions and save on road wear.

There are other things going on right now that will provide some quick-hit opportunities. For example, the Long-Term Infrastructure Improvement Program and smart meter programs in Pennsylvania are helping put us on a path to smart circuits.

M: The Smart Cities initiative kicked off last year with a team to look at promising options. Every city will be different, but it could be electric vehicle charging stations or smart street lighting. We have to partner with the cities in our service territory to figure out what they want. The technology is available, we have the infrastructure to build it, but most important, a Smart City is what a customer wants and is willing to pay for.

We also want to bring awareness to employees about EMT, because they are aware of what customers want. Also, our mission statement says we’re a “forward-looking utility.” If we’re going to be forward-looking, we have to be innovative.

EU: Are there any obstacles you may have to overcome?

R: I think one of our biggest obstacles is the cultural change – figuring out how we’re going to do things differently. It’s happening all around us; we have to get on board.

EU: Where do you see FirstEnergy in terms of Emerging Technologies in two years? Five years?

M: We are in a transitional period right now in terms of our culture and the need to bring awareness to the importance of EmT. In two years, I’d like to think we are fully staffed and the process of identifying and vetting ideas is part of our culture. We’ll have teams to analyze the ideas and a game plan for prioritizing and implementing them. Hopefully, we’ll have a few wins and start to see that the risk pays off. We will demonstrate to regulators the customer benefits of some of the programs.

R: In 10 years, we’d like to be considered a leader in terms of technology, creativity and innovation. In two to five years, I’d like to see reliability improvements on the distribution side, much like we’ve seen on the transmission system. We’re upgrading our grid, we’re making it smarter, we’re making it more resilient and we’ll have the reliability improvement numbers to satisfy our customers that we are investing wisely.