The digital transformation sweeping the electric utility industry is driven by mobile, cloud and Internet of Things (IoT) technologies and analytics that are creating new opportunities for us to interact with our customers, optimize operations, and transform our business practices. Data analytics is one way AEP is using innovation to improve the employee and customer experience and transform into the next generation energy company.
Data collected and analyzed from smart meters and other grid-connected devices is helping us improve operational efficiencies and customer engagement. Traditionally, we obtained usage data from meters once a month. New metering technologies can gather more information about usage, demand, voltage, meter status and more on a 15-minute basis and communicate that data back to us faster than ever. This data can help us design, develop and market the services customers want. We collect a lot of data through this effort and we have systems in place to protect it and respect the privacy of our customers. Learn more about data privacy at AEP.
In 2016, AEP continued to build internal knowledge of data science as well as apply data analytics solutions that help us better manage the grid, including enabling the system to become more intelligent and able to self-diagnose. For example, we developed an algorithm that identifies the circuits on the distribution system that are more likely to result in billing errors. When bills are not accurate, customer satisfaction is affected. By zeroing in on those circuits, we can audit them in real time for accuracy and proactively take action to prevent errors.
Because the science behind advanced analytics is so important, in May 2017, AEP created a new Chief Data Scientist position and established the Analytics Center of Excellence. The Data Science team works with business units to find new ways to use analytics.
In 2016, we developed a customer segmentation model for our operating companies. Segmentation allows us to better understand customers’ different preferences, including the benefits of energy efficiency and billing programs, communication channels and service requirements. With this knowledge, we can better meet individual customer needs in the communication channel of their choice.
We are taking a two-track approach to data science – focusing on gaining a better understanding of our customers through segmentation modeling, and building expertise on the use of analytics to improve operational efficiencies, prevent outages and reduce risk.
With data coming from smart meters, the cloud and IoT-connected devices, we are building capacity to use data and advanced analytics to improve day-to-day operational performance, identify opportunities for new revenue and, through engagement, develop a real-time, 360-degree relationship with our customers.
For example, AEP Ohio’s Smart Columbus commitment will rely on data to identify the best locations for electric vehicle charging stations. And, we are using data to improve estimated restoration times when outages occur, giving customers better information.
AEP is midway through a four-year plan to upgrade its urban underground distribution networks. We are investing approximately $84 million to monitor the networks in real time using fiber optics and cutting-edge sensor technology to capture data in five-second intervals. This gives us a real-time view of the distribution grid. The energy company of the future will need this capability as the distribution system becomes a more diverse, flexible system, enabling all resources to connect and manage demand at the same time.
Having these capabilities and knowledge is important to our customers. During a series of interviews conducted as part of our brand repositioning effort, customers repeatedly told us they want to be part of redefining our energy future. Gaining a more comprehensive view of our customers allows us to design better products and services, innovative solutions and new outreach programs. And, it will help us have more meaningful conversations with customers about how we balance capital investments to meet the objectives of the communities we serve.