Utility companies typically aren’t known for dramatic innovation. With little competition and plenty of regulatory hoops to jump through, most don’t need to worry about customer loyalty or disruptive new players.
But Texas-based Reliant, a subsidiary of NRG Energy, and partner Google are forging a different path — one that’s instructive for other companies in sectors that suddenly get more competitive. Reliant and Google are deploying the Google Nest Hub and Nest Learning Thermostat, voice-assisted smart home devices, as a way to change the way Texans consume energy.
Texas, home to one of NRG’s two headquarters (the company is based in Houston and Princeton, N.J.), is unlike any other state when it comes to energy consumption. In most markets, one company owns the infrastructure and transmission lines for a given area, selling energy to customers at a rate set by a public utility commission. In 2002, Texas passed a bill that would deregulate its electricity market in phases — allowing new market participants to buy power plants and transmission lines. Today, 85 percent of residents can choose their electric providers.
“The [unique thing about the] Texas competitive market…[is] it’s easy to shop and switch providers,” says Scott Burns, VP of Retail Innovation, Customer Experience, and Market Intelligence at NRG. “Because of that, we can never be satisfied with the service we’re providing. We’re constantly on our toes, knowing that there are many other providers in Texas trying to win over our customers.”
And as of 2019, one in four Texans were planning on switching energy providers, according to the analytics firm Escalent.
Joining Forces With Google
The first iteration of the Nest Learning Thermostat launched in October 2011. The smart thermostat, which optimizes energy consumption for the home, was the first offering from home automation startup Nest Labs, founded by ex-Apple engineers and acquired by Google in 2014.
Reliant began collaborating with Nest the following year. Because Texans tend to spend the most amount of energy on air conditioning each year, Burns says, promoting the Nest Learning Thermostat to all of Reliant’s customers made sense. On average, it helps customers save an average of 10 percent on heating bills and 15 percent on cooling bills, according to data from Google. It accomplishes this by reducing energy usage when consumers aren’t at home or by encouraging users to switch to a different energy plan that provides perks like free weekends. In addition to marketing efforts, Reliant began offering the thermostat as a bundled product with some of the company’s electricity plans.
Eventually, this partnership led to the creation of Reliant Action for the Nest Hub — a device that combines voice recognition technology and visual displays to give consumers easy access to information about their energy consumption. The device also provides suggestions for ways to reduce spending.
“When the Google Nest Hub came to market two or so years ago, [Reliant’s innovators] were really quick to…invest in building customer experience on top of that Hub,” explains Jeff Hamel, Director of Industry Partnerships at Google.
The benefits are two-fold: One, customers save money; and two, it incentivizes customers to adjust their energy usage to times when there is less demand — and less stress on the power grid.
As a result Burns says, “it prevents [the need for us to build] more power plants to support those higher-use times in the day.”
Building Trust With Customers
As smart home technology becomes more commonplace, Hamel believes the worries about privacy associated with voice-assistant devices have decreased. On Reliant’s end, the company has worked hard to educate users about the benefits of the Nest Hub technology, Burns adds.
One way Reliant provides information about the uses of the Hub is through links on highly-trafficked pages of their website — like the bill payment page.
“[Getting customers on board] requires some education. So, we do that in our different digital channels that are non-voice assistant channels, [like the website],” Burns says. “We educate our customers [by saying,] ‘Hey, you don’t have to necessarily come to the website to view this information.'”
With the Nest Hub, customers can ask “How much energy have I used this month?” and receive an answer immediately, without having to visit an online portal. Burns believes that this frictionless experience helps build trust by making information more accessible to consumers.
Feeling ‘Safe to Fail’
Reliant’s innovation department is split into two teams: One works on innovation related to the core business, with projects that span three to 12 months. The other, Burns says, uses lean startup principles to work on “new-to-the-world” ideas. The first group rolls out products relatively quickly to Reliant and NRG’s millions of customers, while the latter spends more time working on projects that get rolled out incrementally to fewer customers — at least at first.
Hamel also attributes the success of the partnership to Reliant’s executive leadership — specifically CEO Mauricio Gutierrez and Elizabeth Killinger, Executive Vice President of NRG Retail. These leaders, Hamel says, created a “safe to fail” environment, and have sponsored the company’s digital transformation “from the top down.”
Other characteristics that the Google team looks at in a potential partner are willingness to explore new areas and technologies, their attitude towards risk acceptance and risk sharing, and scale, Hamel says.
“Nest Labs was a startup,” Hamel says. “[The beginning of that relationship] was a lot of Reliant making a bet on the people, the technology, the culture that they saw.”