Death spiral? Energy utilities should check out the food industry

Locally produced food is all the rage. Even more popular are fad food diets, discovering you have a food allergy and obscure food habits, like fine dining in the dark, in the park, or with complete strangers in a new place.

So, with all the recent coverage about the Utility Death Spiral reaching the mainstream (ABC’s Four Corners, no less), we thought we would put together a food-flavoured twist on this story.

Imagine you buy a supermarket for $10m (they don’t come cheap!). Business is booming, rents are strong and the bank is happy. Boom! Your path to food system hegemony looks clear.

But, hang on a minute, what’s all this grow-your-own, reclaim the curb, food sharing, swapping, and direct-from-the-farmer stuff? No-one was doing that last year!

Instead of handsome profits, fast cars and lavish Christmas parties, you are struggling to keep the shelves stocked and the customers happy. That wasn’t in the business plan…

What do you do?

You put your strategic management hat on, developed during your years of prior experience in the energy industry, and you contemplate charging customers extra when they only buy small amounts of food from you.

Or you might increase prices at Christmas and Easter for all the yummy holiday season treats, hoping to claw back what you lost during the rest of the year.

If things get really bad, you might even ask government to discourage food self-sufficiency and run education campaigns warning of the health risks associated with gardening outdoors and eating food from the garden. Surely gardening at home could never be as safe or reliable as buying from the supermarket?

Would your supermarket thrive, or even survive? Absolutely not. You would be on the business recycling heap before you could say 21st century. In a nutshell, this is the Utility Death Spiral. Welcome to the wacky world of energy, Australia.

Let us hope the energy companies are taking management advice from the IT industry, as they intuitively “get” consumer-led markets. An efficient transition to a distributed energy world depends on it.

Tosh Szatow is Director of Energy for the People