R. Blake Young
President / CEO

Arthur “Bud” Vos IV
CTO / Vice President-Strategy

   EET&D  :  First, I want to thank you both for taking time to share your views of the electric utility industry and the demand response marketplace with our readers – and especially you, Blake, since you have just recently taken over the reins of Comverge. So maybe a good starting point would be to briefly visit the mission, goals and objectives of Comverge as relates to the electric utility industry in general and the power delivery marketplace in particular.

  Young  : Even though these are early days for me, I appreciate this opportunity to address your readers across the industry because I think this is a pivotal point in the evolution of both the industry and our company. The evolving Smart Grid represents an extraordinary opportunity for companies that understand how to create value from the unprecedented increase in sophistication, which we are and will continue to see. The ongoing investment in the implementation of the Smart Grid is providing the foundation for renewable energy frameworks, efficiency and conservation programs of the future – and we have only scratched the surface – so this is excellent news for us and also for the industry. To take advantage of this dynamic market opportunity, my core objective is to continue to refine our leadership position as the premier provider of mass market DR solutions.

  EET&D  : In reading over the resume posted in your appointment release, I noticed that you’re a Louisiana State University graduate, so as a longtime Louisiana resident myself, let me say this: Geaux Tigers! But on a more serious note, I also see that you’ve been a Comverge board member since 2006. How will your background help you to achieve goals and objectives as its President and CEO?

  Young  : My relationship with our board is excellent, and having the advice and counsel of Michael Picchi, who served as the interim President and Chief Executive Officer for the past eight months, will be invaluable to me as we make this transition. And, besides joining our board, Mike will also continue in his role as Executive Vice President and Chief Financial Officer, so that’s important to our business as well. Earlier in my career I also served as the president and COO of Illinois Power Company, Dynegy’s electric and gas transmission and distribution company, so I feel like that experience combined with my time on the board have uniquely prepared me to take on this exciting new leadership role.

  EET&D  : Do you have any immediate plans for changing the posture or position of Comverge in the marketplace, either organizationally or from a products and services perspective?

  Young  : Over the past two decades, Comverge has developed a rich portfolio of innovative clean energy solutions, expanding customer relationships and team of more than 400 employees, all of which provide a solid foundation upon which we can continue to build the company and our customer base. Our innovative technology and reliable demand management advice comprise the fundamental tools and resources we need to successfully serve utility and C&I customers in today’s Smart Grid evolution. I’m confident that by continuing to leverage these strengths we can keep accelerating our growth as we drive towards profitability, so I cannot see any reason to change that strategy at this point.

That said, you’ll see us put some serious muscle behind our Apollo DRMS software, which we recently announced to address emerging customer requirements. This enterprise-class software offers a unified solution for the integration challenges our customers are wrestling with as a result of the evolving Smart Grid infrastructure. It provides them a solution that will not only link legacy utility applications with their new smart meter and communications networks, but will provide them with a platform to support all of their complex programmatic needs going forward. 

  EET&D  : Before we proceed, I think we should probably clarify some terminology that is often confused. Demand Response is similar to what we used to call Load Management, so perhaps we should begin by briefly explaining the fundamental differences between the two?

  Young  : Sure. What we generally refer to as a Demand Response Management System – or DRMS – involves new and advanced features that will help keep pace with the momentum being brought about by Smart Grid initiatives. Some of the differences between Load Management and DRMS involve greater use of open standards; millions (i.e., as opposed to thousands) of endpoints under management; two-way communications and verification; and integration of the AMI-Smart Grid network with utility back office systems.

  EET&D  : Comverge has had quite a ride since heading down the DR path, and I’m quite sure you’ve had to blaze some new trails along the way. The part of the business model for service bureau companies like yours that always puzzles me is how you show prospective customers that DR is a good deal for them, both operationally and financially, regardless of their size. How much does the scale of a given project figure into that value proposition?

  Young  : Scale is indeed an important factor, but not the only one. Today, we have about 500 U.S. utility clients and over five million devices deployed throughout North America. This client base includes utilities from all areas of the country, from small towns to big cities, border-to-border and coast-to-coast. We’re committed to growing these programs into the future, developing cutting edge technologies and cost-effective solutions to increase grid reliability and reduce costs to the utility and, ultimately, consumers as well.

But whether it’s for a 2-megawatt system or a 400-megawatt system, the successful and cost-effective launch and operation of any DR program depends heavily on experienced professionals implementing best practices throughout the process. As Comverge provides the technology and support for new programs across the country, we have realized the efficiencies and levels of expertise that can be gained by utilizing a “matrixed” project team simultaneously operating multiple programs at once. This concept engages professionals from RF communications engineers to marketing specialists to statisticians to installer trainers to quality control inspectors for each and every project, regardless of size or scope. Bud can probably add some additional detail here…

  Vos  : There are hundreds of factors that can influence the scalability of a DRMS system, ranging from the hardware to the communications network and even into the design of the application protocol. They all impact how the system must behave in order to deliver messages to the end devices reliably, efficiently and at an acceptable cost. Similar to the problems the industry has seen in transmission and control operations, AMI systems needed to work on the scalability of consuming communications from endpoints over a controlled communications network. The DRMS scalability problem is based on sending commands and controls to endpoints over a communications network – one that is not managed by the DRMS itself.

  Young  : Yes, and all of these issues point to the necessity for longevity in the electric utility industry, as well as expe­rience in, and knowledge of, DR technology. While many of these issues will take years to come to resolution, a customer/vendor relationship that is built on a partnership approach will best facilitate viable and proven solutions and allow the objectives of the supplier and the customer to be better aligned.

  EET&D  : What are the main drivers for utilities and their customers to embrace DR?

  Young  : With energy consumption concerns escalating, companies across all sectors are looking to incorporate elements of clean energy into their power portfolios and implement conservation programs; demand response answers both needs by enabling participants to choose to reduce energy usage during peak hours in exchange for reduced rates or rebates. This reduced demand is an excellent alternative to purchasing or producing expensive peak genera­tion, not only helping to keep electric rates down, but reducing the generation of carbon emissions during those times.

DR programs have proven to be environmentally friendly, effectively eliminating the need to build new generation resources to mitigate peak load situations. Today, these programs can be customized to suit individual needs using only proven hardware, software, and integrated services – all essential ingredients in the success of DR initiatives. In our case, we provide a primary DR solution based on a turnkey, pay-for-performance model that is applicable to all customer classes, from residential to commercial and industrial.

  EET&D  : What kinds of companies are embracing DR, and what kind of acceptance have you experienced so far in this still evolving market niche?

  Young  : Comverge presently has 3,300 megawatts of contracted capacity across all customer classes. For our C&I customers, we provide advanced metering and monitoring products and an advanced network operations center capable of monitoring load and tailoring demand in real time. For our utility customers, we provide solutions – turnkey hardware, software, and services to allow them to remain at the forefront of providing reliable electricity to their customers. Our turnkey packages, consisting of multiple services, hardware and software, are the only integrated, comprehensive solutions available today that allow for real-time demand management and reduction across all customer classes. We assume all of the program’s performance risk, and our clients pay only for the verifiable capacity we provide, thus, creating a no risk, win-win solution for utilities and their customers.

  EET&D  : Security – especially data security – is an issue that comes up a lot these days and for good reason. The more information we gather, handle and store, the more we invite new opportunities for security breaches and unwanted exposure. What role does security – both physical and cyber – play in the grand scheme of things for DR, where literally millions of data points are being collected, manipulated and stored?

  Vos  : As a provider of critical capacity to hundreds of utilities and their customers, Comverge takes security and network operations very seriously. Comverge’s state-of-the-art servers are housed in Class 1 data centers at geographically dispersed locations across the country and provide the most secure and reliable communications links available today. Our servers are proactively monitored through our data network operations center, ensuring our programs operate as expected regardless of circumstances. In addition, we continuously monitor and test inbound and outbound signals to resolve potential issues before they occur.

  EET&D  : Blake, I’ll leave the last word to you: As you know, a lot of stimulus money has been made available by the federal government through the American Recovery and Reinvestment Act to help ignite and accelerate energy conservation and efficiency initiatives, including DR programs. In closing, what’s your take on how and when the effects of these funding programs will materialize in the marketplace and what impact, if any, you think it will have on adoption rates for these kinds of programs?

  Young  : The American Recovery and Reinvestment Act of 2009 resulted in the largest injection of capital to Smart Grid investment to date and punctuates the value our leaders, utilities and ratepayers themselves will place on creating a smarter, cleaner and more reliable power delivery system. We have already begun to see the results of that investment with two Stimulus-related contract wins in 2009, and we expect to see further positive contributions to our company and to the marketplace at large as a result of Stimulus funding.

Although I would like to be able to put that investment rollout on a definitive schedule, that’s something that will be determined by many factors that are well beyond my ability to predict with any substantial degree of specificity. What I can say, however, is that Comverge is well positioned to participate at all levels of demand management expansion at whatever rate it eventually takes place. As you might expect, the Comverge perspective is that the sooner we embrace DR, the faster we can progress toward energy independence.