Matt Ross explains how utilities are using rate design and time-varying rates to address rising rates.
Matt Ross feels at home in the ocean, on his surfboard. Strong currents, choppy conditions, and the occasional thrashing are all part of the experience — and the joy of a good, long wave makes it all worth it.
So when a job pulled him too far from his favorite surf spots in San Francisco, he wasn’t happy. He knew he needed to find his next work challenge closer to home. He found that at GridX, where for the past seven years he’s brought his interest in data analytics and design to product roles, working toward his current role as vice president of delivery.
This week on With Great Power, Matt dives into the economics behind rising rates – and why he thinks that without affordable energy, the clean energy transition will stall. He shares some of his recent projects, designing and implementing time-varying rates with utilities. And he describes the ways that data centers could actually turn load growth into an opportunity to drive rates down.
Credits: Hosted by Brad Langley. Produced by Mary Catherine O’Connor. Edited by Anne Bailey. Original music and engineering by Sean Marquand. Stephen Lacey is executive editor. The GridX production team includes Jenni Barber, Samantha McCabe, and Brad Langley.
Brad Langley: Matt Ross grew up in Virginia Beach, a place some people call the birthplace of East Coast surfing. For him, surfing has always been more than just a sport. It's a passion that connects him to nature. It's even shaped how he thinks about life.
Matt Ross: I've lost track of how many times I've had a dolphin just surface right next to me or a sea lion, and you also get thrashed quite a lot. So I think it gives me a little bit of perspective there on just to kind of roll the punches sometimes.
Brad Langley: One of those punches landed during college. Matt's dream of becoming an astrophysicist ran headfirst into the reality of advanced physics and chemistry courses. So he switched his major into environmental science, which turned out to be a great way to combine his love of the natural world with his budding interest in energy.
Matt Ross: I'm able to bring some of that kind of physics background and experience with numbers. I just don't have to do advanced calculus, which is more agreeable, I think.
Brad Langley: Matt's first role in the industry was co-founding Blade Runner, a startup that developed a marine hydrokinetic energy system, basically underwater windmills. In a way, he was turning the power that sometimes pummels him on a surfboard into clean electricity. Later, he switched gears to software development, spending almost five years at the Dutch company Energyworx, which provides cloud-based software solutions for energy applications.
Matt Ross: Energyworx was my first opportunity to work in software, specifically for utilities. I learned so much. I wanted to be in energy and utilities for the rest of my life, and I still feel that way.
Brad Langley: But the job required a lot of international travel, especially to Portugal. Certainly not a bad gig, but Matt wanted to spend more time at home in San Francisco, which also happens to be near some of his favorite surf breaks.
Matt Ross: I felt like I needed to develop some contacts closer to home and sure enough found GridX and I emailed careers@gridx.com and that's how it worked.
Brad Langley: It just goes to show sometimes cold calls actually do work. Matt's been with us at GridX now since 2019.
Matt Ross: I lead our solutions group at GridX. So that's a team of solution architects, business and tariff analysts. There's a lot of decision making happening at the utility level, so accuracy matters. Is the data mapped correctly? Is the quality good? And then getting down into the tariff calculations, are we able to replicate exactly what the utility is doing on their billing engine so that we can answer "what-if" questions?
Brad Langley: Questions like, can I save money by switching to a heat pump? The answer to that kind of question across millions of households can have a profound impact. That's why Matt calls affordability the gatekeeper of the clean energy transition.
Matt Ross: I think we all have intentions to protect the planet we live on and have some sort of connection to nature and want to do something to mitigate climate change, but it's really hard to turn attention to that when you're struggling to pay your bills.
Brad Langley: That includes electric bills, which are on the rise across the country. And paying for those rising costs can make climate-forward decisions — like driving an EV or switching to electric appliances — feel impossible.
Matt Ross: And so I think we have to solve that for customers in order to continue to accelerate the energy transition. It has to be affordable. It can't be done at the expense of customers' pocketbooks.
Brad Langley: This is With Great Power, a show about the people building the future grid today. I'm Brad Langley. Some people say utilities are slow to change, that they don't innovate fast enough. And while it might not always seem like the most cutting-edge industry, there are lots of really smart people working really hard to make the grid cleaner, more reliable, and customer-centric. Today, my guest is Matt Ross, VP of delivery here at GridX. We talk through some of the work Matt has done around designing and implementing time-varying rates with utilities and why rising energy costs are making that work so urgent right now. With data centers being central to the affordability debate, we also discuss how they could actually turn load growth into an opportunity to drive rates down. But first, I asked Matt to walk me through the basic economics behind rising rates and why they're increasing even before these massive data centers come online.
Matt Ross: The grid is aging. We've deferred certain investments. So the cost to serve has gone up across the board, and that's what's defining that revenue requirement. And then usage is more or less held flat for years and now we're seeing that growth happening. And basically when costs go up, the rates tend to follow, especially if usage is not changing dramatically. And I think AI puts added pressure on that because we are building new infrastructure, which costs money. So costs go up, but we haven't turned on all that usage yet. We haven't energized all those data centers. And that can create a gap where if you do nothing, rates will rise because you've made certain investments and data centers take time to build and ramp up. And if you allocate those costs evenly, you're going to see rate increases across the board. We of course have seen utilities be much more proactive about large load tariffs to make sure that data centers pay their fair share or even more.
So that's becoming almost common practice at this point to mitigate that. But still, this was happening before we really had the AI boom. So we have to find ways to create downward pressure on rates. And there are a few ways that we can achieve that.
Brad Langley: And I want to get into some of those. We're going to talk about some customer work that's being done. But before I do that, I'm seeing more and more, and GridX is espousing this concept too, this idea of bending the cost curve. It's the idea that well-designed rates and programs can drive demand flexibility, which ultimately drives down operational costs. How does that work in practice?
Matt Ross: Yeah, bending the cost curve is the ultimate goal. It's what rate design and certain programs are really focused on. And different times of day and different times of the year are easier to serve, cheaper to serve than others. So if you think the hottest day of the year, the coldest day of the year, that's where it's really costly to serve. And so one of the best ways to bend the cost curve is to reduce the peak demand. And there are of course infrastructure ways to do that. You can build batteries, you can do all sorts of things to kind of offset the peak. But what we do at GridX and a lot of utility partners deploy is different rates and programs that incentivize customers to move their load from peak times to more affordable times off peak times. And especially for large customers, a little bit goes a long way.
And so if you do this at a macro scale, whether it's time of use rates or dynamic rates or interruptible demand, we can collectively drive that peak down. And then you have less infrastructure to maintain, you can accommodate more load onto the existing infrastructure. And that allows you to keep your revenue requirements steady. And if you are able to accommodate more usage, then that actually creates downward pressure on rates.
Brad Langley: I feel like the value of rates and programs that get people to shift their usage is kind of having its moment in the sun right now. And there's lots of examples out there of utilities that have done work in this area, and we're going to talk about those in a minute here. But I'm curious, this feels like a no-brainer to me, and maybe that's a selfish perspective working at GridX, but what are some of the common objections you hear from utilities who don't necessarily want to migrate to time-based pricing? And what do you tell them to maybe change your perspective?
Matt Ross: Well, I think we're all aligned on trying to do what's best for customers. And there can be perceptions that time of use will have certain impacts to certain customers, maybe even your most vulnerable populations. And those are valid concerns and it's always coming from a good intention. My approach and for GridX as well is to let the data speak. And so that's why we don't do back of the envelope calculations or broad strokes. We analyze the full population, all of the smart meter data, and can empirically say this is the impact and let the data tell the story and guide you. You might have certain theories or hypotheses, and then it just breaks down when you see the data or it could be reinforced. And then if you see issues where you say, oh, this population's really impacted. Well, is there something within the rate design that can mitigate that?
There's a lot of really impressive techniques out there to help customers succeed or address, create kind of carve outs for low income programs and things like that. So there's a way to get to an outcome that works for most customers. And then being aware of those impacts that you can communicate to customers how to be successful or how to mitigate and manage those changes.
Brad Langley: PSEG Long Island is one of GridX's customers, and they've done a lot of work on rate modernization from smart meter rollouts to time of use design and customer migration. I think they have the largest time of day opt-out program on the East Coast currently. In your mind, what made their approach stand out in terms of how they were able to make changes and communicated them to customers?
Matt Ross: Yeah, I think they had such an impressive combination of data proficiency. They really did look at the numbers across the full population and with a really compelling marketing strategy. They had different mechanisms, different mediums to meet customers where they are, whether it was information on the bill or it had videos. And it was all powered by the data. And a lot of that was coming from GridX in terms of the analysis of their full population and the split between benefitors and non-benefitors. They really used that to drive their marketing strategy such as, well, we're going to start the first wave with the benefitors. So those are your structural winners who just save money by doing nothing, just keeping things the way they are, to really kind of kick the tires and all the systems that are affected and to make sure that you're creating a positive sentiment about this rollout because it sounds scary to customers here, we're changing how you're build by your utility. And then they were able to roll it out at full scale over successive waves.
Brad Langley: You also worked on a project with Alliant Energy in Wisconsin. They had a theory about rate design and supporting low income customers. And GridX helped them test it with hard data. As you mentioned, data is very fundamental to what we do. Walk me through that project.
Matt Ross: Yeah, that was such a fun project. We really rallied together with their IT teams to get us all that data we needed to really answer these questions where there was kind of two broad options on the table. One was to increase the fixed charges, your base charge, your basic customer charge, or to continue increasing the energy charge, your price for KWH. And that's kind of been the status quo for a period of time. And it rewards customers who save energy and somewhat can penalize customers that use more energy. But at the end of the day, you're trying to meet that revenue requirement and they wanted to test those two kind of competing theories. There was more nuance, but that was it at a high level. And what they were able to say is the bill impacts, because everyone's bill was going up, that was the reality that they were in, was far more mitigated with the increase to the fixed charge, which they felt was more cost reflective anyways.
And then we compared that with the increase in the energy charge and we saw really massive outliers. Certain customers were really heavily affected, greater than 10% bill impacts. And that's really hard to mitigate. And we had kind of overlaid their data with their low-income population to really show that. And they used that in their filing to ultimately move forward with those increases in the fixed charges. And we're proud to have Alliant as a client and are going to work on more use cases later this year.
Brad Langley: I feel like there is potentially a misconception out there that time-of-use rates could actually be disadvantageous to low to moderate income customers. Do the results of this work kind of give firepower to push back on some of that? And what would be your key takeaway or your salient point in talking with other utilities who might be hesitant to roll these kinds of programs out to low to moderate income customers?
Matt Ross: Well, I think with everything, there can be crawl, walk, run strategies as much as I think there should be urgency to roll out time of use rates. It's always a good idea to do a pilot. The nice thing about GridX, you can run these simulations in a sandbox where you don't have to change anyone's rate. You just test it out and get those numbers. So I think for me with affordability, there's a lot to do there. But one of the things that I think is really important is giving customers choice is you give them the power to make certain decisions about whether they want to make changes that will ultimately save on their bill. If you only have one rate option, that's it. You're kind of stuck. And yes, you can reduce your energy, but that can be really hard. Transparency is so important to the affordability conversation, being able to communicate to customers what their bill could be on different rates and preferably in dollars and cents and not kilowatt hours because no one knows what kilowatt hour is. So I think those are kind of things that I think are table stakes for affordability is the choices and full transparency.
Brad Langley: Yeah. And you're hitting on what is a pretty big problem right now. Customers don't understand their bills. These are very complex things that arrive in the mail or the email. They don't know they have right options maybe, don't know how to control their usage. So if you could redesign the utility bill, what would it look like?
Matt Ross: We can definitely do a better job at how we engage customers on their bill and make it more simple. I think that's one of the things I've learned the most from clients and even directly with customers and user testing is simple as better. So driving home those main points I think is key in terms of what you can control. And then some customers want a web experience. They want to be able to drill into graphs and so forth, and others just want a quick summary email or a text, but the current PDF bill isn't quite hitting the mark. I think there needs to be some sort of bill companion that really simplifies the experience and gives customers one or two things they could do to lower their bills rather than asking them to decipher 15 line items and become a utility expert in a matter of seconds.
Brad Langley: One more utility example I'd love to chat through. Our data science team did some analysis recently with the utility on the West Coast in terms of how much money customers could save if they moved to the rate that's best for them. Can you talk about that at all? I mean, I believe it's in the tens of millions of dollars. So where do you think that block is? Does it just come down to engagement insightful analysis or is there more we need to be doing to ensure customers are on optimal rates?
Matt Ross: Yeah, I think it is kind of what we're talking about with PSEG Long Island. It's that combination of data and marketing is really powerful. So the data has told us that there's an opportunity, that there's a big chunk of savings out there for customers. And most people like to save money. I'll just go out on a limb there. And so they're just not getting the message. They're not aware that they have these options and every customer is different and we can find different segments of these customers want to be reached in this way. These customers actually go to your website. So again, being more targeted about how you reach different demographics or rate classes. The data's there to kind of slice and dice and find the most successful ways to inform customers of these saving opportunities because we are leaving a lot of money on the table, but it's mostly because there's a lack of awareness.
Brad Langley: A lot of what we discussed so far has got some residential customer undertones to it. Yet I know in addition to affordability, you're very passionate about business customers as well. So what's the landscape right now in terms of rate education, different rate options for business customers? Because they do represent a significantly large share of energy usage.
Matt Ross: Yeah, there's so much opportunity on the business customer side. I think small, medium-sized business, there's definitely more challenges there. They often need different tools to support them and need that kind of rate education. They're really focused on running their business. They don't have energy analysts on site like some of the large power users. So I think that's really important to have different strategies for your SMB group. And then getting into the truly large commercial or your managed accounts. There is just so much opportunity and it's not often in rates. The large commercial customers don't have that many rate choices. Often those rate choices are kind of self-selected based on the size, their max load, but they do have lots of options in terms of programs and opt-in riders that I think are really important. And a lot of those riders are focused on demand flexibility, whether it's demand response.
I'm a big fan of interruptible demand. I think it's super cool to just have certain load that you can turn down on the hottest day of the year because that really reduces so much strain on the grid. You get compensated for that. And if you can take serious demand off of that peak day for the utility, it has a massive impact to just the broader cost of operating the system. So as we think of these customers, they're tens or even hundreds of megawatts. A little goes a long way. And I think as we see more growth with large power users and particularly data centers, we need to give them incentives to be an ally to the grid. They will deploy the technology. They have the teams to facilitate how they consume energy during those really important times where the grid is stressed.
Brad Langley: You've actually talked about how AI low growth could actually put downward pressure on rates in five to seven years, which is maybe a little bit of a counterintuitive position with all the uproar right now and the concern amongst communities of what data centers are going to do to bills. First, I mean, how would that work?
Matt Ross: You have the opportunity where data centers have really high, what we call load factors. So they kind of consume a really high amount of energy, but at a steady rate. And so if you have that, you're going to be able to run more energy through the same infrastructure. So you've increased the usage. And if your revenue requirement stays the same or doesn't go up as much, you do have that opportunity to create downward pressure on rates. I think the challenge is, will we do enough in the next five years as these data centers are getting built? Will all of that demand be realized? Will it be realized efficiently? There's still some big questions out there, but if we are successful in bringing on these data centers and they're consuming and playing nice on those really intense peak days, I do see an opportunity for it to create downward pressure on rates.
Brad Langley: And how does this idea that it could end up lowering rates in the medium to long-term impact how you think about the affordability story today? I mean, do you think that should be a bigger part of the narrative? And if so, why isn't it?
Matt Ross: Data centers is more than just an energy conversation. There's lots of questions about water and land use and other kind of existential questions that I won't get into. But purely from an energy standpoint, we do see that opportunity and we are seeing utilities and regulators in states use that as a viable pathway. As I mentioned, there's all these new kind of tariff structures coming out for ensuring that data centers pay their fair share. And there have been examples where they're paying more than their fair share to really make certain investments in the grid that benefit everyone. So I do see that as a pathway towards general increase in affordability, but I still think there's work to be done on those rate and programs to incentivize deep demand reductions on those peak days. We just have to create the kind of constructs, which I think are rates to help them be successful and then they'll find those pathways.
Brad Langley: As a fan of the show, Matt, you're going to know this question is coming. So we call this show with great power, which is nod to the energy industry. It's also a Spider-Man quote, "With great power comes great responsibility." So what superpower do you bring to GridX and the energy transition more broadly?
Matt Ross: I'm pretty calm under pressure. As we deliver our projects, and I've been doing software deliveries for large utilities for quite some time, there's almost always a curve ball, something you can't anticipate. And so that's given me a lot of perspective. I always kind of go back to the basics and say, okay, what is the data telling us? Let's follow the breadcrumbs. Let's find the issue and make a plan. And so for me, it's okay to get upset for a minute. Everyone takes pride in their work, but just taking a beat, taking a breath, I find is a much better strategy than pulling your hair out.
Brad Langley: Couldn't agree more. Awesome, Matt. Thank you so much for your time and for coming on the show.
Matt Ross: Thank you, Brad. It's a great time.
Brad Langley: Matt Ross is vice president of delivery here at GridX. With Great Power is produced by GridX in partnership with Latitude Studios. Delivering on our clean energy future is complex. GridX exists to simplify the journey. GridX is the enterprise rate platform that modern utilities rely on to usher in our clean energy future. We design and implement emerging rate structures and we increase consumer investment in clean energy, all while managing the complex billing needs of a distributed grid.
Mary Catherine O'Connor produced a show. Anne Bailey is our senior editor. Stephen Lacey is our executive editor. Sean Marquand composed the original theme song and mixed the show. The GridX production team includes Jenni Barber, Samantha McCabe, and me, Brad Langley. If this show is providing value for you, and we really hope it is, we'd love it if you could help spread the word. You can rate or review us at Apple and Spotify, or you can share a link with a friend, colleague, or the energy nerd in your life. As always, thanks so much for listening. I'm Brad Langley.