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Can Price Transparency Improve Customer Satisfaction for Utilities?

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Rob Girvan's picture
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20+ years in Enterprise Software Applications in the Energy Industry, including ERP, Meter to Cash, CRM, Customer Engagement.

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  • Mar 27, 2020 11:19 am GMT
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“Transparency in business is when a brand maintains open, honest, and accessible communications and relationships with internal and external stakeholders.” – adroll.com

In the last several years, Utilities have made great strides in building transparency with consumers by investing in customer engagement technologies.  Examples abound, including multi-channel outage notifications, high-use alerts, and proactive bill reminders, as well as energy portals for viewing energy usage.  Of course, Utilities with smart meters are advantaged to have more data to provide better insights for their customers.

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However, price transparency is more elusive. Utility billing is notoriously complex with riders, several taxing entities, and block rates measured in KWh, a unit of measure unfamiliar to most consumers.  And now as more utilities are rolling out demand charges and TOU rates to supplement roof-top solar and EV adoption, the problem becomes even more complex.

Some utilities are rising to the challenge.  The Smart Energy Consumer Collaborative recently released a case study on SCE’s TOU rate transition  showing SCE’s price transparency.  In addition to launching a rate awareness campaign, and defaulting customers to the lowest cost plan, SCE built an online Rate Plan Comparison Tool to allow customers to view how their historic annual usage would be priced on multiple rate plans.  Very transparent.

For utilities, price transparency is best achieved with smart meters and an enterprise rating engine providing bill simulation.  This allows the utility or the customer to price alternative rate models on both historic and modified load profiles.  Modified load profiles allow customers to understand how potential load changes such as EV, solar adoption or load shifting will affect their monthly bill, on multiple rate plans.  The simulated costs can be shared via the utility’s my account online or the call center.

“Price transparency can put companies that practice it at a competitive advantage and lift a big weight from the customer psyche,” says Brand Quarterly.  For utilities this can mean retaining customers from alternative energy providers and increasing customer satisfaction scores.

 

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Matt Chester's picture
Matt Chester on Mar 27, 2020

For this being a debate for a particular utility, the only real question I have is: would the transparency hurt customer satisfaction? Probably not. And if the answer is yes, then that's probably more an underlying issue with the rate structure than the fact that they're being transparent about it..

Richard Ford's picture
Richard Ford on Mar 30, 2020

Matt,

You are absolutely right.  If utilities are worried that more information would alienate customers, then that means that the rate structure is unfair.  When I go to the store and buy a bag of carrots, I pay the same price as everyone else.  They don't charge me more per carrot because I am a widower and "don't pay my fair share" of the store's overhead costs.  Why shouldn't utilities charge every residential customner the same price per kWh and per CCF of gas? 

Richard Ford's picture
Richard Ford on Mar 30, 2020

Thanks for the good article, Ron.  More transparency is a great idea.  Every bill should say that overdue bills will be charged interest at an effective annual rate of 19.5%, rather that "1.5%."  People think that is a one time charge, rather than a monthly interest rate that compounds to 19.5% per year.  Bills should also say what the total charge is per kWh.  Widows and widowers living alone are incensed when they divide their bills by the kWh charged and find out that they were not being told that the price per kWh for them is higher than it is for the average customer.  

 

Rob Girvan's picture
Rob Girvan on Mar 30, 2020

Thank you, Richard.

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