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Could Utilities Sell Customer Data?

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  • Oct 7, 2020 9:02 pm GMT
  • 368 views

By mid-April, at the height of the pandemic, America’s airlines faced a big problem: They needed money, and fast. Flight traffic was down almost 100% and the coffers were drying up. The usual moves airlines pull in hard times (leveraging planes and gates for loans) weren't going to cut it. That’s when the flight companies decided to do something novel. One by one, they started offering up their customer reward programs as collateral for big time loans. Here’s how the scheme was explained in an article at PYMNTS.com:

“The way the rewards programs work is that airlines sell miles to banks, and the banks use them as credit card rewards to attract the wealthier customers they want as cardholders. The loyalty programs are especially golden in the U.S., where there are no caps on credit card transaction fees, FT reported. Because of that, the card issuers have more freedom and incentive to pay up for miles.”

It’s a clever move, but I don’t think it was the only option available to the airlines. Those same customer reward programs, or rather the related client portfolios, could have been sold to other companies eager to know how, why, where and when people were moving. It’s data, and data is a valuable commodity these days. I haven’t read about such a plan ever coming into the fray over the spring and summer, but it doesn't seem implausible. 

How does any of this relate to utilities? Well power companies are quickly moving into a position where they’ll at least have the goods to pull such a move. Long gone are they days when utilities existed as big silos. Now, to provide more reliable service and tap into diverse energy sources, power companies are investing in communication networks, IoT gizmos, distributed energy, and AI. Data will fuel these interconnected and highly automated systems. 

Much of the data mined by utilities will not be sensitive, at least from the customer’s viewpoint. Weather data, for example, that allows utilities to better predict problematic events could be sold off or shared to other actors and nobody would have a reason to care. However, data about customers—think energy efficiency programs facilitated by smart meters—are a totally different story. 

Until now, the utility digital revolution has been bitter-sweet for customers, but mostly sweet. Despite some perfectly reasonable reservations about data security, residential customers have generally been happy to finally see how they consume energy and how they can save. I fear, however, that that mostly positive consensus regarding residential data mining could flip if utilities were to start selling it off. 

It may seem far fetched, but two simple facts give reason to worry. First: Utilities are companies and companies are after profit. Data on how people use electricity at home is something a lot of companies would pay big money for. 

From a customer care perspective, such a scenario is a nightmare. Yes, the initial profit made from the sale of data might be nice, but the customer backlash could make the whole thing a net negative. Unfortunately, like so many of the most salient customer care issues, this is not something customer care teams have direct control over. They can lobby against such moves, but it isn’t their call. More realistically, customer care teams could cushion the blow for customers by making the sales transparent and possibly giving customers options to opt out.

I hope utilities don’t get into the business of selling customer data. Not only do I believe it’s bad business in the long term, but I think it’s unethical. However, customer care teams shouldn’t be caught off guard. Ultimately the resulting mess will be theirs to clean up, so they should have plans and systems in place to reassure customers and possibly offer them an opt-out.


 

Henry Craver's picture

Thank Henry for the Post!

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Discussions

Audra Drazga's picture
Audra Drazga on Oct 12, 2020 11:35 am GMT

Henry - what if the customers gave their permission.  In other words the utilities could have some sort of question with their bill pay that asks them if they are open to having their information shared with xyz? 

Henry Craver's picture
Henry Craver on Oct 17, 2020 2:01 pm GMT

I think that would help mitigate some sort of backlash, but not completely. People so often sign things without understanding the implications of the contract, many not even taking time to read the contract itself. That fact doesn't keep those same people from getting angry and feeling mislead when they find out what they gave away. 

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