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Now, More Than Ever, Utilities Are Seeking New Ways To Generate Non-Usage Revenue

Posted to American Water Homeowner Services in the Utility Management Group
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Rob Gilpin's picture
Director of Business Development American Water

For over 25 years, Rob has been helping utilities including Georgia Power, Eversource, Ameren, Oncor, Avista, Alabama Power, Alliant Energy, Xcel Energy, JEA and OUC improve both Customer...

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This item is part of the Special Issue - 2021-01 - Predictions and Trends, click here for more

As it stands, state mandated, or voluntary, temporary utility shutoff moratoriums are now in place for 56% of the U.S. population (185 million people) according to the National Energy Assistance Directors’ Association (NEADA).  The moratoriums & debt relief programs created because of the COIVD pandemic, were meant as an emergency response to an unprecedented event.  Utility re-payment plans may help those still employed, but for the 22 million people in the U.S. that lost their jobs due to COVID, utilities may never get reimbursed. 

Imagine having millions of dollars in discretionary revenue that could be used to fund debt forgiveness or other goodwill programs?

“Moratoriums were imposed as an emergency response with little impact analysis” according to Theodore Kury (Director of Energy Studies, University of Florida Public Utility Research Center).  Another way of looking at it is “a moratorium just kicks the can down the road.  By the time the pandemic is over, these families may have a year’s worth of utility bills” according to Mark Wolfe (Executive Director, NEADA).

Because of COVID, utilities are expecting a negative impact on operating revenue ranging anywhere from $20 million to $260 million due to waived payments.  Somehow, somebody’s going to have to pick up the tab! 

For over 100 years, utilities have benefited from the power and profitability of Behind-The-Meter solutions.  Home Warranty programs including Interior / Exterior service lines, appliance repair and surge protection are just some of the value-added services that can easily be implemented with absolutely NO capital investment on behalf of the utility.  These programs not only generate millions of dollars per year in non-usage revenue but according to JD Power, “they also increase customer satisfaction overall by 70 index points (on a 1,000-point scale)”. 

Additionally, upfront signing bonuses, and other financial incentives, generate significant revenue prior to go- live.  This money can be applied immediately in a variety of ways (above or below the line).  For example, by creating a Goodwill-Fund, utilities can offer debt forgiveness or provide home warranty coverage at no cost to those that simply can’t afford it.            

With over 35 current partnerships, program participation can easily be 20% or more.  The following chart below provides a quick way to calculate the approximate annual revenue a utility can generate based on meter count*:

40% or more of medium to large utilities already offer some form of Behind-The-Meter solutions that provide convenience, build trust, and generate non-usage revenue.  In many instances, utilities will elect to do a phased “crawl-walk-run” implementation or even a pilot program. 

If you’re looking for new ways to generate non-usage revenue, increase customer satisfaction and provide additional “value-added” services to your residential customer base, we would welcome the opportunity to schedule a consultation to talk in more detail. 

Thanks to modern science, and the hard-working men and women in medicine from across the world, we will beat COVID.  We’ve also learned a great deal through this pandemic that will change the way we work and live for many years to come.  Let’s use this pandemic to re-examine many of our internal programs and mindsets.  Just because we’ve never ventured to try new ideas, doesn’t mean they can’t be mutually beneficial and highly successful.    

American Water Homeowner Services has been providing custom warranty programs, exclusively to utilities and municipalities, for over (28) years.  We protect homeowners, and their budgets, from the high cost of home repairs.  To learn more about our programs and calculate your utility’s potential earnings you can contact me at robert.gilpin@amwater.com or 224-828-9969

Here’s to a great 2021 ahead!

 

 

*Note:  Based on internal partner data in IL, OH, IN, TN, FL, VA, GA, MA, PA, KY & MD.  Specific elements of each agreement are variable from partner to partner (such as pricing and revenue share); these elements can affect each utility’s revenue earnings.

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Rob Gilpin's picture
Thank Rob for the Post!
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