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What Do Consumers Know About Their Electric Rate Options?

Posted to Smart Energy Consumer Collaborative (SECC) in the Customer Care Group
image credit: Smart Energy Consumer Collaborative (SECC)
Nathan Shannon's picture
President & CEO, Smart Energy Consumer Collaborative

Nathan Shannon is the President and CEO of the Smart Energy Consumer Collaborative, whose mission is to advance consumer-friendly, consumer-safe smart energy through research, education and...

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Changes in the electric power industry – including decarbonization targets, the need for enhanced resilience and consumer adoption of new technologies, to name a few – have led utilities to explore new rate plans for residential consumers. This includes developing electric vehicle (EV) rates, expanding time-of-use (TOU) rates, offering prepay options and more.

To learn more about what consumers know about these rate options, the Smart Energy Consumer Collaborative (SECC) recently conducted a 20-minute online survey of 2,013 Americans who are responsible for making energy-related decisions at home. The survey sample was representative of the U.S. population in terms of age, gender, income and geography.

The resulting report details consumers’ understanding of whether they have a choice of rate plans, their satisfaction with their current rate plans, their awareness of different types of rates (TOU rates, real-time pricing, fixed rates, subscriptions rates, etc.), their preferred attributes in a rate plan and more. The report also investigated consumers’ thoughts around their electric bills, which was covered in a previous blog here.

Below are three major findings from report that demonstrate what today’s consumers know about their electric rate options:

1. Most consumers aren’t sure whether they have a choice of rate plans.

The majority of today’s consumers have the choice between at least two rate plans – but are they aware of this? When asked directly whether they had a choice, a plurality of consumers (37 percent) stated that they did not have any options. Furthermore, 34 percent of respondents said that they were not sure – leaving only 28 percent of consumers that responded with a definitive “yes”.

The lack of awareness of whether choice is available indicates that electricity providers may need to improve how they communicate with consumers regarding choice of rate plans. The results revealed no notable differences between the segments on this topic — even the Green Pioneers, the “sweet spot” of consumers likely to adopt innovative utility programs and services, seem to be largely in the dark on their electric rate options.

2. Consumers are generally not familiar with different rate types.

Acknowledging that most consumers do not know whether they have a choice of rate plans, were respondents familiar with any rate plans by name? Respondents were asked whether they had heard of 12 different rate plans prior to taking the survey, and no single type of rate plan was known to a majority of consumers.

Consumers claimed that they were most familiar with the flat rate, where consumers pay a consistent price per kilowatt-hour regardless of how much or when it is used (43 percent). This was followed closely by the fixed rate plan (41 percent) – an “equal pay” plan where consumers have the same amount due each month – and TOU rates (31 percent).

Less than a quarter of respondents were aware of eight other rate types, including demand rates and real-time pricing, and 17 percent of all consumers stated that they were not aware of any of these rates. While differences in the results across segments were typically small, Connected Pragmatists were somewhat less likely to claim awareness, and Green Pioneers generally claimed the most awareness.

3. Most consumers value bill predictability and stability in a rate plan.

Finally, the survey tested which attributes were theoretically the most important to consumers in a rate plan. These included bill stability (“bill does not change from month to month”), bill predictability (“bill amount known ahead of time”), green power (“electricity sourced from zero-emission renewable resources”) and more.

Across the five consumer segments, bill stability and bill predictability were the most important attributes, demonstrating that consumers want transparency and consistency in their bills. For the Green Pioneers and Simply Sustainable segments, green power was much more important than for the other segments, and these two segments also valued control, defined as the “ability to manage bills through shifting load or automating when/how I use electricity.”

The new report shows that as utilities roll out new electric rate options, more education and more tools to aid decision-making are both needed. These new rates – whether a TOU rate, a subscription plan, a prepay plan, etc. – can empower consumers to meet their personal energy goals, but they can also be confusing and daunting without the appropriate support from electricity providers.

To learn more about what today’s consumers think and know about electric bills and rates, download the “Electric Bills and Rate Plans: Consumer Awareness and Understanding” report here.

Smart Energy Consumer Collaborative (SECC)
SECC is a nonprofit organization that works to learn the wants and needs of energy consumers, encourage the sharing of best practices in consumer engagement among industry stakeholders, and educate the public about the benefits of smart energy
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