L EVERAGING C USTOMER D ATA AND U TILITY C OMMUNICATIONS FOR C USTOMER B ENEFIT : P REPAY E NERGY TO...

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© 2015 Distributed Energy Financial Group LLC

LEVERAGING CUSTOMER DATA AND UTILITY COMMUNICATIONS FOR CUSTOMER BENEFIT: PREPAY ENERGY TO ENHANCED TRANSACTIONSMichigan Smart Grid Collaborative Forum

Jamie Wimberly, CEO, DEFG

September 16, 2015

ABOUT DEFG

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DEFG Research Consortia

Prepay Energy Working Group ABACCUS Low Income Energy Issues Forum

PEWG OVERVIEW

In 2015, DEFG's Prepay Energy Working Group (PEWG) marks its 6th year as the industry's leading forum for the exploration of prepaid energy service offerings

The PEWG continues to grow because its members value the extensive and actionable research agenda and the record of accomplishments

Participants include energy utilities and suppliers, metering and software vendors, a regional energy efficiency alliance, regulatory commissioners and consumer advocates. Together they cover a broad spectrum of perspectives and experiences

The PEWG conducts research across 4 tracks:

1. Regulatory

2. Consumer / Market

3. Potential for an Energy Conservation Impact

4. Operational Requirements / “Business Side” Research Prepaid energy service is a catalyst, forcing discusses about the need for

innovative and “smart” consumer offerings and the need to bring the rulebook into the 21st century

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22 DIVERSE MARKET MEMBERS OF THE PEWG*

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* PEWG research is sponsored by the member companies. Government agencies and non-profit organizations do not make any financial contribution to the work. PEWG work products do not necessarily represent the views of any participating organization, state regulatory agency, sponsoring company or individual participant.

TODAY’S AGENDA

I. Introductions

II. Overview of Prepay Energy

III. Customer Research

IV. Regulatory

V. Energy Conservation and Environmental Impacts

VI. Enhanced Transactions

VII. ComEd’s “Dollar-A-Day” Low Income Pilot

VIII. Conclusion

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Today’s Objectives

Have a good dialogue and answer any questions you have

Explore together the potential for smart grid to deliver customer benefits


Overview of Prepay Energy

WHAT IS PREPAY ENERGY?

Prepay energy is a voluntary bill pay option for consumers to pay ahead for energy consumption in the future. Some consumers appreciate the convenience and flexibility of the option. Others appreciate an alternative to security deposits or payment arrangements.

Once consumers begin using prepay energy, they tend to drop their energy consumption significantly.

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PREPAY ENERGY IS GROWING RAPIDLY AND PART OF MEGA TREND

Prepay is a mega trend in consumer finance. TransCard projects that prepayments from all segments (consumer, commercial and public) will total $421 billion in transactions in 2017. Of that, the consumer segment will represent $112 billion, mainly reloadable debit cards but also gift and other forms of prepayment.

Prepay energy is an example of grassroots innovation. Many co-ops and public power utilities have been offering prepay energy for years now. Salt River Project has approximately 17 percent of their customer base on a prepay offering. Now, a number of the largest owned investor-owned utilities have a prepay energy pilot underway or planned.

“For North America, the installed base of prepay meters is expected to grow from 650,000 to 3.1 million during the forecast period, with a CAGR of 17.0%.” Navigant Research Reports, “Prepaid Metering: Meters, Software and Services,” Q1 2015

Our consumer survey findings consistently show strong consumer interest. Since 2010, the “top two box” responses (i.e., “extremely interested” and “very interested”) have totaled 17 percent (2010), 22 percent (2012), 24 percent (2013) and 17 percent (2014). Interest has been higher among younger respondents in particular.

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Annual Consumer Survey Results

POSSIBLE TITLES FOR 2015 CONSUMER SURVEY REPORT

Prepay Energy: Jumping Over The Hump

Who Doesn’t Love Prepay Energy????

Give The People What They Want: Prepay Energy’s Convenience and Control

Prepay Energy: Getting The Messaging and Mechanics Right

Lions, Tigers and Bears: Prepay Energy Works for Consumers Seeking Alternatives to High Security Deposits, Bad Debt Recovery and Payment Arrangements

The Regulatory Challenge Posed By Prepay Energy: When The Old Way Is Not Necessarily The Best Way For All Customers

Prepay Energy: Leveraging Smart Grid for Consumer Benefit

Prepay Energy’s Leap Into The 21st Century

How Essential Is An Essential Service?: Prepay Energy and Self-Disconnection

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METHODOLOGY

The Russell Omnibus was conducted via the internet among 980 adults 18 years of age or older from Nov. 21-24, 2014. Figures for gender, age, and geography were weighted where necessary to match their actual proportions in the population. The bases shown in this report are the weighted bases.

An invitation to participate in the study was sent by e-mail to panel members who have agreed to be contacted by Russell Research and interviewed over the Internet.

Participating respondents were interviewed on-line at a secure Russell Research URL programmed for this study, with product / package images were shown for certain questions.

Sample was provided to Russell Research from a leading sample provider.

In theory, with probability samples of this size, one could say with 95 percent certainty that the results have a statistical precision of plus or minus 3.1 percentage points of what they would be if the entire adult population had been polled with complete accuracy. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (non-response), question wording and question order, and weighting. It is impossible to quantify the errors that may result from these factors. This online survey is not a probability sample.

These statements conform to the principles of disclosure of the National Council on Public Polls.

All research was conducted to meet the standards of ISO 20252:2012.

The statistical significance of a result in this survey is the probability that the observed relationship (e.g., between variables) or a difference (e.g., between means) in a sample occurred by pure chance, and that in the population from which the sample was drawn, no such relationship or differences exist. Using less technical terms, one could say that the statistical significance of a result tells us something about the degree to which the result is "true". More technically, the value of the p-value represents a decreasing index of the reliability of a result. The higher the p-value, the less we can believe that the observed relation between variables in the sample is a reliable indicator of the relation between the respective variables in the population. Specifically, the p-value represents the probability of error that is involved in accepting our observed result as valid, that is, as "representative of the population." For example, a p-value of .05 (i.e.,1/20) indicates that there is a 5% probability that the relation between the variables found in our sample is a “fluke.”

The following statistical notations are used throughout the report:

= Indicates figure is significantly higher than the other sub-group at a 95% confidence level (i.e. p-value of .05 or less).

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PREPAID CARDS AND SERVICE HAVE BECOME COMMONPLACE

Prepaid Card and Service Usage

Two-thirds of these consumers have used or purchased a prepaid card or service (66%)

Base: Total Respondents (n=980)Q.1: Have you ever used or purchased a prepaid card (e.g., payroll, gift or reloadable), prepaid wireless phone service plan or any other service that you paid before you used the good or service?


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CUSTOMER SATISFACTION WITH PREPAID CARDS AND SERVICE IS HIGH

Satisfaction Level with Using Prepayment to Make Purchases or Contract Services

Three-fourths of consumers that have used or purchased a prepaid card or service were satisfied with using prepayment as an option (74%)

Base: Total Have Purchased/Used A Prepaid CardQ.2: How would you generally rate your satisfaction with using prepayment as an option to make purchases or contract for services?


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NEARLY ONE IN FIVE WOULD BE INTERESTED IN PREPAID ELECTRICITY

Consumer Interest in Voluntary Prepaid Program for Electricity

Interest in prepay energy was highest among men (22% v. 13% of women) and younger adults (23% among those 18 to 54 v. 7% of those 55+)

Base: Total Respondents (n=980)Q.3: Your local electric utility or service provider may offer voluntary prepaid electric service to consumers in the future. Under this option, you would choose to pay upfront anytime you wanted before you used the energy rather than paying your bill at the end of the month after you used the service. Reasons for possibly using prepaid electricity would include no security deposit required or better managing your budget and energy use. You would always be able to check the balance remaining in your prepaid account. If your local utility or provider were to offer a voluntary prepaid option for consumers, how interested would you be?


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THERE ARE OPPORTUNITIES TO INCREASE EDUCATION AND AWARENESS

Statements That Best Describe Prepaid Electric Service

Older respondents were particularly likely to view this as a service for people having trouble paying their bills (52% vs. 40% for those age 18 to 54)

Base: Total Respondents (n=980)Q.4: Which of the following best describes how you view prepaid electric service?


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PREPAY ENERGY IS CONSIDERED CONVENIENT

One Word To Describe a Voluntary Prepaid Electric Service Option Offered by Local Electric Utility or Service Provider

Frequently mentioned: convenient, unnecessary, and interesting

Also: helpful, different, innovative, savings, uninterested, confusing, and easy

Base: Total Respondents (n=980)Q.5: What one word would you use to describe a voluntary prepaid electric service option offered by your local electric utility or service provider?


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PREPAYMENT: ELECTRONIC AND AUTOMATIC PAYMENTS

Top Two Most Important Payment Options for Reloading Account

The most important payment feature of prepaid service would be the ability to make payments online

Consumers were also interested in setting up automatic payments and making payments by smart phone

Base: Total Respondents (n=980)Q.7: If you were to elect to use a prepaid electric service option, what payment options to reload your account would be the most important to you? Please choose your top two options.


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PREFERRED NOTIFICATION: EMAIL, TEXT MESSAGE, MULTIPLE CHANNELS

Two Most Preferred Ways to Be Notified of Account Balance

Consumers would also prefer to be contacted electronically, primarily by email, both regarding their account balance and about potential disconnection of service due to unpaid bills

Base: Total Respondents (n=980)Q.9: If you were to elect to use a prepaid electric service option, how would you like to be notified of your account balance? Please choose your top two options.


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PREPAYMENT: BEST OPTION FOR THOSE WITH BAD OR NO CREDIT

Best Option for Those With Bad or No Credit to Open Account

Three in five respondents (58%) felt that a voluntary prepayment option was the best way for customers with no credit or bad credit to open an account

Base: Total Respondents (n=980)Q.8: For those utility customers that either don’t have credit (e.g., students) or bad credit, which option do you think would be better for those customers in order to open an account with the utility and start utility service?


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CONSUMERS CONSIDER REMOTE RECONNECTION BENEFICIAL

Perceived Benefit of Remote Reconnection

Nine in ten respondents thought there was a significant or some benefit to them if the utility can restore or reconnect electric service much faster through remote reconnection

Base: Total Respondents (n=980)Q.13: How much benefit would you say there is for you as the customer if the utility can restore or reconnect your electric service much faster through remote reconnection?


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OPPORTUNITY FOR EDUCATION: SELF-DISCONNECTION

Consideration of Self-Disconnection to Conserve Energy

One-fourth of respondents would consider self-disconnection to save energy (26%)

One-fourth said it would depend on the circumstances (28%)

Base: Total Respondents (n=980)Q.14: If you knew that your local utility could turn off your service and then restore your electric service within minutes or on your schedule, and could do so without any penalty or any fee, would you ever consider self-disconnection (e.g., just letting your account reach a zero balance so that the service is turned off temporarily) to conserve energy (away for a weekend), and then reconnecting at your convenience?


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BIGGEST CONCERNS ABOUT PREPAY

One Word To Describe Biggest Concern with Regard to a Voluntary Prepaid Electric Service

Concerns revolve around security, disconnection if they ran out of funds/forgot to pay, and cost

Some felt the service was unnecessary; some said they could not think of any specific concerns

Base: Total Respondents (n=980)Q.15: What one word would you use to describe your biggest concern with regard to voluntary prepaid electric service?


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TAKEAWAYS

Prepay energy is part of a larger mega-trend in consumer finance

A significant number of consumers would really like a voluntary prepay option. The right customer with prepay energy = very high customer satisfaction.

Prepay energy, however, is not the preferred option for all consumers. In fact, there are very distinct segments of consumers who are more likely to want prepay energy: millennials, immigrant communities, property owners and small commercial, customer with credit/ debt issues, and customers who pay in cash.

Customers have a wide range of preferences and needs in regard to customer channel and notifications. However, almost all customers are seeking more control and convenience.

Customers appreciate the benefits of smart grid, e.g., remote connection, in relation to prepay energy.

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Regulatory Issues with Prepay Energy

INTRODUCTION

As technologies and patterns of human behavior evolve, consumer-facing rules and protections must periodically be revisited. Policy approaches may no longer achieve their intended purpose and, moreover, there may be a better approach that considers current lifestyles and consumer preferences.

There is no better example than communication channels. The 21st century has seen a steady move from paper to digital communication.

With various service providers, consumers can elect to receive regular, actionable information that helps manage their services and bills. The information and delivery methods can be customized and automated.

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OVERVIEW: CRITICAL POLICY AREAS

Following extensive research in 2012, the PEWG identified 9 policy areas most critical to the future of prepaid energy service, requiring the attention of lawmakers:*

1. Service must be voluntary

2. Applicability of weather protections

3. Concerns for vulnerable populations

4. Service disconnection

5. Account notifications

6. Arrearage management and deferred payment plans

7. Cost of service: deposits, penalties & fees**

8. Payment channels

9. Availability of / synergies with / payment assistance

* O’Dwyer, C. B. (2012, September). Prepaid Energy: A Regulatory Path Forward. Prepay Energy Working Group. Washington, DC: Distributed Energy Financial Group LLC. http://defgllc.com/publication/prepaid-energy-a-regulatory-path-forward/

** O’Dwyer, C. (2014, August). Security Deposits and Fees: Leveraging New Technologies to Create Greater Flexibility and Opportunities for Improved Budget Management. Prepay Energy Working Group. Washington, DC: Distributed Energy Financial Group LLC.

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http://defgllc.com/publication/prepaid-energy-a-regulatory-path-forward/

OVERVIEW: REGULATORY FRAMEWORK

The PEWG employs four “screens” (analytical framework) to identify the drivers behind relevant policy approaches …

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OVERVIEW: REGULATORY FRAMEWORK

For account notification policies, there are three critical drivers: Principle – customers need reliable and timely alerts to

properly manage account and keep their lights on

Practice or process – content and method of delivery are critical, must consider how and when to effectively reach the customer

Preference – the ability of customers to exercise choice related to communication channels and account management options

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With an eye towards achieving these drivers, regulators should revisit existing notification policies to weigh the benefits and risks / drawbacks associated with traditional and new methods of communication.


OVERVIEW: A NEW CONVERSATION WITH PREPAID

With traditional post-pay, bills are rendered at monthly intervals, and must contain basic information (customer’s name, billing address, service address, account number; electric utility’s name and its payment address) – the monthly bill is a statement of past usage & dollars owed, potentially with additional information related to usage patterns.

With prepaid, the utility and customer need to receive regular alerts, to be in daily / near daily / weekly communication via text / email / IVR / mobile app (depending on customer’s needs & preferences); this creates an opportunity for customers to become energy literate (usage tied to $ in near real-time) and establish a regular conversation with their provider.

Critical Prepaid Service Alerts include: Account balance & usage (daily, weekly - depending on preference) High usage Low balance Late payment (friendly-credit period) Disconnect; pending disconnect Payment posted Reconnect established

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ANALYSIS: ALERTS, DELIVERY & REPORTING—TYPICAL PREPAID SERVICE ALERTS

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Alert Type Description

Daily Balance

Informs customers of their current balance and usage as of the latest meter reading

Daily Usage Informs customers of their daily consumption

Disconnect Notifies customers when service has been disconnected

High Usage Notifies customers when consumption is unusually high based on threshold

Low Balance

Notifies customers when their balance reaches a predetermined amount established by the customer

Pending Disconnect

Notifies customers when their account is subject to disconnect

Recharge Confirms

Confirms successful posting of a payment to a prepaid account

Reconnect Notifies customers when service has been reconnect

ANALYSIS: ALERTS, DELIVERY & REPORTING— EVALUATION OF ALERT DELIVERY METHODS ACCORDING TO POLICY DRIVERS

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Channel Reliable Timely Consumer Preference

USPS Mostly (assuming address is correct) but no confirmation if/when notice is read, and no Sun. delivery and potentially no Sat. service

No, requires lengthier disconnect notice periods to ensure delivery (leading to debt accumulation); too costly and slow for actionable usage alerts

Increasingly less popular vs. e-mail and texting, especially with adults < 50 years

In-Person (Backup – Door Hanger)

Potentially, depends on lifestyle, whether an adult is home during business hours; hanger on front door may be missed

Potentially, if an adult is home; door hanger is not timely if customer arrives home many hours later or doesn’t see it

More often not preferred; feels like a violation causes stress / embarrassment

Text/SMS Yes (assuming # on record is correct and no other tech / service issues); plus, utility & vendor receive delivery codes to authenticate delivery / be made aware of any issues – potentially actionable information

Yes (assuming # is correct and no other tech / service issues) – near immediate delivery

Increasingly a preferred method of communication; for certain segments, #1 choice for alerts

E-mail Yes (assuming address on record is correct and no other tech / service issues); plus, utility & vendor receive delivery codes to authenticate delivery / be made aware of any issues – potentially actionable information

Yes (assuming address is correct and no other tech / service issues) – near immediate delivery

Increasingly a preferred method of communication; for certain segments, #1 choice for alerts

IVR Good reliability if message sent to personal mobile phone of account holder; less reliable if sent to home and minor picks up call, but customer can automate time to receive alerts.

Yes (assuming # on record is correct and no other tech / service issues)

For certain segments, #1 choice for alerts


Energy Conservation and Environmental Impacts of Prepay

OVERVIEW

In the U.S. and abroad, data have shown a linkage between prepayment and a conservation effect, with significant usage reductions of 5-15%. While there is an apparent link, it is not well understood or documented.

Thus, in 2011, the Prepay Energy Working Group commissioned Dr. Michael Ozog to propose a methodology to measure the impact of prepaid service on energy consumption,* which was vetted by market and regulator participants of the Prepay Energy Working Group.

The natural next step was to test the methodology. In cooperation with Oklahoma Electric Cooperative, Dr. Ozog analyzed customer usage data (both post-pay and prepaid) to determine at what level a relationship exists between prepaid service and a reduction in energy consumption. The initial findings are contained in this deck.

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* Ozog, M. (2011). A Method for Estimating the Conservation Effects of Energy Prepayment. Series of Regulatory Choices 7. Washington, DC: Distributed Energy Financial Group LLC. http://defgllc.com/publication/method-for-estimating-the-conservation-effects-of-energy-prepayment/

http://defgllc.com/publication/method-for-estimating-the-conservation-effects-of-energy-prepayment/

REGRESSION MODEL

A fixed-effects panel model was used, with variables for temperature and disconnects as well as participation in prepay:

A log specification was used, so estimated savings would appear as percent of usage.

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ln( ) ( )it t i t t it it it it itkWh Temp PP PP Disc Disc

KEY RESULTS

Estimated Coefficients (savings are negative):

• Enrollment in prepay results in a significant reduction in

energy usage of 11% (about 2,250 kWh/year)

• This implies $192/year reduction in customer’s bill*

* Assuming $146 per month total bill (OEC’s current monthly average) 36


Variable Coefficient t-valueEnrolled in Prepay -11.0% -17.79Disconnects under Prepay 2.4% 2.06Disconnects at any time 3.3% 3Sample Size 65.628 obs (1,217 houses)

PREVIOUS EVALUATIONS

This result is consistent with other evaluations of prepay programs:

12% reduction in a previous evaluation of OEC program in 2008 (Buck, Utility Automation, May 2008)

11% reduction in usage when customers receive training on the system, and a 4% reduction when for customers without training (EEI, January 2008)

12.8% reduction in energy use in the Salt River Project (SRP) M-program (EPRI Technical update 1020260, October 2010)

10.6% average reduction in energy use across two utilities in the Pacific Northwest (NEEA-DEFG, January 2014)

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CONSUMER SURVEY IN THE NORTHWEST:ACTIONS TAKEN TO USE LESS ELECTRICITY*

One question addressed specific actions that the customers may have taken since switching to prepay service. These include behavioral actions, investments, and the act of voluntarily allowing a service disconnection for nonpayment to reduce usage.

Q-5. Now I am going to read a list of actions that some people take after they switch to prepay service. Please indicate whether you have taken this action since switching to prepay service with a simple “yes” or “no.”

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Rank Action Type Action “Yes”1 Behavior Made sure the lights are off in unused rooms 97%

2 Behavior Intentionally made an effort to use less electricity 92%

3 Behavior Adjusted the thermostat a few degrees to use less electricity when the residence was empty 84%

4 BehaviorAdjusted the thermostat a few degrees to use less electricity when you or others are in the residence 80%

5 Investment Replaced light bulbs with energy-efficient light bulbs 74%

6 InvestmentApplied weather stripping to windows and doors or added insulation to the attic or around the water heater 52%

7 Behavior Changed the time of day or how often you use your appliances 48%

8 InvestmentMade a major investment in the home heating system, in new insulated windows or in new energy-efficient appliances 43%

9 Behavior Lowered the temperature setting on the water heater to use less electricity 40%

10 Investment Upgraded or replaced the thermostat 37%

11 Other Allowed my electricity to be shut off as a way to use less electricity 36%

* Source: DEFG. (2014). Prepay Customer Survey. Report prepared for the Northwest Energy Efficiency Alliance. Final release: forthcoming.

ENVIRONMENTAL IMPACTS

Our research on prepay energy and other enhanced transactions in the utility sector is pointing to the potential for consumers to change behavior and drop energy consumption by 10% or more

Utility offerings that combine customer preferences, robust communications and transactions (e.g., bill pay and energy management) could the fastest, cheapest and most satisfactory means to achieve positive environmental outcomes

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Adoption scenarios High Medium Low

Adoption rates 18% 10% 3%

Average electricity savings 12% 10% 8%

Million metric ton CO2 avoided annually

16.35 7.57 1.51

Percent of CO2 from residential electricity usage

2.2% 1.0% 0.2%

Potential of Prepay Energy to Reduce Electric Power GHG


Enhanced Transactions

THE MAGIC WAND

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What if we could wave a magic wand that would allow utilities to:

1) Dramatically reduce customer costs, and perhaps eliminate bad debt

2) Raise customer sat by 10 points or more

3) Hit all the mandated DSM targets for the year, with room to spare.

The magic is here …

But need to move from a binary look at transactions to create a more holistic customer experience tied to the entire utility enterprise


WHAT ARE ENHANCED TRANSACTIONS?

Transaction Data/Analytics

Commun-ications

Customer Intelligence

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CUSTOMER OPPORTUNITY WHEEL

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Behavior

Customer Strategy

Enhanced Trans-

actions

Segmenta-tion

Customer invest-ment

Channels

WHAT IS THE DYNAMIC FOR ENHANCED TRANSACTIONS?

Transactional: In dollars and cents that has an immediate and noticeable impact on customer bill

Preferences: During enrollment, preferences are set in regard to channel, frequency, content, etc.

Channel: Very aligned to mobile platforms Communication: A bill conversation every day through the

channel that the customer chooses Intelligence: Learning from real customer behavior on a

daily basis and making changes to adapt to that behavior Segmented: Low income, younger Americans, Hispanics/

immigrant communities Flexibility: Moving away from the 30-day billing cycle

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MAPPING CUSTOMER CHOICES

Options Available to ResidentialEnergy Consumers

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Current issues

Recent decades

Mid 20th C.Key:

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+ STRATEGY


DEFG’s “+ Strategy” for Budget Billing

Transaction + AMI With advanced metering infrastructure, close-to-real-time data allows more information to flow to the customer when/how s/he prefers. Information is more relevant, and—through budget alerts—more actionable

Transaction + AMI + Energy Conservation

Based on channel and frequency preferences, communications relating to energy conservation can be targeted to customer needs. S/he can act today and see the savings tomorrow

Transaction + AMI + Energy Conservation + Behavior

Positive reinforcement will be key. A feedback loop should be incorporated and grounded into a pairing with an associative good, either economic or social. Context is important: make budget billing mainstream (not just a low income option). Be proactive and positive, rather than defensive and targeting people who need help. (Many customers want to manage bills)

Transaction + AMI + Energy Conservation + Behavior + Portfolio

Help customer optimize what they are already doing by connecting the transaction and platform to other parts of the portfolio or customer service offering to allows more savings and control. When the utility fully enables budget management – combining all the aspects of the customer portfolio – it will allow for personalized and predictive planning with individual customers. This is a trusted energy advisor model in action


ComEd’s “Dollar-A-Day” Low Income Pilot


“DOLLAR-A-DAY” PILOT OBJECTIVES

Help low-income customers manage the affordability of their electric bills by setting their own energy saving goals, and influencing their behavior through incentives and frequent communication using the data from their AMI meters. This could reduce the need for long term financial assistance and operational costs.

Vision: Leverage technology-based tools and customer education to help

low income customers “get to a better place” Reduce the need for energy bill assistance and energy

conservation assistance; stretch limited assistance dollars Help consumers achieve their own goals: improve their cash

management and household budgeting; get out of a debt cycle Target customers who are currently eligible for hardship (CARE)

funds and/or LIHEAP participants who have received the maximum benefits

Reduce customer contacts (call center & collections) 48


BACKGROUND

ComEd’s service territory has 11% of customers that live below the poverty level, 22% with an income of under $25K, but only 5% of the premises are on one of our low income programs

Customers who receive low income assistance funds have a history of cycling in and out of our programs

These customers also may have a higher cost of service: require more disconnection notices, request more DPA’s. We have an example of one customer who called us 100 times.

ComEd has limited funds for assistance programs: $10M annually and would like to stretch those funds to as many eligible participants as possible.

The target audience includes customers currently eligible for hardship (CARE) funds and/or LIHEAP participants

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Care Program Customers with AMI meter as of May 15 , 2015

Care Program Total Customers AMI MetersLIHEAP 167,548 70,856Residential Special Hardship 6,704 2,651


STRATEGY

Conduct qualitative market research with low income focus groups to determine approach.

Target customers to reduce their electricity usage and lower their respective amounts due.

Reward participating customers in targeted segment with incentives for engaging in and delivering energy saving behavior

Utilize Local Administering Agencies (LAA) for outreach to low income customers to encourage enrollment.

Utilize an energy advisor for customer enrollment and to provide baseline education and awareness on household energy usage, set a target and ways to save.

Communicate frequently with customers to change behavior and message monetary savings.

Measure the effectiveness of program in terms of customer behavior and enterprise cost reduction.

Focus on behavioral change and individual accountability by setting the threshold to obtain an incentive higher as the pilot progresses.

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TACTICS

At time of application of LIHEAP or RSH, agency to offer fact sheet and gauge interest

Enroll 1,500 participants; track 1,500 interested customers (comparison group)

Enrollment and goal setting through phone call with implementing vendor

Energy advisor discussion: Participants choose their preferred form of communication (text,

email or robo-call) and affirmatively agree to be messaged to frequently

Participants receive information on how to reduce electricity usage

Participants receive yesterday’s cost and kWh usage; performance-to-date against their monthly budget; daily and accumulated incentive payments; positive affirmation

Participants earn $1 daily amount for meeting their daily kWh budget (weather adjusted calculation); incentive capped at $30 a month (“Dollar a Day” used in promotions)

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CONTRAST: MONTHLY BILL VS. DAILY TEXT

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Sample Daily Text


Conclusion

CONCLUDING TAKEAWAYS

I. Prepay energy is linked to a mega-trend in terms of customer finances and how Americans of all socio-economic classes are choosing to interact.

II. Why? Customers are highly satisfied with prepay. They greatly appreciate the convenience and control.

III. Prepay energy is challenging though to traditional regulations and policies that were developed decades ago.

IV. Prepay energy results in significant energy conservation and environmental impacts.

V. Prepay energy represents the cutting edge of a whole new set of customer offerings and enhanced transactions enabled by smart grid.

VI. A good example of an enhanced transaction aimed at better serving low-income customers would be ComEd’s “Dollar-A-Day” program.

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CONTACT

Jamie WimberlyCEO, DEFGOffice: [email protected]

DEFG believes retail customers are the future of energy. We partner with clients to improve all aspects of the customer relationship. We identify opportunities to create value in a commodity marketplace.

Persons interested in our publications should “Join Our Mailing List” to receive the announcements: http://defgllc.com/publications/

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L EVERAGING C USTOMER D ATA AND U TILITY C OMMUNICATIONS FOR C USTOMER B ENEFIT : P REPAY E NERGY TO...

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