Satisfying Retail Energy Customers with Flexible Billing Options

Billing for energy isn’t what it used to be. Given the growth of smart meter technology and the ubiquity of smart phones, tablets and other web-enabled devices, there are myriad ways for retail energy suppliers and utilities to collect from consumers.

As we are seeing, smart meter technology is quickly becoming the norm for consumers. 43 percent of households had smart meters as of 2014, up from just 33 percent in mid-2012.[i] As more markets deregulate, and as smart meters become even more common in households nationwide, a greater number of customers will have the potential to leverage smart-enabled options for monitoring, controlling and paying for their energy use.

At the same time, customers are becoming harder to hold. 38 percent of retail suppliers say their biggest challenge is improving customer acquisition and retention. As just one example, 960,000 Texas energy consumers swapped providers in 2013 alone.[ii] And, even in regulated markets, consumers (and taxpayers) have likewise raised expectations for their utilities.

Improving billing flexibility is one of the best ways to captivate and satisfy these consumers. On average, the modern consumer uses three different payment methods per month, including online, mobile and walk-in bill pay by check, cash, credit and money order. What’s more, 43 percent of consumers said that having multiple payment options improves satisfaction with their biller.[iii] For both retailers and utilities alike, employing the following flexible strategies will help to satisfy consumers’ growing demands by making better use of smart meter and mobile technologies.

Begin with True Time-of-Use Billing

True time-of-use (TOU) billing is a breakthrough made possible by the combination of smart meters and electronic billing systems. With the ability to pinpoint when and how much energy households are using hourly, or subhourly, utilities can charge different rates that fluctuate around peak times. With the right billing and customer engagement system, customers can likewise monitor their daily energy use and adjust accordingly to lower their bills – without sacrificing comfort. For example:

1. Free Nights & Weekends – TOU pricing opens up numerous options for the retail energy business, including free nights and weekends as just on example. Others include discounted holidays and/or special rates that coincide with energy price fluctuations. Ultimately this contributes to decreased energy use during peak times and that is good for everyone.
2. Let Customers Select Their Billing Frequency – By using interval data you can bill your customers at whatever frequency or interval they so choose. You are not limited to the billing cycle. So if a customer wants to be billed on the 1^st and 15^th of every month, you can offer this.

Let Customers Choose Rewards

Create rates/products that have built-in promotions, credits and loyalty rewards. These can include flat credits, set up as some percentage of an energy charge or bill, or event-driven credits, based on some amount of energy used over a period of time.

In addition to simple credits, customers love to feel like they’re getting more than they paid for. If successful, you can take a happy customer and turn them into a loyal customer. After all, most consumers budget for energy, but few expect the extra purchasing power found at their favorite restaurants, websites and local stores. Here are just a few of the ways retail suppliers and utilities can offer even more than their customers expect.

• Gift cards. Use customer data to offer cards redeemable at their favorite stores and restaurants. The more data you can collect, the more relevant offers you can make.
• Coupons. Offer deals on essentials and luxury goods. Appeal to everyone’s interests with coupons for online and brick-and-mortar stores.
• Location-Specific Discounts. Help build your community by partnering with shops, restaurants and other local merchants.
• Rewards Points. Offer redeemable points, rather than one-off rewards. The points take on additional value in customers’ minds, and redemption becomes another reason to interact with your website.
• Affinity Program Fulfillment. Let customers put their points toward causes they care about. Good feelings can be even more valuable than discounted goods.
• Special Offers. Combine your points system, merchant partnerships and charity affiliations to offer customized rewards packages.

Offer Prepay in Addition to Post-Pay

Traditional post-pay billing is the norm, and it works very well for the majority of your customers. And with interval billing capabilities, retail suppliers have many options for offering creative rates. But there are certain customers where post-pay billing may not be the best option, or at the very least, it creates a revenue collection risk.

A more efficient option for these customers is prepaid billing, which allows you to not only keep risky customers longer, but to provide a viable option for those customers who might ordinarily get turned away because of their credit score. Prepay is an excellent way to provide them with flexibility, affordability and transparency. And it isn’t just for high-risk customers, either. Given the ubiquity of mobile devices and prepaid credit cards, any customer will find prepay to be convenient and affordable!

Prepay also eliminates the need for most extra fees. Security deposits are no longer necessary, even with the highest-risk customers, since they can pay only for the energy they’re about to use. With a smart metering system, reconnection fees are a thing of the past, as well. Instead of rolling a truck every time a customer can’t pay, providers can automatically disconnect and reconnect as balances rise and fall.

These features aren’t just convenient for consumers, either – they’re incredibly beneficial for providers’ bottom lines. No truck rolls, faster collections and fewer funds spent on collections add up to significant savings. According to AT&T estimates, a utility with 250,000 customers and a 10 percent prepay adoption rate would save between $5 million and $15 million per year.[i] “Prepay saves us more than it costs, and it doesn’t cost the customer, either,” says Andrew Brown, customer service supervisor for Wake Forest Power. “We don’t cut a bill, we don’t roll a truck.” Everything is done between the customer, the meter, and our billing system.”

Prepayment has already seen more than a 30 percent adoption rate in the mobile industry, and energy industry experts expect to see a 20 percent adoption rate as soon as 2020. Ultimately, the best way for REPs and utilities to satisfy growing demands for this option is to implement a flexible payment system that includes both prepaid and postpaid billing.

Offer Multiple Payment Formats

Prepay and TOU rating are excellent options, but for today’s energy consumer, they’re not enough. People have become accustomed to communicating with service providers through multiple touchpoints, and most companies offer online, mobile and in-person billing.

Energy companies shouldn’t be any different. Here are some more statistics. 67 percent of consumers who use digital channels are satisfied with their energy providers, compared to 58 percent of consumers whose providers don’t engage online. Further, utilities can lower controllable customer support costs by up to 30 percent by adding low-touch sales and support channels.[i] Overall, payment options should include:

• Walkup cash
• Credit card kiosks
• Interactive voice response (IVR)
• Traditional phone payments
• Online card payments and ACH transfers
• Mobile-optimized online portals

Offering all of these options allows providers to serve a variety of demographics, incomes, needs and preferences. With a cloud-based billing solution, retail suppliers and utilities can also leverage existing kiosks, phone systems and other hardware.

An All-in-One Solution

Pre- and post-pay, multiple payment formats and true time-of-use pricing – You can offer all of these flexible options and more with a billing system from SmartGridCIS.

• Entice new customers with built-in promotional incentives.
• Leverage multiple applications and communications channels to retain customers.
• Stay ahead of the competition by offering creative rate plans and payment options.
• Provide a variety of plans to help customers reduce energy usage and save money.

To learn more about how our solutions can benefit you, request a free demo from SmartGridCIS or call 1 (866) 678-1110.

[i] Accenture, The New Energy Consumer: Architecting for the Future. https://www.accenture.com/t20150523T035714__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub3/Accenture-New-Energy-Consumer-Architecting-Future.pdf#zoom=50

[i] http://www.weltman.com/?t=40&an=40201&format=xml&p=7735

[i] IEI Report: Utility-Scale Smart Meter Deployments: Building Block of the Evolving Power Grid. September 2014. http://www.edisonfoundation.net/iei/Documents/IEI_SmartMeterUpdate_0914.pdf

[ii] Teradata 2016 Global Data-Driven Marketing Survey

[iii] Fiserv Seventh Annual Billing Household Survey https://www.fiserv.com/feature/seventh-annual-billing-household-survey.aspx