Dennis Schroeder / U.S. Department of Energy
The Smart Energy Consumer Collaborative suggests utilities could boost participation by not treating customers the same.
Utilities could improve participation in energy conservation programs by using survey and smart meter data to tailor messages to individual customers, according to a recent report.
The Smart Energy Consumer Collaborative this month released its “2019 State of the Consumer” report, which highlights tools and services energy consumers want and how energy providers could provide them.
Among the conclusions: Utilities have the opportunity to develop stronger relationships with their customers, but to do so they’ll need to stop treating all customers the same.
Customers “want more engagement from the utility,” said Patty Durand, the nonprofit’s president and CEO. Particularly, she said, “they love the idea of having something that analyzes how they could save money before they actually spend the money to, for instance, enroll in a rate plan or purchase an energy efficiency upgrade.”
Smart meters and other technology make it easier than ever to segment customers based on energy use or preferences, but that doesn’t mean doing so will be easy. Among the barriers are corporate inertia, limited budgets, and regulatory scrutiny of marketing spending.
Given that different customers have different interests — some are more focused on financial benefits, some on environmental benefits, others on new technology — utilities could benefit from engaging with them based on those interests, Durand said. For example, if a customer cares especially about clean energy, utilities should be able to offer that customer sustainability and carbon reduction programs.
Particularly given the advent of smart meters, utilities and other stakeholders now have greater opportunity to become more customer-centered and explain to consumers how they’ll benefit from certain choices, Durand said. This data can help them provide tools that show customers, for example, how much money a specific upgrade will save them.
Utilities aren’t always open to changing marketing practices, though, and regulators often limit their budgets to prevent them from spending ratepayer dollars to boost their images without producing efficiency results.
Robert Kelter, a senior attorney at the Environmental Law & Policy Center, said regulators have limited how utilities are allowed to promote programs in part due to concerns that some companies will focus more on building positive reputations than enrolling customers in programs.
Kelter added that some utilities could benefit from bigger marketing budgets, while others, “I wouldn’t trust with additional marketing dollars.” Overall, he said, “I think utilities have to focus on the programs that deliver the biggest bang for the buck and require the least amount of work by the customer.”
Considering how much energy usage comes from air conditioning, smart thermostat programs are a valuable opportunity for utilities to engage with their customers about offers that will benefit them financially and contribute to sustainability goals, Kelter said. ComEd, for example, offers a rebate program for customers who buy smart thermostats, as well as an incentive program in which customers earn money by allowing the device to respond to peak demand signals. But Kelter added that “to take a program like that to the next level, there’s got to be even more” effort on the part of the utility.
“The greater the effort they put into it, the greater the result is likely to be,” including a larger benefit for the grid, Kelter said.
Kelter also pointed out that getting customers to make energy-efficient choices when they have to take action — for example, encouraging them to buy an LED light when a lightbulb burns out — is usually easier than motivating customers to upgrade technology that isn’t broken, like replacing a manual thermostat with a smart thermostat. “And that’s where we want the utility focus to be,” he said — “getting customers to take action and retire inefficient appliances early.”
Recent engagement with the utility is also an important indicator for future engagement, Durand said. The new report highlights a survey in which customers were presented with several hypothetical data-based efficiency programs, for example, a “Replace & Save” program that calculates the amount of money they’d save if they upgraded an appliance.
Respondents that had engaged with their utility in the last six months and had already taken energy efficiency-related actions showed far more interest in programs like that than customers with low engagement levels. “So the conclusion is that for utilities that want to be an energy partner to their customers, being active with them, proactive with them, engaging with them is the best path forward,” Durand said.
Experts agreed that more than anything, customers are likely to take action when they know there’s a financial benefit in store, and additional benefits — particularly environmental — add to the appeal. “When those two messages are combined,” Kelter said, “it produces greater results.”