Three ways utilities can better engage low-income customers
Renewables, smart meters, electric vehicles, mobile apps and other features of the "utility of the future" are proliferating. But are they actually reaching all residential energy customers?
The following is a viewpoint from Patty Durand, President & CEO of the Smart Energy Consumer Collaborative
There's been much talk within the energy industry about the "utility of the future", which is being brought about by new, innovative technologies, sizeable infrastructure investments and evolving customer expectations, to name just a few industry megatrends.
Renewables, smart meters, electric vehicles, mobile apps and other features of the "utility of the future" are indeed proliferating, but are these technologies actually reaching all residential energy customers?
For example, what about the residential customers whose annual incomes fall below the U.S. household median?
These lower-income consumers often have an energy burden (the percentage of household income spent on home energy bills) that's considerably higher than consumers on the other side of the U.S. median income and are arguably best positioned to benefit from the money-saving potential of new energy-saving programs, services and technologies.
To assess lower-income consumers' priorities when it comes to home energy usage and their interests in programs and services offered by electricity providers, the Smart Energy Consumer Collaborative (SECC) mined data from five previous consumer surveys that included over 5,000 total respondents — 1,337 of whom fall into the low-income bracket (defined as annual incomes under $25,000 for this research) and 2,119 of whom fall into the low-to-middle income bracket (annual incomes above $25,000 but below $50,000, which roughly corresponds with the U.S. median household income for 2016).
The research delved into lower-income consumers' reasons for saving energy at home, some of their key demographic features (age, homeownership, education levels, etc.), their preferred channels for communication with their electricity providers and their levels of knowledge of energy-efficient actions they can make around their homes. The meta-analysis also explored interest in a wide array of energy-related technologies, services and other offerings, including solar, battery storage, electric vehicles, real-time outage reporting, prepaid billing and peak-time savings programs.
Based on the insights gleaned from this data, we developed several opportunities for electric utilities and their partners to improve engagement with lower-income consumers and better support their unique needs. Here are three key considerations for customer outreach and program design:
1. Leverage opportunities to streamline program enrollment and cost effectiveness
Streamlining program enrollment can lower administrative costs and enable programs to reach more lower-income consumers.
In addition, adopting a more holistic approach to supporting lower-income consumers by creating dual fuel (or fuel-blind) programs, which are coordinated or jointly administered in territories with separate gas and electricity providers, can also benefit consumers. The overall goal of these strategies is to create a one-stop shop to minimize program delivery costs while maximizing the potential for energy savings.
Furthermore, electricity providers may find opportunities for engagement by reexamining their existing programs that are directed toward single-family homeowners.
Since over half of lower-income consumers reside in single-family homes, and over half of those homes are owned rather than rented, these successful programs may be adaptable for a lower-income audience. Consider creative ways to finance or share up-front investments, such as the as Pay As You Save (PAYS) model, that will make efficiency measures affordable, and target the messaging to address saving money and making life "simpler". It may also be possible to tailor these same programs to engage with landlords of single-family homes to reach even more low-income consumers.
2. Utilize social media, but don't neglect well-established community networks
Low-income consumers value access to high-speed internet services and are avid users of social media, especially Facebook and YouTube. Furthermore, a majority of lower-income consumers are living in single-person households and are over the age of 55.
This group is only going to grow larger as the U.S. population ages; more individuals are "aging in place" by choice. Although they may not have grown up with today's technology, these consumers are highly engaged with social networks.
In addition to social media, there may be an opportunity to further engage with these consumers by exploring and developing collaborations and partnerships with internet service providers since most lower-income consumers consider both energy and internet access as "must haves."
At the same time, it's important to develop and maintain other, more basic face-to-face channels for outreach and engagement with low-income consumers.
For example, the Center for NYC Neighborhoods (with funding from NYSERDA) recently launched the Community Energy Engagement Program using a team of dedicated Community Energy Advisors or "ambassadors" to help educate lower-income consumers about the benefits of reducing energy consumption, adopting efficient behaviors, what is available for them with renewable energy and how to retrofit to lower costs.
Since many lower-income consumers don't see their electricity providers as trusted partners, there may also be opportunities for partnerships with various community-based organizations, such as community centers, neighborhood organizations and churches.
The Illinois Science & Energy Innovation Foundation, for example, which is funded by ComEd and Ameren Illinois, has been successful tapping into these organizations to help engage and educate hard-to-reach and other low-income consumers to promote energy literacy and raise awareness about available energy-related program opportunities.
These ideas and strategies can be adopted to assist lower-income consumers nationwide.
3. Find ways to address the "gap" in low-income assistance programs
In the report, we noted that all but four states tapped federal funding to support weatherization and energy efficiency programs for their low-income residents. In addition, many (but not all) states supplement this federal money with additional funding through state and/or utility revenues.
However, there is never enough assistance to meet the need for those eligible to receive it — as only 20% of eligible consumers receive any assistance from weatherization and energy efficiency programs. Thus, a key to addressing this gap is to create a larger pool of available funding.
For states that lack state-collected or utility-collected funding, state officials or utility leadership may wish to create a supplemental program. These "fuel funds" are a tried-and-true way for communities to share resources and for electricity providers to invest in these customers.
One example of an energy provider addressing this gap is Direct Energy through its digital Neighbor-to-Neighbor program. This innovative program, produced in partnership with Gridmates, allows customers to donate funds via an app or online portal to support their neighbors' energy needs in a customer experience that users will find reminiscent of GoFundMe or Kickstarter.
For providers in states with existing supplemental funding, expanding support can help meet the needs of even more people.
The eligibility rules for these supplemental fuel funds can be set independently from the rules of the federally-funded programs to better meet the needs of consumers living in specific cities or regions of the state.
In other words, the Federal Poverty Guidelines can be relaxed to include more people living "just above" the poverty line.
Lower-income consumers are an important yet difficult-to-reach group for every electricity provider. This subset of customers is not as confident about how to increase their home's energy efficiency, and they tend to be less interested in new energy technologies. In addition, they have unique needs for support, and the vast majority (80%) have never received LIHEAP funding or been enrolled in targeted assistance programs.
However, these issues are addressable – some of them easily so.
For example, approaches that work through community ambassadors and thoughtful social media outreach provide unique opportunities for reaching these consumers. And partnerships with internet service providers and natural gas companies can simplify enrollment and extend program reach.
By understanding their needs and motivations, electricity providers can thoughtfully design programs and communications that engage lower-income customers, enable these customers to receive the help they need and influence them to view their utility as a trusted partner and services provider.