By Julia Friedman, Director of Regulatory Affairs and Market Development at Oracle Opower, a member of the Alliance to Save Energy

 

The world is changing faster than I can type. The energy sector is no exception. After nearly 20 years of flat load, U.S. peak demand in the summer is now projected to grow by 38,000 megawatts nationwide in the next five years. That’s like adding another California to the grid. This growth in annual peak demand would mean six times the planning and construction of new generation and transmission capacity, and the accompanying costs. 

 

And through this change, a constant remains – utilities have an obligation to serve their customers and provide affordable, reliable, and accessible service. 

 

That this obligation exists can be an anchor and a lighthouse for finding a path to a more affordable energy future if, as an industry, we demand it. And now is the time to demand it. According to the American Council for an Energy Efficient Economy, a quarter of all households in the U.S. are energy burdened, meaning over 6% of household income goes towards energy bills. While energy burdens vary from one community to the next, one out of every seven families live in energy poverty – with an energy burden over 10%. 

 

The evolution to a more reliable, resilient, and lower-carbon future energy system will only continue to put upward pressure on affordability, as is already evident. A headline from S&P Global summarizes the path we’re on, “Rate requests by US energy utilities set record in 2023 for 3rd straight year.” To quantify that more precisely, according to the Energy Information Administration, state utility regulators approved $9.7 billion in net rate increases in 2023, more than double the $4.4 billion authorized in 2022. 

 

In times of uncertainty, I look to things that I know to be true: 

Utilities are uniquely positioned to deeply understand their customers better than anyone else. They also have the platform to proactively communicate with and develop programs for consumers. In fact, the FCC provided guidance in 2022 that explicitly allows utilities to text or call their customers (without requiring prior consent) if it is related to affordability. No other entity in the industry has that combination of expertise, scale, and mandate.  

 

Technology is not the silver bullet to solve affordability. As an employee of a technology company, I recognize that and I see the imperative for utilities to use digital solutions to better serve all customers, especially those for which time and money are scarce resources. Technology—data analytics and strong customer engagement platforms—allows utilities to better understand and engage their customer base, helping connect customers in need with the resources available to ease their energy burden. It allows millions of customers in need to self-serve—engage with their utility when it’s convenient for them, in the privacy of their home, and with ease and efficiency. It also allows the limited dollars devoted to higher touch education and outreach to go further and focus on those customers who need or prefer in-person or over-the-phone support. Right now, according to J.D. Power, utilities have the opportunity to significantly improve the digital tools they offer their customers.

 

How can we get better service through the right digital tools? 

2. Data analytics and insights: utilities know a lot about their customers, but there are still gaps in the data. And raw data isn’t particularly actionable. The power lies in actionable insights generated by data analytics. These insights are what allow utilities to understand a customer’s individual needs and can suggest the best action to take to better afford their bills. A strong customer engagement platform will support the sharing of these insights across utility operations (break down those silos!), with customer service representatives, and the ecosystem of partners and contractors delivering clean energy and bill assistance solutions. But it all starts with better data-drive insights, giving utilities a more complete view into every household across their territory. 

 

3. Digital one-stop-shops and proactive engagement: the good thing is that there are often quite a few offerings to help customers better afford their bills including demand-side management programs, community solar, discounted rates, arrearage management plans, and state and federally funded bill assistance programs. The bad thing is that the information about these resources is spread across a vast, worldwide web. Attempting to navigate, understand, and take action to apply for these programs can be a time-consuming and frustrating task, and assumes people know assistance is available to begin with. It’s a why groups like the Rocky Mountain Institute and Consumers International have highlighted the need for one-stop-shops. Utilities need to flip the script—rather than wait for a customer to come to them needing assistance, proactively reach out to customers with personalized communications, leading them to a mobile-friendly digest featuring a customized list of assistance programs for which they are likely eligible. The keys to a successful digital one stop shop are personalization, proactive communication during key moments that affect affordability like seasonal change, and using behavioral science to nudge customers to take action and hit that sweet, sweet “apply” button. 

 

This wouldn’t be a guest article by a regulatory affairs professional if policy and regulation didn’t make an appearance. There are numerous ways to encourage utilities to invest in digital tools that center the customer and affordability. These include adopting affordability performance-based incentive metrics, incorporating metrics like energy burden into rate case analyses and demand-side management plans, requiring granular reporting on arrearage and disconnection data, and allowing for utilities to offer limited income customers a discounted rate. As an Illinois resident, I’m proud to see all of these customer-centric policies adopted in the last five years. 

 

Utilities have weathered changes in Administrations, pandemics, and economic booms and busts. As the industry that is responsible for keeping the lights on, homes heated, and the economy running, partnership must be the name of this very high-stakes game. The right customer engagement platform can make utilities that lighthouse for shepherding customers through these volatile times. To quote a customer interviewed to user test the Opower Affordability Solution, “if the utility sent an email with that information, it would've felt like a lighthouse in the dark night of the ocean.” 

 

Utilities using the Opower Affordability Solution illustrate the power of collaboration. OAS has driven double digit increases in utility assistance program awareness among households for one Midwest client and has increased assistance programs enrollment by up to six times for a client based on the Northeast.

 

Together we are, and must continue, illuminating a path to forward to greater affordability.

 

Interested in contributing a guest article to the Alliance? Contact Jessica Nesterak, Director of Marketing & Communications.