A Look at Changing Utility Pricing Structures. March 23, 2016

A Look at Changing Utility Pricing Structures March 23, 2016 Today’s Presenters Scott Whitmire Dave Elve Project Manager Executive Vice Presiden...
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A Look at Changing Utility Pricing Structures March 23, 2016

Today’s Presenters

Scott Whitmire

Dave Elve

Project Manager

Executive Vice President & Chief Marketing Officer

Southern Company

PayGo

Nathan Shannon Deputy Director

Smart Grid Consumer Collaborative

Agenda

Introduction - Realizing the benefits of AMI through dynamic pricing plans

Scott Whitmire, Georgia Power

Dave Elve, PayGo Utilities

Question and Answer Session

3

2016 State of the Consumer Report

• Theme 5: Consumer and industry experience indicate a path forward for Smart Grid-enabled pricing programs

• Findings indicate that consumers prefer electricity pricing plans that limit their financial risk

Speaker #1

Background

Name

Scott Whitmire

Project Manager at Southern Company • Employed by Southern Company for 30 years and now part of Customer Service •

Has been working on Georgia Power’s Payment Strategy for the last three years



Has worked in many areas of the company, including Generation, Transmission and Distribution, Finance and Information Technology



Bachelor of Applied Science (BASc), Computer/Information Technology Administration and Management from Clayton State University

Georgia Power’s Pricing Plans and PrePay Initiative SGCC Webinar March 23, 2016

Agenda • Georgia Power – Other Initiatives • How did we get here?

• Why PrePay? • Successes, Opportunities, Lessons Learned

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Georgia Power Smart Usage Rate (SUR) • • •

Georgia Power began actively marketing the Smart Usage Rate in May 2015. SUR is a demand based rate with a time of use component for residential customers. Customers are encouraged to keep their electric energy charges low by shifting how and when they use major appliance. • To keep the demand (kW) charge low customers space out when they use major appliance. Customers can hit their max demand charge 24 hours a day/7 days a week • Reducing kWh charge means shifting when electricity is used to Georgia Power’s off-peak hours. Georgia Power is on-peak June-September, 2PM -7PM.

8

How Did We Get here? Customer Engagement Study • 2013 – Bain Consulting assisted us in a study of our customer base • Result included an overview of GPC residential customer group’s key characteristics Mass Market Homeowners

Everyday Georgia

Just Getting Young and Established Households Day to Day Started Mobile

% of population

52%

17%

13%

7%

6%

5%

% of profit

52%

16%

18%

-2%

-1%

17%

Payment history

Great

Poor

Very poor

Very poor

Great

Good

Power usage

Average

Average

High

Low

Lowest

Highest

Own/ rent

Own

Own or Rent

Own

Rent

Rent

Own

Age

Older

Middle

Middle

Younger

Younger

Older

Income

Higher

Middle

Middle

Lower

Lower

Higher

Marital status

Married

Single

Married

Single

Single

Married

9

Five themes surfaced while examining pain points across the customer value chain Customers want more flexibility and ease with payment options

Start, Move, or Stop Service

Customers want a seamless transfer service process

My Bill & Energy Usage Information

Customers want to use their preferred method of payment

Payment Options

Customers want more information on outages, usage and rate plan options

Outages & Service Issues

Additional Products & Services

Customers want more products & services from GPC (energy efficiency)

How Did We Get here? Payment Strategy Initiatives • More Flexibility • How about more locations that are open longer hours and on weekends • Preferred Method of Payment • Credit/Debit is the new preferred method • Payment Options • Pay when you want and how you want Customers want more flexibility and ease with payment options

Customers want to use their preferred method of payment

Payment Options

11

Why PrePay? Benefits to Customer

Benefits to Company

• No deposits, No reconnect fees

• Charge-off reduction and collections

• Utilize existing deposits • Pay off past due amount over time

• A better option for some customers (Customer Satisfaction)

• Pay any time, pay any amount

• Regulatory (GPC)

• Control!

• Return on AMI investment

• Convenience

12

How Is It Going? Georgia Power’s PrePay Program - Successes • Just under 10,000 customers enrolled

• Collected over $900,000 in 2015 from 25% rule • Over $1.5M to date • By the end of 2015, in first full year, we had 8% of the eligible residential population on the program • 56% of active accounts have obtained a zero ($0) deferred balance

13

How Is It Going? Georgia Power’s PrePay Program – Opportunities & Lessons Learned • Experienced a couple of periods where we had more unenrollments than enrollments • Issue #1: Hot summer and technology issues • Issue #2: CSR’s not following unenrollment policy • CSR Training is vital to success of PrePay • Set aside time for detailed training for: • Clear understanding of how PrePay works • How can the Customer get it if the person selling it doesn’t get it? • What to say and what not to say when enrolling • Example: “You only have to pay $XX to get started…” • Make sure the Benefits are clear • Make sure the Process is clear • Get that customer call to the right person(s)!

14

Speaker #2

Name

Background

Dave Elve

Executive Vice President & Chief Marketing Officer at PayGo • Numerous executive roles in the energy industry in a career which spans over 20 years and worked with numerous utilities on their Smart Grid programs •

Active Investor and adviser to several energy industry ventures including PayGo, Verdeeco, Enspiria and Preparis



Founder and past President of the Smart Meter Manufacturers’ Association of America (SMMAA)



Named to the FierceEnergy “15 Most Influential people in Energy”



Holds a B.S. in Business, a MBA in Finance and is a graduate of the Georgia Tech Management Institute’s Executive Program

Prepay: Meter to Cash Leveraging Smart Grid Investment for Customer Engagement

• • • • • •

Customer Payment Customer Customer Account Updated

IVR CSR Web Portal Mobile Kiosk Existing Utility Payment System • Walk-up cash

Utility CSR

Bank

RF, PLC

AMI Collection Engine Software

ESB

CIS

PayGo Utilities 2016©

Utility Funds by 9am

Mesh

MDMS

16

What is going on in the Industry… Customers

Utility

• Background

• Higher customer sat scores • Energy Efficiency (sustainability)

– 33% of smart phones users have prepaid mobile plans – 20% customers are underbanked – 20% of utility customers move annually

• Pay As You Go benefits – – – –

– 7.5% - 12.7% reduction in usage

• Operational savings – Write-offs reductions – Long term call center reductions

No deposits No Late Fees No Reconnect Fees Reduction in usage

• Sample Customer Use Cases

PayGo Utilities 2016©

17

Market Overview • Less than ½% of electric meters are prepaid – …..vs. 33% of smart phones – 10 IOUs either contracted or in some stage of the prepay lifecycle

• Studies: 15-20% will enroll in prepay energy • Customer advocates in Georgia and elsewhere starting to show support • Millennials, environmentally focused and financially challenged are key demographics • Global markets include gas and higher enrollment rates

PayGo Utilities 2016©

18

Lessons Learned • • • • •

Beneficial additional layer to smart grid (Day 2 benefits) Not just about technology…. Business process change is crucial Marketing not to be overlooked Ubiquitous (and cheap) payment channels needed – 3X more payments on prepay

• The Call Center is the key channel – Increase enrollments 3X by call script redesign and comprehensive agent training – Several other IOU are currently engaged in a similar agent “sales agility” program

PayGo Utilities 2016©

19

Thank you!

You will receive a copy of todays slides to the email you used to register

Scott Whitmire

Dave Elve

Project Manager

Executive Vice President & Chief Marketing Officer

Southern Company

PayGo

Nathan Shannon Deputy Director

Smart Grid Consumer Collaborative