No one looks forward to cutting-off their customers’ utility connections. Afterall, customers are not just ratepayers. They’re also neighbors and, more importantly, members of our community. However, as shutoff moratoriums during COVID-19 end, debt from unpaid bills reach an all-time high. Customers who may already be struggling with unemployment and other debts, are then faced with costly service disconnections. This presents elected officials and utility professionals with a difficult balancing task. How can utilities continue to provide essential services to those who may not be able to pay without risking financial stability?
Laying the Groundwork
Many utilities offer Customer Assistance Programs (CAPs) to vulnerable customers. Unfortunately, program adoption has historically remained low. Likely reasons include:
1. Lack of awareness as utilities don’t aggressively market the program and struggle to target at risk customers.
2. Social stigmas associated with being financially disadvantaged discourage participation.
3. Intimidating application processes often require detailed financial disclosure.
So, what can utilities do?
Emerging Best Practices
There are many opportunities to address payment challenges. Let’s review some best practices:
More payment channels
People like options. Some prefer to pay in person, others like to pay remotely, set-up recurring payments from their card(s), or pay through an Interactive Voice Response phone system. Assuring customers have many methods to pay meets the needs of each customer and improves likelihood of on-time payments.
Unifying payment experience
Utilities must improve their customers’ experience. Paying your bill can be confusing especially when multiple payment options (credit, debit, ACH, etc) are each implemented through different vendors with unique interfaces. Unifying payment options under an easy-to-use interface simplifies the steps to complete a payment. Providing a single sign-on or embedded payments experience can facilitate auto-pay, increase paperless billing enrollment, and improve payment reliability.
Flexible payment schedules
Allowing users to pay WHEN they prefer, not just HOW, can also improve payment performance. For example, customers paid bi-weekly may struggle to set-aside money for monthly bills. Offering the ability to schedule payments that align with paycheck periods, or making pre-payment options available, reduces the amount of each payment, making it easier for at risk customers to budget and pay.
Predictive analytics & proactive outreach
Modern data-analytics can comb through years of payment and consumption history. It can also generate highly accurate predictions of users who are more or less likely to pay their bills on time. As an organization, we helped Metropolitan St. Louis Sewer District (MSD) reduce service shut-offs with predictive analytics. Armored with data-driven targeted communications, collections on delinquent accounts increased by 30%. MSD also saw an average of 19,827 fewer accounts entering debt monthly.
It’s important to acknowledge these approaches may not be easy to implement. But given the level of revenue lost each year due to non-payment, delinquencies, and shut-offs, it’s in utilties’ and end-use customers’ best interest to invest. The business case is clear and the payback periods are short. Not all of these approaches need to be implemented concurrently. A staged approach can spread the costs over time.