The perfect storm of circumstances is challenging energy industry accounts receivable as the result of nationwide trends, some as old as a decade. These developments are fueled by the one-two punch of a demanding industry landscape and increasing consumer debt that is reducing revenue. The latter is especially disconcerting because consumers are triaging their debt and relegating their utility bills to lower levels of priority. Consequently, many energy companies are outsourcing collections to agencies that can deliver favorable return on investments, brand protection and customer retention.
On the other hand, some suppliers are conducting successful in-house energy industry accounts receivable and retention efforts while a few have lost their way in the dark.
Industry challenges include a highly competitive environment, declining wholesale power prices, renewable energy sources (mostly wind and solar, but also biomass and geothermal), renewable energy technology (RenTech), environmental concerns and emissions regulations, self-powering communities, off-the-grid housing, and compliance.
On the consumer side, numerous financial reports have attributed rising household debt to three areas (credit card, student loans and healthcare) that precipitate in the inability to pay or worse — delinquent or defaulted utility accounts because of consumer prioritization.
Fortunately, improving energy industry accounts receivable can become a reality if proactive measures are taken in the areas of consumer relations, collections technology and collection optimization solutions. Part one of this three-part series looks at ways to improve consumer relations. Parts two and three will cover collection technology and optimization solutions.
Consumer Relations
Many industries — and particularly, some individual organizations within industries — have leveraged enhanced consumer relations to their advantage, but energy companies have lagged behind to date. Success stories include a select group of auto dealerships, banks, medical groups, retailers (virtual as well as brick and mortar) and even some debt collection agencies.
A commitment to enhancing consumer relations is a long-term investment that can show signs of paying off early on. In energy industry accounts receivable, a consumer-centric approach entails offering:
- Accessibility
- Flexible payment options
- Consumer satisfaction surveys
- Lenient disconnect/reconnect policies
- Chief customer officers (CCO)
Accessibility
Providing consumers with direct access to departments such as customer service, tech support and accounts receivable is one of the easiest solutions to implement, but one of the most overlooked components of consumer relations in the energy industry. Ideally, consumers shouldn’t be required to invest in lengthy sessions searching for departmental contact 
information on company websites. In fact, a lack of accessibility expresses corporate indifference or a lack of transparency.
On the contrary, contact information should be located at two places or more (e.g. web page footers and a bona fide “contact us” page).
Furthermore, it is advantageous to offer access via the most popular channels: toll-free phone numbers, text messaging, department email addresses, web mail and web forms. Finally, the technology behind each channel should be easy to navigate (e.g. optimize interactive voice response menus and eliminate annoying “dead ends” ); the people “behind the wall” should be capable of actually solving problems; and off-shoring customer service should be never considered because of its inherent disadvantages.
Optimized Payments
Providing statements containing useful metrics such as service periods (beginning and end dates as well as the total days in the billing cycle), meter readings, invoice dates, due dates, past-due dates, year-to-year comparison and graphs encourages prompt payments and customer retention. Well-designed and easy-to-understand statements also engender consumer trust and diminish the potential for consumers to contest their charges, or at the very least, procrastinate making payments.
Other payment optimizations include offering multiple payment channels including live phone agents, online payment gateways accepting credit and debit cards, and options for automatic or recurring billing.
Consumer Satisfaction Surveys
Up until recently, utility companies didn’t ask for customer feedback because they didn’t want to open a can of worms that might entail time-consuming interaction or accountability. Seriously. Instead, they relied on what might be termed as the “expert model” of consumer relations — at best, a guestimation of what drives consumer satisfaction.
Fast forward to the modern era of satisfaction surveys being offered at various organizational contact points (web, email, phone or payment gateway) to benefit consumers and energy companies alike.
Surveys enable utilities to gauge the effectiveness of individual and team interactions as well as the entire cycle of offering energy and receiving compensation. Specifically, they help:
- Identify industry and economic trends affecting the ability of consumers to afford monthly payments
- Establish an overview of the shared consumer experience
- Maintain customer satisfaction
- Improve customer service
- Encourage brand loyalty
Compliance with PUC Regulations
While the Federal Energy Regulatory Commission focuses on the interstate transmission of electricity, natural gas and oil, the responsibility of monitoring consumer energy sales and collections lies with state and public utility commissions.
LIHEAP Clearinghouse is an online resource of the Office of Community Services, a division of the U.S. Department of Health and Human Services. The organization’s site is an invaluable tool to both the energy industry and consumers since it provides a Low-income Energy Assistance Snapshot and descriptions of each state’s Disconnect Policies.
Maintaining compliance with the applicable regulations not only abates government intervention, it also engenders positive consumer relations. Understanding the finer points of state laws is essential for companies operating in multiple states.
American Electric Power (AEP) and its affiliates, for example, provide electricity to an number of states such as Arkansas, Indiana, Michigan, Ohio, Texas and Virginia.
In Ohio, the seasonal policy includes the following details:
“The winter reconnect order is issued on an annual basis by the Public Utilities Commission of Ohio. The winter reconnect order allows residential customers who are disconnected or being threatened with disconnection the opportunity to pay no more than $175 to maintain their utility service. If the customer’s service has already been disconnected, the customer must pay a reconnect fee of no more than $36 to restore. Customers who utilize the Winter Reconnect Order must enter into an extended payment plan on their remaining balance.”
Furthermore, energy companies in Ohio must delay disconnections for 30 days if “dangerous to health or if medical or life support equipment is necessary — as certified by a medical professional.”
The $175 fee mentioned above seems reasonable, but imagine the good will that could be established by promoting a maintain-service fee of just $150 and waiving the reconnect fee for loyal customers.
AEP also provides electrical power in the adjacent state of Indiana where disconnection compliance bears different parameters that also impact consumer relations:
- Prohibits utilities from disconnecting residential natural gas or electric service for nonpayment from December 1 to March 15 if the customer qualifies and applies for public assistance, whether or not the customer receives the benefit.
- Postpones disconnection for 20 days if the customer presents a medical statement from a licensed physician which states that disconnection would be a serious and immediate threat to the health or safety of a person in the household.
Chief Customer Officers
The enormity of presenting clear and consistent messaging and a consumer-centric experience has reached the point where some organizations have created a C-level position dedicated to the consumer, the chief customer officer (CCO).
“Just 39 percent of companies either have one or more senior-level executives leading the charge on customer experience,” states the Forbes article “Why Your Company Needs a Chief Customer Officer.”
The piece continues with other salient points in favor of hiring a CCO before citing an example where consumer centrism lead to a 50 percent reduction in customer complaints.
“There are plenty of well-documented reasons why now is the time to change this, first among them being that customers are demanding it,” state the authors. “They evaluate their interactions across every touch point and can easily assess a brand by how it stacks up against the best-in-class options. … In this environment, consistently delighting customers becomes a difficult-to-replicate competitive edge that gives resiliency to a company’s brand equity.”
Summary: Improving Energy Industry Accounts Receivable
It’s taken decades for US energy companies to appreciate the value creating customer satisfaction; perhaps because the old-school mindset was blindly committed to applying one-size-fits-all leverage that harmed return on investment. They eventually surrendered to a more compassionate approach that has proven its worth in energy industry accounts receivable.
The process of consumer relations can be improved at any or all touch points where and when energy companies engage consumers: new accounts, customer service, accounts payable, tech support, construction, claims and payment assistance programs.
In part two of this series about energy industry accounts receivable, we will review ways for utilities to utilize key performance indicators, take a broader view of the revenue cycle, and apply demographic analysis before offering solutions such as consumer segmentation, strategic predictive analytics, and technology.
When energy companies turn to collection agencies, they are advised to seek those built on a foundation of compliance, certification, data security and collections technology. For example, Optio Solutions has considerable experience in financial services and maintains Professional Practice Management System (PPMS) certification, a qualification achieved by less than two percent of US agencies.
Contact Optio Solutions to learn about its individualized collection strategies for energy providers.
