Time-of-use (TOU) and other modern rate designs are critical to managing the increasingly complex grid, integrating distributed energy resources, and achieving decarbonization targets. Yet according to the U.S. Energy Information Administration, while TOU rates are available to 62% of U.S. residential customers, only 7.3% are enrolled in these types of plans.
Eva Molnar of Southern California Edison (SCE), Sanem Sergici of The Brattle Group and GridX’s Scott Engstrom recently sat down to discuss how we can bridge this gap as part of a live Forum with Canary Media.
Three actionable considerations emerged that can help any utility enroll more customers in TOU rate plans and ensure a positive experience.
Personalize the message and let people know exactly what they can expect to pay
Energy customers need to have confidence they are making the right decisions and won’t be financially punished for their usage. But every customer is different. Do they have solar? Do they charge an EV? Are they still working at home and will be for the foreseeable future? These are all factors that are critical in determining the optimal rate plan.
People are more likely to switch to a TOU rate structure – and succeed on it – when they know what they can expect to pay. Educating customers with accurate, clear, and transparent data about the impacts of their usage is important to increasing adoption.
Online comparison tools can be helpful, such as the one SCE used, which led to some great results!
For their default pilot that started in March 2018, only 12% of the 400,000 customers opted out of the TOU rates prior to the transition. Since then, only 2% switched back to the tiered rate.
The rate comparison tool also led to increased customer awareness and satisfaction. Specifically, they saw a 400% increase in customers using the tool. And among those who say they are on a TOU rate, the proportion who believe it is the best rate for them rose significantly from 66% to 82% in fall 2019.
Keep the communications flowing
Emphasize education in the pre-enrollment phase. TOU rates are a new concept that the average energy user may struggle to understand. And if they sign up for a rate plan without grasping the required change to their behavior, higher bills are all but guaranteed.
So, be transparent and make sure your customers understand the process. Use community outreach to inform and educate. Get out in front of the more frequently raised concerns, like defining what peak times are, explaining the efficiency and reliability impacts of their behavior, and showing people exactly what they can expect to pay on their new rate.
With this pre-enrollment foundation set, be sure to continuously communicate through the enrollment and post-enrollment phases of the implementation.
Be available, anticipate customer pain points and have readily available resources for them to access. Your customer service or call center should be thoroughly trained and ready to answer questions and walk customers through the rate they are on, their bills and helpful tips for managing consumption.
Don’t assume you have to pilot your new rate program
Running a pilot is a great way to see how a program will perform before rolling it out more broadly.
SCE ran two pilots – one for an opt-in program in 2016 and another for its default offering in 2018. Those pilots helped SCE learn a lot about the communications that resonated with customers, the proper cadence of that messaging and whether there were any operational kinks to work out. The insights gleaned from these efforts contributed to the success of the full-scale implementation.
But that doesn’t mean a pilot is necessary in every case. It should be noted that these SCE “pilots” were targeted at 100K and 200K customers respectively. Those can’t be considered small by any means! They really were a true test of how the TOU rates would perform within a large population.
Ask the question, “is there value in running a small pilot or should I just go for it?” For instance, research has consistently shown the value of opt-in pilots. So, reconsider running a 5-10K person pilot over the course of a year or two, at which point you need to have your commission approve it all over again. Trust the research and offer it to as many people as possible. Now is the time to get more people on TOU rates, not take a cautious approach.
The bottom line…transparency, ongoing communications, and personalized data insights are imperative in implementing and ensuring TOU rate adoption. There was so much other good information in that live discussion with SCE and The Brattle Group. Check out the full video here. It’s worth your time.
If you have particular questions about implementing modern rate structures, we’d love to talk.
The 4 Universal Truths of a Successful TOU Rate Transition
Having been part of the most successful TOU implementations, we’ve learned a few best practices worth sharing.