Consumers need choice in pricing programs, study finds


Dan Delurey,
Executive Director,
Washington, DC, U.S.A. — (METERING.COM) — June 22, 2012 – Utilities should offer pricing programs that help people develop new daily habits and routines that fit their schedules, and that can be communicated visually, a new study from the Association for Demand Response & Smart Grid (ADS) has found.

Further, the programs should be voluntary, with the process easy and pleasant – nothing onerous – and customers should be let out if they change their minds at any point.

The case study is based on interviews with employees of the Phoenix-based municipal utility, Salt River Project (SRP), and Arizona Community Action, a local consumer advocate. Its aim is to examine the role that consumer choice plays when presenting different pricing options.

Among the other findings are that people should be helped to choose the programs that are right for them through simple questions that reflect their living situations and concerns. A combination of interactive tools for preliminary research, secure account-specific rate comparisons, and support from customer service will allow customers to determine the “best rate” for their residence and allow the utility to achieve broad adoption and persistent participation

Also, prepay should be offered to everyone, not just customers with credit issues. Students, seasonal residents, and people who are paid on a weekly basis see definite cash flow benefits. But service charges per payment should not be applied, regardless of the frequency or amount of payments.

SRP’s pricing experience was chosen as the case study subject, because of the company’s acknowledged history of successful pricing programs, according to ADS executive director Dan Delurey: “SRP’s work was seen as something that would contribute to the discussion around the nation on issues such as the persistence of time-based pricing and whether consumers react favorably to having more pricing options.”

Looking forward, the study suggests that smart meters will allow the utility to build on an existing platform of trust and customer satisfaction, introduce new pricing programs that can appeal to more customers, and allow consumers to potentially achieve greater cost savings.

Among the plans that have proven popular at SRP are seasonal time-of-use, currently used by 22 percent of customers, and the prepay, currently used by 15 percent. However, less popular was an air conditioner load cycling program introduced in the 1990s, principally due to the rapid heating of homes when the load was cycled off, and event-driven critical peak pricing, which is currently only offered to industrial customers.