Pennsylvania joins a growing number of other states when its utility service termination moratorium ends March 31st. What can regulated providers do to curb the expensive disconnection-reconnection process? And how can they protect vulnerable customers before it’s too late?
On April 1, nearly 850K Pennsylvanians who owe unpaid gas, water or electric bills could have their power shut off, unless they pay what’s due before March 31.
Throughout the Covid-19 pandemic, Pennsylvania extended the shut-off moratorium, or “freeze,” several times. This gave at-risk utility customers extra time to catch up on their bills, enroll in a budgeted payment arrangement or sign up for assistance programs like LIHEAP or CAP.
Unfortunately, according to Pennsylvania Utilities Commissioner John F. Coleman Jr., “…it appears that not as many customers as we hoped took advantage of the opportunity to enter into agreements, apply for assistance, or satisfy their arrearages.”
However, as our utility partners have shown, where customer outreach about enrollment and collections has been precision-targeted and intentional, customer engagement grew. And more customers than usual paid debts or showed interest in signing up for programs.
But we’ll get to those numbers in a bit.
In the meantime, regardless of whether delinquent customers had their income slashed or fell ill with coronavirus over the past year, it is “time to return to the regular collections process,” says the PUC.
Shut-off freezes are intended to be temporary.
It makes sense. The shut-off freeze can’t last forever. And we all knew this day was coming. Besides, “Pennsylvania’s largest electric and gas utilities are owed more than $743 million,” says The Philadelphia Inquirer’s Andrew Maykuth, an increase he says is about 76 percent above what energy customers owed a year ago.
Utilities need to be able to get themselves back on track financially, too. They’re in the business of delivering quality service. And they want to be able to keep up with costly advances in energy technology.
But Pennsylvania’s excessive debt level should come as no surprise. In January 2021, the unemployment rate here was 7.3 percent, says the University of New Hampshire’s Carsey School of Public Policy. And the Commonwealth’s GDP dropped 4.2 percent from the end of 2019 to the end of 2020.
The Carsey School’s report also shows these numbers reflect what’s been happening around the country. 49 out of 50 states’ “…economies shrunk through the first three quarters of 2020, with declines in GDP ranging from 0.2% to 8.8%.”
To put this into perspective for the energy sphere, Utility Dive reported on Dec. 3 that, collectively, Americans owed over $40 billion in utility debts at the end of 2020.
But with A.I.-driven data analysis, what we know about utility customer engagement and targeted collections strategies is that (at least to an extent) some of that debt could have been avoided. In fact, it was, when utilities deployed the intentional use of predictive analytics.
Mitigate loss due to shut-offs with integrated data.
Our utility partners have taken steps to organize their data, enrich it with third-party consumer insights, and integrate it with A.I. With it, they’ve been able to achieve a robust level of customer engagement, increase revenue and eliminate wasteful spending, even during the coronavirus crisis.
Using BlastPoint’s data-driven billing and collections solutions, our partners knew, a few months into the pandemic, which households were most at risk of shut-offs. With our segmented customer personas, they knew how to proactively engage those customers. With targeted messaging that resonated, they contacted customers about signing up for low-income assistance programs, payment arrangements or paying what was due.
Over the past several months, our partners have built effective campaigns, ensuring as many at-risk customers as possible could stay connected to power, even without a termination freeze in place. In the process, these utilities have saved themselves money. They’ve avoided some of the future dunning procedures that are sure to take place once PA’s moratorium is lifted.
Initial results from BlastPoint’s data-driven solutions for engaging utility customers and curbing costs:
- One utility partner, using BlastPoint’s predictive personas, showed a 47 percent increase in full payments after an outreach campaign engaging delinquent customers about paying their overdue bills;
- Another partner reported a 131 percent increase in LIHEAP website content engagement after prioritizing information on how to enroll in LIHEAP assistance with a call-to-action button;
- The same partner also showed a near-32 percent open rate (compared to the current average of 18 percent) after emailing targeted customers about enrolling in assistance, using our personas;
- Email outreach to drive sign-ups for assistance conducted by that same partner saw a 8.78 percent unique click rate, which was 7.65 percent above their program promotions benchmark.
And the customer engagement numbers are still rolling in.
How much are utilities really paying for service shut-offs?
As we know, disconnections (and reconnections) are incredibly expensive, for both utility providers and customers. It costs as much as $120 per household just to send a truck to someone’s home to disconnect power. That means, if even half of Pennsylvania’s 850K delinquent customers get shut off in the coming weeks, utilities will have to come up with an additional $51 million or more to cover what they’ve already lost.
Add to these expenses the cost of postage to mail required warning letters. The call center burden of taking calls from customers looking for a solution or attempting to reach customers who’ve vanished. Writing off unpaid balances…
It’s plain to see Pennsylvania utilities are set to face an even higher bill come April.
Preserving customers’ energy service and their financial well-being.
On the other side of the coin, of course, is the high cost to consumers who are already facing hardship. Dealing with a utility shut-off, just as life is beginning to show some semblance of normalcy, could put already-at-risk customers even farther behind, financially.
Meanwhile, other states have already lifted their moratoriums. Georgia Power reported to Utility Dive this week that when their state’s terminations resumed, “Around two-thirds of customers were connected within a day or two of being disconnected, and properties that were not quickly reconnected were often found vacated.”
How much did it cost–in trucks, employee time, warning notices and negative customer engagement–to disconnect and reconnect those customers? Spending time, effort and money in this way, and causing a rift in the customer relationship, seem to be processes that can, and should, be avoided.
It may be too late to reduce the number of energy shut-offs in Pennsylvania at this late stage of the game. But it’s never too late to get to know your customers better and engage them more effectively.
With data-driven insights that offer a 360-degree view of each household in your territory, you’ll be prepared to proactively intervene no matter what kind of crisis occurs next. And you’ll know precisely how to engage the people you serve at every touchpoint on the customer journey.
Is A.I.-driven data analysis right for your utility?
Utilities around the world say that A.I.-driven customer engagement technology is going to be a top priority in the coming year. If you’re interested in learning more about our system for data-driven customer engagement for billing and collections or any other business initiative, please reach out to us. Be sure to sign up for BlastCast, our e-newsletter, and make sure to follow us on LinkedIn, Twitter and Facebook!