News & Views

Beyond Outages: Charting a Path to Improved Customer Experience and Increased Profits for Utilities

It’s a perfect storm for utilities: on top of unrelenting climate change and impending EV disruption, they also face better-informed consumers and increasing regulatory oversight. New options for sourcing and sharing energy are opening up, creating a more competitive landscape in an industry that has long operated like a monopoly.

These new realities mean that dissatisfied customers can no longer be ignored. It’s time to embrace innovation and digital solutions that improve the customer experience (CX) in utilities. If customer satisfaction isn’t enough of an incentive, there’s money at stake, too. Research from J.D. Power continues to show a positive relationship between electric utilities’ customer satisfaction performance and reported profit margin—as well as their ability to secure rate increases.

Knowledge is power, and it’s tipping the scales.

Consumers understandably aren’t happy when their power goes out. But electric reliability—once the sole gauge of customer satisfaction—has become the bare minimum.

Technology is driving transparency and is putting more data into more customers’ hands. Innovative data visualizations like Aramco’s, The Archie Initiative, demonstrate the breadth and depth of information that is available surrounding the energy supply chain. In addition to delivering carbon impact transparency across 92% of the global oil supply chain, Archie lets users explore the extent of greenhouse gas emissions from electricity usage and see the location of fossil, renewable, and nuclear energy power plants around the world. At the same time, home energy management tools like the DTE Insight app and Energy Bridge help consumers understand, manage, and control their personal energy use.

Empowered by this data, consumers’ expectations are rising on several fronts. As they become more aware of carbon impact—both on a global and personal scale—they are demanding more affordable clean energy options from utility providers.

Marketing messages and climate pledges are no longer enough to satisfy these demands. Consumers who are doing their part for the planet want utilities to offer tangible proof of their commitments. And when utility rates increase, they want to know that those dollars are going toward creating a more reliable grid, more affordable energy choices, and a better customer experience. 

Regulators are responding to the voice of the customer.

As consumers demand better service options for their dollars spent, their voices are being heard by leaders who rely on their votes. Regulators and government officials are stepping in to ensure utilities are being good stewards of the dollars being granted via rate hikes, and that the investments will lead to improved grid reliability, resiliency, affordability, and customer satisfaction. This is uncharted territory for utilities, many of which have operated in a monopolistic market for decades.

Examples from across the country show how a new set of checks and balances are being brought to bear.

  • In Colorado, the head of the state’s Public Utilities Commission put a hold on Xcel’s proposed rate card increase, calling for the commission to “scrutinize this to a degree we’ve never done before,” and stating that “Xcel needs to step back and focus on customer satisfaction instead of nickel and diming us with all of these onerous rate increases.”1
  • In New York, the Public Service Commission penalized Rochester-based RG&E $900,000 for missing its bill service quality metric, and promised to scrutinize its rate case on behalf of consumers frustrated by ongoing customer service failures.2
  • In California, the governor responded to resident protests over a spike in natural gas prices by asking federal regulators to investigate price gouging.3
  • And in Michigan, public protests at the state capitol led the State Attorney General to intervene and the Michigan Public Service Commission to conduct its first-ever audit of energy companies. As a result, Consumers Energy’s requested rate increase was cut by 43%, and a settlement agreement included a refund of $15 million in revenue to be applied to customer bills; a $10 million shareholder-funded contribution to programs helping low-income customers; increased support for residential solar and EV charging programs; provisions to expand environmental justice and equity measures; and a directive to conduct customer outreach following the filing of its next rate case so the public has an opportunity to provide input.

As utility customers’ demands grow louder and they are joined by regulators across the U.S., the message to providers is clear: investor-owned utilities can no longer listen only to the voice of Wall Street. The voice of Main Street is demanding attention as well.

Applied technology offers win-win solutions.

To be sure, the voice of the customer is only one of the challenges facing today’s utility providers, who are also struggling to maintain and modernize the grid amidst worsening climate conditions and an aging workforce. Fortunately, improving customer satisfaction can deliver real benefits for utilities themselves. By understanding their customers’ attitudes, behaviors, and preferences, utilities can apply technology to target improvement initiatives that unlock higher customer satisfaction–which can in turn lead to higher profits.

J.D. Power research continues to show a positive relationship between electric utilities’ customer satisfaction performance and reported profit margin, concluding that “customer satisfaction is a leading indicator of the authorized return on equity for regulated electric utilities.”4

The research also found that utilities in the top quartile of customer satisfaction receive authorized rate increases closer to their request compared to utilities in the bottom quartile, and that they receive rate case approvals sooner than lower quartile utilities. Overall, electric utilities in the top quartile of customer satisfaction tend to report profit margins that are on average 3% – 4% higher than utilities in the three lower quartiles.

Applied technology can help drive these improvements in customer satisfaction. Consider the perennial problem of tree growth on power lines. Flying a drone with an attached lidar sensor can equip utilities with the data to conduct preventative maintenance before storms, reducing outages and improving satisfaction among customers who are keenly aware of this obvious problem.

Detroit-based DTE Energy understands the need for constant innovation and is embracing digital solutions for customer satisfaction. After working with Vectorform to launch the DTE Energy Bridge and DTE Insight app, they are equipping millions of utility customers to understand and manage their household energy usage—a powerful enabler they refer to as “know your own power.” It’s a testament to the power of digital innovation that DTE now ranks among the top three utility providers in their category in the latest J.D. Power study.

Are you ready for what’s next?

With pressure building for utilities to deliver improved customer experiences, innovative technologies can improve customer satisfaction, increase safety, reduce operating costs, and demonstrate that utilities are being good stewards of the rates they charge by reinvesting profits into the communities they serve. As utilities take steps to improve customer satisfaction, they also need to accelerate success by making sure customers are aware of the new options.

If you’re ready to explore how applied technology solutions and innovation can drive a better experience for your utility customers, reach out to Vectorform today.


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