Rate Case Communications: Why This Time It’s Different
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Natural gas prices are up sharply. Coal prices are also up. The long-term declines in costs to build renewable energy seem to have paused. Skilled craft labor is in short supply. Supply chain bottlenecks persist. Transformers have a three-year wait time.
All of that means it’s time to activate your rate case communications plan, because you need to talk to your customers (or “customer-owners” for public power, or “members” for electric cooperatives) about why prices are going up.
Duke Energy is raising prices. So too is the City of Fort Collins, Wisconsin Public Service Company, National Grid and Eversource, Puget Sound Energy, Seattle City Light, Austin Energy, Alabama Power, Peoples Natural Gas, West Penn Power and Columbia Gas of Pennsylvania, Xcel Energy and Colorado Springs Utilities. The list of utilities WITHOUT a current or planned rate case is shorter than the list of utilities that have one.
This is a critical opportunity to strengthen — or weaken — connections with those who purchase your electricity, natural gas or water.
I would characterize the traditional utility approach as “just the facts, ma’am,” after LAPD Detective Joe Friday on the TV series “Dragnet.” That means flooding the zone with data: percentage increases in the cost of fuels, three-year wait times for transformers, percentage increase in labor and materials, etc., etc. In other words, rely on facts and data to make your case.
Utility leaders favor this approach for a few reasons. Those leaders operate in a world governed by facts, laws and regulations. As well, this is the way most utilities have conducted rate case communications for decades, even a century or more. It’s time-honored. It’s the truth. And, most importantly, it is familiar — to them.
We’ve blogged on rate case communications periodically over the years (see “Resources” box, below), and we’re not backing away from anything we have recommended in the past. But those posts were written during a time of low inflation and (relatively) low customer agitation.
That’s no longer the case today. And today’s high inflation and high state of customer anxiety is exactly why utilities need to break from the past in discussing the price of their service.
Communications Tip of The Month: I would urge utilities not to shy away from directly engaging with customers about what’s driving up the price of their services. Try to build emotional bridges rather than erect fact-based walls. You’ll create goodwill and trust, valuable resources that can come into play down the road.
Price, after all, is only one of seven aspects of electric, gas, or water utility service. And the concept of “services marketing” is not for marketers only. In fact, it can be a useful framework to understand all of the distinct ways customers experience your service. The concept of “services marketing,” as distinct from Product Marketing, was pioneered four decades ago by B.H. Booms and M.J. Bitner. It holds that customers experience a service company in seven distinct areas, which are referred to as the 7Ps (below).
Source: Strategic Marketing Management Consulting
Go Where Your Customers Go (Face to Face Communications)
Leave behind the reliance on facts and data. Instead, opt for radical transparency. Create opportunities to interact face-to-face (F2F) with customers. Go where they go. Show them you don’t have horns, a pitch fork and a tail.
COVID-19 put the kibosh on F2F interactions. But now that we seem to be entering a post-COVID period, let’s get out there! (Wear a mask if you feel the need).
I have often written about the power of F2F communications. Like here. And here. And here.
I recently wrote a white paper on customer experience for Questline Digital. As part of that, I was delighted to interview Neil Neroutsos, APR, the communications manager for Chelan County Public Utility District in eastern Washington.
“Our Trusted Energy Advisor goal is about being a team of real, live community members with names who customers can contact for any of their energy questions,” he told me. “For example, we include our energy advisors by name and photo in most of our communications, including webpages, email marketing, mailings, brochures and audit scheduling, to make a more personal connection with customers.”
Chelan County PUD also expanded its in-person, one-on-one home energy audit offerings and created a livestream Q&A called “Power Hour” (held monthly on Facebook Live) to transparently answer customer questions (below). For the “Power Hour” events, the utility district’s Lacy Stockton, an energy efficiency marketing strategist, hosts subject matter experts to discuss energy topics with the community.
Credit: Chelan County PUD
Increasing Efforts to Communicate to Diverse Customers
Neil said the utility district also has found door-to-door outreach particularly effective to inform high-energy-burden customers about programs that could positively impact them. “We’re focused on making key outreach materials and efforts bilingual and bicultural to build trust with our Hispanic-Latino customers as well.”
Speaking of Hispanic-Latino customers, Neil told me that nearly 30% of the utility’s customers self-identify as Hispanic-Latino. Building positive relationships with this community has become an increasingly important priority for the utility district in recent years.
Much of Chelan County PUD’s emphasis on diversity came after discussions with community members, who identified a need to establish more two-way communications with key audiences. In 2014, the utility created a community engagement coordinator position and hired Mario Cantu to lead it. He has valuable ties to the Latino-Hispanic community in Chelan County.
“One of our strategies has been to reach people in the places where they’re most receptive to a conversation,” said Mario (below). “We’ve found face-to-face outreach to be one of the most effective means to connect with the Latino-Hispanic community. We also know we need to be culturally relevant in our communications.”
Source: Chelan County PUD
“Authenticity and transparency have gone a long way in building long-term trust with our customers. We can’t please everyone, but when we’re honest and take the time to explain our programs and limitations, customers learn to trust us over time, even if they don’t always agree.”
I know Chelan County PUD is not the only utility seeking F2F engagement with customers. But it looks like they’re doing it well. Check out the white paper. And start to rethink your approach to F2F customer engagement.
Creativity Goes a Long Way in Communicating Rate Increases
As I wrote in the Questline Digital white paper, all too often utilities discuss their service through the lens of price. But today, customers also experience their utility’s service through its processes, technology, people, communications and value-added services. Improving their experience means utility leaders need to spend as much time and effort thinking about the non-price attributes of their service as they have spent thinking about the price of their service.
But since we’re talking about rate case communications today, I would urge utilities not to shy away from directly engaging with customers about what’s driving up the price of their services. Try to build emotional bridges rather than erect fact-based walls. You’ll create goodwill and trust, valuable resources that can come into play down the road.
To some extent, frustrated customers today just want to vent. This is a great time to empathize with them and show them what you are doing to try to fix the problem. For example:
- Maybe your utility had decided to temporarily absorb the cost of increased fuel?
- Or perhaps you have increased the size and scope of customer assistance programs?
- How about telling them that customer service representatives are ready and willing to work out a customized payment plan?
Today, you’ll be talking about rising prices. But next spring maybe you’ll be highlighting your investments in renewable energy, or the positions for which you are hiring? If you directly and candidly engage with them today, they’ll be more receptive to your messages in the future.
EEC Resources on Rate Increase Communications
- Marketing Electric TOU Prices: The Time Is Right
- Utility Communications: Don’t Play Word Games on Price Increases
- Why the Price is Right (But the Rate is Wrong)
- Tips From Your Peers for Talking About Price Increases
- Gas Prices Fell, Will Electric Prices Follow?
- The Danger of Detail – Talk About “Prices,” Not “Rates”
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