August 19, 2020
Research, Consumers, COVID-19, Save Energy
As we enter the sixth month of the COVID-19 pandemic, many Americans are still un- or underemployed, and many financial assistance programs are due to expire this summer – if they haven’t already. In this time of economic instability, consumers are struggling to pay their electric bills, which are likely higher than normal due to more time spent at home.
According to a survey conducted by Fast Company in May, 13 percent of low-income respondents had been unable to pay an energy bill during the prior month; 9 percent had received a shutoff notice; and four percent experienced a disconnection. Data from TransUnion in late July shows that 77 percent of consumers are concerned about being to pay their bills and loans, the highest level ever recorded.
Some states and utilities have passed additional consumer assistance in recent months, yet this may not be enough for all consumers as energy expenses become an increased burden in the months ahead. In addition to assistance packages, utilities and other stakeholders have an opportunity to help consumers find new ways to save energy at home.
The Smart Energy Consumer Collaborative’s (SECC) consumer research offers numerous strategies for stakeholders that are looking to maximize consumer engagement in energy-saving programs throughout the COVID-19 pandemic.
1. Demand response programs can help consumers save money and help manage the grid.
With peak demand spiking in many service territories this summer, the value of demand-side management will be even greater for many stakeholders during COVID-19. SECC’s research offers many valuable insights for stakeholders that are looking to increase engagement in and savings from these programs. While the current level of awareness for demand response programs is somewhat low, many consumers are interested when given the option. In fact, the vast majority of consumers (74 percent) report being interested in receiving bill credits for reducing home energy usage during peak demand.
As stakeholders look to manage peak demand this summer and fall, they will likely find many consumers to be enthusiastic partners in demand response programs, particularly peak-time rebates. Eco-conscious and tech-savvy consumer segments are the most likely to participate; however, less-engaged segments will only be interested if the financial benefits are clearly communicated, if enrollment is streamlined and if financial risk is limited. During this difficult time, consider programs that incentivize rather than penalize consumers; these are always more popular with consumers.
2. Prepay programs can help consumers manage usage and avoid delinquency.
As temporary consumer protection measures are lifted, there’s a looming crisis where many consumers cannot pay their current bills or past balances. Prepay programs may be a useful solution in this scenario depending on how they are structured. According to SECC’s research, about 20 percent of consumers are very interested in participating in a prepay program, and this number goes up to about 33 percent for eco-conscious customers.
During the COVID-19 pandemic, interest may spike as consumers look to their utility providers for assistance and new ways to manage their energy expenses. Prepay programs can provide consumers with data on how much money they have spent on energy and can help them manage their energy costs. Prepay can also be used to help consumers manage overdue balances by paying down debt as they also pay their current bill. Prepay is especially helpful to struggling consumers if there are no deposits or reconnection fees.
According to PayGo, a software company that administers programs for Georgia Power, Duke Energy and other utilities, 80 percent of payment arrangements fail, while 80 percent of prepay customers with arrearages pay off their balances. The company states that out of its 81,800 enrollees more than 77,000 have paid off past balances, while also reducing their home energy usage by eight percent.
3. Smart thermostats can automate savings from time-varying rate plans.
Smart thermostats can be a gateway to energy efficiency at home as consumers learn to pay attention to and manage their energy usage with them. SECC’s studies have shown that consumers do not already have one are very interested in these devices. In a 2019 study, one-third (31 percent) of all respondents stated that they would likely buy a smart thermostat within the next year. An earlier survey found that 68 percent of consumers would participate in a smart thermostat program if a rebate were provided for the price of the thermostat.
The cost-saving potential of these devices can be amplified if paired with a time-based pricing program, and according to SECC’s research, 44 percent of consumers indicated they’d be more willing to participate in a time-based pricing program if automation technology were available to them. A recent study demonstrated that smart thermostats combined with time-varying rates can have additional bill savings of 8-19 percent, in addition to on-peak savings and overall energy savings.
Several utilities have programs that provide free or heavily discounted smart thermostats to consumers, and the time may be right to offer such a program. Earlier this summer, Consumers Energy announced a giveaway of 100,000 smart thermostats. These are free to customers if they allow program partner Uplight control their thermostats to reduce A/C loads up to four hours per day for no more than 14 of the hottest days per year. Ameren Illinois also offers the Smart Savers Initiative, which makes it easy for lower-income customers to receive a smart thermostat at no cost and with no program requirements.
4. Energy-efficient lighting is an easy way to reduce consumers’ energy burdens.
LED lightbulbs are a proven way to help consumers lower their bills, and according to SECC’s research, they can also be a valuable first step to engaging consumers in their home energy usage. The “Consumer Values: Moving the Needle on Engagement” report looked at selectively engaged consumers and actions required to help them become more energy efficient. According to that report, these consumers are often frustrated by the difficulty of taking advantage of energy-related programs. The easier that programs or rebates are to take advantage of, the more likely consumers are to leverage them. Accompanying offers with information that emphasizes consumer benefits is also vitally important.
During the pandemic, stakeholders should consider ways to distribute energy-saving bulbs at no cost or deeply discounted to lower-income consumers. This can drive immediate bill savings, while lowering overall residential consumption and improving consumer trust. In 2018, Con Edison distributed free LED bulbs via food banks and a smartphone app for recipients of nutrition benefits. Through the program, Con Edison reached 50,000 low- and moderate-income customers with four-packs of energy-saving bulb and additional energy efficiency information. These efforts have also helped Con Edison manage the grid as a part of the Non-Wires Solutions Program.
Energy savings can help with consumers’ COVID-19 recovery
While disconnection moratoria and assistance programs are important components of recovery from the COVID-19 pandemic, there are many additional steps that electricity providers and other industry stakeholders can take this summer and fall to help consumers manage their energy-related expenses. By listening to consumers’ needs and wants, stakeholders can design these programs to maximize both consumer engagement and consumer benefits.
To learn additional ways stakeholders can help consumers save energy during COVID-19, download SECC’s “Partnering with Consumers to Save Energy During COVID-19” white paper here.
About the President
Smart Energy Consumer Collaborative President & CEO
I am the President & CEO of the Smart Energy Consumer Collaborative. Before coming to SECC, I worked for Georgia Tech, where I focused on smart grid research projects and helped to submit almost $10 million in grants to ARPA-E and DOE. Before that, I served as the Executive Director for the Georgia Chapter of the Sierra Club where I focused on energy policy and programs. I also served for two years on the Board of the Smart Grid Society for the Technology Association of Georgia.