Like many other household goods, the average monthly residential electric bill in the U.S. continues to increase. In 2024, bills hit an average of $182, an 8% increase over the past two years. Though the causes of the increases are well documented—inflation, the hottest summer ever recorded and an increased need to harden infrastructure due to severe weather—consumers’ reaction to these increases seem proportionally more negative, compared to other commodity service providers.
COMMENTARY
In fact, J.D. Power’s 2024 U.S. Electric Utility Residential Customer Satisfaction Study found that satisfaction among electric utility customers declined for the fourth consecutive year. Especially in regulated markets, consumers may hold energy companies to a higher standard due to a perceived lack of choice. Therefore, it becomes even more important to showcase value. According to the J.D. Power study, one of the areas with the most significant decline in satisfaction was customer care. This creates an opportunity for utilities to implement proactive communication strategies that mitigate declining satisfaction, protect market share, and open doors for new programs and projects.
Consumer perception of value plays a significant role here. Customers assess the value of a service based on the benefits and costs relative to its price. In the energy sector, this process is influenced by factors such as reliability, customer service and the emotional satisfaction derived from energy consumption. As energy costs continue to climb, it becomes difficult for customers to reconcile higher bills with the same level of service they have received in years past. Unlike industries where consumers can easily switch between providers, many utilities operate in a regulated environment. And, in any industry, limited options create customers who are more willing to voice their dissatisfaction. This exacerbates negative perceptions even when utility companies are making significant investments in new technologies, system hardening and increasing reliability. The opportunity then is for utilities to ensure customer expectations and perception stand up to the cost they see on their bills, especially as the industry faces increasing complexity, external pressure and volatility.
The good news is that increased customer satisfaction has tangible, bottom-line value for utilities. For example, a study conducted by PwC found that customer satisfaction can have a direct impact on regulatory outcomes. A minimum level of satisfaction can influence success when needing to ask for rate increases. Further, in most industries, customer satisfaction serves as a competitive differentiator. For highly regulated industries, satisfaction translates to an easier path for new unregulated services and products that may be introduced to the market.
FPL’s House of Savings challenges players to work alongside Saver the robot to lower energy use throughout the home and discover energy-saving clues along the way. Source: rbb Communications
Utilities can also look to the example of other customer-centric businesses. To address the needs of its key customers—small and medium-sized businesses, or SMBs—DHL Express recently expanded its sustainable services offerings to meet a need customers were seeking. This expansion followed a survey in which 95% of SMB respondents said sustainability is important to their business, with almost half (48%) believing it’s extremely important. However, when asked about the biggest challenge to achieving sustainable goals, 42% said the overall investment is the main obstacle, and 11% said they had no idea where to start.
GoGreen Plus is a sustainability solution that provides DHL Express shippers a tangible avenue to significantly reduce (“inset”) the carbon emissions associated with their shipments. Source: rbb Communications