Municipal Aggregation: An Insider’s View

In addition to the work that I do at CBD, I sit on the Board of Trustees in a suburb of Chicago. Like dozens of other communities in Illinois, my village passed a municipal electric aggregation referendum in March of 2012. I, along with another Trustee and our Village Manager, was tasked with seeing the aggregation process through on behalf of the village.

When determining what was important to me in aggregation, I understood that savings was a given. What mattered to me was getting the most flexibility for residents and making sure that I was making the right—not the wrong—decision. It’s easy to explain to residents that they are going to save a significant amount of money on their electric bills, but the last thing that any elected official wants to deal with is making a decision that creates issues for residents. I wanted to be confident that residents would get good customer service and that they could opt out without financial penalty at any time.

Other things I would have liked to see that may have helped tip the scales in favor of one provider or another, if everything else was on-par:

• Help with getting the word out about the referendum, as the village was prevented from taking a side on how to vote when informing residents about the ballot initiative for aggregation. This could include:
  • Augmenting regular consumer-focused customer acquisition campaign tactics with a “vote yes on aggregation” message.
  • Hosting a coffee reception for residents (not Village Board members) to explain what aggregation is and how it benefits residents, encouraging them to vote to pass the referendum.
  • Reaching out to local press to discuss the benefits of municipal aggregation and explain what a “yes” vote on the issue means to residents.

Knowing that a company was willing to act as a partner with the village prior to the referendum would have created some goodwill, not to mention positive visibility, for the provider.

After the referendum vote, bidding REPs could have considered:

• Providing concise, yet compelling “why us” narratives to the Village Board. Help the decision-makers understand that there is a qualitative difference between providers.
• In the bid package, offer to send out a mailing explaining why the board made a good decision in selecting the provider (if they are selected).
• Offering more than one plan for residents to choose from. Ideally, I would have liked to have offered residents a default green plan, but also give them the option of a brown plan to opt into—with both plans priced at an attractive, aggregated rate.

Bottom line: There’s opportunity for REPs competing for municipal aggregation contracts to meaningfully differentiate themselves at a time when it’s very likely that bids will be a tenth of a penny per kWh or less apart.

Tags: ballot initiative, Board of Trustees, CBD Marketing, Chicago, electric aggregation referendum, electric bills, Energy, energy industry, energy insights, energy marketing, energy markets, energy providers, Energy Sector, energy suppliers, energy utilities, finanical penalty, Illinois, Mark Shevitz

Door-to-door sales: timing is everything

It seems that Direct Energy is taking a little bit of heat this week.  The retail energy provider is canvassing door-to-door to attract new customers in Con Edison’s service territory. Unfortunately, an urgent public warning was released by the utility last week…urging the public to be aware of scammers. Three types of scams were described in the utility warning. One was related to fraudulent meter readers. The neighborhood watch must have immediately gone on high alert.

It’s easy for the average citizen to fail to distinguish between a fraudulent meter reader and a salesperson who is asking to see their electric bill. And it’s easy to understand why Direct Energy would utilize door-to-door sales… to manage their cost per acquisition while reaching elusive consumers at a place where they have access to their electric bill.

Perhaps suppliers should test the use of door-to-door efforts as an education channel that drives sales, rather than a closing channel. Of course they’d need to weigh higher cost per acquisition vs. lower cost to reputation.

But retail energy providers should definitely suspend any door-to-door campaigns immediately after a utility scares customers out of their socks with threats of imminent home invasion.

Don’t you wonder, though, if this was just a case of unfortunate timing for Direct Energy, or a shrewd move by Con Edison?

Tags: Con Edison, Direct Energy, door-to-door marketing, energy marketing, energy providers, energy suppliers, meter readers, utility providers

Municipal Electricity Aggregation – A Customer Acquisition Silver Bullet?

This has been an exciting year for electricity providers in Illinois. Competition to acquire new customers has been fierce. In fact, many providers, having just introduced themselves to consumers, are claiming success. Early on, these wins came through marketing campaigns that drove brand awareness and enticed residential customers to switch via money-saving offers. As we wrap up the year, a new phase has emerged.

Providers are now heavily courting municipalities. Municipal aggregation efforts have significantly gained in importance. An enormous amount of outreach by providers and broker organizations have helped educate communities on how residents would benefit and how village boards might realize a boost to their bottom line along the way.

And while it may have started with a handful of communities, voters in several Northern Illinois municipalities have passed referenda approving the process for aggregation and many more are poised to follow. The deadline to pass a board ordinance to place  a referendum on the March 20, 2012 ballot is December 31st, and over 100 townships and districts in Northern Illinois alone are on the membership list of the top-ranking broker organizations specializing in aggregation.

The energy providers competing in this space embrace aggregation opportunities enthusiastically. They view it as a cost-effective avenue to acquire customers and as a way around having to spend money to build a brand and consumer trust. But there are significant perils to that approach. First, it’s a winner take all scenario, and to date, only a small number of providers are winning these bids. That means many energy providers competing for aggregation are coming up empty. Secondly, these efforts put the providers who do not win the bid in a situation where marketing becomes even more critical. That’s because they are faced with the challenge of convincing residents in aggregated communities that they can still switch. But those marketing efforts will require more education, surgical and targeted application, and offers that extend value far beyond price. Differentiation through value proposition development is something the entire industry has yet to focus on, and prefers to ignore. It’s the hard work that has to be addressed and thanks to aggregation the time to tackle it is now.

Tags: aggregated communities, customer acquisition, electricity providers, Energy, energy marketing, energy providers, municipal electricity aggregation, Northern Illinois electricity

Add Marketing Power to Life Support Lists

Under several state Public Utilities Acts, there is a requirement to compile a list of individuals on a Life Support Registry. That is, a database of customers who have notified the utility, often via their doctors, that they rely on medical apparatus such as an oxygen concentrator that is electronically operated and life supporting.

These lists are rarely utilized by energy providers and utility companies. They are there mostly to demonstrate compliance. Utility companies are very clear that being on the registry doesn’t guarantee there won’t be a power outage. And that it does not create a priority for restoration after an outage.

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Tags: energy marketers, energy providers, Life Support Registry, power outage, utility companies