Energy-insecure households must sometimes make difficult choices between maintaining safe indoor temperatures and electricity and providing essentials like food and medical care. At the same time, technology can offer an opportunity to help these households better manage their bills, one small payment at a time.

In 2021, McKinsey & Company’s Digital Payments Consumer Survey found that 82% of Americans used digital payment channels, such as in-store checkouts, online purchases, and payment to person. As noted by the panelists in “Pay as You Can: Digital Banking and Customer Affordability,” a webinar earlier this year co-hosted by RAP and the National Association of Regulatory Utility Commissioners, utilities and consumer advocates are increasingly aware that these digital tools can help customers better keep up with their utility accounts.

“The systems that have been in place for decades, including the ways to interact with consumers and solutions, have not kept up with the changes of today, including the different ways people manage their money,” said panelist Odogwu Obi Linton, a former Maryland public service commissioner and founder of UtilityCampus.com. Linton shared some of his extensive experience in resolving disputes between utility companies and consumers, noting that “as regulators, we would never want to hear that a utility company is refusing to take a payment from a customer, even if it’s a small one.”

Cory Ritthaler, a principal with Deloitte, discussed a study he conducted looking at affordability issues with customers of an investor-owned utility. Among other findings, he noted that 83% of households’ energy funding needs go unmet even after assistance allocations. Ritthaler said that while low-income households are more inclined to seek assistance, at the same time they are usually not aware of all the affordability programs that are currently in place, demonstrating the need for more consumer support and education. 

Deloitte has developed the Assistance Finder, a self-service digital application that empowers limited-income customers to manage their utility bills through accessible, personalized assistance. This is a technological tool that addresses the lack of transparency and access to funding for eligible customers while also addressing the burden of bad debt and collection costs on utilities. Ritthaler explained that the utility that was the subject of his study experienced a significant reduction in call volume and late payment charges, while the utility was able to provide approximately $20.5 million in additional payment assistance to customers by connecting them to programs they might not have known they were eligible to enroll in.

Panelists noted that welcome packets for new utility customers should outline all assistance programs for which they may qualify. Utilities can also automatically enroll clients in initiatives, making it less of a one-way transaction. This would benefit existing customers as well, especially if new programs are added. The implementation of technology can expand service payment options and provide consumers with more control over their ability to catch up on their bills.

Around $5.7 billion in arrearages are owed by utility customers nationwide each year. Not only does this put customers at risk of debt cycles and eventual shutoffs of service, but collections are an expensive and time-consuming process for utilities even when shutoffs are avoided.

Panelist Kevin Dick, a principal at 389nm, showcased his organization’s technology tool for managing arrears in a more streamlined way, known as LITEBILL. The software provides flexible mobile payment options, daily expenditure notifications, and targeted income-eligible program opportunities. It enables instant program eligibility checks with no additional paperwork, making it quicker for customers to be awarded much-needed bill subsidies.

Those who can benefit from payment technology include people or households that are “unbanked,” meaning they do not have a bank account. These households, which are disproportionately elderly, Hispanic and Black, must rely instead on prepaid cards, payment apps such as Cash App or Venmo, or cash. It should be noted that a potential barrier to using payment technology to help unbanked households is that about 60% of such households use cash only.

One simple way to allow customers to better keep up with their bills is when utilities allow for partial payments. Ohio is one state that requires utilities to allow customers to make partial payments. Accordingly, Ohio utilities enable customers to schedule multiple partial payments to go through at various points in the billing cycle when household income is available.

Another option is deferred payment plans, which allow customers to spread their bill over multiple months. This became a more urgent issue during the early months of the covid-19 pandemic. Questline Digital partnered with Public Service Electric and Gas Company in New Jersey in August 2020 to offer a deferred payment arrangement program for past-due account balances, allowing customers to pay over agreed timeframes (12, 18 or 24 months) without any down payment. This program successfully reached 73,745 customers with unpaid account balances via email, generating 11,930 enrollments within 72 hours. This in turn led to $20.8 million in past due balances being paid down, significantly reducing the utility’s costs while helping consumers in need to keep their utility service connected.

Regulators set the bar for consumers’ energy bill affordability. Panelist Shelby Green, a research fellow at the Energy and Policy Institute, emphasized the importance of creating processes that ensure individuals can easily access and manage their energy bills. She discussed how utilities can increase energy affordability by implementing flexibility policies more frequently, rather than only in specific situations. Disconnections can be delayed through various methods, including expanding grace periods or raising the minimum amount owed to meet conditions for a shutoff; for example, Maine legislation does not allow service shutoffs when the amount owed is less than $50 or if the bill has been overdue for less than 90 days, among other conditions. Flexibility can then be applied to collection scheduling, which encourages more customers to make payments in the long run. 

Questions for Utilities and Commissioners

Are the utilities in your state required to publicly disclose data about household disconnections?

What are utilities doing with the overdue payment fees?

How often do these fees occur?

Does your utility offer different digital and non-digital payment options? Options without fees?

Does your utility offer financial assistance programs to help customers who struggle to pay their bills?  

Are the affordability programs offered easy for customers to enroll in? Are there instructional materials readily available for payment options and how to work programs?

Do you see examples of successful outreach around your programs? Are they reaching your consumers? Are the utilities in your state required to provide customer participation and satisfaction data?

Are you able to report on customer data that involves knowing the characteristics and demographics of the households within your service area?

Has the implementation of affordability programs reduced disconnections and arrearages?