As a Retail Energy Provider, Are You Ready for Energy (Hyper) Inflation?
World events, policy changes, and dropping domestic energy production has led to the fastest growth in residential electricity rates since 2008. If this trend is consistent with previous inflationary periods, this may be just the beginning of a prolonged period of rising home electricity costs and living expenses.
So what does this mean for retail energy providers (REPs)?
Potentially, this can be a big problem for REPs and their customers. On the other hand, it can be an equally big opportunity, namely for REPs to create more engagement and a stronger relationship with their customers.
Many of us are familiar with the 2016 Accenture study, which found that consumers spend about 6 minutes annually thinking about their electricity bill. This statistic is alarming enough on its own, but let’s make it sound even worse. “Compare that to Facebook, where the average U.S. user spends about 20 minutes per day on the website. Perhaps a more apt comparison is online banking, where customers interact with their financial institution an average of 17 times per month, according to Accenture.[1]
Yet energy is a “Top 3” monthly expense for many families. And rising! In fact, “in 2021, the average nominal retail electricity price paid by U.S. residential electric customers rose at the fastest rate since 2008.” This is according to the U.S. Energy Information Administration.[2]
So, it makes sense that as the cost of energy increases over the coming months and years, and as green technologies and energy efficiency continue to trend, the level of consumer awareness and engagement, related specifically to energy, is certain to grow.
So how does an REP leverage, and even monetize this trend?
The answer is to extend your relationship with your customers beyond supply. Easier said than done. Many, if not most, home energy consumers focus only on their supply rate as a means of “saving money” and ignore the demand side of the equation. But with a future of higher energy prices and the increasing societal focus on sustainability and climate change, consumers will be looking for new solutions.
This is a Big Opportunity for REPs.
We believe the REP Consumer Engagement Portal will be the next key differentiator for home energy consumers when it comes to selecting and sticking with, a new REP. The advent of new technologies including smart meters, smart thermostats, EVs, smart appliances, Distributed Generation, batteries, etc., can all be connected, managed, and controlled through an REP Consumer Engagement Portal platform. And they will be driven by data, AI, machine learning, natural language processing, and connectivity to provide homes with an unprecedented ability to manage their home energy conveniently, and with little or no impact on comfort and convenience. This will drive the next phase of the Retail Energy competition!
In the last couple of years, amazing progress has been made in Home Energy Management Systems (HEMS). The technology already exists to provide households with a transformational consumer experience that will give them far greater control of their home energy. This will in turn lead to an ongoing higher level of satisfaction and loyalty to those REPs who provide this service, thereby reducing consumer obsession on supply cost.
The vision described above is not just “future talk.” It’s available today. Some CIS providers offer multiple consumer-facing applications, including Consumer Engagement Portals and Enrollment portals and now even Home Energy Management Platforms that will help REPs of all sizes provide a level of customer experience that was not possible in the past.
[1] https://www.greentechmedia.com/articles/read/customers-spend-8-minutes-a-year-interacting-online-with-their-utility.
[2] U.S. Energy Information Administration, “Short-Term Energy Outlook”.
By: John Bastian, VP Business Development, SmartGridCIS
