by Betsy Loeff, contributing writer
If gas-pump prices have consumers reeling, wait until they see their heating bills this winter. According to a recent story in The Wall Street Journal, folks who heat their homes with natural gas — the heating fuel used by roughly 50 percent of U.S. households — may see bills rise 30 percent or more. Heating oil is up 36 percent over last year’s prices, a recent New York Times article reported.
Not surprisingly, utility disconnections are up, as well. An August 7 story in the Los Angeles Times noted that Southern California Edison saw a 14 percent increase in disconnections between January and May of 2008 compared to the same period in 2007. Likewise, through July, Illinois-based People’s Gas performed 33 percent more disconnections this year than last, and Detroit’s DTE Energy saw a year-over-year increase in shut-offs that equaled an eye-popping 56 percent during the first five months of 2008.
Given these figures, now might be a good time for utilities to review collection processes. Many have done so in recent times, and some are finding automation to be an effective tool for keeping dollars coming in the door cost-effectively.
Putting expenses on hold
That’s what happened when Aquila, a Midwestern gas and electric company, turned to automation in 2002. “Our collection department was in rural Michigan, and our company was reorganizing. We wanted to bring collections down to Kansas City,” said Danny Gillam, a senior analyst with Kansas City Power & Light, the company that now serves some of Aquila’s customers due to a recent sale. Gillam says that utility managers picked outsourcing and automation as ways to make the move without adding expense.
The utility now uses Varolii Corp.’s collection suite which, according to Gillam, closely replicates the collection-call processes followed by Aquila agents. As needed, both agents and the calling system contact delinquent account, verify a “right-party” connection, review payment status and payment options, then allow the customer to take action, he said. Call recipients have the option of paying by check or credit card.
“We had 26 people making outbound collection calls in Michigan,” he said. “They’d call one time. If they didn’t get someone on the line, they didn’t try again.”
Automation allows utilities to call customers multiple times, resulting in far better contact rates. At Aquila, the multiple calls resulted in a 216 percent increase in contacts.
The right call
The more delinquent customers you reach, the more money you can collect from them. At least, that’s been the experience of collection managers at Aquila and other utilities.
One Idaho gas company increased payments 59 percent within the first seven days of its collection cycle, according to Rob Gilpin, director of commercial services for TeleVox, a provider of that utility’s automated calling solutions. Gilpin said that same utility saw a 29 percent increase in payments overall, as well as a 22 percent decrease in dispatched service calls to disconnect customers. “On average, a $1 investment equates to a $250 return on investment for our utility customers,” Gilpin said. Varolii claims similar results.
Georgia Power, a TeleVox customer, has found the calling solution prompts some 60 percent of customers to pay up within three days of contact. The utility’s number of fulfilled “promises to pay” has jumped 45 percent. And, disconnects dropped from 198,000 to 168,000 annually. Georgia Power managers “estimate they’ve saved more than a million dollars in truck rolls,” Gilpin said.
At Aquila, collections managers achieved a 39 percent reduction in write-offs through automation compared to collection efforts performed by customer-service representatives. Gillam also said people prefer an automated contact over “somebody on the other end of the line saying ‘you owe us money.'” There is less embarrassment, emotion and confrontation with an auto call, he said.
Automation earns a thumbs-up from regulators, too. “There’s consistent messaging for all customers, and they all get the same payment options,” Gillam said. “Overall, regulators were very pleased with it.”
Gilpin from TeleVox added that automation ups the convenience factor for customers. They can dodge a disconnection and “avoid having to drive across town with a check. Plus, they can pay at 2 a.m. from their kitchen table with a telephone or internet connection.”
According to Gilpin, most utilities using his company’s system for collections eventually find other uses for the technology, such as calling customers with energy-audit offers, meter change-out alerts or other utility business.
Like so many people and companies stretched in today’s economy, “Utilities are trying to do more with fewer resources,” he said. “How do you do more with less? The quickest place to turn is automation.”
Betsy Loeff has been freelancing for the past 15 years from her home in Golden, Colo. She has been covering utilities for almost four years as a contributor to Utilimetrics News, the monthly publication of Utilimetrics (formerly the Automatic Meter Reading Association).
