In the current economy, millions of families are having difficulty meeting their basic expenses and are, too often, falling behind on their utility payments and into debt.

A sense of abundance allows many of us to feel we have options and a degree of control over our lives. For vulnerable consumers, the electric bill exists in the context of other utilities (gas, heating fuel, water, garbage, phone) and vital necessities like food, clothing, transportation, healthcare, childcare, and shelter.

A meta-analysis was conducted of 70 studies, presentations, and articles. The research supports that when low-income families have reasonable options for their energy use, assistance in understanding the tradeoffs, and the ability to manage their choices, they will choose to exercise control for the simple reason it will free up cash they can apply to other expenses.

It is in the utility’s and other ratepayers’ interest for these customers to avoid the “debt and despair” vortex. Regulators and municipal oversight boards can help low-income consumers become active energy partners to the fullest extent possible by supporting effective policies, technology investments and protections.

The research highlights seven elements that consistently yield the greatest possibilities for success by combining context, literacy, options, advice and feedback:

  1. Basic protections and policies that encourage people to be engaged and empowered
  2. On-going education from trusted advisors from the utility or through other social service agencies, consumer advocacy offices, and community-based organizations
  3. Integrated program information to solve the family’s situation
  4. Optional program and pricing bundles that reflect the family’s home usage patterns, habitat realities, and priorities, as well as alternative payment plans that align with cash flow
  5. Subsidies, discounts, and payment plans optimized to allow families to remain current
  6. Elimination of numerous extra fees that are punitive for people barely scraping by
  7. Appropriate use of technology to facilitate communication and convenience

Low-income consumers do not represent a monolithic group or a customer segment likely to respond to the same set of messages and programs in the same ways. Just as with more affluent customers, personalized advice or tools are needed to help people determine the best choices from a portfolio of options.

  • The behavioral science research shows that opportunities for personal achievement, dignity, self-respect and community validation are powerful motivators
  • Personal attitudes will determine what messages are most persuasive
  • Physical structure and ownership of the home will shape what tips and opportunities are relevant
  • Protections for physically vulnerable people are critical and ideally will not limit choices for the healthy
  • Cash flow, access to and ease with technology are key factors in determining payment and budgeting tools that will be most attractive and effective
  • Who delivers the message is particularly important for people and communities that have good reasons to be distrustful; fair practices and policies are needed to earn their trust

This paper is a work product of the Low Income Energy Issues Forum. This paper does not necessarily represent the views of any participating organization, state regulatory agency, sponsoring company or individual participant. To participate, contact Nat Treadway, Managing Partner at ntreadway@defgllc.com or 713-729-6244.

Filed Under: Low Income, Smart Grid