The utility industry is ripe with analytic opportunities. Usually, when I share that perspective, thoughts immediately jump to making the energy grid more efficient. Certainly, there are efficiencies to gain with improved data about where power is being consumed and the sources that are available to support it.
However, there are also direct financial benefits to be gained in the area of revenue protection. It may surprise you, but utilities around the world lost an estimated $89.3B in revenue from individuals who do not pay their bills or who tamper with their smart meters to avoid incurring charges.
As we get into peak season for winter heating, I'm reminded of the opportunities to ensure that utilities’ customers don’t have bill shock, which is an unpleasant situation and a drain on customer satisfaction. And keep in mind, utilities have the tools to track down those who may choose to defer payments for another time – or never.
As you see from the chart below, the largest driver of electricity consumption is “entertainment” activities. This includes our televisions, home networks, stereos, computers and household fun like beer-making. While we are creatures of comfort, we certainly wouldn't want to miss the next episode of our favorite show just because we forgot to pay power bill last month!
If you live in a climate that has hot summers and cold winters, you may have been offered a program to have a consistent bill amount each month. This helps customers manage energy expenses and also provides more consistent revenues for utilities. If needed, there's a true-up at the end of the year to reconcile usage with payment. This eliminates the need for high bill alerts and increased call center costs to handle the calls that come in to resolve a high bill.
In Australia, Origin Energy has a first of its kind “Predictable Plan.” This means that your flat monthly rate covers any level of usage – whether higher or lower than expected – with no end-of-year reconciliation. No matter how much you use! This offer is enabled by robust energy forecasting, which can predict hourly and daily consumption well in advance. This reduces the risk to Origin Energy and provides customers with a unique energy offer.
For the utilities that still experience energy theft in the system, analytic techniques are available to reduce false positives and prioritize collection efforts. Cemig in Brazil is one of the largest utilities in South America. They were able to detect losses in the electric system and identify cases for investigators to pursue. As a result, they're able to capture revenue for the services already delivered to customers, at a value of roughly $500,000 each month or $6 million a year.
With these analytic capabilities, utilities now have the power to know which customers are paying their heating bills, which are likely to default, and what programs they can put in place to ensure that everyone stays toasty and warm during these holidays.
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