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Putting Customers in the Driver’s Seat!

Shaping Loads through Inverted Block Rates. APPA Business & Financial Conference September 24, 2007 Austin, Texas Sheila Boeckman Manager of Business Operations & Development Waverly Light and Power. Putting Customers in the Driver’s Seat!. In Waverly, Iowa. 4,958 customers 31 MW System Peak

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Putting Customers in the Driver’s Seat!

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  1. Shaping Loadsthrough Inverted Block Rates APPA Business & Financial ConferenceSeptember 24, 2007Austin, TexasSheila BoeckmanManager of Business Operations & DevelopmentWaverly Light and Power Putting Customers in the Driver’s Seat!

  2. In Waverly, Iowa • 4,958 customers • 31 MW System Peak • Home of Wartburg College • Concern for environment • Help meet new load requirements with Energy Efficiency programs • Price Signals become important

  3. Goals • Send price signal “Energy Efficiency Counts” • Put Customers in the Driver’s Seat • Reduce Greenhouse Gas emissions • Move Customers closer to cost of service • Board goal is 85% for residential class • Reduce interclass subsidies • Reward those with low usage

  4. Customer Driving their bills • We want to directly influence • Energy Efficiency measures • Usage habits • Purchasing habits • AND have happy / comfortable customers

  5. Waverly Light and Power

  6. 27% 37% 17% 10% 38% AVG Home w/ AC 73%

  7. Zero in on Cost of Service • Summer peaking Utility • Differentiate between seasons • Inside this rate class • Home Based Businesses • Line extensions = no cost to customer • Larger lots, spreading out in rural areas • Transformers serving fewer customers • 2001 5 kVa per home, Now 7 kVa per home

  8. Send the price signal • . . . and pay WLP’s bills! • Be aware what revenue is at risk • Take it slow, find out if customers will respond to signal with reduced usage • We can tweak over the years

  9. A few tricky wickets • Don’t penalize low income customers • Lowered 1st tier rate from $.087 to $.085 all year • Meant to reward low usage vs. low income • Watch out for Electric Heat customers • Retained flat rate in winter w/ heating discount • They still have inverted summer rate

  10. The Big Tricky Wicket • Marathon Water Heaters • Remember, we lowered the rate on 1st tier usage • Users with timer historic $14 / month discount • In reality, due to lowered 1st tier rate we should have also LOWERED discount • Get serious, this won’t fly • Customer perception = • we promoted using Electric Water Heaters and now are punishing them! • Talk with them person to person

  11. Residential Inverted Rate • Move to a 4 tier rate July 1, 2007 • June - September • Maintain current flat rate at other times • Price increases as kWh usage rises • Customer Charge increase $2 / month • Overall 3% Utility revenue increase

  12. New Rate Design July 2007 • Customer Charge $10 a month all months • Winter Flat Rate $0.085 all kWh’s used • Summer June through September: • First 600 kWh used $0.0850 • Next 500 kWh used $0.1201 • Next 400 kWh used $0.1600 • Over 1,500 kWh used $0.1701

  13. Under $2 per month in summer $2-$17.50 $18-$47 $48 and up

  14. Board puts money in beliefs • November Board meeting • 8 decision makers • 5 Board, 1 Guest Board, 2 City Council Liaisons • Orally presented personal usage habits • 1 = 2nd Tier customer • 7 = 4th Tier customers • With one of the 7 using the 8th largest average on system in this rate class GO FOR IT!

  15. The Drivers Seat Campaign • Send Key Account budget letters NOV ’06 • On Board agenda 3 times NOV ’06, MAR, APR ’07 • Key Accounts Newsletter MAR, APR ’07, JUNE ‘07 • Press Releases MAR, APR ‘07 • Employee Mtgs MAR, APR ’07, JUNE ‘07 • Set date for public hearing MAR ’07 • Hold public hearing APR ’07 • 60 day notice by direct mail APR ’07 • Internal Utility and City distribution NOV ’06 & Each Month • New rate schedules mailed APR ‘07

  16. The Drivers Seat Campaign (con’t) • Website postings MAR-JULY ’07 • Public speaking engagements MONTHLY • Driver’s manual direct mail MAR ’07 • Commercial Newsletter MAY ’07 • Post card-direct mail MID JUNE ’07 • Radio JUN-AUG ’07

  17. Reaction (so far) • During speeches customers cheered! • They all thought they were low tier of course • Phone calls during spring mailing • 22 customers called asking for Energy Audits • 48 total phone calls with questions, not complaints • 1 letter to editor about Electric Water Heater usage • 7 calls logged as complaints

  18. Put Customers in the Driver’s Seat! www.WaverlyIA.com

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