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Phase: Research Missions: Share Business Innovations

Designing a human-centered payment system (vs a utility-centered one) yields multiple benefits, including higher customer satisfaction, fewer defaults, lower stress and significantly lower usage and bills.

A well designed customer experience has many benefits: Lower usage and bills, fewer complaints, fewer defaults, less stress on customers. Salt River Projects M-Power program has been running since 1980 in the Phoenix area. The pay as you go program enjoys a 95% customer satisfaction rating and leads to a conservation effect of 12%. By making the payment system user friendly, customers can pay their bills when it's convenient for them not on a schedule determined by the utility. Customers on M-Power pay multiple times a month, sometimes as many as 7. Stronger engagement with their energy usage leads to greater awareness and drives behavior change to cut back on waste. Originally aimed at low income customers, it now serves many more.

Photo of Andrew Burroughs
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This program is inspiring because it has proven over the past 30+ years to work very effectively and has acheived significant energy savings, simply by adapting the payment system to better fit peoples real lives. Traditional utilities ask customers to conform to their financial reporting and collection programs, designed by accountants for the ease of the company. M-Power has created a system that uses smart grid technology, to custom fit the service experience to allow people to pay in ways that are easiest for them. The results speak for themselves and perhaps most inspiring is that a financial innovation leads directly to energy (and cost) savings. It relies on staying very true to ideals. There are no costly fees or penalties for paying more often, unlike some other copycat programs. While the rate is slightly higher than a standard rate to cover costs, the benefits clearly outweigh the downsides for the many people who are voluntarily signed up. 
How can we overcome the organizational inertia to make changes like this in how energy is paid for?
More details below:
The program site.
A detailed EPRI report.
 

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Photo of Alper Yaglioglu

Hey Andrew! I think you're onto something here which could translate well into a new concept for our Ideas phase. You've got till Jan 15 to summon the creative energy to post an idea. Here are some tips: https://openideo.com/blog/rr-welcome-to-ideas and we hope you'll find some time to get your innovation game on!

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Photo of Jocelyn Garibay

I love the way this payment system is centered around the consumer. It completely changes the way we view energy unlimited. We are socialized to believe that as long as you pay your bill at the end of the month energy will always be there. That model of thinking contributes to the notion of "unlimited energy" whereas this "human-centered" model directly connects people to the energy they use. On a large scale, this could absolutely change the way we view energy -- from unlimited to limited.

I do think this contribution could use a social angle -- how do we move communities to want to be a part of this new system? My guess would be around saving money.

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Photo of Carles Guerrero Santiago

Totally agree on changing the perception of infinite energy. This payment system has to be more effective than the actual model.

However it is a bit hard to me to understand how to bring it into communities. Please help :)

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Photo of Alper Yaglioglu

Totally agree. Energy is something really abstract for most of us and I think paying bills once a month makes it even worse. We have a very short but harsh winter here in Turkey and I use a lot of gas to survive these days. I am really looking forward to my next bill. I have not a clue how much money I spent for heating today. In that sense, it would be much better to pay my bills every week, even every day! That would make energy much more tangible. Let's say I have used heating for two hours today and here is how much it costs : 2 dollars! Now, I more or less have an idea about my energy use. Two hours of heating = 2 dollars. Great! Even turning on and off things at home might give a great amount of information about energy use.

Great share indeed, Andrew. I am sure this contribution will be a great inspiration as we enter the Ideas phase!

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Photo of Andrew Burroughs

This concept could be readily scaled up to the community level, and has been in projects like Tidy Street, at least as it raises awareness of usage. But what if communities (or families, groups of friends, etc) paid their bills collectively? This would tie in the daily/weekly awareness with the motivation to keep usage and bills low. It could also highlight where waste in the system needs to be addressed, by making that information more public for community members who opt in. If communities are to lead the way, then communities could pool responsibility for paying bills, vs defaulting down to the individual family unit. This could change the game.
The downside might be a less personal connection between individual actions and collective usage, but good visualization and communication could minimize that downside and encourage help to be directed where it is needed most. We are so conditioned to tackle energy as individual units vs groups.
Group buying power could influence prices and group coordination of usage would enable reduction of peak demands by aligning and adjusting usage to better match available power, again lowering costs.

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Photo of Jocelyn Garibay

Thank you everyone for your contribution!

Andrew, I love of the idea of communities paying their bills collectively. It (could) create such a positive environment centered around collective accountability.

I would add that you can use this model as a means to mentorship between those who may have higher bills i.e. higher energy consumption and those with lower consumption.

Creating a space for sharing best practices and a place where you can have community events aimed at promoting renewable energy.

Sometimes the hardest part of creating a rapid transition is building the community, this eliminates that step in some ways and allows for the focus to be on renewable energy sources.

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Photo of Marianne Ho

I encountered this kind of technology in a dorm room while on an exchange program.

It totally made me more wary of how much energy I'm consuming. And how much that is costing me.

In a way I think the primary motivation here is "I don't want to pay more/top up my card a lot" vs "I want to help the environment."

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Photo of Andrew Burroughs

Right. Making the primary motivation be about something very necessary and practical (paying your bill) has a desirable secondary effect of using less energy...sort of a sneaky/clever/cheap way to achieve results.

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Photo of Jes Simson

Hey Andrew, I really love how this system compels users to engage with their energy usage (via price).

In a similar vein, Australia has introduced a Smart Meter which more accurately captures energy consumption. While most residents don't actually look at their energy meters, a host of energy suppliers have created apps that allow you to easily track your energy usage on a daily / weekly / monthly basis (most use cost of electricity as their unit of measure). I've got plenty of friends who use these apps.

I wonder if there are any other mechanisms other than price to communicate energy reduction? How might the community be involved to collectively decrease the community's energy consumption?

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