SRP M-Power A Customer Preference For Pre-Paid Electric Service. Michael Lowe Customer Services Executive Salt River Project

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1 SRP M-Power A Customer Preference For Pre-Paid Electric Service Michael Lowe Customer Services Executive Salt River Project

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3 Customer Services Vision We generate customer and community satisfaction with SRP through innovative and cost-effective customer services delivered in a consistent and timely manner. Customers find doing business with us to be rewarding, easy, and pleasant.

4 Credit Activity Consumes Substantial Resources in Customer Services Out of 867,000 customers in August 2005: 74,000 called regarding credit issues 66,000 made face-to-face payments (typically last minute) 164,000 were billed late fees 17,000 received field notices or were disconnected

5 Prepay Case Study Mr. Marshall Date of Purchase Amount of Purchase Amount to Card Amount to Arrearage Arrearage Beg. Bal.=$ /9/05 $20.00 $12.00 $8.00 $ /13/05 $20.00 $12.00 $8.00 $ /15/05 $ 3.00 $ 1.80 $1.20 $ /16/05 $20.00 $12.00 $8.00 $ /18/05 $ 5.00 $ 3.00 $2.00 $ /19/05 $ 3.00 $ 1.80 $1.20 $ /20/05 $ 9.00 $ 5.40 $ 3.60 $ /21/05 $ 5.00 $ 3.00 $2.00 $ /22/05 $12.00 $ 7.20 $4.80 $ /23/05 $ 5.00 $ 3.00 $2.00 $ /24/05 $ 3.00 $ 1.80 $1.20 $ /25/05 $ 6.00 $ 3.60 $2.40 $ /26/05 $ 7.00 $ 4.20 $2.80 $ /27/05 $ 3.00 $ 1.80 $1.20 $ /28/05 $ 6.00 $ 3.60 $2.40 $ /30/05 $ 9.00 $ 5.40 $3.60 $541.20

6 Prepay Case Study Mr. Marshall (cont.) Date of Purchase Amount of Purchase Amount to Card Amount to Arrearage Arrearage Beg. Bal = $ /05 24 purchases $ $ $ $ /05 24 purchases $ $ $ $ /05 24 purchases $ $ $ $ /05 25 purchases $ $ $ $ /05 24 purchases $ $ $ $ /05 21 purchases as of 12/19/05 $ $ $ $174.80

7 M-Power is About Customer Satisfaction A better way to keep customers in power

8 Our Customers Speak The M-Power program has brought a comfort level that I ll not get a bill I can t pay. Leah Leah David There were times when I got turned off and would have had to pay a deposit of $150. I couldn t do it I wouldn t trade M-Power for anything in the world. David

9 Our Customers Speak What I like most is the display box. It s like a car. You put gas in and you know how much you ve used and how much you have left. You find out what appliance wastes the most energy. Rebecca Rebecca Johnny Ray If I had a choice today, between M-Power and the standard plan with bills every month, it d be a no-brainer. I d take the M-Power program every time. Johnny Ray

10 Community Based Organizations Speak Marcie Widmer Case Worker City of Phoenix If a customer is out for disconnection, he can apply his deposit money to his bill and get started on M-Power. This opportunity lets a percent go to the old bill and the rest for usage. This option is a useful tool to help the client become stable. Marcie

11 Community Based Organizations Speak In the M-Power environment, we can help with one or two weeks of power vs. a two or three month delinquent bill. It s hard to come up with funds to do that. Ray Ray Heifley, Volunteer St. Vincent de Paul Society

12 Community Based Organizations Speak Janice Parker Executive Director Save the Family Foundation We re a non-profit with HUD as a funding source. Before M-Power, it was not a good experience because Save the Family is required to pay the electric bill. It was difficult to get clients to not stand with the refrigerator door open, or the outside door that lets in heat. Now we give clients a smart card and they monitor their usage and make the power last. M-Power changes our clients behavior. Janice

13 The Issue with Traditional Service Electricity is intangible and is sold on credit. Life skills and mindset are required to manage the household electric bill.

14 Real-Time Information Makes Electricity Tangible Current cost per hour is $0.xx Rate Y charge is $x.xxxx/kwh Cost today is $x.xx Cost yesterday was $x.xx Cost this month is $xx.xx Cost last month was $xx.xx Enough credit for xx days Remaining credit is $xx.xx In-Home Display Unit

15 How Does M-Power Work? An Integrated System Vending Solution BackOffice System & CIS Customer In-home display (English or Spanish)

16 M-Power Growth Actual Forecast 40,000 Customers in December 2005 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09

17 Customer Experience Savings Summer 13.8% decrease Winter 11.1% decrease Annual 12.8% decrease Average purchase $17.90 Average # of purchases per month Summer = 7 Winter = 5 Average # of customers who disconnect per month = 20% Of these, average # of disconnects per month = 2

18 Customer Benefits of PrePay Credit PrePay Deposits $200 $99 Late Payment Fees Disconnect Fees $4.45 or 2% of current billing amount + tax $0 $57.50 $0

19 Utility Benefits of PrePay (Avoided Costs for One Customer for One Year) Read meter (12 per year) $ Prepare and send bill (12) Send disconnect notice (8) 2.96 Calls to request extension (6) Payment at Business Office (8) Reconnect (1) Write-off Total $199.46

20 Summary of Benefits For Customer Reduced consumption/outlays Puts customer in control 95% of customers tell us they have more control over electric usage

21 For Utility Summary of Benefits More satisfied customers 84% of M-Power customers are very satisfied or satisfied with the program Avoidance of negative interactions Reduced write-off

22 Summary of Benefits For Both A better way to keep customers in power

23 M-Power is About Customer Satisfaction 1999 Residential 2000 Residential 2002 Residential 2003 Residential 2004 Residential 2004 Commercial 2005 Residential 2005 Commercial