Communication Technology, Customer Service, Executive Insight

Six rules for utilities navigating the looming collections communications challenge

Utilities face a public relations nightmare.

At the start of the pandemic quarantine, many did not shut off customers with overdue bills. Some companies did this voluntarily. Others were prohibited by state governors.

But now, we’re entering a new phase.

Utilities report as many as 40 percent of their customers are behind on payments. In some cases, the average amount owed more than doubled between April and June. Utilities are not alone. More consumers have fallen behind on mortgage and rent, car payments, credit card bills and other commitments. The mounting debt comes as enhanced unemployment benefits have ended and the ban on collecting overdue bills is expiring.

Do utilities risk their reputations by ordering shutoffs as we head toward fall, a time when customers will need to heat their homes and use lights more hours each day? No one wants to be the Big Bad Wolf.

Many utilities are publicly traded, and it’s tough to find answers for shareholders. Revenue already dropped because of the COVID-19 business slowdown, and now overdue bills from residential and commercial customers may further depress balance sheets. Bad debt could impact credit ratings, complicating funding for new plants and infrastructure upgrades. And seeking rate relief from state regulators—effectively spreading the bad debit across the rate-paying base—is difficult to imagine given the slumping economy.

More aggressive collections won’t solve this crisis. It will involve a coordinated effort between customer service, communications and government affairs. Utilities need to embrace flexible programs backed by effective communications. They must consider fundamental changes to policies and credit rules they have used for decades. Utilities need to strengthen coalitions with crisis assistances agencies, houses of worship and schools. And they need to pivot to simpler-to-use and easier-to-access digital portals to process consumer inquiries. This won’t happen overnight, but it needs to take place quickly.

Many of the current batch of late-paying customers have never been behind on utility bills. Many don’t know of home energy assistance programs or the possibility of payment plans. Proactive utilities need to start conversations with those customers. Utilities must consider a range of flexible options for those with large past-due balances, including prepayment programs for future service. For businesses that typically discontinue service for only  1-2 percent of customers each year for nonpayment, the number of customers currently behind on utility bills has the potential to spark a flood of shutoff notices that will boomerang in terms of everything from call center volume to complaints to regulators.

Those customers are also prey for scammers who pose as bill collectors. Utilities must be transparent about collection efforts, warning customers about common tricks used by criminals.

As we enter the pandemic’s sixth month and utilities contemplate how to best navigate these challenges, we recommend keeping six rules in mind when communicating with customers:

Rule 1: Take ownership.

Utilities were there for their customers when this crisis first hit. Utilities stepped up to the challenge, kept service on and offered support to the communities they serve.

You have a right to acknowledge the support you provided. While this is not a time for boastful claims or self-congratulation, your organization must tell its story. If you do not, someone else will—and the people telling your story will not be charitable.

Rule 2: Demonstrate compassion.

Every residential customer and business has been impacted by COVID-19. Loved ones have been seriously ill or died. Jobs have disappeared. Home electric, gas, water and data usage may have increased as people work and learn from home.

Utilities must demonstrate an understanding of their customers’ challenges and show they care. This is not the time for overly legal or formal communications.

Rule 3: Rely on existing resources.

Some customers may be behind in their payments for the very first time. Others may be embarrassed. And, most will not know about the resources available to them.

As you communicate with customers, be sure to fully explain their options, whether they be payment plans, energy assistance or referrals to local organizations that help with financial difficulties. Do not assume your customers understand the full range of options available.

Rule 4: Build bridges.

Many organizations can be helpful in communicating information to consumers. Local mayors’ offices and houses of worship as well as chambers of commerce and schools should be part of your outreach strategy. Make sure the places where residential and small- business customers might turn when faced with a shutoff notice understand the programs available to help avoid a service interruption. This will not only help reduce consumer anxiety, it will also cut the volume of questions you might have to field.

With remote learning in place in many parts of the country, the loss of electricity or internet service means students will miss school. Making sure school districts have information on utility payment and assistance programs means they can help parents resolve an issue before it reaches a critical stage.

Rule 5: Get creative and make it easy.

When COVID-19 first hit, utilities quickly took action to support rate payers, and government officials mandated actions that may not have fully anticipated the return to normal billings and collections.

As you begin to work with customers, be mindful of the challenges they will face and take every opportunity to cut the red tape. Do your rules require consumers to apply in person or via a call center? Build an online portal to reduce the wait time and application backlog. Do your customers need to receive a shutoff notice before they qualify for heating and energy assistance from your company, local government agencies or charities? Waive these rules and talk to agencies and charities about working to avoid the need for something that can seem bureaucratic and heartless. Are credit reporting agencies notified when bills are 60 days behind? Consider extending the period to 120 days. Does your website list customer resources across multiple pages? Put everything in an easily accessible place.

Rule 6: Demonstrate compassion (again).

It is the right thing to do for your customers and your reputation. Empathy is a critical element of customer relations during times like these.

Utilities did not cause the COVID-19 economic crisis, but they have been asked to shoulder significant burdens during the downturn. Utilities must communicate with customers, be transparent with regulators, and collaborate with agencies and charities that offer payment assistance for consumers. Otherwise, for those utilities’ reputations, it’s lights out.