Transforming Utility Customer Service: Fee-Free Credit and Debit Cards—One Last Case Study

In this final article in this series on fee-free credit card acceptance, I continue with my interview of Chuck Shafer, NiSource senior vice president of customer service and new business.  NiSource, one of the largest natural gas utility companies in the United States, serves more than 3.4 million customers in seven states under the Columbia Gas and NIPSCO brands. NiSource also serves approximately 500,000 electric customers through NIPSCO, its vertically integrated electric subsidiary in Indiana.  NiSource, on their website, proudly notes that, “Our customers are the reason we’re here. We’re improving the way we serve our customers each day—incorporating service industry best practices to meet their needs and expectations.”

Shafer is not only a leader at NiSource, he is a recognized leader in the industry. He is passionate about customer service and an advocate for advancing our entire industry in how we can better serve our utility customers.

NiSource is to be applauded for listening and acting on the voice of their customers with the fee-free credit and debit card offering.  NiSource has successfully secured regulatory approval and is currently offering fee-free in three of its states.  Their rollout of fee-free was deliberate and strategic, thereby ensuring a successful launch while gaining an understanding of customer adoption behaviors enabling enhancements to the service.  I asked Shafer about lessons learned to date and advice he would give to other utilities considering this offering.  He shared his ideas on approaching the regulatory process and in implementing the new service.

Regulatory Learnings

One of the challenges in developing the business case for fee-free is determining the costs for this service. With adoption rates increasing over time, determining specifically what to request in revenue requirements is complex.  Shafer suggests requesting an annual true-up mechanism.  In talking to utilities offering fee-free, the adoption rate has been difficult to predict and hence presents challenges in accurately budgeting to support the cost of the offering.   A true-up mechanism allows for a more elegant approach to managing the costs while adoption rates are increasing prior to reaching a predicable steady state.  A fully reconcilable true-up mechanism provides both regulators and utilities with an approach that ensures effective regulatory oversight of the process, along with timely recovery of difficult to predict costs.

Shafer also advises that in the regulatory filing, it is important to request time for implementation.  This was a theme echoed by Phyllis Messner, a national account executive with Speedpay, a Western Union Company. Speedpay is one of several leading providers of payment processing. Messner has personally led the implementation of many fee-based and fee-free credit and debit card applications for utilities and other industries.  She noted that it is important that companies planning to offer fee-free develop a solid understanding of the system integration work involved, as well as the timeline to ensure that promises made to regulators can be met.


Shafer suggested that utilities request fee-free for small business and residential customers.  NiSource initially secured approval only for residential customers.  But small business customers have expressed frustration and dissatisfaction that they are not able to use this same service.  Shafer noted that going forward, NiSource will be requesting this service for both residential and small business customers.

An unexpected bonus he discovered in offering fee-free is that NiSource could negotiate a lower convenience fee rate in the states that do not have approval for fee-free.  In fact, NiSource reduced the convenience fee by nearly 30 percent, thereby saving a lot for customers still paying the convenience fee.

 Shafer also recommended  implementing fee-free via a soft launch.  In the case for NiSource, once gaining regulatory approval and completing the implementation work, the fee-free offering was made available to customers, but not promoted via messaging or advertising. This was deliberate and enabled NiSource to gauge customer response.

 Shaver noted that the driver behind offering fee-free was 100 percent customer feedback.  Customers expressed their dissatisfaction with the convenience fee on the web, in social media, in customer satisfaction surveys, and in direct feedback to customer service professionals.

 NiSource listened and acted on the voice of the customer, then it made the business case with regulators for fee-free debit and credit card acceptance. The collective voice of utility customers is clear:  they want fee-free credit and debit card payment.  Utilities are responding by developing proposals for regulatory consideration and, more often than not, gaining approval for the service.   

About the author: Penni McLean-Conner is chief customer officer at Eversource Energy, the largest energy delivery company in New England. She serves on several boards, including the American Council for an Energy Efficient Economy.


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