Will Consumers Manage Their Electricity Use?

A detailed customer report on energy usage (Image credit: Direct Energy)

Most people are about as engaged in their monthly electricity bills as they are in tracking the amount of air they breathe. Direct Energy is innovating changes to the ways energy is understood, as well as used.

“When we asked customers, many of them said that they had no idea how small changes in their everyday lives could affect their bills,” said Manu Asthana, President, Direct Energy Home. Direct Energy is the largest HVAC, electrical, and plumbing provider in the markets in which it competes, in addition to supplying electricity and natural gas.

More the half of U.S. states offer some form of competitive retail energy pricing plans. While consumer participation has doubled since the early 2000’s, it’s still woefully low.

“Combined with a history of commoditized, undifferentiated offers, and high levels of consumer churn, it was clear that we needed to innovate on a big idea,” he added.

That idea was to begin to combine the company’s energy and services businesses in 2015, and start experimenting with ways to engage and reward its customers.

“We wanted to find ways to give them transparency into what they’re using,” Asthana explained. “Show them how their decisions impacted consumption, and then give them the tools to control their use.”

“Our hypothesis is that if we help them buy less energy, it will yield their long-term loyalty.”

The project started in Texas, where smart meters allow Direct Energy access to energy usage data updates in 15-minute increments. It used a formula to spot patterns and track the estimated usage of specific devices in homes, such as clothes washers and dryers, and convert that data into a simple, line-itemized bill.

Asthana’s team has also innovated benchmarks through the compilation of data among similar households in a given area, working to gamify usage so consumers can see how their usage stacks up against their neighbors. Another program also offers alerts to consumers during peak demand periods, and incentivizes them to shift usage to other times of the day (and sells free Saturdays with certain plans). Additionally, Direct Energy provides prepaid consumers a daily text update on their usage balance, much like the way data plans are managed on mobile phones.

“We’ve seen that prepaid consumers can save up to 18% simply by having such insights.”

Direct Energy’s vision for the retail energy future is far more robust, however. Those insights linking devices to energy consumption can serve also as predictive tools for service calls, as well as guides to replacement purchases. Already, over a third of its retail customers buy energy linked to one or more of the maintenance and service plans it sells, which is over three times the number that did so in 2014.

“Our vision is to empower our customers with information so that they have more control over the energy and services choices they make, and to make their lives easier by delivering tools to automate these choices,” Asthana added. “Imagine a retail energy model in which your energy consumption and device maintenance are monitored and supported automatically.”

“Our vision is to create a unique business that takes care of your entire home.”

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