This article was originally published in the November/December 1993 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.
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Home Energy Magazine Online November/December 1993
TRENDS IN ENERGY
Trends in Energy is a bulletin of residential energy conservation issues. It covers items ranging from the latest policy issues to the newest energy technologies. If you have items that would be of interest, please send them to: Trends Department, Home Energy, 2124 Kittredge St., No. 95, Berkeley, CA 94704.
Detroit Edison Saves
Detroit Edison turned the prospect of $14 million in unpaid bills into a success story by combining consumer education with energy conservation measures. The utility achieved almost unheard-of results. In the first year of the program, 89% of over 11,000 customers participating in the program reduced their electric bills by an average of 26%.
In the early 1980s, the State of Michigan's low-income assistance programs paid utilities an unlimited amount for each customer's monthly bill and protected low-income customers from being shut off. This left many consumers with little motivation to conserve. In 1989, the state set limits on utility payments though nothing was done to change customer usage behaviors or lift the shut-off protection. Arrearages started building. A large percentage of customers on the program never even opened their bills, remembers Judy Lord, project coordinator for Detroit Edison's Customer Credit Services Department. Without any changes, the utility projected the arrearages could grow to $48 million by the start of 1993.
From surveys, the utility learned that many of these high users did not understand why their bills were so huge. Some arrearages were as high as $5,000 with monthly electric bills of over $250--in an area where natural gas is the predominant winter heating fuel. To address the problem, Detroit Edison launched the Low-Income Energy Management Program (LIEMP) in 1991. Customers no longer have automatic shut-off protection. Customer electric usage is screened monthly by Detroit Edison. If a customer's average daily usage exceeds the state's funding allowance, a letter is sent advising them and offering LIEMP services. The program combines a negotiated arrearage repayment plan with the following energy services:
Utility field representatives have come across some surprising situations. In one home, the refrigerator had no door and the customer had taped a sheet of plastic over the opening. In another situation a customer allowed a neighbor to use her clothes washer every week, unaware how much the friendly act was costing. After the home visit, the customer negotiated an arrangement with the neighbor to help cover the costs.
Central to Detroit Edison's approach is the payment plan. A monthly payment level is negotiated, including average usage plus an amount toward arrearages, to be paid off over several years. Customers agree to pay either this monthly payment amount or their current bill, whichever is larger. Detroit Edison attempts to personalize the service by designating a customer service representative as a single point of contact for each program participant.
By keeping customers active in the program, Detroit Edison reduces the number of uncollectible accounts. Out of an original target group of 11,390 low-income customers, 76% of participating customers are paying their current bill in full with some additional dollars toward their outstanding balances, while 92% are paying all or some portion of their bills. Without the program, Detroit Edison would have lost many of these customers entirely.
Some of the success of this program can be attributed to the strong partnerships we have built with the Department of Social Services, local universities, hospitals and human service agencies, explains Diana Rascano, Detroit Edison's director of customer credit services. By providing training to these organizations, we have been able to continuously reinforce the energy education to our customers long after our initial visit. The program has now reached over 25,000 customers, reducing their electric bills from $10-$60 per month.
-- Dave Brook
Dave Brook is an area extension agent in the extension energy program at Oregon State University, in Portland.
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