More than 20 million US households are behind on their utility bills, according to the National Energy Assistance Directors Association (NEADA), which described it as the worst crisis it has ever documented. Delinquencies are rising across all industries, but utility debt specifically has doubled from pre-pandemic levels, and as moratoriums ended customers faced the onslaught of unpaid bills.
So how can utility providers (or any company facing a rise in delinquencies) collect on past-due balances while still helping struggling customers get back on their feet since the moratoriums lifted?
It starts with understanding today’s financial landscape and refining your debt recovery outreach to meet customers when, where, and how they can best get back on the path to financial stability. Let’s look at how serious the current situation is for utility debt and the recovery strategies to keep bad debt from rolling into uncollectible write-offs.
A Historic Situation for Utility Providers and Consumers
Having customers behind on payments is nothing new for utility providers: before Covid-19 Americans had about $8 billion in utility debt, but today this number has doubled to $16 billion with high energy prices and pandemic-related job loss as major contributing factors to the jump.
In March 2022, overall energy prices increased 32% over the previous 12 months, according to the NEADA. The Bureau of Labor Statistics broke this down even further, finding the price for natural gas rose 21.6%, electricity up 11.1%, and heating oil and propane up 70.1% within the same timeframe.
Utility providers across the country are seeing the effects of this multifaceted issue:
- California’s PG&E Corp. reported more than a 40% jump in the number of residential customers behind on payments since February 2020
- Minnesota’s CenterPoint Energy and Xcel Energy experienced more than 246,000 customers behind on their bills in February 2022
- New Jersey’s Public Service Enterprise Group saw the total of customers at least 90 days late rose more than 30% since February 2020
- And in New York more than one million households have fallen delinquent with at least $1.7 billion owed in unpaid energy and utility bills since the start of the pandemic
Facing this historic situation for both residents and utility providers, what can companies do to both recover the overdue balances and ease some of the stress on consumers?
How to Help Customers and Collect More in the Process—A Real World Example with Real Results
While overdue and unpaid bills are not unexpected, there was no way any company could predict the unprecedented toll from the pandemic: the average balance owed has climbed 97% since 2019, according to NEADA.
But the pandemic did illuminate how well customers respond to digital communications and self-serve options for their utilities. One of our TrueAccord clients, a national leader in electric utility systems, realized this firsthand after the moratoriums began to lift—and after making the switch from traditional collection practices to a digital-first omnichannel approach, the utility provider recovered over $17 million with TrueAccord’s intelligent client-labeled early-stage recovery platform.
Historically, this electric utility provider relied on direct mail and an in-house call center to contact customers with overdue accounts. But during Covid, the provider saw engagement and revenue decline using these old methods, due in part to changing customer behavior. It was time to find a new effective and customer-friendly way to collect on growing delinquent utility bills.
The electric utility provider had already observed that its customers were becoming more digital, from engaging with its distribution companies’ mobile apps to using online outage maps and bill pay tools—and the trend only seemed to be picking up during the pandemic.
The utility provider decided to deploy a digital outreach strategy to drive customer engagement and resolution through TrueAccord’s early-stage collections platform. Every email goes out under the provider’s brand name, but under the hood, HeartBeat—TrueAccord’s patented machine learning engine—dynamically optimizes every digital touchpoint in real-time based on signals of engagement. It also helped the provider boost the efficiency of their call center: instead of trying to get delinquent customers on the phone through outbound dialing, contact center agents can work as productive inbound solutions specialists.
And the utility company saw a transformational financial impact:
- Recovered over $17 million
- Collected over 63,000 payments
- $300,000 of delinquent funds collected daily
- 44% paid in full rate
- 24% overall collections rate
Ultimately, TrueAccord enabled the company to deliver an effective and empathetic approach to collections—one that is sure to transform the utility provider’s relationships with its customers.
Effective, Efficient, Empathetic—Keys to Better Collections in Utilities
Both providers and their customers are facing another wave of unprecedented conditions when it comes to utility debt, but new digital-first omnichannel collection strategies can hold the keys to better recovery.