water affordability

Customer Engagement and CAPs: Strategies for Water Affordability

By Sophia Stetson
Affordability-blog
Affordability. It's a word that gets tossed around a lot as water bills continue to rise. Over the past 10 years the median water bill has risen 75% and is going to continue to climb as our national wet infrastructure requires up to $1 trillion in rehabilitation investment over the next 25 years. But with nearly 15% of the US population living below the poverty line and spending 3% of their after-tax income on water, many families are more vulnerable to bill increases and water shutoffs. Water utilities have the responsibility of maintaining public health by providing high quality, readily accessible water and many providers have shown their commitment to their low-income customers through the implementation of Customer Assistance Programs (CAPs). In addition to CAPs, online customer engagement can reach low-income customers and help to ease their bill burden before they become delinquent.
 
Why CAPs?
By taking advantage of CAPs, at-risk customers are able to maintain water access that is crucial to their health and daily life. This doesn't just help low-income customers: CAPs can benefit anyone in the case that a temporary hardship should befall them. Beyond the more obvious benefits for customers, utilities are also able to see rewards in 3 areas:
  • Reduced costs: A utility loses about $20 for each disconnection/reconnection. With fewer delinquent customers receiving service disconnects, utilities are able reduce costs associated with water shutoffs,  saving the utility money. Some utilities may also need to work with collection agencies to recover payments from delinquent customers. By implementing CAPs, utilities can also decrease administrative and legal costs associated with delinquent payers.
  • Social responsibility: Utilities have a responsibility to protect public health. By caring for the less fortunate, they are able to give back to their community and ensure that there are fewer disconnections that may lead to public health problems.
  • Public relations: CAPs are good publicity - demonstrating that a utility cares about its community can lead to improved public perception and an increase in satisfied customers. Currently there are no federal water bill assistance programs as there are for other types of utility bills. Because of this, the responsibility to provide safe, affordable water for all lies with the individual utility and community. In addition, disconnections are often a target of public criticism. Reducing the number of shutoffs can increase the popularity of the water utility and increase its reputation within the community.
Of critical importance is the fact that CAP's are effective. Circle of Blue found that for those customers who enrolled in Seattle’s CAP, less than 0.5% had water shut off in 2016 and only one household enrolled had a water shutoff in San Francisco due to a late payment. 
 
Online Customer Engagement works to supplement CAPs.
As of 2017, 70% of utilities have not implemented CAPs. This is often due to state laws that restrict program funding options. Consequently, the problem of water affordability persists. 5% of customers lost water service in 2016 because of overdue bills. Another way to fight increasing bills, whether a utility has a CAP or not, is by turning to online customer engagement and self-service. This can provide support to at-risk customers in a variety of ways:
  • Interactive solutions: Customer self-service platforms can help low-income customers understand where they are using the most water and offer tips to decrease their water usage (and their bill!), which in turn decreases the likelihood of water shutoffs. 
  • Make it easy to pay: Online bill pay and automatic billing make the payment process more streamlined. In addition, having utility payment options accessible through a smart phone can make a big difference. 13% of low-income adults are dependent on their smart phone for getting online. Mobile billing, text message or email alerts can help ensure that these bills are paid on time and give customers another easy way to access their consumption and bill information
  • Promotes awareness: There is traditionally low participation in CAPs due to ineffective public outreach. With a customer engagement platform, utilities can proactively target communications to customers who would most benefit from CAP enrollment, such as households already signed up for other assistance programs. 
  • Online application: Digitizing forms online can also help with the CAP application process. Historically, utility service requests included the laborious process of a customer having to print or pick up a form and then fax or return it to the utility. With digitized forms, the process is streamlined and much more user-friendly. Using this innovation to allow customers to apply for CAPs can ensure that those who need assistance can obtain it easily. 
With an online customer self-service platform, utilities can segment and target communications to customers ensuring that they receive the correct support. 
 
CAPs are here to stay.
As infrastructure investment needs grow, utilities will need to continue to raise rates to support system rehabilitation. Low income households will need more help to ensure that water remains affordable and that the public health is protected. Whether the utility chooses to use CAPs, customer engagement, or both, utilities are helping to protect the communities they serve and ensuring that clean water keeps flowing for years to come.

Posted in water affordability, utility customers, shut-offs, rate increases, low income, disconnection, disadvantaged communities, delinquency, customer engagement, customer assistance programs

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