Top Six Areas Utilities Need To Get Right In 2022

Electricity sales are growing again, and utilities are investing capital at record levels on renewable generation, transmission expansion, and on hardening the distribution grid. All of this is taking place while utilities face considerable challenges from sustainability standards, soaring fuel costs, supply chain bottlenecks, and a lean employment market driven by The Great Resignation.

How will all this impact the experiences of utility customers?

J.D. Power has identified six key issues confronting U.S. utilities and their customers. These are the areas of critical importance to get right in 2022: reliability and resiliency, affordability, sustainability and the rise of renewables, customer engagement, employee experiences, and electrification.

Aging infrastructure across the nation continues to be in need of upgrades, and utilities remain at the forefront of investment: electric utility industry capital expenditures increased 9% in 2021 to $144 billion, with nearly one-third of that total spent on distribution systems. While this investment is substantial, utilities can do more to amplify this work. Our data shows that customer awareness of their utility’s infrastructure initiatives is strongly correlated with higher customer satisfaction – this is an opportunity for utilities to strengthen customer relationships.

Do your customers know all that you are doing to improve the grid, especially in their neighborhoods? Do your customers know how good the reliability is that you actually deliver for them?

The headwinds of inflation remain a strong factor of consideration for utilities. The average cost of natural gas delivered for electricity generation increased 115% from October 2020 to October 2021. The price of coal delivered for electricity generation is up 6.6% from one year ago. Coal and natural gas made up 58% of all electricity production (including utility scale renewables plus small scale solar) in 2020 (YTD October 2021) and 58% in 2021 (YTD October 2021). Despite these price increases, we still saw the growth of electricity sales by 2.4% (YTD October 2021) compared with the previous year.

How do utilities manage customers’ affordability expectations in the face of soaring fuel costs? Do you have a robust mix of pricing options, energy savings programs, and informational tools so that your customers are able to make the right choices for themselves?

Sustainability and businesses' impact on the climate are under increased scrutiny from investors, regulators, public authorities, and customers. However, even with over 60% of U.S. electric sales now subject to clean energy commitments, customer awareness of the climate sustainability initiatives of their local electric utilities remains low. Despite a greater corporate push towards Environmental, Social, and Governance (ESG), the opportunity for utility customer advocacy remains largely untapped.

Our data shows that customer awareness, engagement, and advocacy are key factors in the success of a utility’s sustainability initiatives. Unless utilities bring their customers along, utilities will struggle to achieve their clean energy goals they have put in place for the coming decades.

Customer behaviors need to change to meet clean energy goals – are your customers aware, engaged and participating? Do you understand sustainability customer segments and how to address different segments?

COVID-19 has rapidly shifted customers towards digital channels. Based on customer experiences with other services providers, utility customers expect their digital experiences to be simple and effortless - something not all utilities are ready to deliver. The utilities industry is slower to redesign its digital platforms than other industries, which can lead to less satisfactory customer experiences. As a result, in our 2022 Utilities Digital Evaluation Study, 21 of 36 brands saw a decline in satisfaction from the prior year, putting downward pressure on the entire industry. We find it inexcusable that one-third of utilities still do not have a mobile app. Meanwhile, other low-touch digital industries such as insurance and wealth management are seeing increasing digital satisfaction scores in the wake of COVID-19. With so many digital avenues to choose from, it’s important for utilities to keep up with these changing customer interaction outlets that are here to stay.

What can utilities learn from these other industries to implement digital changes for their customers? What are your plans to increase the take-up of digital engagement, especially with mobile apps?

Rising attrition and new complications related to the shift to remote work have put a strain on service organizations across the globe, and utilities are no exception. A higher intent to quit correlates with a lower intent to engage with customers, and both are leading indicators of employee attrition and performance. First call resolution and agent retention are two vital KPIs that simultaneously reduce operating costs and improve CSAT, loyalty, advocacy and revenues. Customer communication hinges on employees understanding the tools at their disposal and feeling empowered to use them.

Every utility is battling attrition right now, and you need to know in actionable terms which solutions to put in place to protect your bottom line.

How is your organization pivoting during The Great Resignation?

The race to plug in more electric vehicles (EVs) is happening right in front of our very eyes. Automakers are committed to creating a fully electric future with 25 new EV models scheduled to be released in the U.S. during 2022. The EV share of all U.S. vehicle sales doubled from 2018 to 2021. Put simply: the automotive industry is on the brink of massive EV expansion and adoption.

What does this mean for electric utilities? EVs offer a golden opportunity for a new revenue stream. Customers with EVs today rate their utilities higher in overall customer satisfaction. And our studies show that consumers are more willing to consider an EV purchase as they become more exposed to EVs – riding in them and test driving them. Communicating running costs and providing access to test drive EVs are a few of the ways utilities can foster EV adoption and make a positive impact on their revenue streams.

Do you know where EVs in your market charge up? What are your plans to support the adoption of EVs by the next wave of buyers?

Bottom Line...

Being equipped with the most up-to-date industry data informs decisions from infrastructure improvements and sustainability initiatives to customer engagement activities and sales of the next great appliance (EVs). J.D. Power is committed to providing cutting edge data that helps solve our clients’ toughest problems.

Upcoming 2022 J.D. Power Utilities Industry Syndicated Studies

Across its utilities practice, J.D. Power has a wealth of data and perspective on the trends impacting the industry and consumers. Upcoming syndicated studies for 2022 include:

Utility Digital Experience Study: February 22^nd
Water Utility Residential Customer Satisfaction Study: May 3^rd
Sustainability Index: July 21^st
Gas Utility Business Customer Satisfaction Study: October 18^th
Electric Utility Business Customer Satisfaction Study: November 15^th
Gas Utility Residential Customer Satisfaction Study: November 29^th
Electric Utility Residential Customer Satisfaction Study: December 13^th

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Industry data such as electricity prices and infrastructure expenditures courtesy of U.S. Energy Information Administration.

Satisfaction outcome data courtesy of J.D. Power Satisfaction Studies.

Top Six Areas Utilities Need to Get Right in 2022