Thought Leadership

A Strategic Approach for Utilities to Announce Rate Increases and Maintain Customer Engagement

June 19, 2024
An image of a couple looking over their utility bill

Does your utility company have a rate case in the works? Or has your company’s rate case already been approved and you have to start announcing it to your customers?

First, the bad news: Many, if not most, of your customers already know about your rate case or upcoming rate increase because they’ve been reading about it online for MONTHS. And they’re probably irked, angry or absolutely furious.

And now, the good news: You still have time to craft compelling messages and develop a strong strategy to effectively reach customers and help your utility maintain customer engagement.

Why Utility Customer Communication Needs to Contain More Than Just the Facts

Some utilities still follow the old-fashioned “just the facts, ma’am” communication model, which focuses on the utility’s financial needs, while other utilities outline customer benefits in language that does not really connect with their customers.

However, in today’s climate where customers are grappling with frequent rate hikes, it is insufficient to merely present the facts. Utility companies must go beyond providing just basic information and strive to make their communication relevant, convincing and empathetic for their customers. Whether the reasons behind the rate increase include covering higher fuel costs or expenses from restoration efforts, improving existing infrastructure or customer-facing systems, or building new eco-friendly generation sources, your “why” messaging needs to emphasize how those improvements are going to benefit customers.

The Impact of Economic Pressures on Customer Engagement

Announcing a rate increase requires a lot more strategic planning these days. While inflation has slowed, worsening macroeconomic conditions are putting pressure on utility consumers, driving declining utility value and monthly bill manageability perceptions. Concerns about the cost of living, the local political environment and the ability to work remotely are creating a shifting landscape as people look to move to more attractive states that better align with their economics, beliefs and lifestyles. As new residents mix with your existing customer base, having a deep understanding of the economic conditions and headwinds your customers are facing is more important than ever.

Over the past several years, we have seen economic pressures surface as a key influence on customer engagement scores in our Cogent Syndicated Utility Trusted Brand & Customer Engagement (UTBCE): Residential study:

  • The percentage of customers who report they cannot afford to pay their utility bills peaked in late 2023, and bill manageability perception has improved only slightly in the first quarter of 2024. The inability to pay the utility bill correlates with 11% lower Brand Trust scores.
  • After peaking in mid-2021, utility value perception is down by 8% and continues to see a trending decline. While the jaw-dropping utility rate increases of 2022 and early 2023 have stabilized, many customers are still paying higher utility bills and the heartburn from those dramatically higher bills continues to reverberate.
  • Customer trust in utilities to set fair and reasonable rates has continually declined since early 2021. This is bad news for utilities planning rate increases because trust is vital to customer engagement: consumers who trust their utility to set fair rates report Brand Trust scores that are 22% higher than the average.

The Connection Between Utility Investments and Customer Support

To help utilities explore strategies in communicating rate increases in ways that positively impact customer awareness and opinion as well as minimize negative effects on brand trust, we introduced a customized, utility-specific rates and economic-centric report, the Utility Rate CX Navigator. It looks at the impact of inflation on residential customers and explores how various communication strategies, program offerings and brand activities can shape residential customer perceptions before, during and after rate increases. The content is based on current data from our Cogent Syndicated UTBCE: Residential study alongside relevant external sources. Featuring national perspectives, customized insights, and data from individual utilities, the interactive report is rich with insights unique to individual utilities. It is designed to help utility companies maintain or improve customer satisfaction and trust as utility rates continue to rise along with prices for other consumer goods and services.

In our analysis, we found that customers are more likely to support—or are at least OK with—a slight rate increase if their utility invests in programs that matter to them. Nationally, 14% of customers say they would be OK with a rate hike if some of the money went toward ensuring more reliable service. As an example of why utility-specific insights matter, we found that number to rise to 24% among customers of one combination investor-owned utility in the East—meaning rate case communication for that company should emphasize the utility’s plans for grid infrastructure improvements, highlighting how it is making the grid more reliable as well as improving how it communicates grid outages and the speed of restoration to customers when grid issues occur.

How Utility Rate CX Navigator Can Help Utilities Craft a Winning Rate Increase Communication Strategy

One rule holds true for all utilities: Detailed information on how customers can manage rate increases is essential to effective rate communication. The Utility Rate CX Navigator can help you identify savings as well as energy-control programs and services that correlate with higher customer value perceptions.

We’ve designed the Utility Rate CX Navigator to be an on-demand, dynamic deliverable that analyzes timely, utility-specific data to deliver actionable insights to help utilities navigate the challenges of rate increases. It can be purchased anytime during the year so utilities can receive insights using the most up-to-date data from our quarterly residential fielding.

Fill out the form below for more information on the Utility Rate CX Navigator to see if your utility can leverage our UTBCE residential and business studies in other ways, or if you have additional questions for our energy experts.

Want to learn more? Let’s connect.

About the Utility Trusted Brand & Customer Engagement: Residential Study

Escalent conducted surveys among 62,898 residential electric, natural gas and combination utility customers of the 141 largest US utility companies (based on residential customer counts). The sample design uses a combination of quotas and weighting based on US census data to ensure a demographically balanced sample of each evaluated utility’s customers based on age, gender, income, race and ethnicity. Utilities within the same region and of the same type (e.g., electric-only providers) are given equal weight to balance the influence of each utility’s customers on survey results. Escalent will supply the exact wording of any survey question upon request.

Suzanne Haggerty
Suzanne Haggerty
Director, Syndicated Research

Suzanne is a director of syndicated energy research for Cogent Syndicated. In this role, she translates consumer data analysis from the Utility Trusted Brand & Customer Engagement™ studies into actionable insights and recommendations for clients. Suzanne is an experienced researcher, writer and customer experience strategist who has been tracking trends and identifying best practices in the utility industry for nearly 10 years. Before joining Escalent, she was director of customer engagement and insights at Chartwell, where she led a team of analysts in the development and delivery of utility research to address pressing industry needs. Suzanne holds a master’s degree in English from the University of Alabama in Huntsville and a bachelor's degree in journalism and history from the University of Southern Mississippi.