Rethinking Rates. Market Research

Transcription

1 Rethinking Rates Market Research

2 Phase 1: Focus Groups Phase 1: Market Research Focus Groups (10) COMPLETED 1 Focus Group for each Board District 2 Commercial Focus Groups Groups reviewed video and printed educational materials Qualitative: Gauge effectiveness and perception of materials about current rate structure and potential changes 2

3 Phase 1: Focus Group Overall Themes 3 Keep it simple Most customers don t want to be very engaged in their electric bill or immersed in the detail of how the bill is created. But, for the sake of transparency and for those who would seek out detail, participants agree that having details easily available online is mandatory. Make the change once In light of an assumed monthly bill impact of $5-$15, participants tended to favor a one-time rather than a phased approach to the change. There will likely be pushback Whether or not it affects them, customer-owners showed concern for low income families and any potential impacts they might experience based on a rate change. The perception of participants was that low usage translated to low income. Reinforce emphasis on efficiency Help customers understand that efficiency is still a major component of OPPD s mission with a new rate structure.

4 4 Phase 1: OPPD Online Power Panel Surveys Phase 1: Market Research OPPD Power Panel Research COMPLETED Rate Restructure Survey Customers shown an example of a bill after the potential restructuring Quantitative: Test customer reactions to hypothetical new rate structures Video Evaluation Survey Customers viewed updated video about potential rate restructuring Quantitative: Test customer understanding and perceptions of updated video

5 Rate Restructure Survey OPPD utilized its online research panel to get customer perceptions of hypothetical fixedvariable composition rate options. The survey explored: To what degree low/average/high energy users accepted or rejected hypothetical fixed-variable cost scenarios? To what degree respondents found the restructured process to be reasonable? What the hypothetical rate structure means to the respondent, OPPD customers overall and OPPD? Who it benefits most? What type of impact it will have on the aforementioned parties? Potential adoption curve preferences for rolling out the hypothetical fixed-variable rate structures. 5

6 6 Methodology Quantitative study of residential customers from OPPD s online research panel. 1,380 respondents split across usage levels (low/average/high). Fieldwork conducted between August 27 September 8, Three hypothetical Basic Service Charge (BSC) levels were tested in comparison to the current $10.25 charge: $20 / $30 / $35. Usage categories required weighting of the data to make the sample reflect the customer-owner population. *Significant differences in results were analyzed at the 95% confidence level.

7 Acceptance and Reasonableness Overall Respondent Base Degree of acceptance of hypothetical restructured bill compared to current bill. Reasonable or not for OPPD to align its rate structure with its costs.

8 1 Rethinking Rates Acceptance Overall Q_ACCEPT-REJECT. To what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? Q_ACCEPT-REJECT-RN. While individual bills will change depending on a customer s usage the hypothetical adjustment in the basic service and usage charges would not create any more revenue for OPPD compared to the way bills are currently structured. Rather, it would align OPPD s revenue with its costs. Taking that into consideration, to what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? [SCALE: Not at all acceptable, Somewhat unacceptable, Somewhat acceptable, Very acceptable ] 100% 80% 40% 20% 71% 64% Acceptance (% Very + Somewhat Acceptable) DATA IS WEIGHTED n=1,380 68% 67% 56% Revenue Neutral Initial Reaction The Acceptance level was steady from lowest to highest BSC. Revenue Neutral showed a positive effect. Acceptance was higher across the board when respondents learned the restructure would be revenue neutral to OPPD. 0% n=460 n=460 n=460 $20 $30 $35

9 9 Rethinking Rates Reasonableness Overall Q_REASONABLE. Which statement below most accurately reflects your opinion on this potential change? [Rotate response options.] [SCALE: It is reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. ; I don t feel strongly either way. ; It is not reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. 100% 80% 40% 20% Reasonableness DATA IS WEIGHTED 27% 23% 29% 28% 30% 33% 26% 30% 44% 44% 45% 42% It is not reasonable I don t feel strongly either way It is reasonable Respondents were significantly more likely to say it is reasonable for OPPD to align its rate structure with its costs. Overall, nearly one-third didn t feel strongly either way. 0% n=1,380 n=460 n=460 n=460 Overall $20 $30 $35

10 Acceptance and Reasonableness Individual Usage Groups Low, average and high usage.

11 Low Usage Group Acceptance Perceptions 11 Q_ACCEPT-REJECT. To what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? Q_ACCEPT-REJECT-RN. While individual bills will change depending on a customer s usage the hypothetical adjustment in the basic service and usage charges would not create any more revenue for OPPD compared to the way bills are currently structured. Rather, it would align OPPD s revenue with its costs. Taking that into consideration, to what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? [SCALE: Not at all acceptable, Somewhat unacceptable, Somewhat acceptable, Very acceptable ] Low usage respondent Acceptance (% Very + Somewhat Acceptable) Acceptance was fairly steady 100% across the board, but there seemed to be a breaking point 80% above the $30 BSC where the 57% 56% Revenue Neutral Acceptance 44% drops. 40% 20% 0% 43% 35% 33% n=108 n=108 n=108 $20 $30 $35 Revenue Neutral Initial Reaction Still, Revenue Neutral had a positive effect on Acceptance.

12 Average Usage Group Acceptance Perceptions 12 Q_ACCEPT-REJECT. To what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? Q_ACCEPT-REJECT-RN. While individual bills will change depending on a customer s usage the hypothetical adjustment in the basic service and usage charges would not create any more revenue for OPPD compared to the way bills are currently structured. Rather, it would align OPPD s revenue with its costs. Taking that into consideration, to what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? [SCALE: Not at all acceptable, Somewhat unacceptable, Somewhat acceptable, Very acceptable ] 100% 80% 40% 20% 0% 73% 74% 75% 65% n=189 Acceptance (% Very + Somewhat Acceptable) DATA IS UNWEIGHTED 57% 67% n=190 n=190 $20 $30 $35 Revenue Neutral Initial Reaction Average usage respondent Acceptance was equal at the lowest and highest BSCs. Despite what it looks like, there was no statistically significant drop in initial reaction acceptance at the $30 BSC. Again, awareness of the revenue neutral aspect had a positive effect on Acceptance.

13 High Usage Group Acceptance Perceptions 13 Q_ACCEPT-REJECT. To what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? Q_ACCEPT-REJECT-RN. While individual bills will change depending on a customer s usage the hypothetical adjustment in the basic service and usage charges would not create any more revenue for OPPD compared to the way bills are currently structured. Rather, it would align OPPD s revenue with its costs. Taking that into consideration, to what degree would you say that the hypothetical adjusted bill structure would be acceptable to you? [SCALE: Not at all acceptable, Somewhat unacceptable, Somewhat acceptable, Very acceptable ] 100% 80% 40% 20% 0% Acceptance (% Very + Somewhat Acceptable) 83% 83% DATA IS UNWEIGHTED 76% 75% 83% 82% n=156 n=155 n=156 $20 $30 $35 Revenue Neutral Initial Reaction Acceptance for the high usage group was relatively high and steady across the board. For this group, initial reaction Acceptance was equal to Revenue Neutral Acceptance. This group evaluated restructured bills that were lower than their current estimated bills.

14 Low Usage Group Reasonableness Perceptions Q_REASONABLE. Which statement below most accurately reflects your opinion on this potential change? [Rotate response options.] [SCALE: It is reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. ; I don t feel strongly either way. ; It is not reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. 100% 80% Reasonableness DATA IS UNWEIGHTED 35% 30% 31% 44% It is not reasonable The majority of low usage respondents were likely to say it is reasonable for OPPD to align its rate structure with its costs or did not feel strongly across all three levels tested. 40% 20% 27% 31% 27% 38% 39% 42% 22% 34% I don t feel strongly either way It is reasonable Above $30 is a tipping point where unreasonableness perceptions increase noticeably. 0% n=1,380 n=109 n=109 n=109 Overall $20 $30 $35 14

15 Average Usage Group Reasonableness Perceptions Q_REASONABLE. Which statement below most accurately reflects your opinion on this potential change? [Rotate response options.] [SCALE: It is reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. ; I don t feel strongly either way. ; It is not reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. 100% 80% Reasonableness DATA IS UNWEIGHTED 26% 26% 29% 23% Approximately one-fourth of average usage respondents felt it was unreasonable for OPPD to restructure rates across all three levels tested. 32% 32% 25% 39% It is not reasonable 40% I don t feel strongly either way 20% 42% 42% 46% 38% It is reasonable 0% n=1,380 n=194 n=193 n=193 Overall $20 $30 $35 15

16 16 High Usage Group Reasonableness Perceptions Q_REASONABLE. Which statement below most accurately reflects your opinion on this potential change? [Rotate response options.] [SCALE: It is reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. ; I don t feel strongly either way. ; It is not reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. 100% 80% 40% 20% 19% 13% 32% 38% Reasonableness DATA IS UNWEIGHTED 27% 27% 50% 50% 46% 16% 30% 54% It is not reasonable I don t feel strongly either way It is reasonable Typically, three-fourths or more of high usage respondents felt the rate restructuring was reasonable or had no strong feelings either way. 0% n=1,380 n=157 n=158 n=158 Overall $20 $30 $35

17 Findings Acceptance of the proposed structures did not vary substantially across BSC levels tested. Acceptance increased when the aspect of Revenue Neutrality was emphasized. Low usage customers did show less acceptance of the proposed structures and were less likely to view OPPD s action as reasonable. 17

18 Positive Themes More focused on total bill - don t mind higher fixed costs as long as total bill is lower or remains about the same. Rates are better than other parts of country. Rates are fair and customers understand rising fixed costs. 18

19 Negative Themes Prefer to be charged based on usage - hypothetical bill penalizes low users. Customers would have less control of their bill because of fixed costs. Unfair to those who attempt to conserve energy. OPPD should reduce its own costs before raising rates. 19

20 Video Evaluation Survey Overall rating. Communicate important messages; Readily understandable. Effect on opinion of OPPD. Reasonableness.

21 Video Evaluation Survey Customers viewed updated video about the potential rate restructuring. Quantitative: Test customer understanding and perceptions of updated video. 21

22 Video Evaluation Survey Q: How would you rate the video overall? (n=281) Q: How would you rate this video specifically in terms of its ability to communicate the important messages to you in a way that you can readily understand those messages? (n-281) 100% Top-Two-Box 91% Top-Two-Box 92% 7% 2% 6% 2% Q: As a result of viewing this video, do you feel more positive, less positive or about the same toward OPPD? (n-281) 100% 80% 16% 80% 48% Less positive 54% 37% Poor About the same 40% Fair Good 40% More positive 20% 37% 55% Excellent 20% 37% 22 0% Overall Understandability 0%

23 Video Evaluation Survey Q: Please select which statement below best describes your overall feelings regarding OPPD s rate restructuring initiative. (n-281) Q_REASONABLE. Which statement below most accurately reflects your opinion on this potential change? [Rotate response options.] [SCALE: It is reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. ; I don t feel strongly either way. ; It is not reasonable for OPPD to change the structure of residential rates to better match its costs. I understand that depending on my household s energy usage, this potential change might increase, decrease or not affect my average monthly bill. 100% 80% 14% 15% 7 out of 10 respondents said they felt it is reasonable for OPPD to align its revenue with its costs. 40% 70% It is NOT reasonable I don't feel strongly either way It is reasonable Almost 9 out of 10 either felt it was reasonable or did not have a strong opinion. 20% 23 0%