With Energy Rates at All-Time High, Utilities Struggle to Find Antidote to Customer Frustration
The pressure on electric utilities in the United States is peaking.
In 2024, the average residential electric bill increased to a record $182 per month, according to J.D. Power data, causing customers and legislators in some states to push back against rate hikes. And with new policies threatening to boost customers’ bills even higher, there’s growing urgency for utilities to find ways to ensure their relationship with their customers is deeper than the cost of their monthly meter reading.
That is no small feat when you consider that average prices now reflect a 27% spike since 2021 and, unsurprisingly, the level of customer satisfaction with electric utilities has fallen precipitously during that time. Unfortunately, when it comes to alleviating those concerns, utilities’ communication strategies in the face of heightened customer stress are focused on the wrong things. Many utilities continue to miss the mark on what issues truly move the needle on customer satisfaction.
As utilities stare down the barrel of continual high energy demands, extreme weather and geopolitical volatility, it begs the question: Just what can be done to bridge that gap between utilities and their customers during such a disruptive period?
Prices Continue to Climb
In most parts of the country, customers don’t have the ability to choose their utility. As a result, the relationship between utilities and their customers usually takes on a distinctly transactional relationship. The customer pays, the lights stay on and—as long as the prices don’t get too high—everyone is relatively happy.
Unfortunately, that’s not always feasible, especially in this period of record-high prices. As a result, just 31% of electric utilities have either improved their customer satisfaction or held steady for the past 12 months. The rest have declined.
The slump in satisfaction is clearly price driven. Back in 2020, the average price paid per customer was $141 per month. At that time, the industry average customer satisfaction score was as high as 751 (on a 1,000-point scale). As prices began to steadily rise, customer satisfaction dipped. In 2024—with average prices more than $40 more per month than they were just four years ago—customer satisfaction slumped to 707, its lowest point in nearly a decade.
The Communication Conundrum
For utilities to stave off the negative effects of rate increases, they need to create avenues for open dialogue, particularly around key hot-button issues that are proven differentiators.
For example, according to the latest data from the Smart Electric Power Alliance, 80% of U.S. customer electric accounts are served by a utility with a 100% carbon-reduction target. In a world that is increasingly polarized about energy consumption and conservation issues, it would be logical to assume that hearing more about utility sustainability initiatives might not improve customer attitudes. But surprisingly, customers who are aware of their utility’s efforts to use clean energy had a customer satisfaction score of 780, compared with 682 for those who were unaware.
That doesn’t mean that utilities can simply quell angry customer concerns with investment in green initiatives. In fact, according to our data, energy prices are the second most important issue to families over the last few years, just behind the economy/jobs That beats out government spending, healthcare, and housing. So, if utilities can make those concerns go away, they must learn which are the right issues to put at the center of their communication plans.
For example, when we asked utility customers what types of communications they recalled receiving from their electric utilities, the majority clearly recalled messaging on paperless billing. However, when it comes to measuring the influence of those communications on overall satisfaction, it becomes quickly evident that messages about paperless billing are not improving customers’ experiences with their utilities. Meanwhile, when customers can recall utility messaging on corporate citizenship or environmental issues, those outreach initiatives do play a big role in driving improvement in customer satisfaction, even more so than emergency preparedness alerts. The problem is that there is limited recall on these issues.
Strategies that Work
Many utilities need to get rate hikes cleared by their customers, which makes communication around these issues vital to their operations. Utilities need to foster strong bonds that will keep customers on board with their plans, and that’s nearly impossible to do without making customers feel like stakeholders in the process.
Utilities that can effectively walk the line with their customers between energy chaperone and engaged partner will meet far less resistance to their rate hikes and will create better bonds in their community that will come in handy, whether that’s in the face of the next rate increase or in the aftermath of natural disaster. To get that buy-in, utilities must effectively message the right points. Those that don’t run the risk of a very tumultuous, price-dependent relationship with their customers.
