Overcoming Distrust In Utility Rate Management
Customers never want to pay more for something unless they see an increase in value. Paying for water and utility services is no exception. Utility customers expect to receive the same services at the same or reduced costs that they previously enjoyed. This makes raising water or utility rates a tricky proposition indeed.
It is a commonly held belief that because government controlled utilities don’t have profit motives, there is no upward price-pressure on the services these utilities provide After all, what motive would a government unit have to increase fees? Water Rate Consultants, who are generally charged with maintaining rate structures agreeable to consumers, advise utility clients to be prepared for events that would cause major rate increases.
Public lack of trust of general government and utility service providers is a major challenge to most water service providers. Overcoming the lack of public trust is difficult. Even when service providers have very good reasons, such as the necessary replacement of key infrastructure, to seek a rate increase, the conflicts between provider and consumer are often difficult to manage.
The public perceives that much of government or public spending is wasteful. If there have been issues of real fraud, waste, and abuse in the past, then the public may have valid trust issues. Usually, though. the perception that rates and fees are being misappropriated or even just poorly spent is just that: perception.
There are several tactics that utility managers utilize to repair the problem of negative public perception. The bottom line is that the utility must gain the trust of its consumer base – or in some cases re-gain it.
There have emerged four primary tools to establish trust that have been used by Water Rate Consultants with great success. These are: Planning Communication Execution Repeat process
The public must understand that managers constantly anticipate high cost contingencies such as plant replacement, system and equipment failures and major infrastructure costs. Risk assessments can ascertain a relative likelihood of failure for a given part of a particular system and replacement plans should address these possibilities.
The public must believe that managers are sharing information. Managing consumer expectations via frequent, creative and constant communication is essential. Avoiding surprises should be one of the main communication objectives. Customers are far more likely to support rate increases when they understand fully what happened and why it happened.
Execution of previous upgrades is something that many utility managers overlook. As the public perceives most government management ability to be open to question, utility managers should be able to point to previous emergencies and share how problems were quickly and efficiently solved. Establishing confidence with the customer base is essential – as is avoiding surprises.
Finally, the public must believe in the entire process. Utilities need to create patterns of success with their customers so that everyone in the process understands and supports what is happening. Treating the customer base with respect by keeping them informed about changes and about new events is the key to avoiding surprises. And as we have seen time and again – surprises on the part of the consumer is something to be avoided.
Author Jason Mumm is highly respected among Utility Consultants. Operator of StepWise Advisors, Jason has years of financial management experience to each client engagement. A specialist in planning for facility upgrades, replacements or emergency events, Jason’s unique experience and solid base of experience makes him an important part of any Utility Management Team.
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