Affordability Discussion

The forum focused on how utilities are defining, measuring, and responding to affordability pressure. First Quartile framed affordability as a growing issue tied to customer stress, resiliency needs, load growth, the economy, rate pressure, and increasing attention from regulators and governing bodies. The purpose of the discussion was to begin building a more unified, defensible affordability position that supports customers while also giving utilities better peer context and practical tools when working with regulators.

A clear theme was that affordability is not just a rates issue and not owned by one department. It cuts across rates, credit and collections, assistance programs, billing, customer communications, regulatory strategy, field operations, and leadership. Participants shared that some companies are still developing a common definition, while others are already using measures such as share of wallet, energy burden, arrears, disconnects, payment arrangements, assistance enrollment, installment plan breakage, inflation comparisons, and customer outreach effectiveness. First Quartile proposed creating a collaborative affordability group, supported by a shared scorecard and playbook, so companies can compare data, learn from each other, and build a practical path forward.

The group also agreed that affordability is both a data issue and a customer perception issue. Even when a company can show that rates are competitive, below inflation, or stable as a share of household income, customers are reacting to the total bill they receive and the financial pressure they feel. That makes customer education, bill transparency, employee talking points, assistance access, and empathy-based outreach important parts of the affordability response.

Key Takeaways

• Affordability needs a shared definition and a practical set of measures. Companies are using different definitions today, including rate levels, rate increases, energy burden, share of wallet, arrears, disconnects, payment arrangements, and assistance participation. First Quartile’s proposed scorecard would help create a common view while still allowing companies to explain their local operating context.

  
  

• First Quartile’s proposed scorecard was well received as a starting point. The group discussed metrics such as percent of receivables current, arrears balance per customer, disconnect rate, disconnect practices, payment arrangement activity, energy assistance enrollment, assistance dollars available and funded, energy burden/share of wallet, and average residential bill. The intent is to show each utility’s relative position against peers and support better internal and regulatory conversations.

  
  

• The scorecard will need enough detail to be fair and useful. Participants recommended improving the proposed metrics by separating electric, gas, water, and combined service impacts where appropriate. Some companies can calculate energy burden at the customer or service-territory level, which may provide better insight than state-level income measures alone.

  
  

• Affordability should be viewed cross-functionally, not as one team’s issue. Many companies still manage affordability in silos, with different teams owning rates, credit, assistance, billing, or communications. A few companies have already started cross-functional affordability teams, and the group saw value in moving the topic closer to enterprise leadership so decisions can be coordinated.

  
  

• Customer perception is one of the hardest challenges. Participants noted that customers often do not care whether a bill increase comes from delivery, supply, generation, taxes, or another component. They see the company logo and react to the total amount due. This is especially difficult when a company bills for charges it does not directly control.

  
  

• Bill education and transparency are becoming core affordability tools. Companies are working to explain what is driving bill changes, where rate dollars go, what portion of the bill is utility-controlled, and what options are available to customers. First Quartile noted that its billing section now includes questions on bill redesign, transparency, and customer education.

  
  

• Internal education is just as important as external communication. Several companies are equipping employees with quick facts, short talking points, ambassador materials, and “elevator speeches” so employees can respond clearly when customers ask why bills are high. This includes field workers, office employees, customer-facing teams, and leaders.

  
  

• Empathy and compassion need to be built into the affordability response. Participants emphasized that employees should be prepared to speak with customers in a way that is kind, practical, and respectful. One company described using a poverty simulator to help leaders better understand the broader household pressures low-income customers face.

  
  

• Payment arrangement success should be measured, not just participation. One company shared that it tracks both payment arrangement penetration and installment plan breakage. It has also used “fresh start” approaches to help customers who previously missed installment plans but may be close to getting current.

  
  

• Assistance access and outreach are major opportunities. Companies are looking beyond whether assistance programs exist and asking whether customers know about them, can access them, and can get help in the right setting. Examples included community resource events, direct access to subject matter experts, customer service support on site, and tools that help match customers with available dollars.

  
  

• The group wants to explore non-bill affordability levers. Participants asked for discussion around metrics and actions that are not strictly tied to billing rates. This could include operational choices, customer support processes, assistance delivery, outreach effectiveness, education, program design, and other levers that reduce stress even when rates cannot easily be lowered.

  
  

• Regulatory pressure is increasing and becoming more detailed. First Quartile shared that some regulatory bodies are looking more closely at the projects behind rate requests, when those projects will occur, and how future spending may affect customer bills. A shared playbook and scorecard could help companies be better prepared for those conversations.

  
  

• Operating context matters. State rules, legislation, commodity mix, service offerings, moratoriums, supply structures, and rate recovery models vary widely. The scorecard should support peer comparison, but it also needs space to explain why companies may look different from each other.

  
  

• The group has strong interest in continuing the conversation. Participants supported the idea of a quarterly First Quartile affordability forum focused on metrics, peer learning, communication practices, customer stress trends, cross-functional ownership, rate pressure, and practical solutions.

  
  

Next Steps

• First Quartile will build the first version of the affordability scorecard. First Quartile will review the benchmarking data already available and confirm which proposed metrics can be created now. The early view is that most of the scorecard can be built from existing data, with only one or two additional data elements likely needed.

  
  

• First Quartile will send a small data request through normal benchmarking contacts. When the missing data elements are confirmed, First Quartile will reach out with a focused request. CTA: Please respond to that request promptly so the first scorecard can include as many participating companies as possible.

  
  

• The next forum will review the first scorecard draft. The group will look at what works, what needs to be clarified, and what additional metrics should be considered. This will include discussion of energy burden/share of wallet, commodity-level views, payment arrangement effectiveness, assistance funding, disconnect activity, arrears, and non-bill levers.

  
  

• Participants should identify the right internal subject matter experts. Future discussions will need people who understand rates, billing, credit and collections, assistance programs, regulatory strategy, customer communications, community outreach, and field operations. CTA: Begin thinking about who from your organization should join future sessions based on the topic.

  
  

• First Quartile will propose a quarterly affordability forum structure. The group supported meeting quarterly to keep affordability front and center, share trends, update the scorecard, and discuss practical actions companies are taking.

  
  

• First Quartile will draft a topic calendar for upcoming forums. Likely topics include customer communication, bill transparency, supply/generation impacts on bills, internal employee education, assistance matching, payment arrangement performance, non-bill affordability levers, commodity under-recovery, cross-functional ownership models, and rate/capital planning impacts.

  
  

• The group will decide how often to refresh the metrics. Once the first scorecard is reviewed, participants will discuss whether the data should be updated annually, semiannually, or quarterly. The goal is to keep the information useful without creating unnecessary reporting burden.

  
  

• Companies should come prepared to share what they are already doing. The value of the forum will come from practical examples, not just data. CTA: Bring examples of scorecards, bill education materials, internal talking points, assistance outreach, customer communication campaigns, or governance models that could help the group build a stronger affordability playbook.

Rob Earle 

First Quartile Consulting 

315.944.7610

Rob.Earle@1QConsulting.com

www.1qconsulting.com