Empowering & managing the consumer: an essential part of ...lirneasia.net/wp-content/uploads/2014/06/Galpaya_PUCSL_21May_Consumers.pdftelecom service providers. 6.5. To facilitate

Empowering & managing the consumer: an essential part of sector management

Helani Galpaya

@PUCSL Intro Energy Regulatory Training Course

21 May 2014

SLIDA Sri Lanka

The work is carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada (www.idrc.ca)

CONSUMERS ARE IMPORTANT

To manage the system (demand)

• Sector management: not just where to build new plant

• Demand side management: significant impact– Outages

– Costs

• If consumer demand changes in the long term– Reduction in costs reduction in price

– Less outages

– Ability to address national level climate change concerns

To establish legitimacy

• To carve out a space for regulator

– Between government and utilities

– When regulator seen as advocate for consumers (give them “voice”)

– Consumers as advocate for regulator also

• To improve image of utility

– Through satisfied customers

Why in electricity? “voice” vs. “exit”

• Role of regulator (in giving consumers Voice) more important when Exit is not an option

• In competitive markets (e.g. Telecom): – Multiple suppliers, mostly private sector suppliers– Exit (consumers switching) a real threat to suppliers– Therefore, incentive for improving quality built in? – Incentives to listen to consumer “voice” in order to imrpove

• Electricity: – Mostly monopoly distribution; state owned supply (LK, BD),

some private sector participation (IN)– No exit option? [x generators, candles…]– Why should suppliers care about “voice”? – But “Voice” only way to ID problems, change supplier behavior

How? First understand the consumer

• What they want

• What (and how much) they consume

• What they like/dislike about the service

• How their needs are being met (by suppliers)

• How and if they might respond to various initiatives (e.g. DSM)

Understanding why some are NOT consumers

• Were they ever consumers

– Why are they not, now?

• Did they never consume?

– Why, if the need is clear

– Maybe even more important

• Understanding barriers to entry, reasons for exit

What do you think consumers want?

• To have supply

• To have low prices

• To have good quality (reliable) supply commensurate with price

• To have service/product choice/variety

• To have recourse (legal /+ financial) when above things are NOT delivered

• How do you make sure all/none/some of the above are being delivered to consumers– How do you “know” it’s being done

Monitor, measure, report, act

• What gets measured gets improved– Identify key indicators related to customers

– Collect data against these indicators (who collects?, when?, how?)

– Analyze this data

– Make the data public (empower consumer; empower the regulator)

• Powers under the regulatory frame work?

• Telecom sector appears to do this reasonably well; Can electricity improve?

REGULATORY APPROACHES TO CONSUMER-CENTRIC PERFORMANCE OF SUPPLIERS IN TELECOM

Examples from Telecom

At a minimum, set up the rules/regulations related regulator’s role in ensuring quality

• India: Consumer Protection from NTP 2012

6. QUALITY OF SERVICE AND PROTECTION OF CONSUMER INTEREST

6.1. To strengthen the regulator for ensuring compliance of the prescribed performance standards and Quality of Service (QoS) parameters by the Telecom Service Providers.

6.2. To formulate a Code of Practice for Sales and Marketing Communications to improve transparency as well as address security issues relating to Customer Acquisition.

6.3. To support the sector regulator in its efforts to enhance consumer awareness about services, tariffs, and QoS.

6.4. To make mandatory provision for web based disclosure of area coverage by

telecom service providers.

6.5. To facilitate establishment of a National Mobile Property Registry for addressing security, theft and other concerns including reprogramming of mobile handsets.

6.6. To undertake legislative measures to bring disputes between telecom consumers and service providers within the jurisdiction of Consumer Forums established under Consumer Protection Act.

Next step is setting minimum performance benchmarks. India (TRAI) has done this.• Not just network level quality

standards• Among customer-level

indicators are: – Error rate in billing– Resolution period for billing

errors– Time taken for refund of

deposits– Customer call center response

times

Source: TRAI Performance Indicator Report, July-September, 2012, http://www.trai.gov.in/WriteReadData/PIRReport/Documents/Indicator%20Reports%20-%20Sep_2012.pdf

Electricity: catching up

• PUCSL in the process of defining Supply Side Codes

– Codes of conduct for DistCos

– Everything from handling interruptions, how to contact the supplier, metering, billing, connections & disconnections, etc.

• But taken a long time

– Indication of priority?

BEYOND DEFINING INDICATORS AND BENCHMARKS: COLLECTING DATA, MONITORING, ACTING ON THE INDICATORS

Regulator needs to actively collect data –easiest is to collect from suppliers

• Operators have access to indicators that can helps regulators understand customer service and satisfaction

• But most regulators don’t demand/collect such data (relevant to the consumer experience) from suppliers

– Instead, limit reporting to indicators that give insight into supply-side only

In Sri Lanka too, attention today is mostly about supply-side performance measure

• Monthly purchases from Generation Licensees (including SPPs): Peak demand

• Monthly purchases from Generation Licensees (including SPPs): Energy

• Monthly sales by Transmission Licensee: Coincident Maximum Demand

• Monthly sales by Transmission Licensee: Energy

• Monthly sales by Distribution Licensees: Energy

• Monthly sales by Distribution Licensees: Max Demand & number of customers the category

• Monthly sales by Distribution Licensees: Energy sales to other Distribution Licensees

• Indicators on network reliability

• Daily purchases from Generation Licensees (excluding SPPs): Capacity

• Daily purchases from Generation Licensees (excluding SPPs): Energy

• Monthly cost of generation purchases

Some supplier-collected indicators can and do hint at consumer (demand-side) performance. Regulator could use these (at granular level)

• E.g. Average time taken to resolve a fault– If reliably reported by DistCo’s, time series data can

indicate improving/deteriorating service quality experienced by consumers

• Network performance and reliability: – Systems Average Interruption Duration Index (SAIDI)

– Systems Average Interruption Frequency Index (SAIFI)

– Can be more or less granular; PUCSL compares regions?. But suppliers should know more.

– Directionality over time: useful

Asking consumers (surveys, observations) give more information.

• PUCSL consumer survey

• LIRNEasia CRM (Customer Relationship Management) research

– Quantitative: survey of urban, poor, micro-entrepreneurs [Sri Lanka, India, Bangladesh]

– Qualitative: various protocols

Consumer insights through analysis of data that already exists/created routinely

• Analysis of bills: – spending patterns

– Singapore’s Energy Market Authority• Released anonymised household level bills

• Software developers allowed to play with the data

– where do they pay? Why?

• Analysis of call center data– Who calls? For for what? When?

– diagnose dissatisfaction; changes over time

HIDE OR PUBLICIZE?

What should regulator do with supplier-provided performance data?

• When confidentiality matters…

– E.g. if commercially negotiate rates of competing suppliers revealed by publishing data

– Publish only aggregate results (not individually identifiable)

• But in other situations

– Publish, online, in digitally consumable form

– As granularly as possible

What about studies directly conducted on consumers

• Usually no confidentiality involved

– Except individual consumer names which must be kep confidential

– Publish

• PUCSL consumer survey

– Seen some results

– Why not public?

Why? Informed consumer empowered consumer.

• When more than one product/service is available

– Help select best/most suitable

E.g. TRCSL data on telco Broadband speeds

Even in monopoly markets, information can empower consumers

• No choice (i.e. can’t switch to better electricity suppliers)

• But can use ‘voice’ to – Make their supplier pay attention to problems

– Clarify if issues are system-wide or only in the customer’s area

– Directly; through others (consumer organizations)

• To moderate their own behavior – Others are consuming more? Why?

NOT JUST A NUMBER: OTHER CUSTOMER-CENTRIC SERVICES REGULATORS PROVIDE

Regulator as first and last resource

• First, because consumer rights can be (and should be) defined by regulator

• Last, because regulator has to step in as mediate, arbitrator

– when suppliers don’t pay attention to consumer grievances

– When suppliers actions are insufficient to compensate consumer losses (in the consumers eyes)

Do consumers know their rights? Do they know what the regulator can/will do? How can they reach regulator? • Is the information available? Where? In what

languages?• Do consumers know how to contact the regulator?

– Regulators contact information printed in the bill?– Can websites be effective in communicating this? Who

uses the web?

• Does the regulator insist on specific forms of communication?

• Can we ask consumer to use websites? – Poor people rarely use. Need alternatives for them (can

mobile/IVR be one?)

• What is the burden of proof and who bears it?

Sri Lanka receives complaints, and mediates where necessary

• Dispute Settlement in Sri Lanka

• A published Statement of Rights and Obligations of an Electricity Consumer

• Formulating Consumer Consultative Committees

Customer attempts

resolution with Utility provider

Unresolved issues can go to PUCSL for non-binding

mediation

Customer can go to Courts if not satisfied with

solution

Can data generated from this process indicate customer problems of the sector?

Mode of Receipt No. of Complaints

Mode of receipt - Postal 95%

Mode of receipt - By Hand 2%

Mode of receipt - Fax 2%

Mode of receipt - Email 1%

Category Name No. of Complaints

for 2011 (Jan-Dec)

No. of Complaints

for 2012 (Jan-Aug)

Complaint category 1 – Billing & Metering 98 85

Complaint category 2 – Tariff 37 49

Complaint category 3 – Way-Leave 686 289

Complaint category 4 – New Connections 387 670

Complaint category 5 – Disconnection & Re-Connection 128 224

Complaint category 6 – Other Electricity related complaints 86 85

TOTAL 1422 1402

Complaints received by PUCSL

Modes of complaint receipts by PUCSL

UNDERSTANDING CONSUMERS AND DESIGNING SOLUTIONS: LIRNEASIA’SEXPERIENCE

Target of our research

• Urban, low-income, micro-entrepreneurs (MEs)

• Why low-income MEs? – A group that is not visible to many service

providers

– ‘Lost’ between the Bottom of the Pyramid users and large corporates

• Why urban? – A decade of urbanization. Continues

33

Studied three services consumed by Micro Enterprises

• With different levels of competitive provision– Telecom: high levels of competition

– Electricity: low competition/monopoly

– (Municipality Delivered) Government Services (e.g. business registration): monopoly provision by govt.

• Different levels of ICT use– Telecom: high use

– Electricity, Govt services: lower

34

How can MEs be better served?

• What are current levels of customer-centricity in each sector?

• Can we identify ‘best-fit’ practices from one sector that could work in the other?

– E.g., Telecom seems to use ICTs to manage customer relationships. Can electricity do the same?

• Can practices from one country be adapted to work in another?

– Three countries: Sri Lanka, India, Bangladesh

35

Research methods

• First: from supplier point of view– How are customers served? How is the relationship

managed?

– Interviews with service providers + Desk research

• Then: from user point of view– What is used? What are problems? Satisfied?

– Quantitative: Sample survey of 3,180 MEs

– Qualitative: in-depth interviews/focus group discussions of 76 participants and 12 ethnographies at sites of service provision

36

Why do we care?

• SMMEs are a large percentage of a nations employed citizenry

• Not all MEs remain MEs for-ever

• Some grow– Into SMEs (small/medium enterprises)

– Even into large enterprises

• Economic growth happens when this journey takes place

• What can we do to catalyze it? – First, we need to identify MEs

37

Definitions

• Micro-entrepreneurs (MEs) = those employing 0 -9 employees– paid part or full time workers

– inclusive of family members)

• Low income = MEs in socio-economic classification (SEC) C, D and E and B1,B2, (for those employing 1-9 employees)– SEC based on education and job

– Close correlation to income

• Urban = definition used by the National Statistics Office in each country

A ‘weak city’ and ‘strong city’ in each country identified

• Strong/weak determined by proxy indicators – Sri Lanka: various poverty measures by province

– India: City Competitiveness Ranking by state

– Bangladesh: poverty + literacy + electrified households

• In Sri Lanka– Western Province: Colombo

– North Western province: Kurunegala, Kuliyapitiya, Puttalam & Chilaw

• India: Delhi and Patna (in Bihar)

• Bangladesh: Dhaka and Ghaibanda+Kurigram

Quantitative study: 3,180 MEs surveyed

460641

501

455

638

485

Bangladeshi cities Indian cities Sri Lankan cities

Dhaka

Kurunegala, Kuliyapitiya, Puttalam &

Chilaw

Colombo

Delhi

Patna915

1279

986

Gaibandha & Kurigram

No country had registry of MEs. Best possible source used to determine quotas

• Sri Lanka: Census of Industry (2003/2004) by Department of Census and Statistics

– Used to determine % male/female in sample

– Used to determine business type (i.e., % retail, manufacturing, retail)

• India : Non-agricultural Enterprises in the Informal Sector, 2000. Survey

• Bangladesh: Economic Census

More on sampling method• In each country, two locations were selected. The capital city and

another city which is weaker in terms of governance.

• The respondents for the study were selected through a probability sampling method. In Sri Lanka, the A-Z map book published by The Survey Department of Sri Lanka was used. The entire province is divided into square blocks.

• The blocks were given numbers and using a random number table, blocks were selected.

• In each block, respondents were found first at the northwest corner and then subsequent interviews were conducted in the same block by continuous walking.

See our website

Qualitative research after the survey to understand why and to re-design

• The survey: answers the WHAT questions • Qualitative research:

– answers WHY questions– for envisioning (better) solutions

• A qualitative study with 76 participants conducted as in-depth interviews, ethnographies and focus groups and 12 ethnographies at sites of service provision– Day ethnographies at sites of service provision– In-depth interviews with service providers– In-depth interviews with MEs– Community group design activities

The Sri Lanka (LK) sample older, more educated and more female compared

to India (IN) and Bangladesh (BD)

Bangladeshi

cities

Indian

cities

Sri Lankan

cities

Average age 36 36 42

Female micro-entrepreneurs 9% 12% 26%

Illiterate or primary schooling only 39% 87% 29%

LK had the most numerate MEs. Over 90% can do calculations

14%

19%

69%46%

81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


I can calculate interest rates, tax calculations etc.

I can do simple addition, subtraction & multiplication etc.

I can read and write numbers but cannot do any calculations

I can recognize numbers but cannot write them

I cannot recognize or write numbers

Please tell me about your numerical abilities (as % low-income MEs)

More than half the MEs in LK are in trade

7%

38%

13%

25%

30%

34%

68%

33%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Manufacturing Services Trade

Type of business (as % of low-income MEs)

81% of MEs in LK have a fixed location

8%

24%

13%

71%

17%

41%

13%

11%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Others Variable location for which I do not pay

Variable location for which I pay From a fixed location that I rent, outside my home

From an fixed location that I own, outside my home From a part of my rented home

From a part of my home that I own

Could you tell us where your business is located? (as % low-income MEs)

Access to bank accounts highest in LK

12%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Separate bank account just for business Personal bank account

Does your business have a separate bank account to use just for business purposes?(as % of low-income MEs)

Do you have any bank account in your name? (as % of low-income MEs)

All MEs normally deal with cash

How do you normally do make or receive payments in your business? [MC] (as % low-income MEs)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Cheque Online banking Mobile Moneytransfers

Informalhandwritten notes


ELECTRICITY USE BY MICRO-ENTREPRENEURS

50

Many have an electricity connection which they use for business

Do you have an electricity connection which you use for business purpose? Where electricity can be from the grid, solar, generator and other sources ( % low-income MEs)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


51

Those without electricity don’t see need for it; But 12% in LK give documentation as reason

What is the main reason for not having electricity connection for business? (% low-income MEs who not have electricity for business)

84%16%

Use electricity for business

Don't use electricity for business

84% 90%77%

4%6%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Others

It's too expensive for me

No source of electricity in my area

I cannot get a connection as I do not have required documentation

I have no need for it

52

Battery/ generators mainly used in IN. LK on grid

Who is the main supplier of electricity to you? (% low-income MEs who use electricity for business)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Electricity company Battery Diesel generator Solar

53

Is the electricity connection in your/or your business’s name? (% low-income MEs who use electricity for business with supply from electricity co.)

37% of LK MEs have the connection in their name

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Connection is in ME's or businesses name Connection is not in ME's or businesses name

54

Most can’t change the name because connection is in landlord’s name

Please tell us the most important reason for not having connection in your name (% low-income MEs who don’t have the connection in their name)

37%

63%

Connection is in ME's name

Connection is not in ME's name

41%

9%11%

13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


I do not want to say

It's in my parents/ spouses name

No particular reason

Procedures are too long

I do not have necessary documents to obtain it in my name

It's in the landlord's name and I can't change it even if I wanted

Connection was already there and I didn't change ownership

55

Amongst grid electricity customers LK MEs pay more than double compared

to others

56

0

5

10

15

20

25


Avg monthly payment: Electricity Avg monthly recharge: Telecom

(=LKR 3297)

(=LKR 1345)

How much is your average monthly electricity bill and mobile recharge (prepaid)?(% low-income MEs who use electricity and telecom for business with supply from electricity co.)

USD

Energy efficient lighting: most popular money saving method

Please tell us about your most important step in conserving energy [reducing electricity bill] you have been following?(% low-income MEs who use electricity for business with supply

from electricity co.)

75%

34%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Have not done anything Switched to energy efficient light bulbs

Turn off unnecessary appliances/lights Run appliances at off peak rate hours

Other

57

More information needed on how to reduce electricity bill

My electricity bill has risen lately. Since

I am the only earning member of my

family, things are difficult for me. I

switch off my refrigerator when I am

not using it, but I would like to know

more about how else I can reduce my

electricity bill.

Name: Nazreen Rilaya

Age: 46 years

Location: Colombo

Education: Grade 4

Occupation: Food business

Number of Employees:0

I require electricity for my business since I

run my business from home. Any increase

in my costs will adversely affect my

business. 58

What can be done? DSM…

• DSM is defined as “modification of consumer demand for energy through various methods such as financial incentives and education”

• Many new learnings emerging from the field of behavioral economics – Behaviors of human beings change in response to

nudges

– Human beings not always rational: How information and choices are framed matters!!!

• Sunstein, C. R., & Thaler, R. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven: Yale University Press.

59

From theory to practice…

• Richard Thaler (Prof of Behavioural Science & Economics at the University of Chicago; co-author of “Nudge”) now works with British

Government.

60

People tend to change behavior when they get timely and specific feedback

• No time-of-day metering

• But Keep telling them how much they are spending

– Best solution:

• Install smart meters that displays the RUPEE value of current consumption (not current kWh consumption)

– Second best (without smart meters):

• Implement a system where users are able to find out their current amount payable via SMS

61

Real-time feedback

• Most consumers only find out their consumption when they receive the bill

• Often results in bill shock; too late to make changes to consumption

• Bill calculators available online. However, these are not accessible for all

• Let people find out their consumption real-time (when they want) through SMS

Text number of units and number of days since the last billing date to

designated numberReceive current amount payable

63

2 possible systems…

• The format of the SMS has to be specified and printed on the monthly bill or put up as a sticker on the meter

Do a one time registration with the distribution company

<Mobile phone number gets linked with the electricity account number>

Text in current meterreading

<Utility has information about the last billing dateand the last meter

reading>

Receive current amount payable

A basic solution

An advanced solution

Another solution - Prepaid Meters. Think

what did think to telecom

The consumer can top up at a local vendor for a reload thus reducing costs for the electricity

distribution company due to non involvement of the meter reader and bill prints.

Reduces liability for the distribution company

It ensures that consumers don’t suffer from bill shock

To enable easy top ups,

super markets, small shops

and agents (who presently

sell mobile vouchers) are

used to provide access to

reloads

Consumer reloads as per his

requirement.

SMS

Your transaction has been

successful

64

94% of MEs in LK get a bill. Use them effectively

Do you get an electricity bill? (% low-income MEs who use electricity for business with supply from electricity co.)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Gets a bill Don’t get a bill Not applicable

65

People judge their wellbeing relative reference points, and care about what other people think about them

• A reference point they have experienced before, or what other people are doing (social norms)

• “75% of this hotel’s guests reused their towels” more effective in increasing reuse of towels than saying “partner with the hotel to save the environment” or “preserve our resources for the future”

• If you want consumers to use less electricity– Compare their consumption with those (in their

neighborhood) who consume less than them– When users DO manage to reduce consumption, recognize

this (smiling face/message printed in their bill)

• Singapore: running trials with bills that provide monthly national average costs for electricity for similar households .

1) Cialdini, Robert, Goldsetein and Griskevicius. 2008. A room with a viewpoint: using social norms to motivate environmental conservation in Hotels. Journal of Consumer Research, Vol 35, pp 472 - 482

Messaging through bills

Bills have approximate number of units consumed for various

appliances.

67

68

69

70

People are psychologically invested in costs they have already paid (sunk cost) regardless of current costs/benefits

• Makes it harder for them to throw out non-energy efficient items such as old, energy-inefficient refrigerators

• Need to frame incentives. E.g. in DSM

– Exchange programs that say “Receive Rs. 5000 in return for your old refrigerator”

– As opposed to “Receive a Rs. 5000 deduction when you buy a new energy efficient refrigerator”

People are bad at evaluating a large number of options or complex information. They tend to do nothing

• Limit choices

– E.g. promote 3 types of CFL bulbs, not 8

– Provide a limited number of energy saving tips, not exhaustive lists in your brochure

• Inform people of approximate electricity consumption of household appliances

– Ensure it is framed in a way easily understood by the consumer

• E.g., No. of units used by appliances (instead of KWh)

Tomorrow – RS lecture

• More problems (from our survey)

– Lack of notification about blackouts

– Lack of confidence in distcos solving consumer problems

• And more solutions at http://lirneasia.net/projects/2012-2014-research-program/improving-service-delivery-for-e-inclusion/

http://lirneasia.net/projects/2012-2014-research-program/improving-service-delivery-for-e-inclusion/

THANK YOU

www.lirneasia.net

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