Tuesday, May 8, 2012

Can Customer Engagement at Utility help expedite AT&C loss reduction?

Some recent discussion on best practices at Linkedin Power Distribution Franchisee group have started discussing the role of Customers in helping reduce AT&C losses. Some key excerpts:
" .... I strongly feel that key factor for reduction of AT&C loss is very much linked with consumer care initiatives and winning consumer confidence. With the support of consumer group one can control the theft by providing new connections thr' camps etc, one can initiate and execute loss reduction schemes in fast mode, one can get information about theft at particular location etc." (Sr. utility professional with experience at one of biggest private utility) 
" .... The whole problem with Utilities & Consumers relationship whether the utility be govt controlled, pvt utilities, Joint venture or DF, is the major trust deficit. Any utility ownership change when it come to DF or complete Pvt, utilities starts its business with an approach that all consumers are stealing so should start with dent on it whereas consumers always thinks of Utilities as somebody there like a Police which is there to unnecessary harass consumers..." (Mgmt. Consultant in Utility domain) 
" ... Real work can be started somewhere after Oct and with this they will get around 5 months to get ready for next summer peak. In this 5 months, they can focus on low hanging fruits for reducing losses and enhancing recovery along with work of increasing confidence in consumers by starting customer centres, call centres etc. With this they will get almost 7 months to positive brand image before next summer peak or storm winds ( which are generally in last Feb early March) in Chambal River areas....(Sr. utility professional with experience at one of biggest private utility) 
"In common nature, the employees of MPSEB will do the maintenance work half heartedly. It results, the failure of Distribution Transformers, Power Transformers and Breskdowns of 33, 11KV & LT lines. So the DF's Material department have to plan for procurement of materials and appointing Contractors for the above activities. Otherwise, the harassment from consumers will be faced by field officers on large scale"  (Sr. utility professional with experience at one of operating Distribution Franchisee) 

The above comments bring interesting set of related questions:

  1. Are forced customer behaviors (like theft, aggression, default, late payment) resulting from poor utility service quality and delivery, or inherent human behavior?
  2. Can improved 'Customer co-operation' help utilities to expeditedly undertake AT&C loss reduction?

In Indian utilities, there is still not much appreciation of 'Customer Engagement' and its role to reduce 'AT&C losses', which is core for all Distribution reforms (including the emerging Distribution Franchisee business model). One definite reason for this overlook is the regulated and monopolistic utility market structure in our country.

There has always exist a gap between the Customer 'perception' (how he sees service delivered to him) and their 'expectations' (what he wants from the service). The wider the gap and more its overlooked, there will be increased occurrences of forced customer behaviors, which accounts for significant AT&C loss.

Gap between Customer Expectations and Perceptions (Source: pManifold)

At pManifold, we see following connection as how AT&C losses can be influenced through improved 'Customer Engagement':

  • AT&C loss reduction is core to Utility (Discom, full privatized or Distribution Franchisee) success
  • Commercial losses form significant part of AT&C losses
  • Commercial losses contributed by customer’s ‘forced behavior’
  • Managing customer’s ‘Perception’ is key to reduce forced behaviors
  • Building ‘positive brand image’ is necessary to manage Perception
  • Listening to customers & Engaging them positively will build positive brand image
  • This Customer Engagement will drive overall ‘Performance’ (Customer, Operational and Financial) enhancement through internal process refinement
  • Continuity in Customer Engagement and Monitoring essential for effective utility Life Cycle Management

Increased Customer Engagement will reduce AT&C losses (Source: pManifold)

Your comments on our hypothesis are welcomed. One of our broad aim through this work with Utilities is to support a Customer driven Governance & Transformation in Indian utilities, and position Customer Engagement as one of the important tool for success of Franchisee business.

Post by: Rahul Bagdia @ pManifold

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