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May 24, 2016 | Demand Response

Three ways opt-out can improve your demand response program

Kat O'Leary
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The modern utility is increasingly focused on customer satisfaction. From J.D. Power surveys to Net Promoter scores, today’s utility is paying closer attention to how utility programs and performance impact their reputation and customer happiness.

Given this focus on customer satisfaction, many utilities are reexamining how they can deploy load management programs that ensure, or even increase, customer satisfaction. One of their primary areas of focus is how mandatory demand response events impact residential customer satisfaction. Historically, many utilities designed residential demand programs that made participation mandatory. This was due, in large part, to limitations of technology – as residential DR relied primarily on switches, it was difficult to design a process that allowed customers to easily opt-out of an individual demand response event.

As residential demand response has evolved to include Internet connected devices, it has become easier for utilities to allow their customers to opt-out of individual demand response events. Recently, EnergyHub participated in a pilot program with a major investor-owned utility that compared the effectiveness of opt-out vs. mandatory events with a pool of residential customers. Specifically, one of two groups of participants was given the option to override demand response events, with the other required to participate in all events. At the conclusion of the pilot, we observed the following benefits of offering opt-out:

1. Increased response to solicitation. Customers who received a sign-up offer for the program that included the ability to opt-out of events were 20% more likely to participate in the program than their counterparts who received the same offer but with mandatory participation.

2. Less time spent on support. Participants in the opt-out program spent a lot less time contacting customer support. Compared with the mandatory event group, the opt-out group saw demand response-related support reduced by 95%.

3. No attrition. None of the customers in the customers in the opt-out group dropped out of the demand response program over the course of the pilot, while a small percentage (0.64%) of the mandatory group abandoned the program.

Most importantly, the opt-out group achieved these results while delivering the same load reductions as the mandatory group:

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Overall, offering customers the freedom to opt out of demand response events had no impact on load shed results – but a big impact on customers’ perception and experience of the program. We view offering opt-out as a best practice in designing a demand response program.

Interested in learning more about strategic program design? Check out our June 9 webinar, "BYOT from the Consumer Perspective," to learn about how to design a Bring Your Own Thermostat® demand response program that will engage and retain customers.

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