Affordable Price Commissioner Monica Martinez Michigan Public Service Commission

What affects our energy bills? Household: owner or renter Housing unit size Heating/cooling degree days Household size Heating fuel mix Energy use intensities

Bottom of the Pyramid “concept”

Utility Pyramid Utility thefts, large uncollectible and bill arrearages, customer service center calls, shut-offs Under 200% of poverty Customers paying their bills Customers with frequent transactions: payment issues, utility problems

Serving the under 200% “they won’t pay” “they won’t accept or don’t need advanced technologies or different methods of service” “we don’t need them” “i guess we have to serve them. We are the provider of last resort.” “we aren’t a charity case, we are a business” WHO THINKS or TALKS LIKE THIS?

There is a market There is a market for goods and services if they are at affordable prices Evidence is out there – just take a look at the booming cell phone industry… Understand the consumer… We need innovations in the business model

Segmentation Degree of literacy Spoken or written language Cultural differences Age Level of education Geographic location Household characteristics, etc. And every other conceivable basis for segmentation

Value Proposition Cost + Profit = Price Versus Price - Profit = Cost And, consider that price really is directly related to the total price to the end user price = “the bottom line on the bill”

Lastly, Remember…. What You See Is not What It is…