American Gas - March 2011 - (Page 16)

To Be The BesT Great Ideas | solutIons To Your Credit Behavioral Credit Scoring helps customers reach a zero balance while reducing write-offs for utilities. To provide customers with the reliable energy they need, utilities need to know the weather predictions for the day, month and year. For optimal operation, it’s also important for utilities to be able to predict if customers are going to pay for the energy they have used or leave a balance for possible write-off. er would pay without collection efforts. (2) Some high-risk customers could have multiple past-due bills prior to the collection process beginning due to the system incorrectly assessing the account as low risk. At times, Avista experienced a shortage in manpower because of processing collections for both low-risk and high-risk customers. Behavioral Credit Scoring (BCS) provided a solution for improving our credit-scoring methodology and focusing collection efforts on accounts with a high risk for write-off. BCS is a tool that predicts how likely a customer will be able to pay debt, based solely on the customer’s history with the utility. Challenged with a continual sluggish economy and increasing uncollectibles and collections costs, Avista was looking for ways to contain and reduce avoidable collection costs. We also wanted to improve customer satisfaction for our low-risk payment customers by reducing unnecessary collection notices. Avista’s Customer Service System (CSS) housed a first-generation credit assessment, group- Going on a Fact-Finding Mission Avista’s review of the AGA DataSource statistics revealed significant correlations between the use of credit-scoring tools and companies with lower-than-average field collections costs, disconnect ratios and net write-offs. Analysis of the DataSource findings indicated the tools could be valuable. We conducted benchmarking and best practices conversations with vendors and several users to determine if such a tool would benefit Avista, and, if so, what challenges and costs would be experienced during the implementation process. Comparing some of the key collection costs by a utility as well as by a credit-scoring vendor provided key insights into the effectiveness of credit scoring. Various available credit-scoring tools use a customer’s utility credit history as well as external credit-reporting criteria. Avista was AMANDA REINHARDT is an analyst for Avista Corp., an energy company involved in the production, transmission and distribution of energy, as well as other energyrelated businesses. Avista Utilities is the operating division that provides electricity to 357,000 customers and natural gas to 316,000 customers. Avista service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.5 million. ing customer accounts into four categories based on a few account attributes. The lack of sophistication in the system produced two undesirable outcomes: (1) Low-risk customers received collection notices even when payment history showed the custom16 marCh 2011 AmericAn GAs

Table of Contents for the Digital Edition of American Gas - March 2011

American Gas - March 2011
Contents
President’s Message Greetings
Industry News
Safety First Keeping Safety First
To Be the Best To Your Credit
Ask AGA The Value of Participation
A Passion for Excellence
Vendor News
Noteworthies
Marketplace
Places to Be
Jobline
Advertisers’ Index
Facts on Gas

American Gas - March 2011