Consumers Energy Co.
Proposed Project for the MSU Industrial Math Students
Problem: Assessing the Accuracy of
Estimates in eBilling Process
Background:
Consumers Energy's revenue operations process consists of five key process
steps: Bill Production, Bill Presentation, Revenue Collection, Uncollectible
Account Forecasting, and Assistance Agency Impact on Uncollectible Accounts. In
the first stage of Bill Production, typically, each bill is based on a meter
read obtained at the customer's premise. On those occasions when a read cannot
be obtained due to weather or other factors, the bill is estimated based on
previous consumption history. Factors that may compromise this historical data
include weather, customer occupancy, energy efficiency measures, etc. Customers
have a payment option to equalize payments throughout the year. The payment
plans are established on an annual basis with the intent that, at the end of the
plan year, the customer's net balance is zero. As above, factors that may
compromise the plan include weather, occupancy, energy efficiency, etc. During
Bill Presentation, we continue to encourage customers to receive and pay their
bills electronically due to reduced costs for both of the company and the
customer as well as the obvious environmental benefits. While about 550,000
customers subscribe to eBilling, we would like to increase that number.
Project:
The objective of the project is to assess the accuracy of the estimates
and provide recommendations to improve the estimating process, as well as the
accuracy of past payment plan amounts in the bill production in order to define
opportunities to improve the accuracy such that customer balances are as close
to zero as possible at the end of the annual plan period. The project
deliverable also includes the analysis of our customer base associated
demographics to define segments that represent the greatest potential for eBill
subscription. For example, what is the subscription rate of students who live in
apartments, how does that compare to our customer base overall and what types of
communication channels would increase subscriptions?
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