KEMA Residential Survey Finds Choice Awareness Outpacing Switch Rates, Cites Market Potential

"[S]ignificant market potential" still exists for retail suppliers to explore in residential power markets across the United States, despite recent increases in residential switching, DNV KEMA Energy & Sustainability said yesterday, based on its second annual Residential Power Choice Survey.

Among other things, KEMA compared residential awareness of electric choice to actual switch rates among residential customers.

KEMA's survey found that the percent of residential customers aware of choice was as follows:

Pennsylvania: 77%
Connecticut: 64%
New Jersey: 60%
Maryland: 58%
Illinois: 56%
New York: 48%
Ohio: 35%
Massachusetts: 32%

KEMA noted that less than half of those who are aware of choice have switched in New York (22% aggregate residential switch rate), Pennsylvania (23%), Massachusetts (12%, includes opt-out aggregation), New Jersey (10%), Illinois (4%), and Maryland (21%).

"This suggests that there is more marketing potential to explore in residential retail markets of these states," KEMA said, though KEMA noted regulatory developments since its December 2011 survey may diminish any difference between choice awareness and participation rate (notably in Illinois were about 1 million customers will be competitively served under aggregations approved this week).

KEMA also said that the survey shows that 60% of residential customers in Texas are satisfied with their retail energy providers, while less than 40% of residential customers in non-restructured states are satisfied with their utilities.

KEMA's survey confirmed that a lower price is the primary reason (81%) for switching. Some 9% of switches are driven by customers exercising their options due to moving. Among other reasons for switching, "referred by someone," "green power," and "good customer service" account for 3-4% of switching each.

Approximately half (51%) of respondents would switch for a savings of 20% off their electric rates, and 26% would switch for 10% off.

KEMA found low levels of customer interest in four currently offered smart energy products (smart thermostat, nights & weekends, peak pricing, and prepaid plans). The Smart Thermostat plan was rated the highest by customers among the four smart energy offers.