5.5. ERMUSR 05-13-2008Ji
Elk River -~
Municipal Utilities
13069 Orono Parkway • P.O. Box 430 Phone: 763.441.2020
Elk River, MN 55330-0430 Fax: 763.441.8099
May 8, 2008
To: Elk River Municipal Utilities commission
Jerry Takle
Jerry Gumphrey
John Dietz
From: Theresa Slominski
Subject: Possible ACH Incentives
I solicited some office help and conducted an informal survey of some utilities (that were
of similar size and larger) and asked what they were doing to offer ACH incentives to
encourage customer participation. The utilities surveyed were Connexus, Connections,
Austin, Hibbing, LeSeur, Owatonna, Shakopee, and Willmar. Currently, none of these
surveyed utilities are offering an incentive, however, some had offered it before and then
discontinued it. One utility offered the reason they discontinued it was because they had
people moving in and out of dwellings and receiving multiple credit incentives, and it
became difficult to keep track of who had already received the incentive and who hadn't.
For the others, I can only surmise that they felt they had reached the participation
saturation for current customers that were willing to switch and were able to "direct ask"
the new customers.
Connexus had a different incentive that they are currently offering and it is for signing up
for E-billing instead of paper billing. It is a one-time incentive of a $5.00 credit or
signing up.
Currently at ERMU, to encourage ACH participation we have the application on the back
of the bill statements and receive an average of 30 new applicants every month. Last
month's total number of customers on ACH was 2,019 out of approximately 9,400 total
customers.
To offer an incentive, it would need to be large enough to be enticing, but not too large
that it is a burden of the other utility customers that are subsidizing it. A one-time credit
is probably the most effective as far as enticement, and yet poses a tracking problem as
noted above. A monthly credit could be marketed so that it is a total dollar amount that is
perceived as large enough (for example $.50 per month for a total of $6.00 per year.) If a
monthly credit is used, we may want to have it for a certain time period, or continue it
indefinitely.
We also participate in an electronic payment submission with a company called VANCO.
They work with the various bank bill pay systems and funnel those payments to us
electronically instead of sending us a check to post from. We had 777 customers last
month on this program and that number has grown from 675 at the beginning of the year.
Unless this commission desires otherwise, we would recommend continuing these two
programs as they are without offering an incentive at this time.