The newest loyalty programs aren't about air miles flown or dollars spent -- but kilowatt hours saved and energy conserved.
A growing number of utilities offer loyalty programs that reward consumers with cash back or points for taking steps that cut their energy bills. Such perks help utilities offset demand on the grid with an offer that's more enticing than the usual rebate programs for buying energy-efficient appliances, says Bernard Neenan, a technical executive at the Electric Power Research Institute.
Turning energy savings into a reward-earning challenge could also play a part in the shift to so-called smart meters, which track usage over the course of each day instead of monthly meter readings. The meters allow for real-time feedback and action -- for example, seeing a spike due to air-conditioner use could prompt someone to set the thermostat a few degrees higher to keep costs in check, instead of getting a shockingly high bill weeks later, says Alan Nogee, a research director for NPD In-Stat. Currently, 30% of U.S. households use smart meters, and 75% will by 2016, according to NPD In-Stat. "Utilities have been having trouble getting people to adopt it, and customers had trouble seeing why they should," he says.
Reward programs vary widely. Over the past year, utilities including Southern California Edison, DTE Energy in Detroit, Commonwealth Edison in Chicago, and Northeast Utilities signed on with software provider Efficiency 2.0, which compares users' energy bills year over year and awards two points per unit of energy saved. Participants earn an average $160 in rewards each year, toward deals such as $10 off at Staples and buy-one-get-one entrees at Ruby Tuesday, says chief executive Tom Scaramellino.
Others, like Midwest and Mid-Atlantic utility Dominion, trade cash in exchange for permission to lower electric use with technology from Good Cents that cycles off air conditioners for short periods during peak-demand days. Dominion paid out $40 each for 43,000 Virginia homes that enrolled last year, and is expanding eligibility to all residential customers in Virginia and North Carolina, says spokesman Karl Neddenien. There's also Energy Plus, a growing alternate energy supplier that offers rewards in partner programs -- including Hilton HHonors, American Airlines AAdvantage and UPromise -- based on electric or natural gas use.
As enticing as the extra savings may be, experts say utility rewards aren't always the best deal. EnergyPlus, for example, has variable rates that shift with energy prices. "In our disclosures, we say that our rates may be higher or lower than the existing utility at any point in time," says Paul Frantz, the company's chief marketing officer. Determining where rates will go isn't easy, he says. And Dominion customers may find $40 is a poor trade if the summer is sweltering. Since the program allows the utility to cycle off a/c power between 2 p.m. and 6 p.m. on weekdays only, it's best for those who work during the day, says Neddenien.
Consumers may also have privacy concerns to contend with. Generally, utilities don't share any data about a customer's energy without their consent, says Neenan. Signing up for a third-party rewards program counts as opting in, and with smart meters, those programs get a fairly detailed analysis of one's energy use. Read the terms and conditions before signing up to see how that data will be used and shared, he says. "Knowing how much energy I use and how much I owe on my bill is certainly sensitive information," says Efficiency 2.0's Scaramellino. "Security is absolutely paramount when you're working with this much data."