How to Manage Utility Bill Shock

How to Manage Utility Bill Shock

Bill shock is a phrase increasingly being used to describe how utility customers might react to incorrect or unexpectedly high bills. It is of course to be avoided at all costs, particularly as the rate of competition in most markets is increasing leading to greater opportunities for customers to switch. 

In this blog post we explore the likely causes of bill shock and how utilities can manage it effectively.

What are the main reasons customers receive bills which are much higher than they anticipated? Broadly the causes can be classified into two groups:

  1. Customer Expectations - issues related to perceived usage V's reality and a lack of information / education.
  2. Technical Issues - measurement and bill generation errors.

Customer Expectations

When the amount billed greatly exceeds what was expected, a number of factors may be involved. Often the bill is correct but the customer has not taken into account all the factors at play. For example:

  • Seasonal changes.
  • Installation of new household appliances e.g. under floor heating, hot tubs, power showers etc.
  • Increased number of inhabitants, (possibly for short periods of time during the billing cycle).

Most utilities would no doubt accept that they have a responsibility to educate customers on what affects usage and how to employ conservation measures therefore helping to manage expectations of future billing amounts. Engaging customers through smart technology is certainly a key way in which customers can gain more insight and control of their consumption levels before the bill is issued.

Technical Issues

Localised household issues such as faulty thermostats or valves can cause issues. Furthermore, (pre-smart technology), incorrect customer self-reads can also cause problems on occasion.

Although technology and automated processes ensure that the vast majority of bills are accurate, no system is flawless and from time-to-time issues may occur. Unfortunately for utilities, when mistakes do happen they can cause significant customer distress and are often extremely press worthy.

Customers can be understanding, particularly if the utility in question is pro-active in managing queries and complaints. As a commonly used customer service quote says:

"Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong" - Donald Porter.

Therefore, utilities can respond effectively and turn negative customer experiences into positive ones.

Avoiding Bill Shock

One way that utilities can help to avoid bill shock is to use analytics within the billing process to detect and investigate data which is outside of the norm. This approach uses profiling to identify data which could be incorrect. Such profiles are ideally based on customer segmentation using historical customer data, benchmarked against other customers who share a common profile, (in terms of location, house size, family size etc).


Using business intelligence tools to inform the billing process and reduce the number of occurrences of bill shock has to be a positive step forward for all utilities. Although no doubt some errors will inevitably slip through from time-to-time despite best endeavours. In such circumstances the successful utility will rely upon their customer service capability (applications, processes and culture) to deal with the situation effectively.

Although bill shock is of course to be avoided wherever possible, issues of this nature can be an opportunity for organisations to impress. However without an effective customer service response what is very clear is that unresolved customer service interactions will result in a reduction in brand loyalty, (as reported by MIT Sloan Management Review). Therefore bill shock and an organisation's response to it, is an important issue in today's increasingly competitive marketplace.

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