Generating stable revenues is essential for every water utility, and rate increases are often necessary to improve the financial health of the utility. Unfortunately, these increases can attract significant public scrutiny and can derail implementation, further eroding financial health.
WaterSmart Software WaterSide Chat: Best Practices to Gain Support for Rate Increases
1. WATERSMART SOFTWARE 1
Best Practices to Gain Public Support for
Rate Increases
July 19, 2016
Sapna Mulki–Director for Water, Hahn Public Communications
Justin Wallin– COO & CMO Probolsky Research
Moderator:
Dominique Gómez – Director of Market Development, WaterSmart Software
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Agenda
• Housekeeping
• Meet Our Panelists
• Introductory Presentations
• Sapna Mulki
• Justin Wallin
• Moderated Discussion
• Open Q&A
• Next WaterSide Chat – TBD
• How-To Webinar – 8/23
• Follow-up to this WaterSide Chat
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House Keeping
• WaterSide Chat will be recorded
• Video and presentation materials will
be made available to all attendees
later in the week
• All attendees are muted so submit
your questions through the
GoToWebinar ‘Question’ panel
• Follow us on Twitter: @getWaterSmart
• Share your thoughts: #watersidechat
Library of WaterSide Chats at http://www.watersmart.com/media
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Premise: Utilities often do not get the public and political support needed for entire water
rate increase requested mainly due in part to ineffective communication tactics.
Tested 13 messages
Sample size included:
800 Customers
Majority homeowners
Diverse ethnicities and varying education levels
Represented 350 utilities in water, electric and gas
Hahn Public Study:
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Message
Category
Definition
Fact Concrete and speak to verifiable characteristics of an
increase.
Feature Speaks to values that consumers derive from their
relationships to the utility; security, satisfaction,
convenience.
Character Attacks the character of the utility being greedy or
corrupt.
Competency Attacks the ability to perform the job; inefficient and
wasteful.
Messages Tested
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What makes a message…
− Safety
− Saving $$
− Environmental sustainability
− Innovation
− Commitment to high
standards of service and
customer satisfaction
− Comparisons to other
utilities/cities/communities
− Resources directed towards
non-utility purposes
− Attracting new businesses
and job growth
Most Persuasive Least Persuasive
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Why are the messages…
− Fair
− Factual
− Accurate
− Descriptive
− Abstract
− Complex
− Generalized
Most Persuasive Least Persuasive
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• Reduce abstract messaging about safety and reliability.
• Use highly specific messages- date, time, cost, reiterate value of infrastructure,
ensure continued service.
• Empower a third party messenger and limit the use of utility representative as
spokesperson.
• Create an objective blue-ribbon panel of community leaders, neighborhood
representatives, subject experts such as engineers, academia and financial
consultants.
Recommendations:
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43.0% 43.4%
13.6%
Support Oppose Unsure/Refused
Don’t take support for granted
Example of divided opinion: Charging the full cost of fixed costs
Question: The water agency that delivers water to your home charges you not only for the water you use, but also for the
fixed costs associated with delivering water to your home, the repair, maintenance and replacement of water pipelines,
pumps and water treatment facilities as well as chemicals and necessary to keep our water supply safe.
Most water agencies in California do not change customers enough to recover the full cost of their fixed costs, meaning the
agencies lose money every month. These water agencies sometimes take money out of reserve funds to cover the difference.
Recently water agencies in California have gradually started moving toward recovering 100% of of the fixed costs of
delivering water to their customers to prevent spending down reserves and to ensure reliable water service in the future. Do
you support or oppose this move toward water agencies charging customers the full cost?
16(949) 855 6400
www.probolskyresearch.com
* Research conducted Thursday, June 16 through Monday, June 20, 2016 throughout the State of California
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• Second largest retail water agency in
Orange County, California
• Over 155,000 customers in Mission
Viejo, Rancho Santa Margarita, Coto de
Caza, Las Flores, Ladera Ranch and
Talega
• 80% white, 17% Latino
• Median age: 46 years old
• Median houseold income: $97,000
• Median home price: $630,000
• NO groundwater resources…all drinking
water must be purchased from
Metropolitan Water District of Southern
California
• 44% of budget is cost of purchasing water
17(949) 855 6400
www.probolskyresearch.com
Case Study: Santa Margarita Water District
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BUT Ratepayers can be willing to pay more
62.3% supports Santa Margarita Water District’s new rate structure
Question: SMWD has changed its rate structure so that these fixed costs are spread equally and more fairly among
similar types of water users, who would pay similar amounts. Fixed costs are now the baseline for every bill from SMWD.
In addition to this baseline fixed costs charge, customers will be allocated a water budget based on their type of household
or business. Every SMWD customer has unique water needs. Typically, more water is necessary for large homes than
condominiums, and businesses use water in a variety of different ways. The new rate structure provides each customer with
a personalized water budget designed to meet their specific indoor and outdoor water needs. Those customers who are
efficient and use the lowest-cost water will therefore pay the lowest rates. Customers who are less efficient pay more for the
increasing cost of the water they consume.
Would you say that you support or oppose SMWD’s new rate structure that includes a baseline fair, fixed cost for water
infrastructure as well as a customer-controlled water budget?
18(949) 855 6400
www.probolskyresearch.com
62.3%
26.3%
11.3%
Support Oppose Unsure/refused
* Research conducted Wednesday, October 14 through Tuesday, October 20, 2015 within the boundaries of Santa Margarita Water District
Santa Margarita Water District
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Message Identification
What is most effective? And identifying “mover messages”
Question: SMWD is a leader in using recycled water for landscape irrigation and has been successful in obtaining water
from additional sources in the local area to supplement supply. The District stores recycled water in the 1.2 billion gallon
Upper Oso Reservoir…..
19(949) 855 6400
www.probolskyresearch.com
51.9%
22.8%
21.5%
3.8%
More likely to support 51.9%
Less likely to support 22.8%
Makes no difference to me 21.5%
Unsure/Refused 3.8%
How does this affect those who
initially opposed?
Who does this affect those who were
initially unsure?
66.7%
24.2%
6.1%
3.0%
More likely to support 66.7%
Less likely to support 24.2%
Makes no difference to me 6.1%
Unsure/Refused 3.0%
74.3%
11.3%
11.7%
2.7%
More likely to support 74.3%
Less likely to support 11.3%
Makes no difference to me 11.7%
Unsure/Refused 2.7%
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74.3%
73.3%
64.0% 72.7%
63.0%
55.7%
58.0%
55.3%
59.7%
65.0%
62.3%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
BecomelesslikelytosupportBecomemorelikelytosupport
Those who were initially unsure
20(949) 855 6400
www.probolskyresearch.com
Size of bubbles = all voters
Thosewhoinitiallyopposed
Become less likely to support Become more likely to support
District will be able to maintain
new water infrastructure
Customers will be able to control
how much they pay for their water use
Every SMWD customer will receive
a personalized water budget each month
The District fixed costs of operating
and maintaining its water system
Customers will be able to obtain
modifications to their water budget
District's water supply is
purchased from the MWDSC
SMWD has decreased its staffing levels
To expand its water resources
and increase local reliability
SMWD has prioritized
water supply projects
SMWD plans to further
diversify its water supply
SMWD is a leader in
using recycled water
Message Mapping
Clear identification of mover messages
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Always test your messages
Don’t ignore opposition or alternatives
• Test your messages against opposing arguments
• Test alternatives (even those that don’t seem fully plausible)
21(949) 855 6400
www.probolskyresearch.com
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Messages that we have found to be consistently effective
22(949) 855 6400
www.probolskyresearch.com
Recycled water efforts (especially in the context of insulating ratepayers from
fluctuations in costs of imported water/independence)
Water supply diversification (such as desalination, etc.)
Water supply reliability projects (such as reservoirs, etc.)
Preserving/maintaining local natural resources (such as watersheds)
Create a “resume” of accomplishments to test
Better able to maintain reserve funds
Employee pension contributions, lean workforce…
Revenue generating activities (cell towers?)
Funding education programs and rebates
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Thank you
Probolsky Research
3990 Westerly Place Suite 185
Newport Beach, CA 92660 USA
(949) 855-6400 Newport Beach
(415) 870-8150 San Francisco
(202) 559-0270 Washington DC
www.probolskyresearch.com
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Q & A
Sapna Mulki Justin Wallin
Director for Water
Hahn Public Communications
COO & CMO
Probolsky Research
smulki@hahnpublic.com justin@probolskyresearch.com
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Next WaterSide Chat –TBD but.. Join Us
August 23, 2016
11 a.m. PST
Register at www.watersmart.com/always-on-customer
Bojinka Bishop– Ohio State University & Former Public Affairs Director for AWWA
Nathan Adams – Water Efficiency Administrator, Santa Margarita Water District
Emily Kleeman – Senior Product Manager, WaterSmart
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Join this how-to webinar where you will learn how to craft the right messages, at the
right time, and through the best channels.
Editor's Notes
Fact – “the increased monthly fees are necessary to cover infrastructure costs with higher fixed charges, preventing the cost for grid upkeep from being shifted to customers who do not have their own distributed generation…” Northern Indiana Public Service Company, 2015.
Feature – “DWP officials said the department needs to increase water revenue by $230 million over five years to repair infrastructure.” – Los Angeles Utility, 2015
Character - “…the utility company is an enemy to all who are impoverished…” Memphis Utility, 2015
Competency - “A filing this week called IPL, ‘misguided’ and ‘mismanaged,’ saying the company has spent too much on paying its investors and not enough on fixing its crumbling infrastructure that has threatened people’s safety downtown.” Indianapolis Power and Light, 2015
Use specific messages -“Construction on a new water treatment plant will begin on June 2, 2016. The plant will be completed in late summer 2017. The new water plant will replace the old treatment plant that was built in 1929. There will be no disruption to our residents and businesses during the construction phase or during transfer of operations.”
Our next WSC will be scheduled soon. Please stay tuned for the next WSC.
In the meantime, we will be having a part 2 session of the WSC as a how-to webinar. For those of you interested in getting into the technological solutions on how to craft messages, the timing the messages, and a case study, please join us for a WaterSmart Webinar on 8/23 where we will hear from
Bojinka will teach you how to craft messages and the best times. Nate will give a case study.Emily will showcase our newest Group messenger feature in which you can target and outreach to many of your customers through several channels.
Prompt:
Today’s customers are “always-on.” Yet traditional forms of communication are expensive and rarely cuts through all the clutter that inundates your customers. Join leaders in the water utility industry to learn how to use modern technological solutions to successfully influence customers. Join this how-to webinar where you will learn how to craft the right messages, to the right people, at the right time and through the right channels.
