Department of Mathematics

Consumers Energy Co.

Proposed Project for the MSU Industrial Math Students

Problem: Assessing the Accuracy of Estimates in eBilling Process

Background:

Consumers Energy's revenue operations process consists of five key process steps: Bill Production, Bill Presentation, Revenue Collection, Uncollectible Account Forecasting, and Assistance Agency Impact on Uncollectible Accounts. In the first stage of Bill Production, typically, each bill is based on a meter read obtained at the customer's premise. On those occasions when a read cannot be obtained due to weather or other factors, the bill is estimated based on previous consumption history. Factors that may compromise this historical data include weather, customer occupancy, energy efficiency measures, etc. Customers have a payment option to equalize payments throughout the year. The payment plans are established on an annual basis with the intent that, at the end of the plan year, the customer's net balance is zero. As above, factors that may compromise the plan include weather, occupancy, energy efficiency, etc. During Bill Presentation, we continue to encourage customers to receive and pay their bills electronically due to reduced costs for both of the company and the customer as well as the obvious environmental benefits. While about 550,000 customers subscribe to eBilling, we would like to increase that number.

Project:

The objective of the project is to assess the accuracy of the estimates and provide recommendations to improve the estimating process, as well as the accuracy of past payment plan amounts in the bill production in order to define opportunities to improve the accuracy such that customer balances are as close to zero as possible at the end of the annual plan period. The project deliverable also includes the analysis of our customer base associated demographics to define segments that represent the greatest potential for eBill subscription. For example, what is the subscription rate of students who live in apartments, how does that compare to our customer base overall and what types of communication channels would increase subscriptions?

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