Effective Tactics for Managing Rebate Oversubscription
Published: October 19, 2011
Kate Drexler
As many utilities have recently learned, selling out of rebates can come with costs. An unplanned drawdown of rebates can lead to customer, trade ally, and regulator dissatisfaction that’s difficult to smooth over. It could also potentially affect future demand-side management (DSM) efforts by discouraging customer participation and stakeholder coordination.
One key to avoiding rebate oversubscription is to accurately gauge customers’ appetite for rebates by pinpointing the factors that will drive participation. These factors can vary considerably from market to market, but some of the most common variables are customer income levels, local cost of living, housing type, climate, and the attractiveness of the measure (that is, how appealing a particular measure may be to customers).
Initial and ongoing market research can help utilities better understand these variables and anticipate their effects on demand for rebates. Ultimately, this will help program managers set rebates at the most appropriate levels and promote their programs more effectively. If there’s any doubt about customer demand for rebates, we recommend that utilities intentionally set rebate levels low while gathering more information about the market’s characteristics.
Another key strategy for avoiding rebate oversubscription is to build mechanisms into the program that give program administrators control and flexibility. For example, implementing DSM tracking systems with useful metrics can help administrators stay aware of rebate uptake and better manage stakeholders’ expectations in a timely manner. Similarly, a rebate reservation system with clearly delineated instructions for multiple phases can set straight-forward expectations for stakeholders while allowing program administrators to assess program demand in real time, forecast future rebate subscriptions, and adjust the program accordingly.
If a program is already trending toward oversubscription, there are actions a utility can take to mitigate any possible negative impacts. First, it’s critical for program managers to get as much information as possible about the remaining program pipeline and funds in order to make accurate projections about potential attrition and to estimate final expenditures. This information will help administrators develop a closeout plan, followed by a carefully crafted communications strategy that includes information about future rebate programs in which customers may wish to participate.
If you’re interested in learning more about preventing and mitigating rebate oversubscription, please contact us for more information. |
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About the Author
Kate Drexler
SENIOR RESEARCH ASSOCIATE
Kate Drexler provides research, analysis, and consultation to E Source members on policy and program issues related to energy efficiency and demand-side management (DSM). Through her work at the Colorado Governor’s Energy Office, she has direct experience managing energy efficiency and utility DSM programs for low-income customers. Specifically, she brings to E Source members expertise in design, implementation, and evaluation of energy-efficiency programs. At the University of Denver, Kate received an MA in international political economy with a focus on energy, development, and economics. In addition, she holds a BA in public relations and marketing from Ithaca College.
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