Water utilities are rightly concerned about managing their business through the course of winter 2021 and into the hot summer months. This is especially true as the lingering effects of the COVID-19 pandemic keep some of their customers’ finances suspended, just as many consumer prices continue to rise, and disconnections of non-payers may be prohibited in some localities.
Water utilities can benefit from a focused understanding of the potential impact on their business. Last year, more than half of U.S. consumers had their income negatively impacted by the pandemic. According to the TransUnion Consumer Financial Hardship survey (Nov. 30, 2020), 57 percent of U.S. households indicated that their income has been negatively impacted.
TransUnion’s monthly Financial Hardship survey data reveals that as many as 77 percent of U.S.-based consumers who have had their income impacted may have trouble paying their bills. This level of unpredictability underscores the need for water utilities to not only provide great experiences for customers, but also to understand them more closely with insights that may predict when they are in temporary trouble or are experiencing something worse.
The survey data reveals households in the Midwest and South are at the highest risk of nonpayment.
Financial Hardship Analysis Highlights
Impacted consumers that indicate they are unable to pay either their wireless bill, internet bill or utility bill are experiencing greater levels of hardship than the average consumer.
24 percent of respondents have received a financial accommodation such as a deferral, forbearance or payment holiday from a lender.
In the absence of financial accommodation, 23 percent of consumers said they prefer to create a repayment plan to catch up by making larger payments, but keeping the loan terms the same.
When it comes to Winter 2021, determining an accurate projection for monthly revenue while reviewing customers’ ability to make their payments in a timely fashion is critical. In order to tackle this challenge, water utility companies should plan for both the short and long term. This means analyzing more holistically the utility’s entire customer portfolio to understand risk by geographical area, household size, and other demographics, to be able to segment and treat the portfolio appropriately.
Geographic Region: According to TransUnion’s November Consumer Hardship Survey, the Midwest and South have the highest percent of households that indicate they will not be able to pay their utility bills at 40 percent respectively. The West region is second at 33 percent followed by the Northeast with the lowest percentage of non-payers at 31 percent.
Generation: Gen X consumers are the most likely to miss a utility payment, with 43 percent saying they will not be able to pay their bill. 41 percent of Boomers with a utility indicate they are not going to be able to pay their bill, followed by Millennials at 38 percent and Gen Z consumers at 24 percent.
Environment: Rural households are at the greatest risk of non-payment of their utility bill, with 43 percent saying they will not be able to pay. Urban and suburban that indicate they will be unable to pay their utility bill is a bit lower, at 36 percent and 34 percent, respectively.
Income: Income is the most predictive demographic in determining the risk of nonpayment of a household’s utility bill. 43 percent of households with an income less than $50k indicate they would be unable to pay their utility bill. The income range between $50,000 – $100,000 decreases to 34 percent, and for those with an income greater than $100k, 27 percent are unable to pay their utility bill.
Regular and predictable revenue is the lifeblood of stable water utilities. Now is the best time to manage their businesses closely and help customers in the short term. They can do this by understanding them more closely with financial and credit information that paints their picture individually as they navigate a changing economy.
About the TransUnion Consumer Financial Hardship Study
The Consumer Financial Hardship study was originally launched the week of March 16, 2020. Fifteen waves of the study have been conducted through Nov. 30, 2020. Total sample across all 15 waves = 39,895. Surveyed adults 18 years of age and older residing in the United States. Online research panel method. Balanced responses to ensure national representative sample. Results are unweighted and statistically significant at a 95 percent confidence level within ±1.76 percentage points.
Rachael Olson serves as director of strategic planning for credit reporting agency TransUnion, a consumer credit reporting agency. Olson leads market development for TransUnion’s communications, utilities and solar lines of business.
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Water utilities are rightly concerned about managing their business through the course of winter 2021 and into the hot summer months. This is especially true as the lingering effects of the COVID-19 pandemic keep some of their customers’ finances suspended, just as many consumer prices continue to rise, and disconnections of non-payers may be prohibited in some localities.
Water utilities can benefit from a focused understanding of the potential impact on their business. Last year, more than half of U.S. consumers had their income negatively impacted by the pandemic. According to the TransUnion Consumer Financial Hardship survey (Nov. 30, 2020), 57 percent of U.S. households indicated that their income has been negatively impacted.
TransUnion’s monthly Financial Hardship survey data reveals that as many as 77 percent of U.S.-based consumers who have had their income impacted may have trouble paying their bills. This level of unpredictability underscores the need for water utilities to not only provide great experiences for customers, but also to understand them more closely with insights that may predict when they are in temporary trouble or are experiencing something worse.
The survey data reveals households in the Midwest and South are at the highest risk of nonpayment.
Financial Hardship Analysis Highlights
When it comes to Winter 2021, determining an accurate projection for monthly revenue while reviewing customers’ ability to make their payments in a timely fashion is critical. In order to tackle this challenge, water utility companies should plan for both the short and long term. This means analyzing more holistically the utility’s entire customer portfolio to understand risk by geographical area, household size, and other demographics, to be able to segment and treat the portfolio appropriately.
Geographic Region: According to TransUnion’s November Consumer Hardship Survey, the Midwest and South have the highest percent of households that indicate they will not be able to pay their utility bills at 40 percent respectively. The West region is second at 33 percent followed by the Northeast with the lowest percentage of non-payers at 31 percent.
Generation: Gen X consumers are the most likely to miss a utility payment, with 43 percent saying they will not be able to pay their bill. 41 percent of Boomers with a utility indicate they are not going to be able to pay their bill, followed by Millennials at 38 percent and Gen Z consumers at 24 percent.
Environment: Rural households are at the greatest risk of non-payment of their utility bill, with 43 percent saying they will not be able to pay. Urban and suburban that indicate they will be unable to pay their utility bill is a bit lower, at 36 percent and 34 percent, respectively.
Income: Income is the most predictive demographic in determining the risk of nonpayment of a household’s utility bill. 43 percent of households with an income less than $50k indicate they would be unable to pay their utility bill. The income range between $50,000 – $100,000 decreases to 34 percent, and for those with an income greater than $100k, 27 percent are unable to pay their utility bill.
Regular and predictable revenue is the lifeblood of stable water utilities. Now is the best time to manage their businesses closely and help customers in the short term. They can do this by understanding them more closely with financial and credit information that paints their picture individually as they navigate a changing economy.
About the TransUnion Consumer Financial Hardship Study
The Consumer Financial Hardship study was originally launched the week of March 16, 2020. Fifteen waves of the study have been conducted through Nov. 30, 2020. Total sample across all 15 waves = 39,895. Surveyed adults 18 years of age and older residing in the United States. Online research panel method. Balanced responses to ensure national representative sample. Results are unweighted and statistically significant at a 95 percent confidence level within ±1.76 percentage points.
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