Principal Research Results

Customer Satisfaction and Analysis ofRates and Services Menu Preferences by Electric Power Suppliers in Japan
BackgroundIn evaluating the retail competition of electric utilities, it is essential to examine advantages and disadvantages for customers
in a comprehensive way which includes the long-term perspective. A key future issue for electric power suppliers is effectively
improving the satisfaction of all customers, while providing rate menus/services which are optimal for individual customers, underconditions of fixed constraints on management resources. In responding to this issue, priorities must be clarified, and the preferencesof the customers themselves must be taken into account.

Objectives
The purpose of this study is to focus on domestic customers in various contract categories, confirm their degree of satisfaction and needs with respect to electric power suppliers, and develop an understanding of their degree of interest in, and intent to use,
various menus or services relating to electricity rates. It is also intended to clarify the characteristics of preferences for ratemenus/services by customers, and examine the best approach to rate menus/services.

Principal Results
In October 2007, a questionnaire survey regarding electric power services was administered to residential and businesscustomers in Japan, and there were 5,559 responses. Analysis based on the survey results yielded the following findings.
1. The total percentage of customers who were either “Satisfied” or “Somewhat satisfied” with electricity rates was 16% for residential customers, 11% for low-voltage, 13% for high-voltage, and 19% for extra-high-voltage customers. Factors thought to underliecustomer selection of these menus/services for electric rates include: “Lower electricity rates,” “Less fluctuation in rates,” and“Added value” in areas such as energy conservation and safety diagnosis. When these weights were measured for each customer,
using the paired comparison method, the top priority was “Lower electricity rates.” For residential customers, this was followed by“Less fluctuation in rates,” “Matches lifestyle pattern,” and “Added value”; and for business customers, it was followed by“Environmental benefit due to reduced CO2 emissions,” “Less fluctuation in rates,” “Matches work pattern,” and “Added value”(Fig. 1).
2. The relationship between customers' degree of interest in, and intent to use, various rate menus/services was analyzed, including
new options which at present have not yet been provided. The results showed that, for all customers, “Rates not dependent on
fluctuations in fuel prices,” “Discount based on long-term contract,” and “Rates based on increasing metering rates” were all specified as items with high priority. Furthermore, it was found that options such as “Point conversion service” for airline frequent flyer
miles and credit cards, and “Discount due to a gas package contract” were useful for residential customers, and options such as“Providing information/advice on energy conservation etc.” and “Rates where nuclear power generation can be selected for lower
CO2 emissions” were useful for business customers (Fig. 2).
3. Customer preferences for rate menus/services can be classified based on the degree of interest in them. For example, seven characteristics can be identified in the case of residential customers: (1) “Compatibility with lifestyle pattern,” (2) “Added value” withpotential for provision of information etc., (3) “Compatibility with high volume consumption” where rates become cheaper to thedegree that large amounts of power are consumed, (4) “Long-term stability,” (5) “Environmental benefit,” (6) “Ability to achieve a
short-term lower price,” and (7) “Energy conservation.” Seven characteristics can also be identified for extra-high-voltage
customers: (1) “Compatibility with work pattern,” (2) “Compatibility with high operating rates,” (3) “Ability to reduce contractcosts,” (4) “Added value,” (5) “Flat rates/Stability,” (6) “Long-term stability,” and (7) “Ability to achieve a short-term lower price.”
A significant relationship is evident between these characteristics and customer intent to use, and for customers overall, the directionality of the ideal rate menus/services desired by groups having similar intentions, such as the “Indifferent group” and the“Innovative active group” have been indicated in a preference structure map (Fig. 3).

Future Development
We shall evaluate new rate menus/services taking into account not only needs on the customer side, but also factors such ascosts incurred on the supplier side. We shall also conduct empirical analysis of preferences for energy equipment and other issues,
based on survey data obtained in this research.
Main Researcher: Toshio Ariu,Senior Researcher, Socio-economic Research Center
Reference
T. Ariu and H. Goto, 2008, “Customer Satisfaction and Preference Analysis of Rates and Services Menu by Electric Power Suppliersin Japan”, CRIEPI Report Y07013 (in Japanese)34

1. Socio-economy1(Note) -Points for degree of interest were: 5 points for Extremelyinterested, 4 points for Interested, 3 points for Neither,2 points for Not very interested, and 1 point for Completely(Note) In preference factors for residential customers, environmental
uninterested. Similarly, points for intent to use were 5 points
benefit is included in Added value.
for Already using/Would like to use immediately, 4 points
for Would like to use within 5 years, 3 points for Will
Fig.1 Preference factors for rate menus/services,consider within 5 years, 2 points for Will not consider
within 5 years, and 1 point for Completely unnecessary.
by customer typeThe graph was created by calculating average values for each.
-Partial analysis results for high-voltage customers.

Fig.2 Degree of interest and intent to use ratemenus/services(1) Residential customers(2) Extra-high-voltage customers(Notes) -Of the 7 characteristics identified for each customer contract category, two examples are indicated― Long-term stability andCompatibility with high volume consumption for residential customers, and Long-term stability and Compatibility with highoperating rates for extra-high-voltage customers.
-For residential customer, directionality is indicated for All respondents, as well as for groups based on intent to use, i.e.
Indifferent group,
Innovative active group, and Intermediate group.

Fig.3 Preference structure map for rate menus/services

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