1CONSUMER ENERGY SENTIMENTS REPORT 2014 Copyright © 2014 The Nielsen Company

U.S. C O N S U M E R E N E R G Y S E N T I M E N T S R E P O R T2014

2 CONSUMER ENERGY SENTIMENTS REPORT 2014

INTRODUCTION For consumers, the relationship they have with their utility providers is

one of necessity. Since most modern conveniences require some form

of energy, the consumer is complicit in their need to live “on-the-grid.”

Yet differences exist in how we manage our energy consumption and

what drives those behaviors. The Nielsen Energy Behavior Track collects

consumer data annually from a nationally representative sample to gain

insight into how we use energy resources.

ENERGY BEHAVIORS AND THE ENVIRONMENT The impact of energy usage on earth is a topic we are all too familiar

with in recent years. Scientists are becoming deeply concerned that the

rate of energy consumption is unsustainable for the planet. Many also

predict dire consequences if society, as a whole, does not alter its habits.

This message is not lost on some consumers.

Consumers are open to altering their behavior to save energy, but are

willing to do so more for personal impact than for the benefit of the

environment. Data from the 2013 survey indicates that seven in 10 (72%)

consumers believe they have control over the amount of energy they use

in their homes. However, when indicating their willingness to change

their energy behaviors, more would do so for the personal cost savings

rather than reducing their environmental impact.

3CONSUMER ENERGY SENTIMENTS REPORT 2014 Copyright © 2014 The Nielsen Company

WILLINGNESS TO CHANGE ENERGY BEHAVIORS

I FEEL LIKE I HAVE CONTROL OVER THE ENERGY COSTS IN MY HOME 72% 28%

9%

23%

34%

41%

43%

91%

77%

66%

59%

57%

STRONGLY/SOMEWHAT DISAGREE STRONGLY/SOMEWHAT AGREE

I AM WILLING TO CHANGE MY ENERGY USAGE BEHAVIOR TO SAVE MONEY ON MY

ENERGY COSTS

I AM WILLING TO CHANGE MY ENERGY USAGE BEHAVIOR DUE TO ENVIRONMENTAL

CONCERNS

I AM WILLING TO LIVE WITH SOME DISCOMFORT TO SAVE MONEY ON MY

ENERGY COSTS

I AM WILLING TO PAY MORE FOR SOMETHING IF IT IS BETTER FOR THE ENVIRONMENT

I AM WILLING TO LIVE WITH SOME DISCOMFORT TO IMPROVE THE

ENVIRONMENT

So, are consumers currently taking any steps to reduce their energy

usage? Indeed they are, but mostly simple ones. While over three

quarters (78%) of consumers indicate they are actively making efforts

to reduce their consumption presently, these are mostly in the form

of simple procedures such as turning lights off when not in use or

setting thermostats lower/higher seasonally. Beyond the active energy

saving steps consumers exhibit day-to-day, they are also likely to keep

things simple, such as installing weather stripping when making home

improvements to save energy. Major undertakings, such as installing

solar panels, are extremely rare at the national level.

Source: Nielsen Energy Behavior Track, 2013

4 CONSUMER ENERGY SENTIMENTS REPORT 2014

ENERGY BEHAVIORS IN ACTION

NOYES LIGHTS OFF WHEN NOT IN USE

ELECTRONICS OFF WHEN NOT IN USE

SET THERMOSTAT LOWER/HIGHER SEASONALLY

REPLACED OLD APPLIANCES

OTHER

Source: Nielsen Energy Behavior Track, 2013

PRIMARY ACTION TAKEN

22%

42%

17%

33%

7%

1%

78%

ENERGY UTILITY SERVICES SUBSCRIBED TO

MADE EFFORT TO REDUCE ENERGY USAGE IN PAST YEAR

5CONSUMER ENERGY SENTIMENTS REPORT 2014 Copyright © 2014 The Nielsen Company

ENERGY BEHAVIORS IN ACTION ENERGY IMPROVEMENTS MADE TO HOME

WEATHER STRIPPING

ENERGY EFFICIENT WINDOWS

ADDED INSULATION

ADDED SHADE

SCREENS

ADDED SHADE TREES/ PLANTS

OTHER NONE OF

THESE

Consumers are not alone in their desire to use energy more wisely.

Many energy providers provide a selection of programs and services to

encourage appropriate behaviors. These could include anything from

real-time pricing, where the energy provider’s price per kWh fluctuates

to charge more during peak times and less for off-peak, to rebates for

purchasing appliances that are energy-efficient. While not all energy

providers offer the same selections, as a whole, surprisingly few

consumers are taking advantage of these.

37% 33% 28% 27% 21% 20% 6%

SERVICE AND PROGRAM SUBSCRIPTION

ENERGY UTILITY SERVICES SUBSCRIBED TO PROGRAMS UTILIZED PAST 12 MONTHS

BALANCED/BUDGET BILLING APPLIANCE REBATE

WHOLE HOUSE AUDIT

WEATHERIZATION SVC.

APPLIANCE RECYCLING

EQUIPMENT REBATE

ONLINE ENERGY AUDIT

DUCT TEST/REPAIR SVC.

REAL-TIME PRICING

TIME-OF-USE/DAY RATE

FIXED OR FLAT BILL PLAN

HVAC INSP. & MAINT.

GREEN ENERGY

LOAD MANAGEMENT

PRE-PAID BILLING

CARBON OFFSET

24% 7%10%9%8%

6%5%

5%

5%

4%

4%

4%

3%

4%2%1%

6 CONSUMER ENERGY SENTIMENTS REPORT 2014

CONNECTING CONSUMERS TO SMART METERS In addition to the energy-saving services and programs offered by some

providers, in recent years many have begun to bring utility delivery

and monitoring into the 21st century in the form of Smart Meters. The

concept of Smart Meters is simple; they allow providers to actively

monitor and collect data on energy consumption in real time while

concurrently providing a means of two-way communication between

provider and consumer. In theory, gone are the days of relying on meter

readers. The technology is meant to provide convenience for both

parties, and allow for yet another means of actively monitoring energy

usage to keep consumers informed of exactly when they are using the

most.

While the rollout of Smart Meter technology has met with some

resistance by consumers worried about security and some widely-

publicized building fires caused by installed meters, a surprising

majority are unsure whether or not they even have them installed in the

first place.

In 2013, Nielsen’s Energy Behavior Track indicates that seven in ten

(73%) either don’t have or are unsure if they have Smart Meters installed

at their homes. Furthermore, four in five (81%) either have not or are

unsure if they’ve had information regarding the benefits of Smart Meters

given to them by their provider. This communication disconnect between

provider and consumer could delay the acceptance of the Smart Meter

technology many providers are eager to rollout.

7CONSUMER ENERGY SENTIMENTS REPORT 2014 Copyright © 2014 The Nielsen Company

HOW SEGMENTATION DIFFERENTIATES ENERGY BEHAVIORS Nielsen PRIZM is a segmentation model that classifies every U.S.

household into one of 66 segments based on purchase preferences.

One feature of PRIZM® is its ability to group and sort each of the 66

consumer segments into “Social Groups.” These groups are based

on PRIZM data inputs for urbanization (from “Urban” to “Town

and Country”) and affluence (“Low” to “High”). Consumers’ energy

behaviors can be differentiated based on Social Groups for more

efficient marketing and communications to key segments.

Affluence and home ownership are two drivers of energy behaviors

among PRIZM Social Groups. High affluence segments (for example,

“Urban Uptown”) tend to own homes and pay the most annually for

their energy bills while conversely, low affluence segments (for example,

“Micro-City Blues”) tend to rent and pay the least annually.

However, while lower affluence segments pay the least, their bills make

up a larger percentage of their monthly income. Affluence levels also

appear to dictate who budgets for their energy bills; only about a quarter

(24%) of high affluence segments budget monthly while two in five

(41%) do among low affluence segments.

8 CONSUMER ENERGY SENTIMENTS REPORT 2014

MONTHLY COST AND BUDGETING BY AFFLUENCE

“URBAN UPTOWN” (HIGH AFFLUENCE)

“MIDDLEBURBS” (MID AFFLUENCE)

“MICRO-CITY BLUES” (LOW AFFLUENCE)

PERCENT OF MONTHLY INCOME

AVG: 7.2%

AVG: 9.6%

AVG: 12.8%

<5% 6-10% 11-15% 16-20% 21-50% 51%+

24% SET MONTHLY ENERGY BILL BUDGETS

32% SET MONTHLY ENERGY BILL BUDGETS

41% SET MONTHLY ENERGY BILL BUDGETS

51%

28%

20%

28%

37%

29%

11%

18%

21%

7%

11%

17%

2%

5%

10%

1%

3%

9CONSUMER ENERGY SENTIMENTS REPORT 2014 Copyright © 2014 The Nielsen Company

CONCLUSION We’ve seen that both consumers and providers are concerned with their

energy impact—be it for environmental or monetary concerns—but

there lies a communication disconnect between the parties. Provider

programs and services go underutilized in favor for more simplistic

energy-saving steps such as weather stripping. Smart Meters, which are

designed to make use of data to aid in more efficient energy behaviors,

are met with reluctance by end users. Moving forward, it would benefit

providers to take a second look at their communication strategies and

tailor them to specific audiences to enable better energy behaviors

among their customers overall. Nielsen PRIZM enables this precision

marketing by uncovering the latent components of the consumer’s

everyday behavior—a powerful tool in unlocking the potential of any

marketing campaign.

Increasing the number of subscribers that budget their monthly energy

usage could help both provider and consumer—consumers ultimately

save money while providers can worry less about an over utilized grid

and the resulting environmental impact. With PRIZM segmentation, a

provider can create a custom communications plan specifically targeting

consumers who should be setting budgets; particularly high affluence

groups such as Urban Uptown. For example, this group spends heavily

on computer and wireless technology and also has an above-average

concentration of Asian and Hispanic Americans. This may mean that

mobile ads and/or apps with native language support may have a bigger

impact than an English-only ad placed in print.

METHODOLOGY

Nielsen Energy Behavior Track is a survey conducted annually,

collecting consumer-level data on behaviors related to home energy

usage. Approximately 32,000 respondents, sampled to be nationally

representative, participate. For more information please contact

your Nielsen representative.

10 CONSUMER ENERGY SENTIMENTS REPORT 2014

ABOUT NIELSEN Nielsen Holdings N.V. (NYSE: NLSN) is a global information and

measurement company with leading market positions in marketing

and consumer information, television and other media measurement,

online intelligence and mobile measurement. Nielsen has a presence in

approximately 100 countries, with headquarters in New York, USA and

Diemen, the Netherlands.

For more information, visit www.nielsen.com.

Copyright © 2014 The Nielsen Company. All rights reserved. Nielsen and

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CONSUMER ENERGY SENTIMENTS REPORT 2014