Case Study AES ELETROPAULO

Profile

AES Eletropaulo is the largest distributor of electricity in consumption and sales in Latin America. In 2010, scored 6.1 million customers, reaching 16.5 million people served. Its concession area covers 24 municipalities in the metropolitan region of São Paulo, including the capital, where is the administrative headquarters.
  • Company Name: AES Eletropaulo
  • Country: Brazil
  • Sector: Energy
  • Name of Initiative: "Transformation of consumers into customers” (SINCE 2004)
  • Level of Engagement: Local
  • Purpose: Create/share common value/ innovate
  • Approach: one to one/partnership
  • Type of stakeholders: representative stakeholders

Purpose

In 2004, AES Eletropaulo established as strategic goal the regularization of illegal energy connections in low-income urban communities. The initiative has been planned for 24 cities where AES Eletropaulo operates. In order to make this an achievable goal, the company was faced with the need of stepping into such communities to install or regularize energy infrastructure, including public (light poles, cables, etc.) and private (meters) electricity installations. However, many of these communities are dominated by hostile leadership, have high violence and poverty rates, lack access to public services or have never paid for them. AES Eletropaulo designed a community engagement program as a solution to enable trustful communication and engagement relations with such communities and its leaders. By establishing presence and continued operations in those neighborhoods, AES Eletropaulo is able to achieve corporate goals of regularization, access and distribution of electric power.

Practice

Before entering the communities, AES Eletropaulo engages its employees in a preparatory stage that consists in: mapping communities, influential organizations and their leadership; making contact with community leaders; and training of internal teams that will be in charge of working directly with the leaders and households affected by the regularization. 
Once the regularization area and internal team are defined, AES Eletropaulo organizes a meeting in the community with the objectives of connecting field managers (who lead AES Eletropaulo internal teams) and community leaders, who inform AES Eletropaulo about the singularities and context of that neighborhood. At this meeting the company presents its intentions and how the community will be benefited by the regularization. After these collective meetings, AES Eletropaulo starts to work on the public infrastructure as well as the installation of individual energy meters.
Encouraged by community leaders, the managers also promote energy consumption awareness sessions during visits in specific households, which include incentivizing the replacement of lamps, refrigerators and electric showers with more efficient items. These visits are scheduled as problems in the regularization process are identified.  Field managers also have the autonomy to negotiate debts and customize rates for each family according to their needs. Initially, AES organized one collective awareness session where all families could ask questions and hear from the company what had changed. However, most families would not express their reactions, and afterwards would try contact with AES Eletropaulo’s customer service by phone or in stores. That was not an effective problem solving process, which led AES Eletropaulo to shift to the individual approach.
In addition, meetings with community leaders are held annually to promote the exchange of experiences, discussion of improvements in the engagement process and company approaches. Any decision that affects all communities is discussed during these annual meetings.

Members/Participants

Only AES Eletropaulo employees are engaged in the program development and implementation, without support of an external organization. The teams include a person responsible for the reading of energy consumption and field managers, whose position was created exclusively for the program. Field managers were hired based on required skills to deal with the communities.  Operational/Technical teams are also involved for the infrastructure and installations.
The initial selection criterion of communities is the technical feasibility of regularization, which enables the company to perform the works.

Facilitation/Communication

Community meetings are facilitated by AES Eletropaulo employees. Community leaders are informed about the progress of activities through ongoing relationship and contact, and annual meetings. Community leaders are the focal point for communication, as a mediator of dialogue between community members and the company, strengthening the sense of trust for both sides. Managers and leaders mediate most of the dialogues in daily operations.
As the access to these communities is often difficult, it is necessary that managers and teams are identified and recognized by the community and its leaders as AES Eletropaulo employees, which allows access to the works and regular readings of consumption.

Connection with company governance 

The goal to decrease the default and illegal connection rates in its electric distribution concession area not only promotes higher quality of life and safety of the communities served, but also contributes to the increase of revenues.
The engagement with the community leaders is closely linked to the success or failure of the company's efforts to regularize connections, and as this process brings benefits for both parties, the relationship is very close and participatory.
The AES Eletropaulo field managers are submitted to a monthly performance evaluation based on the amount and quality of services provided. They also undergo written tests based on the training applied and phone calls to the families who were assisted by the manager to obtain individual feedback on their work.
In its Sustainable Strategic Planning, there is a group responsible for the careful approach in the relationship and engagement with its stakeholders. The VP of Institutional Relations, Communications and Sustainability is responsible for monitoring action plans related to this area. Monthly meetings are held to with the teams for plan updates and, if necessary, selection of critical points to be communicated to top management.

Outcomes and benefits

The collaborative approach with communities allowed AES Eletropaulo to develop a new business model that addresses specific needs of low-income families (e.g. the negotiation of a fixed or 'social' rate). Debts negotiation and rate customization by field managers have been helping to avoid default and create a trustful relation between company and families, reinforcing the community commitment to implement the proposed adjustments.
Community families are benefited from the guarantee of safe and good quality energy in their homes. That includes having the right to hold a proof of residential address in their names, which many times they do not own because of being illegally connected.
The community also learns to use this benefit in a more efficient and conscious way, thus generating savings in their energy bill.
By working closely with communities, AES Eletropaulo is constantly learning how to deal with this stakeholder e how to improve their programs, always seeking more effectiveness of the initiatives performed.
Lessons learned contribute to the development of the departments involved and provides the company with a broader perspective on the needs and benefits of engaging stakeholders in all activities.
  • Between 2004 and 2011, the “Transforming Consumers into Customers” Program has benefitted approximately 1.83 million people:”
    • In 2004, more than 457,000 families;
    • In 2011 only, total of reconnections reached 46,203 families, which benefitted approximately 185,000 people.
  • Replacement of 29,589 refrigerators, 104,718 lamps and installation of 12,570 efficient showers from 2004 to 2011.
  • Renovation of 2,743 residences that presented precarious electric installations, from 2004 to 2001.
  • 2011 investments reached the total of R$ 51.12 million, from which R$ 13 million were AES Eletropaulo own resources and R$ 38.12 were compulsory resources. From 2004 to 2001, total investment has been of R$ 321 million.
Periodically, AES Eletropaulo returns to communities that were benefitted by the program to conduct surveys that evaluate consumer satisfaction and perceptions on the program. The consultation in 2001 demonstrated 80% of clients with a positive evaluation.

FUTURE PERSPECTIVES
AES Eletropaulo has the goal to expand access to regularized electricity and efficient consumption to 170,000 families in low-income communities by 2016.

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