NeighborPower Brings Rewards Points to the Energy Market

5/21/12Follow @xconomy

Former Massachusetts secretary of energy and environmental affairs Ian Bowles thinks energy efficiency isn’t all that engaging for consumers.

But he’s betting that rewards points are one way to get them excited about it.

Bowles is co-founder of the Andover, MA-based startup NeighborPower, which has built a platform allowing consumers to pay their home utility bills with points they’ve racked up from shopping. He believes that the system could ultimately be used to encourage customers to reduce their energy consumption,

NeighborPower founder and CEO Paul Harkins, who previously worked in advertising and incentives for OfferIQ and InStream Media, says he was always interested in understanding what motivates people to take advantage of incentives. “If the benefit of that incentive is to pay a bill they have to pay, would that make a difference to customers?”

NeighborPower was founded last March and in July introduced its platform allowing consumer to pay their oil bills with rewards points. “Oil is the most fractured utility out there,” with no one vendor owning more than 3.5 percent of the market and phone ordering as the only means of purchasing, says Harkins. NeighborPower developed the first electronic payment system for oil, where consumers order online and NeighborPower immediately purchases the oil from over 100 different oil vendors, he says.

Users sign up with a NeighborPower account, and then download a browser toolbar that indicates which e-commerce sites offer rewards points and how many dollars spent on that site equal a point. Those accrued points are directly applied to a user’s next oil bill (at about 10 cents per point) when he goes to pay it online. Points in participating brick and mortar stores are linked through credit or debit cards or existing store loyalty cards.

Harkins touts the fact that consumers don’t have to take extra steps with each purchase to get the points and don’t have to wait until a certain number of points have accrued in order to use the discount. “The biggest problem with rewards is redemption,” he says. “We make redemption completely seamless and completely easy.”

NeighborPower has raised under $500,000 from friends and family, and has “generated revenue from day one,” now pulling in between $120,000 and $130,000 per month, says Harkins. Brands—such as Groupon, Travelocity, Gap, and Best Buy—pay NeighborPower as consumers shop through the rewards system, and NeighborPower distributes the rewards points. The company buys oil on behalf of its consumers, at no additional charge to the oil vendors. NeighborPower now has 10,000 active users and on June 1 will release its rewards platform for paying electricity bills.

But of course reducing an energy bill through rewards points is a different proposition than reducing it by cutting energy usage. Both Bowles and Harkins see the rewards site as a way to get consumer excited about and more engaged with their energy spend. Ultimately, they hope consumers can use the rewards platform to pay for energy retrofits to their homes, like new boilers.

“It may be that people just love to earn points and save money and that’s that,” acknowledges Bowles. “That’s also a big service for the customer. I think the larger good is served by trying to make energy efficiency more engaging and more appealing. Energy one of the few remaining pieces in the economy that doesn’t have a loyalty program—it’s one of least innovative parts of the economy. If you can change that then you can open up other possibilities.”

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