Efficient Administration of Rebate Programs
Governments often use Rebate systems to encourage particular spending behaviour. Typical examples are rebates for car LPG conversions, rebates on the purchase of home water tanks, and rebates on measures to reduce energy consumption.
Problems arise in the administration of rebate programs because they tend to be “one off” and of
relatively short duration and so it is not cost effective to
implement sophisticated control and audit systems to control them.
Edentiti Rebates provides a generic solution based upon Edentiti Rewards to integrate the allocation, effect of, and spending of rebates. This provides a cost effective solution to a difficult administrative problem while giving decision makers the information to determine the best allocation of resources.
The following is part of a proposal to the ACT Government on an Administrative system for Energy Audits.
Edentiti Rebates reduces the cost of administering the Energy Audit Programs while increasing the effectiveness of the program through more comprehensive data collection and analysis. Data collection and interaction with clients is centralised so that the complete process is integrated and able to be cross referenced, checked and reported on as an audit develops and any resulting actions take place.
The steps are:
Client enrols online for an audit to be conducted.
The system checks for age of building and information from ActewAGL (or the applicant) to see if the is audit appropriate.
Client fills out information on house and household.
Application accessed by Energy Audit Team who arrange interview.
Energy Audit Team put into the online system recommendations for improvements. Possible Rebates calculated and made available to client.
Client purchases goods through independent online websites. Goods types are previously approved by Energy Audit Team as appearing from the specifications to be appropriate. The merchants give approval for their items to be listed but listing does not guarantee that they attract a rebate for any particular buyer and the merchant is unaware which customers may get rebates.
After client purchases and installs then they apply for the rebate as calculated by the system..
ACT government reviews applications and grants approval. This can be a largely automatic function.
Funds transferred by the government to the client bank account after approval. This can be automated.
Energy usage obtained from ActewAGL or client and reports made, including estimates of energy saved and effectiveness of the program, to the ACT Government.
The process is the same as currently exist except that all the information is collected in the one place, many functions are automated and all the data is accessible to the ACT Government, the client and the Energy Audit Team.
Advantages of the proposed system
It is difficult for the government to evaluate the effectiveness of rebate systems using the current administrative systems. The problem arises because rebate programs tend to be “one off” and of relatively short duration and so it is not cost effective to implement sophisticated control and audit systems.
Edentiti Rebates is a generic system that can be tailored to a specific rebate program for relatively low cost.
Edentiti Rebates is designed for evaluation. Its overall purpose is to evaluate systems with multiple objectives including financial, and reduction in green house gases. By centralising record keeping and through extensive automation of both data collection and of reporting Edentiti Rebates enables the effectiveness of the rebate system to be determined at multiple levels. For example, the system will be able to show the energy savings and the greenhouse gas reductions obtained for each dollar spent by the government.
Edentiti Rebates can be applied to any rebate program envisaged by the government in other areas such as Water. In the case of water rebates the system will be able to evaluate the effectiveness in terms of reduction in potable water, reduction in greenhouse gases and cost.
Edentiti Rebates can be extended to Edentiti Rewards and can be used by private and other government organisations to implement other strategies and to supply funds for infrastructure development in any area. For example, it is envisaged that other organisations will take advantage of the system to introduce Energy Rewards to supplement any government’s Rebate program. The Federal Government will be able to use the system to implement its Rebate schemes and to enable different schemes across different sectors to be coordinated. Organisations wishing to issue Green Rewards as an alternative to other Rewards programs like “Fly Buys” or “Frequent Flyer Points” will be able to use the system to direct expenditure towards greenhouse reducing investments.
Costs
Charges to cover the cost of running the system are obtained from consumers when they purchase items. However, the charges are organised to encourage both merchants and consumers to use rebates.
Whenever a rebate is used at the online store there is an extra service charge of a percentage of the rebate added to the cost of the goods and paid for by the consumer. Rebates are normally only a fraction of the total cost of the goods so the rebate fee is low in comparison to the total cost of the goods.
All items sold through the online store incur a transaction cost of a percentage of the sale charged to the merchant. This cost covers all selling costs to the merchant including payment charges and “shelf space” on the website.
It is in
the merchant’s interest to sell all goods on the website at the
same price as the merchant does not know which sales have attracted
the rebate.
Risk Assessment
Government perceived as endorsing or recommending particular companies or product brands
This problem is addressed by keeping the product sales website completely independent of the government and by having third parties use the same system. The website will have many products that are not eligible for rebates. It will have reports on products by standards organisations, consumer advocate groups like Choice, consumer feedback and independent assessment bodies. In other words the selling website is a general selling tool and is not specifically constructed for government rebate programs.
The items to which rebates apply and the amounts of each rebate is only be visible to people who are in the program and can vary depending on their other purchases and their Energy Audit. Merchants will not know if a particular customer through the website attracts a rebate or not.
Merchants whose goods do on occasions attract a rebate will not be permitted to use this fact in any promotions or advertising. Companies whose goods do not attract a rebate are only known to customers who are eligible for rebates.
Government accused of favouring some companies over others
Any company can apply for its products to be considered for rebates. If they meet all the specifications of the Energy Audit Team and if the company has obeyed the rules associated with the Rebate program then it can join. The Energy Audit team specifies the types of goods and services and Merchants agree that their goods or services meet the specifications and hence there is no choosing of Merchants. It is in the governments interests for as many companies as possible to participate as this will bring greater competition to the market place.
Registered companies’ products and service standards do not meet rebate program requirements
Merchants claim their products and services meet the rebate program requirements. If it is found that they do not comply the merchant is banned from having any products attract a rebate for a period of time.
The Rebate Program causes market distortions
Merchants do not know if a product attracts a rebate for a given. If somehow merchants are found to increase prices to buyers who have rebates compared to other purchasers of the same goods, then the merchants will be banned from having any of their products attract a rebate for a period of time. Introducing a rebate program using this approach will not cause market distortions.
Participants do not like the voiceprint technology
Voice prints are not needed and participants can use other methods of identifying themselves. This is necessary for those who cannot hear and if a hearing individual does not wish to use voice prints then they can use the less convenient alternative systems.
Participants dissatisfied with products or services for which a rebate is payable and hold Government responsible
The consumer has a choice on which particular product or service to choose to attract the rebate. The choice of product is made independently of the rebate. If the Energy Audit recommends ineffective solutions this is a function of the Energy Audit and has nothing to do with the rebate. The administration of the rebate program reduces the chances of the government being blamed for any perceived failure of the Energy Audit program.
Rebate rules not applied correctly resulting in ineligible rebates being paid or eligible rebates not being paid
The rebate rules are defined by the government and embodied in the system. If these rules are set correctly they will be applied correctly. Ineligible rebates are likely to be detected through normal audit because of comprehensive record keeping. Similarly eligible rebates that are detected but not paid can be paid because of the comprehensive record keeping.
ActewAGL does not agree to making water and energy records available
This is a convenience to the customer and if ActewAGL does not supply the records automatically then the customer will report consumption manually. It is however, in ActewAGL interests to supply the information as ActewAGL may wish to be a supplier of goods and services that attract rebates and if they do not agree to provide the information they are not permitted to participate as suppliers.
Security of participant information compromised
The system is designed to be secure and private and internal operations follow best practice with respect to privacy and security. Customer information is not made available to merchants or to any other customer. Government and the Energy Audit team need not know any personal information for normal operations. All reports prepared are made using the same techniques employed by the Bureau of Statistics to hide identifying information from general public reports.
System unavailable due to technical problems with software or hardware
The system uses multiple backups and redundancy. If there is a breakdown in supporting infrastructure such as an Internet malfunction the system can continue manually until repaired.
System data lost or corrupted
Multiple levels of backup of data are made and best practice is followed in design and construction of all systems.
Government does not achieve value for money
The system
will cost the government less to administer than the existing system
and will deliver more comprehensive information. If the current system
delivers value for money then the new system will improve it.
Edentiti no longer able to provide or support system – Edentiti closes down or removes product
This is
highly unlikely as the system is multi purpose and components are
used in other systems. The government will have a contract with
Edentiti to supply the service. The only way Edentiti would fail to
deliver would be in the case of closing down the Company and even in
that case it will be in any administrator’s interests to keep
the system operational as running costs are related to throughput as
is income. The major cost of the Edentiti Rewards system is in sunk
capital development costs not in operational costs.
