The decision to buy, build, and/or sell information technology assets carries many pitfalls, especially for a regulated utility.
The Ultra Award
CUSTOMER SERVICE LINKED THE FIVE FINALISTS OF THE 1998 ULTRA competition, with all addressing, and improving, some aspect of serving end users.
The contest winner, Florida Power & Light Co., combined old hardware with new software and other innovations - such as using the Internet - to address a problem that plagues many utilities: how to cut the number of just-paid delinquent customers who call for power reconnects.
Second-place winner LG&E Retail Access Services, a subsidiary of LG&E Energy Corp., faced a new problem posed by deregulated markets: providing highly efficient management and electronic commerce capabilities demanded by energy service providers and industrial customers. LG&E RAS developed real-time consumption-measuring equipment for energy requirements forecasting, electronic billing and site-specific load management.
Sponsored by Public Utilities Fortnightly and IBM, the ULTRA award recognizes energy companies that develop the most innovative applications for information technology. Judging focused on how the solution addresses a corporate need, is unique, has quantifiable results, offers productivity savings, is cost-effective, integrates with existing solutions, and is flexible to adapt to growth.
First Place: FP&L's OPAL
As with many complex technological solutions, Florida Power & Light first began with a straightforward problem. Each year, FP&L's Customer Care Center receives more than 800,000 calls from customers who have made in-person payments at agent locations - kiosks at bus stations, check cashing stores, even jewelry stores and pawn shops. These outsourcers recently replaced the utility's 30 district offices, which were closed to cut costs.
"The people who tend to use the in-person payments are people from a lower economic strata who are more likely to be disconnected [from electric service] and who are more likely not to have checking accounts," says Steve Reed, FP&L technical project manager. "So if they don't have checking accounts, they don't feel comfortable mailing a payment and we ask them not to mail cash."
FP&L sends out 10,000 final disconnection notices to customers per day; some 420,000 customers are actually disconnected each year. FP&L logs 340,000 reconnect orders annually. The utility counts 3.6 million customers and processes 160,000 payments daily.
Research shows, however, that half the 26,000 payments made in person each day are made by good payers, Reed says. "It's convenient to them. They like the routine of dropping the payment off. They like the idea of not using a postage stamp. We've tried our best to discourage good-paying customers from using this service because as a regulated utility, we pass on costs to all customers."
The utility's preferred method of payment is electronic funds transfer, automatic debit. Its second favorite is through a service called CheckFree, made over the World Wide Web.
But this project's goal was to reduce the costs related to in-person payment - the most expensive way to pay an FP&L bill.
"We couldn't do too much about the transaction costs because that's a fee paid to the payment agent," Reed says. "But we could handle some of the associated costs. It turns out about half the customers who use the payment agents ¼ are delinquent."
Under the old system, the utility had