When utilities across the country began rolling out smart-grid and dynamic-pricing programs, many expected some push-back from customers who would resist changes in their static rate plans. But few expected these initiatives to turn into full-blown controversies. Consumers in several jurisdictions—reacting to utility initiatives they didn’t understand—unleashed a tirade of opposition against smart-metering and dynamic-pricing programs.
By now the examples are well known: class-action lawsuits in California and Texas; picketing outside the offices of the California Public Utilities Commission; rate-case rejections in such states as Maryland and Massachusetts; and even a possible municipalization of the utility system in Boulder, Colo.
Right or wrong, many consumers distrust utilities’ planned use of customer data and their ability to control power usage in the home, and this has proved to be a major challenge in utilities’ efforts to communicate the benefits to customers. This challenge isn’t just affecting utilities’ communications approaches, but also their strategic, regulatory and financial plans.
For example, rating agency Moody’s raised the issue in a September 13 press release after the natural gas explosion in the residential community of San Bruno, Calif. Despite reaffirming the ratings of Pacific Gas and Electric and its parent company, PG&E Corp., Moody’s called the San Bruno tragedy “yet another piece of negative news” for PG&E, specifically citing a recent California PUC report criticizing PG&E’s customer communications in implementing its smart grid program that “contributed to substantial negative customer reaction in certain PG&E communities.”
Partly in response to this apparent backlash, utilities across the country are working harder at customer engagement, pursuing education and outreach programs designed to help consumers understand the smart grid and their role in making it work. The industry’s prior emphasis on technologies and regulation wasn’t necessarily misplaced, but utilities have realized that customer empowerment is an element that must be considered and emphasized in order to achieve the desired end-use benefits.
Forward-thinking companies are focused on the customer, but all companies know that customer adoption rates for utility programs can be improved. With the need for customer engagement gaining renewed prominence, Fortnightly turned to investor-owned utilities to learn what tactics, processes and systems are working for companies in the trenches, and how they are ascertaining which ones have the most promise in attaining true customer partnerships.
Fortnightly asked several of the industry’s leaders about their experiences in determining what the customer wants; how to overcome customer resistance to new utility programs; and what lessons they’ve learned. These experts are:
• Joseph A. Forline, v.p. of customer operations, Public Service Electric & Gas
• Brenda Jackson, senior v.p. and chief customer officer, Oncor
• Reid V. Nuttall, v.p., information technology, chief information officer, OGE Energy and OG&E Electric Services
• Tammy McLeod, v.p. & chief customer officer, Arizona Public Service
• James E. Schinski, v.p., chief information officer, PPL.
Fortnightly: What led your utility to realize it needed a chief customer officer or someone in upper management to focus specifically on customers?
McLeod, APS: At APS, we value our customers as we always have. For the 124 years that our company has provided power to Arizona, APS has realized that while our business is about building power plants and distribution lines, it’s also about building relationships with our communities and our customers. Our customers are the reason we are in business.
When I was named the company’s first chief customer officer three years ago, the obvious intention was to bring a more intense focus on customers. The question is, why was this needed? Independent research, as well as our own surveys, already showed high levels of customer satisfaction. But APS management recognized changes on the horizon that would challenge our ability to retain those high satisfaction levels. We see increasing emphasis on energy efficiency, demand management, distributed generation and renewable energy, as well as customer demand for higher reliability and more service choices.
Fortunately, we also see the potential for new technologies to help us adapt to, and manage, the rapid changes we are facing. And to realize the full benefit of new technologies requires unprecedented levels of customer interaction and acceptance. Without customer participation, our company cannot take full advantage of the efficiencies promised by new technologies. Clearly, a major challenge of my job is to implement, test and evaluate the impact and cost effectiveness of those products for our customers.
As the APS CCO, I bring the needs of customers to the table when management discusses issues like renewable energy and energy efficiency that will profoundly impact our business. Because of this emphasis on customers, when APS thinks ‘how will this impact our business?’ at the same time we ask ‘how will this impact our customers?’ We never forget that one will inevitably affect the other.
Jackson, Oncor: When the Texas electric market was deregulated, retailers told us they would take care of customers. But after two of the worst storms in Oncor’s history and the installation of a million smart meters, customers let us know they weren’t getting the information they needed or expected from their retailers, and Oncor realized we needed to step up. Early in my career I worked closely with customers, so I’m thrilled to see us returning to this role.
Forline, PSE&G: The customers and communities we serve have been important to our company since its founding in 1903. In fact, “public service” is part of our company name. This focus has been one of the keys to our long record of success, and we couldn’t imagine being any other way.
In recent years, we have deepened this commitment by aggressively pursuing programs that help our customers and communities be greener. Today we are a national leader in solar and energy efficiency.
Two innovative programs are at the heart of PSE&G’s efforts to increase renewable energy use in New Jersey. The first is our highly successful solar loan program, which helps remove customers’ financial barriers to installing solar systems on homes and businesses. To date, we’ve helped finance the installation of more than 130 solar power systems in our service territory, and demand for these loans continues to grow. The second program is called ‘Solar 4 All,’ which brings the benefits of solar power to all of our electric customers. By 2013, we will have installed 80 MW of solar power in our service territory—enough capacity to power about 12,000 average-size homes. We’re accomplishing this by installing individual solar panels on 200,000 utility poles around the state, building large solar farms on PSE&G-owned properties, and leasing space from third parties. The best part is that all of this solar capacity is tied directly to the power grid, so all of our customers realize the benefits.
We also implemented programs that help identify and finance energy efficiency improvements for residential and small business customers in select towns as well as government facilities, non-profits and hospitals. And, we are the first in the nation to offer more efficient induction fluorescent street lighting, which emits more light, lasts four times longer and costs less to operate than older models—providing immediate cost savings to participating municipalities. We’re proud of what we have and continue to do for the customers and communities we serve.
Fortnightly: How long have you been a Chief Information Officer? What background do you bring to the utility and how does that factor into your approach at an energy utility company?
Schinski, PPL: I have been a chief information officer for eight years, first at the Midwest Independent Transmission System Operator, and now here at PPL. I have also held a variety of technology, engineering and program management positions, also working at Lockheed Martin, Philadelphia Electric (now PECO), General Electric and Reliance Insurance.
Of my experience outside the energy industry, my work at Lockheed Martin was especially valuable. At a defense contractor, you need to bid successfully on every job—demonstrating either a strong technological or cost advantage—and you have to execute to ensure your customer’s success and ultimately make a profit. In much the same way, an internal information services department has to provide a technological advantage to help the entire company succeed. Also, the whole operational mindset that comes from working on programs for the federal government was valuable to me. Most programs I worked on had an operational side: A lot of the time, we were maintaining and operating the systems we developed and working directly with the customer on meeting operational requirements for performance and availability, while developing next-generation capabilities.
That was also where I learned about the CMMI approach (capability maturity model integration) to process improvement. You live and breathe it on a daily basis; it’s all about getting better over time. That type of approach and that focus on improvement is part of what I try to bring to my current position, and my management team is committed to this approach.
Nuttall, OGE: I have been associated with information technology for over a decade. My background includes roles in a wide variety of business functions before I came to the utility industry. [Editor’s note: Before joining OGE in 2006, Nuttall spent 24 years at oil and gas equipment company Varco, most recently as v.p. of information technology.] In my opinion, these roles have given me perspective, business understanding, empathy, an understanding of change management and the vision necessary to be an effective CIO.
While I believe that my substantial business experience outside of the industry and outside of IT has helped me tremendously, I need to recognize that I have seen some very effective utility CIOs that do not have the same experience.
I think it is critical that the CIOs be very knowledgeable about the business they are in, understand the goals and direction of the company, be effective in developing a team, and be strong enough to be an effective member of the senior management team. The effective CIO must be more than strictly a cost-cutting functionary doing only what you are asked to do. A person with these capabilities will be successful, regardless of exactly what his or her previous experience has been.
Fortnightly: How do you find out what the customer wants and needs?
Jackson, Oncor: This year we launched a series of open house-style events and a website, AskOncor.com, inviting customers to get answers and information. At 100 ‘Ask Oncor’ open houses this year, we will have subject matter experts on energy efficiency, smart meters, and vegetation management—among other topics—as well as free food and energy-saving giveaways. We invite homeowner and neighborhood associations, as well as local elected and appointed officials.
Online, our commitment to customers is to answer their questions within two business days. The response has been tremendous, with hundreds of questions being asked and answered both face-to-face and online, and this feedback helps guide our newly-created customer experience council.
We also regularly visit executives, conduct executive workshops, review customer satisfaction surveys—especially their verbatim comments—and assign executives to manage accounts, keeping lines of communications open.
Schinski, PPL: PPL Electric Utilities conducts a wide variety of market research to find out what customers would like us to do to enhance their experience. We regularly conduct online and hard-copy surveys of residential, commercial and industrial customers to gather both quantitative and qualitative information on improving our bills, interactive voice response systems, Web site and other ways in which we interact with users. We also track industry-wide research by firms like J.D. Power & Associates and Chartwell for additional viewpoints on what utility customers are asking for.
The Web site also gives us indications of new and changing customer demands. Earlier this year, we determined that, for the first time, more customers were using self-service options on our Web site and our customer-care center’s interactive phone system, rather than speaking with a customer-service representative. While customer-service representatives are still a vital part of our customer response, we are also listening to the customer and considering what other self-service options we can provide.
Our Web site (www.pplelectric.com) allows customers to look at their bills and energy use over time, see how they are using energy and receive customer-tailored tips on how to save. They can also start and stop service, find out more about payment-plan options and enroll to pay their bills online each month.
Last year, Pennsylvania adopted Act 129, a law requiring electric utility companies to reduce overall demand and work with customers to help them save energy and money. My department has worked closely with PPL Electric Utilities to put systems in place so we can track our attainment of these requirements over time, and in support of customer programs related to Act 129. PPL Electric Utilities is driving the selection and implementation of customer programs, and we are providing the necessary information systems support.
McLeod, APS: Customer research drives the programs and resources we offer our customers and the way we communicate with them. We take full advantage of the annual J.D. Power surveys and our own internal research to gauge our progresses. We research best practices in technology and systems to improve the way our customers receive and pay their bills, talk with associates in our call center and report outages.
We contact customers to find out where we can make improvements in our business. Employing both online and over-the-phone surveys, we seek customer input on such crucial items as rate plans, online experiences, outage communication and overall satisfaction.
We recently launched an area of the APS intranet site that allows employees to make comments on our daily newsletter, which features late-breaking news in and around all departments of the company. Most of our employees are also APS customers, and they live, work, and play in the communities we serve. The comments we receive from employees through our intranet site provide a rich source of insight on what we can do to further satisfy our customers.
In addition, the APS call center allows customers to call 24 hours a day and speak with an APS representative who is there to help them find whatever answer they are looking for. Our call center is well respected; last year it won the Chartwell best practices award in customer service.
Through our community outreach efforts we receive broad, qualitative but nevertheless valuable input on how we are perceived. We take advantage of every opportunity to reach out to the community, whether it’s with customer service, community and economic development or the volunteer efforts of our employees. Customers and communities are a core area of focus in the strategic framework of my company.
Nuttall, OGE: This is an interesting question. Historically, many have viewed the regulators as the voice of our customer. At OG&E, we are quickly increasing our focus on the customers, bringing in the right skills and organizational focus to understand the needs and wants of our customers.
As CIO, I have the obligation to plan ahead for understanding enough of our customer needs and wants that we can develop the architecture and infrastructure to be successful. Although I previously held the position of director of marketing in another industry, it’s not my role to second guess our very talented and professional marketing department. However, I have many things on my to-do list that are critical for our customer relationships.
Our leading need, right now, is to develop the information systems capability to have a unified customer experience. We should not force different logons to different systems, and need to make sure that however we communicate, whether it be via bill inserts, text messaging, email, Web site interactions or phone applications, we can provision unified and targeted communication.
Forline, PSE&G: We build strong partnerships with our customers and take the time to listen, both formally and informally. We are not a company of bystanders.
To formally seek our customers’ views, we have a robust perception survey program targeting our residential, small business and large business customers. Our program comprises regular surveys, focus groups and moment-of-truth questionnaires. We compare our results with a benchmarking database of more than 80 companies and map our data into a model that helps us to understand the paths and levers for improving customer perception. Understanding our customers and responding well to their input is a priority.
We also have account representatives focused on our industrial and commercial customers and continue to focus our efforts in this area despite budget concerns. In the event of critical situations, such as storms and heat waves, our close relationships with these customers make all the difference.
Our tradition of community service—a strong source of pride—also keeps us connected with our customers. Our employees are the true heroes in this area, serving at soup kitchens, coaching sports, raising funds for various causes, and more. An example of this hard work: We have been the number one New Jersey corporate fundraiser for the March of Dimes for the last 10 years. Employees also actively use our grant and matching programs, leveraging their own resources to make New Jersey a stronger place to live, work and play. And our company foundation supports a range of programs, donating more than $50 million to support education, the environment and community economic development since 2000. We play a meaningful role in making the state a better place, and in so doing we build strong relationships.
Fortnightly: What systems and service providers are you using to encourage customer participation with utility programs?
Nuttall, OGE: We have an SAP ERP backbone, and use SAP’s customer care system as the tool that our customer-service representatives use for communicating with the customer. As part of our smart-grid program, we are using Silver Spring Networks applications to provide portals for those in our demand-response pilot.
Our first iPhone app is in beta now, and we are completing extensive work in organizing and hosting our customer-oriented data.
We are developing the skills and infrastructure needed to be able to enhance our interaction with our customers beyond the emphasis on the monthly bill and the call center. This involves many structural improvements, including significant improvements in our handling and organization of data.
McLeod, APS: The original customer-information system (CIS) APS used was an IBM CIS, which we have adapted and customized to meet our needs. The APS call center and our billing service continue to run on this CIS software.
We are also in the process of integrating OPower into our business. We have filed a new behavioral feedback energy efficiency program with the Arizona Corporation Commission that uses the OPower process. This program will provide information about a customer’s usage and compare it to similar homes in the neighborhood, reinforcing energy efficient behaviors and highlighting inefficient practices.
In addition, APS has recently taken the plunge into social media. Social media is a great tool for any company’s portfolio. It’s another way to reach a target audience, which in our case, is all our customers. This past summer, we started updating customers about outages using Twitter (@APSOutageCenter). We have seen great success in this endeavor and will look to Twitter in the future for other communications needs.
YouTube is another social media tool we have used successfully. Over the past two years, APS has added several videos of events, energy efficiency programs, and more to our YouTube page. We will continue to open new doors into social media, including the launch of an APS Facebook page, as another way to encourage customer participation.
Schinski, PPL: We worked with Aclara to set up the ‘Energy Analyzer’ feature on PPL Electric Utilities’ Web site, which has proven to be a popular tool. More than 400,000 customers have accessed the analyzer to obtain information on their energy use and tips on how to manage it. Studies have shown that customers who access the analyzer regularly have been able to reduce their energy use.
We’re also working on a pilot program with OPower to provide 50,000 of our higher-use residential customers with monthly reports on their energy use, relative to other users in their area. We are hoping that can achieve results similar to the Energy Analyzer, empowering people to manage their electricity use by giving them detailed information and useful recommendations.
We have been hearing that customers are interested in more and different methods to communicate with PPL Electric Utilities—mainly, different ways to receive billing and outage information and to submit comments. We’re working on several systems to make that possible, including text messaging and e-mails to smart phones and iPads. However, we have not yet selected specific programs to implement those communications.
PPL Electric Utilities is in the process of moving to a new bill-printing program, and my department is involved in that process as well. The new program will be more agile and flexible in terms of the messaging we are able to provide customers. We may be able to use that new flexibility to customize our messages and encourage customer participation in some of our programs.
My department recently brought forward and implemented an idea for a virtual hold program. Customers whose hold times are expected to exceed two minutes hear a message that tells them the expected wait time, and gives them the option to continue to hold or request a call back in the order their call was received. It’s one of many ways we are working to add convenience, make communicating with customers as easy and direct as possible, and ultimately encourage customer engagement with our company.
Forline, PSE&G: We realized that self-service was the direction that many of our customers were going in and we stepped up to the plate. In early 2009, we launched online convenience options, as part of a broad new, SAP-based customer-information system rollout, which won the CS Week award for best CIS implementation at a large company.
These convenience options, available to PSE&G customers through the ‘My Account’ self-service feature at www.pseg.com, enable customers to sign up for service contracts, schedule service appointments, report and view outage information, enroll in paperless billing, conduct a personalized home energy analysis and more.
Customers have been registering for My Account at a rate that exceeded all business-case projections. In less than a year and a half, more than 600,000 customers have signed up for My Account and are enjoying the services.
Some of the additional methods we use to encourage customer participation include electronic newsletters and energy analysis tools and calculators provided through Questline, a service of Tech Resources; email campaigns using Constant Contact and Campaign Monitor; and customer-relationship management processes to help facilitate enrollment in various company programs.
Jackson, Oncor: Our Street Light Outage Tracking System creates tickets using a google maps-based interface we developed internally. We hope to add interactive storm-related outage and weather information to these maps in the first quarter of 2011. Our Vertex customer-contact center will also pilot a new program this fall to offer live chat and text messaging. We’re also active in social media, using Facebook, Twitter, YouTube, Flickr, and LinkedIn to communicate with various stakeholders throughout each day.
Fortnightly: Is customer resistance to utility engagement difficult to overcome?
Forline, PSE&G: Our experience is just the opposite. Our customers are engaged. We actively build our customer relationships, keep involved with our communities and solicit customer feedback through various channels. Most of our employees also live in our service territory and are PSE&G customers. PSE&G is one of the largest employers in the state. More important, we have employees on the front lines with customers each day.
Meter readers, appliance service technicians, electric trouble shooters and others visit customers’ neighborhoods and homes to provide quality service. Our 16 walk-in customer-service centers offer face-to-face service in a comfortable and convenient environment, and our two New Jersey-based call centers are staffed with highly-skilled professionals ready to respond to questions.
Engagement is not our challenge. Rather, it’s how to be as responsive as possible to the input we receive.
Jackson, Oncor: Customers are eager to engage with us. Our only challenge is managing their expectations. People under 30 have lived entirely in a wired world and want to report streetlight outages or see a map of weather-related outages online, so for them, AskOncor.com is ideal. Other customers want to speak with a real live human being, and our Ask Oncor open houses make them feel welcome.
Schinski, PPL: The increasing number of customers that are using our many online tools and our interactive phone system indicates that our customers are generally willing to learn more about the programs we offer. We now have about 75,000 customers enrolled in paperless billing programs and 200,000 customers enrolled in our budget-billing program, which tells us that we are reaching and convincing our customers about the benefits of these programs.
Our customer base spans a broad range of ages and geographies: Our customers live in urban downtowns, rural agricultural areas and every setting in between. We believe in offering a variety of platforms and services to enhance the customer experience. No matter what your needs are or how you choose to engage with us, we believe we have technologies to enhance each interaction.
On a related topic, we have talked extensively about the extent of our customer engagement through smart meters. Other utilities have offered programs, for instance, to remotely turn off customers’ air conditioners or other major appliances during times of peak demand to save energy and help customers save money. We have not yet entered the domain of actively controlling appliance use. But Pennsylvania’s Act 129 legislation mandates that we offer direct load control, among other energy management programs. So, we are starting to work on pilot programs in that area that we will begin to offer next year.
McLeod, APS: The secret to engaging customers is options. APS serves more than 1.1 million customers in Arizona. We have customers who live in the snow, and customers who live in the desert. We have customers in their early 20s buying their very first homes, and we have snowbirds—retirees that live in Arizona only during the colder months. With so much diversity, service and rate options are essential to engaging each and every customer.
When it comes to energy usage, different people have different needs. That’s why APS offers several rate plans, so customers can find the one that is most convenient for their lifestyle and saves them the most money. APS offers the most extensive time-of-use program in the nation, with 450,000 customers on one TOU plan or another.
APS also offers several options for customers to pay their bills. Customers can pay online, over the phone, through the mail, in person or they can set up payments that automatically come straight from their bank account each month. Customers also have the choice of whether to receive a paper bill. In fact, most of our customers choose to go paperless and view their bills online. In the past five years, online transactions have increased 90 percent, with more than 240,000 customer transactions a month.
Customers also have more control over the size of their bills than ever before. APS has many energy efficiency programs that offer incentives to help cover the costs of making a home more energy efficient—rebates for everything from high-efficiency air conditioners to pool pumps, from duct sealing to attic insulation and most recently, we’ve created financing options for customers to accomplish this type of work.
We have so many options to help customers stay engaged, customer resistance has not been a problem.
Nuttall, OGE: I do not feel qualified to answer this.
To date, we have been relatively passive, on the whole, in our engagement attempts. Our communication has been mostly 1) the monthly bill mailing; 2) call-center interactions with a minority of our customers; and 3) some very good activities from our communications department (i.e., ‘SystemWatch’ outage reporting, promotional advertisement campaigns, and appropriate news bulletins).
However, this is changing, as we are moving into a world with varying prices, significant usage information, and a multitude of new products. We are learning to engage our customers in our demand-response pilots, but I believe that we will have much more to learn as time goes on.
Fortnightly: Are there any specific lessons learned so far vis-à-vis customer-engagement attempts?
Nuttall, OG&E: I think our smart-grid team has excelled in their engagement of our customers. I think their willingness to elevate and investigate customer issues, rather than putting off customers who complain, has helped the small number of issues we experienced not explode into a groundswell against the program.
McLeod, APS: We’ve learned that customers recognize a good deal when they see one. Like many utilities, APS must meet ambitious renewable energy goals that include a distributed component. To encourage customers to install solar photovoltaic panels on their homes, we offer a substantial rebate. Last year, we reached a tipping point in customer engagement with solar when customers oversubscribed the program and exhausted the funding allotted by regulators. This year, we offer rebates on a sliding scale: When the solar-panel program reaches a certain number of subscribed customers, we reduce the rebate amount.
As a company we learn what works and what doesn’t from our customers every day. With all of our outreach and our dozens of options to keep customers engaged, we work hard to listen to customers through different channels. In today’s technology-driven world, one unhappy customer can lead to a flurry of online journalists spreading a story and shining a negative light on APS. Let me give a specific example of this.
Last year, we experienced a situation where a customer started an on-line blog expressing dissatisfaction with a recent billing interaction with our company. The customer felt her concerns were not being adequately heard, so she used the blog to vent her frustrations at us and other utilities. Within hours of the blog posting, her Web site was proactively indentified by our communications team through regular social media monitoring. We then used the blog to identify the customer and immediately initiated on-line and phone contact. Once we made contact with the customer, we were able to quickly resolve her concerns, while at the same time using this experience as a learning opportunity.
The customer was so appreciative of our unsolicited outreach and response that she went back to her blog and deleted it. In its place, she started a new blog featuring energy-efficiency and customer service tips and actually linked site visitors directly back to our company’s Web site. APS worked with the customer not because we wanted the online praise, but because it was the right thing to do.
This situation demonstrates the influence of each customer with a computer and a Web site. Before social media, we might never have known about this customer’s frustrations, but today’s on-line tools helped opened a fresh communication channel between her and us, leading to an improved relationship and a happy ending for all. Social media is changing the way we do business, and we look at this as an opportunity to engage customers in exciting new ways and receive more feedback.
Jackson, Oncor: Vegetation management is always a sensitive issue and we wish we never had to trim a tree, but when customers’ trees grow into our power lines and cause outages, we have an obligation to prune. Our customers asked us for more options, and we are now sending arborists to personally meet with each and every homeowner to discuss all the cuts that will be made and why. For those customers who are willing to sign an alternate tree maintenance agreement and hire a line clearance qualified tree service, Oncor initially prunes trees seven feet from our lines for safety, then we allow customers to trim as often as they like as long as a seven foot minimum distance is maintained. It’s tough to strike a balance between safety and reliability and the expectations customers have, but it’s been a worthwhile exercise.
Schinski, PPL: We have received very positive feedback so far on our virtual hold system, and our Web site has received positive coverage in several publications for the timeliness and completeness of its data.
In building solutions to support PPL Electric Utilities, we have been fortunate to have an information services organization that is quick to adapt and that understands the utility’s business and processes. PPL employs business analysts who are tasked with analyzing and understanding business operations so we can provide the most appropriate technology to meet business objectives. That kind of understanding of both the business and the technology is invaluable in creating solutions that meet the customers’ needs and demands.