J.D. Power, Navigant let customers voice kudos, complaints about their utilities

Kathleen Davis, Associate Editor

Customer satisfaction has become both buzzword and dead horse in this uncomfortable hiatus between regulation and deregulation. That old retail mentality of “the customer is always right” rears its head repetitively at industry conferences around the nation-making even the most stalwart of companies flinch.

Customer satisfaction is new utility territory in a world set in the tradition of monopoly, but saying and doing are, as always, on opposite ends of the spectrum. The lip service to customers is everywhere, but where are those results?

J.D. Power & Associates, in cooperation with Navigant Consulting Inc., has released a report entitled Electric Utility Residential Customer Satisfaction Study, giving customers a chance to voice both kudos and complaints about their electricity provider.

This is the second year for the study, which polled 24,000 residents through a randomly conducted twenty-minute phone interview with customers of the 75 largest electric utilities in the U.S. The interviews took place in April and May of this year, and the findings are now ready for release.

Those findings suggest that utilities deserve a hearty pat on the back for their significant improvements. In fact, the study points to a twelve-hour drop in average length of power outage between 1999 and 2000. While Jim Gatz, director of energy services at J.D. Power and Associates, does admit that hurricane Floyd and other weather factors contributed to the high number of 1999, he also heralded improvements made in that intervening year as well.

“Electric utilities have made a concerted effort to upgrade and maintain their distribution systems as well as implement outage management and communication systems,” Gaz told EL&P.

Weighing in

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Overall the study reports that 65 percent of customers are content with their utility in the area of company image as well as customer service, billing and payment, power quality and reliability, and price and value. (See fig. 1) Company image was the component with the most weight in the study, which Gaz attributes to a lack of connection between customer and utility. Such a gap requires that the customers hitch their judgements to a corporate identity rather than a product.

“Electricity is an intangible commodity,” he said. “Customers do not have very much experience with their utility unless things go wrong.”

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Gaz added, “However, we have seen the more tangible areas of customer service, power quality and reliability, and billing and payment become more important to residential customers in determining their overall satisfaction with their electric utility. As competition becomes more prevalent and interactions increase, we expect customers to be able to apply other more tangible criteria,” he finished.

Customer satisfaction has definitely improved on the index as a whole, bumping four more utilities above the industry average over 1999.

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Jeffrey Conklin, director of Navigant Consulting commented, “Many utilities have improved this year due largely to enhancements in power delivery and customer service. The investments made in technologies, processes and human resources are paying off.”

Sounding off by region: East

Potomac Electric Power (Pepco) tops the charts in the Eastern U.S. with an index number seven points above the industry average of 101. At 108, they lead a pack rounded out by Allegheny Power, PPL Utilities, National Grid USA, Rochester Gas & Electric, Baltimore Gas & Electric, Central Maine Power and Public Service Electric and Gas. Allegheny Power is Pepco’s closest follower, sliding into the second place slot just one point behind at 107. PPL comes in third at 104. (See fig. 2)

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“Two things happened to put Pepco on top in the East region,” Gaz commented. “They improved in each of the five customer satisfaction components and are, in fact, the most improved utility-year to year-in the region. Also, PPL Utilities, last year’s leader, fell back a bit,” he finished.

Central Main Power and Public Service Electric and Gas both came in at the industry average, but there were a string of utilities who fell below that 101 cutoff, including Conectiv, Consolidated Edison of New York, Duquesne Light, GPU Energy, Long Island Power Authority, New York State Electric & Gas, Niagara Mohawk, Northeast Utilities, NSTAR, PECO Energy and United Illuminating.

Midwest

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LG& E Energy, the parent company of Kentucky Utilities and Louisville Gas and Electric, leads the pack in the Midwest. They grabbed the brass ring of provider ranked highest in customer satisfaction for the second year running.

“LG&E has some of the lowest rates in the industry, and they do an excellent job serving their customers,” Gaz said. “LG&E has been tops in the Midwest region in both residential studies-1999 and 2000-as well as our 2000 midsize business study, followed closely by NSP in each study.”

And Northern States Power (NSP) is only a sliver of a step behind LG&E with customers. Like Allegheny Power in the East, NSP trails by a single point. Where LG&E ranks at a solid 117 on the customer index, NSP hits at 116. They’re closest competitor is Wisconsin Public Service, in third at 110. (See fig. 3)

Alliant and MidAmerican Energy tied at 109, Cinergy and Illinois Power at 105, and American Electric Power, Indianapolis Power & Light and Wisconsin Electric at 103. Both Ameren and Consumers Energy met industry average in the Midwest, while ComEd, Detroit Edison, FirstEnergy and Northern Indiana Public Service Company all ranked below average.

South

Memphis Light, Gas and Water, which serves both the home of the King and Shelby County, is frontrunner is the South at 113. South Carolina Electric & Gas comes in second at 111, and City Public Service of San Antonio is tied for third with Tampa Electric at 110. (See fig. 4)

“Memphis LGW is the most improved utility in the South region, and showed gains in each of the five customer satisfaction components [consisting of company image, customer service, billing and payment, power quality and reliability, and price and value],” Gaz commented. “Certainly being a municipal that provides many services to their customers helps solidify their role in the communities they serve,” he added.

Powerhouses Southern Company and Duke weigh in at 109 and 108 respectively, while Carolina Power and Light, Central and South West, and Virginia Power were only a notch behind. The rest of the pack leaders for the South: Oklahoma Gas and Electric, Florida Power, Florida Power & Light, TXU Electric and Gas, Kansas City Power and Light, and Reliant-all above the 101 average. Both Jacksonville Electric Authority and Nashville Electric Service made it in just at the wire.

Austin Energy, Entergy and Western Resources were all below average for the region.

West

The Salt River Project, which serves Phoenix, rides high in the West and, in fact, leads the study overall at 118. Like LG&E in the Midwest, it’s a repeat victory. While ranking high in all areas of the study, Salt River sets itself apart in customer service, power quality and reliability, and billing and payment.

Seattle City Light came in second in the region at 115 with Idaho Power in third. (See fig. 5) Sacramento Municipal Utility District, Avista, New Century Energies, Sierra Pacific Resources, Tucson Electric Power, San Diego Gas & Electric (SDG&E), Arizona Public Service, PacifiCorp, Southern California Edison, Pacific Gas and Electric (PG&E), and Puget Sound Energy all came in above average in the West. Portland General Electric hit the average on the nose.

Gaz did tell EL&P he expected to see SDG&E, PG&E and Southern California Edison-all immersed in the so-called “California energy crisis” to varying degrees-to drop because of the volatile summer. J.D. Power and Navigant have returned to the SDG&E service area to repeat the survey in order to have “a before and after snap shot of customer satisfaction,” according to Gaz.

“I cannot comment yet on the degree of change,” he said. “But we do expect to see some decline is satisfaction.”

El Paso Electric, L.A. Department of Water and Power and the Public Service Company of New Mexico all came in below industry average in the study, although Gaz commented that Public Service Company of New Mexico was the “most improved” electric utility in relation to last year’s standing.

Lessons in customer service

Gaz predicts that continuing competition may waylay a utility from focusing on customers for a time-simply because the change in market will mean changes within the company, and that the sheer volume of new, confusing information (“like unbundled bills”) may create irritated consumers without a real power problem. However, he predicts that-in the end-the customer will return to center stage.

“Customer satisfaction matters,” he said. “Satisfied customers are loyal customers.”

Gaz reveals those companies at the top of the study-like Pepco, LG&E, Memphis Light, Gas and Water and the Salt River Project-know how to juggle, that they are certainly “firing on all cylinders.”

And what should an up-and-coming utility garner from this study? How could it climb to the peak of the pack in 2001?

“The best performing utilities do a lot of things well; there’s no silver bullet,” Gaz commented, adding a laundry list of positive qualities.

“They deliver value. They provide quality service. They communicate, educate and inform effectively, and when their customers call, they take very good care of them to resolve their issues.”

More information on the J.D. Power and Associates/Navigant Consulting study is available at csi.navigantconsulting.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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