Customers lack faith in power pricing but love the service

Kathleen Davis, Associate Editor

Your residential customer isn’t a happy camper.

According to J.D. Power and Associates’ 2001 Electric Utility Residential Customer Satisfaction Study, faith in utilities has plunged. In fact, customers in 39 out of the 42 states involved in the study “registered strong criticism” about their utility’s charges and value.

Customers weighed in with an average monthly electric bill of $104 this year, which is up almost 20 percent from last year. Plus, 61 percent of those surveyed predicted that number will only grow higher and higher in 2002, increasing an estimated 23 percent from this year.

“[Customer] comments pushed our study’s nationwide utility industry price and value measurement down an astounding 10 points compared to the 2000 study,” commented Jeffrey Conklin, senior director of electric utilities practice at J.D. Power. Indeed, price and value numbers fell in this year’s study, registering at 91, well below last year’s 101 mark.

“The problem is threefold,” Conklin stated in an interview with EL&P. “First, everyone was aware of California, and there’s probably a reaction-a fear factor-with that. Second, there was general angst about the future of the consumer’s electric bill. Third is natural gas prices.”

“Household consumers may have a broad sensitivity to energy prices,” Conklin added. “And to them, the overall issue is the sum of what they pay for electricity, what they pay for natural gas and what they pay at the gasoline pump. So it becomes a broader energy issue to them, and they are reacting negatively, even though the facts seem to be that electricity prices in certain areas, like the Midwest, didn’t really increase.”


However, the picture painted by the study isn’t all doom and gloom. Customer satisfaction with electric utility performance has improved, building on the rising numbers of last year’s study. Customers were generally happier with power quality and reliability, billing and payment, and customer service, Conklin pointed out. When balanced against the pricing and value concerns, the positive aspects helped to cushion the pricing blow so that overall satisfaction fell only two points, remaining basically the same. While 2000 registered at 101 for overall satisfaction, 2001 only fell to 99.

“When we look at power delivery, bills and customer contact with the utility, those are all rated stronger this year compared to last year,” Conklin told EL&P. “I think customers just reacted viscerally to perceptions about price or even the general economic malaise, but as they thought about actual interactions with the utility, they consistently gave the utility better marks.

“Also, utilities have been investing in the distribution network for the last few years, and there certainly has to be some payoff for that at this point. I think that’s also being reflected in improved perceptions of performance.”

The survey also found that seven out of ten study participants supported competition in the industry, especially those in New Hampshire and other Eastern states like New Jersey, New York and Rhode Island. Texas customers were heavily supportive of the statement as well.

J.D. Power’s study also revealed that 75 percent of respondents outside of California believed that there is already enough power to supply “all the electricity needs” of customers in their area. However, only 49 percent of Californians agreed. According to the study, customers in Idaho and Washington were also concerned, while residents of Mississippi, Oklahoma and North Carolina were “positive about adequate power supplies.”

The 2001 study was based on 25,501 interviews with residential customers of the 71 largest electric utilities in the continental U.S. Responses were collected during March, April and May of this year, with the results broken down in specific regions. Omaha Public Power District came out the ultimate victor with a satisfaction index number of 121, which put them atop the Midwestern regional chart. The leader of the Eastern region, PPL Utilities, came in a close second with 118.


PPL manages to reclaim the regional crown that they previously held in J.D. Power’s inaugural 1999 study. Last year they came in third behind Potomac Electric Power and Allegheny Power. This year, PPL is back with a vengeance, blowing by last year’s 108 regional heights by a good 10 points.

“Our business is customer-focused,” said Michael E. Bray, president of PPL Electric Utilities. “Our service is reliable, and our prices have been stable. Our employees have a genuine service ethic, and the company is active in the community. We believe that those key attributes, along with a strongly positive company image, are the reasons our customers rate us as among the best.”

“PPL has a good handle on how to keep the customer informed,” Conklin stated. “And there are lessons here that other utilities can learn about how to convey information about outages.

“Give the consumer enough information to make a decision: Is it going to be out for six hours? Should I go to the mall and go see a movie? Do I need to go buy ice?

As long as you can tell them, reasonably, what the cause was, the extent of the outage and how long you expect it to last, customers are often very satisfied with just the ability to make a decision based on detailed information.

“Whereas they react very negatively if they are not told much,” he added.

The survey noted that PPL was one of a very few utilities “to improve its performance in each of the five components of satisfaction.”

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Besides PPL, nine other utilities came in above the industry average for the region: Allegheny Power, Energy East, Potomac Electric Power Company, Public Service Electric & Gas, Baltimore Gas & Electric, GPU Energy, Northeast Utilities, Rochester Gas & Electric and United Illuminating (see Figure 1).

Allegheny Power keeps a steady second place for its third straight year with its 107 finish and Energy East, the combination of New York State Electric & Gas and Central Maine Power, rounds out the top three in an 104 tie with Potomac Electric Power Company.

Coming in at or below the industry average of 99 for the region were Conectiv, Con Edison, Duquesne Light, Exelon-PECO, Long Island Power Authority, Niagara Mohawk Power, National Grid USA and NSTAR Electric.


Southern Company took top honors in its namesake region and was third overall (behind Omaha and PPL) with a satisfaction index number of 113. Progress Energy followed a close second with 110, which ties with the Western region top player Tucson Electric Power. A three-way tie for regional third rests just one point below at 109. Duke Power, Jacksonville Electric Authority and Oklahoma Gas and Electric all take the bronze.

Southern Company shows a four-point gain from last year’s fifth place finish behind Memphis Light, Gas & Water, South Carolina Electric & Gas, City Public Service of San Antonio and Tampa Electric.

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Memphis Light, while still treading water, has fallen to the industry average of 99 this year, a fourteen-point slid from the year before. South Carolina Electric & Gas fell to tenth place, City Public Service of San Antonio to seventh and Tampa Electric to sixth (see Figure 2).

Other regional utilities taking above average honors include Virginia Power, Florida Power & Light, Nashville Electric Service, AEP-CSW and TXU Electric & Gas.

Finishing at or below the industry average of 99 for the region were Austin Energy, Entergy and Reliant Energy HL&P. (Austin Energy and Entergy were both in this same category last year.)


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Omaha Public Power District entered the study for the first time with a bang, coming in tops overall with customer satisfaction. Last year’s regional winner, LG&E Energy, slid to third with a score of 108, down from 117 last year. Wisconsin Public Service clawed up from a third place finish last year to second place this year, moving up three points to 113 (see Figure 3).

Alliant Energy slid from a 2000 fourth place finish to ninth; Illinois Power fell as well, just hitting the 99 industry average in 2001.

AEP-Midwest, Consumers Energy, Cinergy, Indianapolis Power & Light, Xcel Energy-NSP, Alliant Energy, Ameren, Detroit Edison, Kansas City Power & Light, MidAmerican Energy and Dayton Power & Light all came in above industry average.

Illinois Power, Wisconsin Electric, Exelon-ComEd, FirstEnergy, Northern Indiana Public Service Company and Western Resources were at or below that average.


Tucson Electric Power (TEP), a subsidiary of UniSource Energy Corp., led the Western region with an index score of 110, a good 11 points behind overall winner Omaha Public Power. The utility has shown steady improvement each year, according to the study, gaining two points in 2000 and 4 points in 2001-making it one of only 10 utilities to improve at least one overall index point each year of the study.

UniSource Energy President, Chairman and CEO James S. Pignatelli said the award reflected TEP employees’ commitment to excellence. “In recent years, our work force has remained stable while our customer population has increased dramatically. The fact that TEP employees are doing more with less and doing it so well in the eyes of our customers is solid testimony to their team spirit and drive,” he stated.

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Salt River Project, last year’s leader, came in second at 109, a slide from its finish of 118 in 2000. L.A. Department of Water & Power, which was listed below industry average last year, shot up the chart to tie for third with Portland General Electric and Seattle City Light (see Figure 4).

None of the three major California utilities in the news of late (San Diego Gas & Electric, Southern California Edison, Pacific Gas & Electric) came in above the average, even though they were all three in that category just one year previous.

“Customers got extraordinarily critical in California on many aspects about their overall satisfaction,” Conklin stated.

“With the awareness of the California power crisis relatively high, and energy prices expected to increase, consumer loyalty is eroding,” said Al Destribats, executive director of utility and telecommunication practices at J.D. Power.

Rounding out the region: Idaho Power, PacifiCorp and Avista were above average. Puget Sound Energy, Arizona Public Service, El Paso Electric, Pacific Gas & Electric, Public Service Company of New Mexico, Sacramento Municipal Utility District, San Diego Gas & Electric, Sierra Pacific Resources, Southern California Edison and Xcel Energy-NCE were at or below average.

“Utilities tend to put an awful lot of weight into the consumer surveys,” Conklin told EL&P, when asked to weigh residential against commercial and industrial customers. “Utilities realize that those customers have an impact at some point beyond just the monthly bill. Residential customers vote. They call and talk to regulators. They have influence over businesses, which are also customers.”

“Benchmarking is principally the most predominant use that the utilities have for our study, and many utilities are starting to use this study as one metric among many in their corporate scorecard,” Conklin said. “So they are putting residential customer satisfaction on par with a lot of other aspects of how they measure themselves, and that’s obviously a very important turn for the industry.”

More information on the 2001 J.D. Power & Associates Electric Utility Residential Customer Satisfaction Study can be found at or by contacting Michael Greywitt at 818-880-6330.

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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

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