When Puget Power & Light merged with Washington Natural Gas (WNG) in 1997, the resulting company, Puget Sound Energy (PSE), became one of the largest utility companies in the Northwest, serving 885,000 electric and 500,000 gas customers. With deregulation looming, the merger provided PSE an opportunity to redefine itself and its customer information system (CIS) to meet the demands of the new energy marketplace.
Feeling Deregulation’s Impact
The early 1990s brought major shifts in utility requirements. As utilities attempted to adapt, it became clear that existing billing and customer information technology could not support the enhanced services necessary to remain competitive in the changing market.
To address these concerns, PSE, AXIOM Consulting, Alberta Power and Portland General Electric formed a consortium to examine marketplace trends and identify ways to create customer bonds that went beyond energy delivery. The consortium concluded that no single tool at a utility’s disposal has as much impact on success or failure as the CIS. The consortium’s multi-year effort resulted in completion of customer system data models, process models and the design of a technical CIS architecture.
Armed with this new information and technology, PSE executives realized that modifying the existing Puget Power and WNG legacy systems, which were currently incapable of meeting new billing and customer care requirements, would be impractical and costly. PSE needed to install a new CIS that would meet utility customers’ increasingly sophisticated demands. The new PSE CIS would have to be versatile enough to accommodate growing regulatory requirements and strategic utility objectives, including mergers and acquisitions and new retail business strategies.
Several factors influenced PSE’s overall strategy in implementing a new CIS. First, negotiations between Puget Power, WNG, the Attorney General’s Public Counsel, and the Washington Utilities and Transportation Commission (WUTC) produced a number of consumer-friendly provisions that would ensure the public would be served by the merger. These provisions included a comprehensive service quality program with a customer service guarantee, which set standards for measures such as customer complaints, repair problems and extended outages. The WUTC could impose up to $7.5 million a year in penalties if the combined utility failed to meet these service standards.
Additionally, while the state of Washington had no immediate plans to deregulate, executives at PSE were planning for the inevitable. With deregulation, customers would become a more crucial aspect of business. Cost containment, accuracy and clarity in billing would be critical to customer retention. PSE executives knew that under competition utilities that didn’t accommodate new business rules-in other words, those that didn’t put the customer first-would be pushed out of the supply business. PSE wanted to be prepared.
PSE Implements AMR Technology
While PSE was focused on providing excellent customer service, the company also needed to create new ways to contain costs. Installation of an automated meter reading (AMR) system was part of the answer.
Through the use of a wireless AMR system, PSE could enhance its service by providing customers with more timely and accurate bills, automated outage notification and improved resolution of meter-reading disputes. The near-real-time usage information AMR can provide allows PSE to implement real-time pricing for energy, ultimately giving customers a choice in how and when they consume energy.
Conventional meter-reading is a labor-intensive, sometimes arduous process. With AMR, PSE would realize significant savings through meter reading cost reduction. As well, AMR would provide an infrastructure to implement programs that allow more interactive relationships with customers.
In 1997, as the Puget Power/WNG merger was being finalized, PSE began deploying a network meter-reading pilot in Thurston County, Wash. Since April 1998, it has extended the network to Pierce and King counties. By 2002, 95 percent of PSE’s electric and gas customers will be radio-equipped.
A CIS that Supports AMR
Installing a new CIS can be a perilous endeavor. Many energy providers have attempted to modify existing legacy systems to meet new business rules-often with disastrous results. Some system modifications or new implementations have resulted in systems that don’t provide the necessary flexibility and scalability to meet customer and regulatory demands. Other utilities have tried building all-encompassing systems, but most have fallen short of expectations. In some cases, utilities resorted to ad hoc systems and special billing processes, which proved to be limited and costly.
PSE took a fresh approach. As the Puget Power/WNG merger was being reviewed, a new company, ConneXt, was formed as an independent subsidiary of what would become PSE. The company was established to continue development of the CIS that the energy consortium formulated in the early 1990s. The new CIS would increase service levels and improve efficiency while also addressing deregulation issues. The solution the consortium sought was the product ConneXt ultimately developed-ConsumerLinX.
ConsumerLinX would deliver a range of customer care requirements and multi-company billing in one comprehensive system. The software’s scalability accommodates PSE’s 1.3 million customers and leaves ample room to grow. The flexibility offered by ConsumerLinX’s table-driven design also simplified business process definition. Process changes would require only configuration changes instead of programming changes, which can be made in a matter of minutes rather than weeks or months.
In an age of dwindling margins on commodity sales, PSE would have the ability to sell new products and services to its customers, transforming good marketing ideas into revenue. ConsumerLinX was designed to track and manage all interactions with anyone, including guarantors, banks, government agencies and customers. It would generate mailings, personalized correspondence or information for inclusion in statements automatically. Additionally, it would generate targeted communications based on business events or activities.
The new CIS could support any new business strategies that were conceived or changes in regulation that occurred. In addition, ConsumerLinX’s faster billing and customer care services link with PSE’s extensive wireless AMR network to match real-time energy use with real-time market pricing.
In June 1999, PSE selected PricewaterhouseCoopers as the systems integrator for the ConsumerLinX project, and initial data conversion began. To kick off the project, the systems integrator, PSE and ConneXt developed teams to head up key aspects of the implementation: integration, data conversion, training and organizational readiness. Each company allocated full-time, dedicated process owners as team leads, which enabled developers and project managers from each company to work closely together. In a somewhat unorthodox move, the teams were relocated to a central work location, rather than working from their original respective company locations. This centralization facilitated unprecedented collaboration between the customer, the systems integrator and the software vendor. Because many functional processes, such as accounts receivables management, cross all disciplines of each functional team, having the developers and project managers in a forum where they could easily interact was crucial to keeping the project on schedule.
In October, after the initial project start-up, a program to train users was implemented. The systems integrator recommended a contingent workforce to help absorb the shock of productivity loss while the agents were training on the new system. Some contingent staff were trained on the legacy systems, and some were trained only on the new ConsumerLinX software. PricewaterhouseCoopers developed and oversaw the “train the trainer” sessions with assistance from ConneXt and PSE.
A particularly useful training component was a “mentorship” program in which contingent staffers were able to shadow full-time agents as a prelude to live system use and to supplement completed training courses. The contingent workers proved to be technically savvy and tended to have higher-level computer skills than their full-time agent counterparts. Conversely, the PSE agents were highly skilled in PSE business rules. The different skill sets helped these groups form a strong peer relationship not normally seen during the stresses of implementation.
PSE integrated the ConsumerLinX system in 11 months, half as long as the industry norm. ConsumerLinX went live at PSE on April 10, 2000. In April, PSE increased its timely call handling by 12 percent over the first quarter’s results with the old system.
The ConsumerLinX system currently serves PSE’s 907,000 electricity accounts. The company’s 570,000 natural gas accounts were to be converted at the end of 2000. Linked with the extensive wireless AMR network, the new system allows PSE to offer a variety of rates and pricing options and improved communication to its customers. When ConsumerLinX is fully implemented, PSE customers can use it to access their accounts via Internet, e-mail, fax or telephone to monitor usage, choose preferred pay dates, select electronic payment options and take advantage of other services.