The Utility Company that Offered a Service Guarantee
1 May, 2004
By: Manny DrozPacifiCorp is one of the lowest-cost electricity producers in the United States, providing more than 1.5 million customers with reliable, efficient energy. The company works to meet growing energy demand while protecting and enhancing the environment. It operates as Pacific Power in Oregon, Washington, Wyoming and California, and as Utah Power in Utah and Idaho. The company merged with ScottishPower in 1999.
One of the cornerstones of the company’s focus on service delivery is its Customer Service Guarantee program. Launched in February 2000, the program is a comprehensive set of guarantees and performance standards unmatched among U.S. electric utilities.
We spoke with Karen Gilmore, Vice President of Customer Services, to provide more details regarding the program.
CP: While guarantees of quality customer service are not a new approach for some industries, your Customer Service Guarantee program is unique for the utility sector. What prompted you to institute such a program?
KG: The program was developed as one of the key components of the merger between ScottishPower and PacifiCorp and was designed to demonstrate to customers and regulators the merged company’s commitment to customer service. ScottishPower had successfully implemented a similar program in the U.K. several years prior to the merger, and its positive experience with the guarantees helped guide the development of PacifiCorp’s program.
CP: What are the key elements of the guarantees?
KG: The guarantees are centered around day-to-day key interactions between company employees and customers, such as keeping appointments, connecting new service, providing notice for planned interruptions and restoring power.
CP: How were the objectives and remuneration for the guarantees determined?
KG: The intent of the guarantees is to provide customers with a payment to recognize that service was not up to the high standards PacifiCorp set for itself. The guarantee payments are not viewed as “compensation” for customers, but more as recognition by the company that service was not as it should have been. In deciding on the specific amount of remuneration, both ScottishPower’s U.K. program and other similar guarantee programs in existence around the U.S. were relied upon to determine appropriate levels of guarantee failure payments.
CP: Are there any instances where these commitments do not apply?
KG: Yes. The guarantees are designed to cover the company’s normal day-to-day interactions with customers. Excluded from the guarantees are outages and delays caused by major storms and other instances of force majeure. A top priority for the company is the safety of the public and its employees, and as such, safety-related issues that preclude the company from meeting the guarantees also are excluded. Also excluded are actions or defaults by someone other than a company employee that did not allow the guarantee to be met, such as road closures. Other exclusions include situations where the company did not have access to the customer’s facilities, or when the customer did not provide enough information to allow the company to fulfill its obligation to serve.
CP: How did people react to the program?
KG: Customers were very impressed with the company’s commitment to quality and timely service. Employees have embraced the guarantees and have been supportive of the program because they are convinced we were already providing this level of service before the guarantees were put in place. For the most part, they were correct. The guarantees have highlighted our success in meeting these targets and helped us maintain our already strong commitment to our customers.
CP: How do you communicate the program and its results?
KG: A monthly report outlining success and failure rates is sent to all management personnel, and current statistics are posted on a Web site that all employees can access. Quarterly reports are submitted to all state regulatory commissions. Externally, we share guarantee-related activities with customers through an annual report card demonstrating our success rate as well as through articles in monthly and quarterly newsletters that reach customers and community leaders and on our company’s Web sites. We also contact the news media with our guarantees success rates when appropriate.
CP: Have you implemented internal initiatives to ensure these commitments are consistently met?
KG: We have. Many process improvements have been implemented companywide to support the program. A management review committee meets monthly specifically to analyze the results of the program. Focus is placed on program metrics and failure points. Managers of areas where issues are identified are tasked to develop an action plan and time frames to rectify the problem. Trends are periodically analyzed, and where failures are deemed to be too frequent a thorough review is performed and corrective action plans are developed.
New technology, in the form of an automated “outage system” was implemented to quickly identify outages and their causes, communicate more effectively and efficiently with affected customers and provide enhanced reporting capabilities.
Training for company employees has been revamped to align the curriculum with the Customer Service Guarantee program and to support performance development activities.
The company has also received ISO 9001 certification and is audited by ISO annually, as well as by its own internal auditors.
CP: Was it necessary to implement any new technology to assist with theprogram?
KG: Initially, we were able to use and modify existing technology to track our internal work processes. As new technology enhancements that may affect the guarantees are implemented throughout the company, we ensure the new technology can accommodate the guarantee program requirements.
CP: How are your employees trained?
KG: All new employees companywide receive an orientation to the program. For some roles, specific hands-on training is offered to ensure employees are provided the tools necessary to be successful. Across the company, each business unit trains employees on the guarantees depending on how the program affects that department.
CP: What are the results of this initiative to date?
KG: Many internal refinements have occurred as a result of the guarantees program. An increase in performance controls has led to a number of operational efficiencies, such as outage reporting, call handling service levels and power supply restoration time frames. The program has facilitated many other “consistency-focused” initiatives throughout the company.
It also has created a heightened awareness of customer needs and the idea that every employee has an impact on how well the customer is served and the company perceived. Overall, the company succeeds in meeting the guarantees more than 99 percent of the time, a significant achievement given the over 3 million opportunities to serve the company’s customers.
CP: How does a customer initiate a claim?
KG: Only two of the guarantees require a customer to file a claim. Six of the eight guarantees are automatically recognized through our technology, and customers automatically receive guarantee payments and a letter notifying them of the credit to their account. For the remaining two guarantees, customers must file a claim by calling the company within 30 days of the occurrence.
CP: How have your customers responded to the program?
KG: Recent focus groups show that customers continue to be very impressed with the fact that the company has this type of program. It’s been a “good thing” for both customers and the company, and has enabled us to become more efficient in providing service, as well as reducing errors and operational costs.
CP: What’s the biggest challenge in delivering a program like this?
KG: Initially, the most challenging aspect was making sure that all other processes that could impact the guarantees were identified and any subsequent changes to those processes were reviewed by the team that manages the program. Eventually, this challenge was simplified as the organization started to include a “guarantee checkpoint” in its process change efforts.
