Public Power - June 2008 - (Page 43)

Cost Breakdown by Function in demographics, and then pick a reasonable stretch goal. Our favorites, of course, are first quartile members because that represents superior performance, without the extremes sometimes created by the most successful. Often those top-performing utilities have some unusual demographic or reporting circumstance that enable that extreme performance level. At the advice of the advisory committee, the 2007 Benchmarking Survey increased the focus on best practices over previous APPA Customer Service surveys. The consultants, with help from the advisory committee, identified a set of practices and tracked the penetration rates for each utility. The table on page 44 summarizes the group results in these practice areas. In theory, a utility with higher penetration of each practice would have better cost results. However, a best practice for one utility is not necessarily the best for another, depending upon their situation. “Best” also depends on whether the goal is cost reduction or improved service. Also, some of these practices require a high level of capital investment (such as automated metering infrastructure or mobile data). The following examples illustrate the interaction between cost and service goals: IVR usage: We know that handling a call through the interactive voice response is cheaper than handling one with a live agent by a factor of 10, but because of other factors, we cannot show a statistically significant correlation of IVR usage to cost per customer. In many cases, the IVR provides additional services or meets the unique demands of a particular service territory (e.g., high cost labor, transient population). In one view, adding more capabilities to the IVR causes more Credit & Collections 19% Contact Center 22% Payment Processing 10% Field Service 12% Billing 19% Meter Reading 18% the breakdown of costs by function. Without benchmarking, most utilities set goals for improvement without analysis. However, benchmarking creates an impetus for utilities to set goals to be better than average or number one. As external consultants, we often advise utilities on what goals to set. As part of our benchmarking study, we look at the basic demographics of the participants to try to help each utility understand where it fits. That type of review helps greatly in understanding what might be reasonable goals for a given utility. The table below shows the demographic profile developed out of the study. There are a few caveats, based on an understanding of demographics, before you set a goal to be number one: Contacts per customer: Unless you have a good interactive voice response system, the more that customers call, the higher your call center costs will be. For example, one of the participants who served a major military installation incurred high costs. Hourly rate: The hourly rates paid to meter readers in the survey ranged from $9.15 in a relatively rural area, to $21.63 in a major metropolitan market. The city folks did not seem to be more productive, unless they had installed mobile automated meter reading. Commodities: Comparing costs on a per-customer basis is a valid approach, but a utility serving only electricity is at a disadvantage in cost comparisons where dual-commodity customers are counted as two customers, which is how the results above are calculated. Single-commodity utilities are very unlikely to achieve number one status on costs calculated this way. In setting goals, the utility must understand its service level requirements, factor Demographic Profile Average Minimum Maximum Contacts per Customer per Year (Customer x Commodities) 3.2 0.4 7.5 Meter Reader Starting Average Hourly Wage Rate $14.27 $9.15 $21.62 Total Annual Field Service Orders per Customer (Customer x Commodities) 0.6 0.1 1.5 Change of Account Field Orders per Customer (Customer * Commodity) 0.3 0.1 0.6 Moratorium Days - Disconnect for non-pay 32 0 150 Percent of Customers that are Residential 86% 70% 93% Customer Density - Accounts per Square Mile 693 15 2,894 Customer Count 174,298 10,891 1,001,642 Number of commodities offered 2.4 1.0 4.0 www.APPAnet.org JUNE 2008 43 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - June 2008

Public Power - June 2008 Contents Perspective 10 Questions Finding Common Ground on Climate Change Solutions A Patchwork Approach to Renewable Energy Whose Grid Is It Anyway? The Little Utility That Could Benchmarking Customer Service Can Prairie Hay Power Your Town? Storming the Control Room Investing in the Smart Grid Coming of Age: Superconducting Cables Community Broadband Economic Development Customer Service Human Resources For Governing Boards Safety Parting Shot

Public Power - June 2008

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