Customer Services - Budget and Operations

BEFORE THE LONG ISLAND POWER AUTHORITY

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IN THE MATTER of a Three-Year Rate Plan Case 15-____________ ------------------------------------------------------------

DIRECT PRE-FILED TESTIMONY OF

CUSTOMER SERVICES BUDGET AND OPERATIONS PANEL

Date: January 30, 2015

DIRECT PRE-FILED TESTIMONY OF CUSTOMER SERVICES BUDGET AND OPERATIONS PANEL

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TABLE OF CONTENTS

I. WITNESS QUALIFICATIONS AND DESCRIPTION OF TESTIMONY 1

II. CUSTOMER SERVICES ORGANIZATION 14

A. Introduction and Background 14 B. Revenue Operations 21 C. Customer Contact and Billing 25 D. Customer Experience and Utility Marketing 30 E. Meter Services 34

III. CUSTOMER SERVICES O&M BUDGET 37


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I. WITNESS QUALIFICATIONS AND DESCRIPTION OF TESTIMONY 1

Q. Please state the names of the members of this Customer Services O&M Budget 2 Panel (the “Panel”). 3

A. Daniel Eichhorn, Suzanne Brienza, Frederick Daum, Jorge Jimenez, Richard Walden 4

and Nicholas Nolau. 5

Q. Mr. Eichhorn, please state your employer and business address. 6 A. I am employed by PSEG LI (“PSEG LI” or “the Company”) at 15 Park Drive 7

Melville, NY 11747. 8

Q. In what capacity are you employed by PSEG LI? 9 A. I am employed at PSEG LI as the Vice President of Customer Services. 10

Q. Please explain your role and principal responsibilities at PSEG LI. 11 A. I am responsible for customer experience, customer contact, all meter-to-cash 12

functions, electric metering, field operations and utility marketing. In addition, I am 13

responsible for leading the Customer Services organization to meet the Company’s 14

commitments to our customers and other stakeholders, including achieving top 15

quartile performance in Customer Satisfaction and Customer Services performance 16

metrics within the first five years of the Amended and Restated Operations Services 17

Agreement between Long Island Lighting Company d/b/a LIPA and PSEG Long 18

Island LLC, dated as of December 31, 2013 (the “OSA”). 19

Q. Please describe your educational and business experience. 20 A. Before joining the PSEG LI executive management team in 2013, I worked at Public 21

Service Electric and Gas Company (“PSE&G”), the utility subsidiary of Public 22

Service Enterprise Group (“PSEG”) in New Jersey. I worked at PSE&G since 1989 23


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and held several leadership, management and engineering positions at the company in 1

Customer Services, Electric and Gas. 2

From March 2012 through October 2013 I was the Director – LIPA Transition 3

– Customer Services. I was responsible for leading all aspects of the transition for 4

Customer Services from National Grid to PSEG LI. The Customer Services 5

organization completed all major Customer Services milestones during the Long 6

Island Power Authority (“LIPA”) transition and began serving the Long Island and 7

Rockaway customer base on January 1, 2014. 8

Prior to my role as the Customer Services transition lead, I was Director - 9

Customer Contact & Technology at PSE&G from 2010 – 2012, where I was 10

responsible for an organization consisting of 635 employees. In this role, I provided 11

leadership, strategic direction, and oversight for Call Center, Walk-In Customer 12

Offices, Inbound Collections, Construction Inquiry and Customer Technology 13

groups. The organization obtained break through results in Call Center operations 14

and contributed to PSE&G’s top quartile JD Power ranking. 15

Prior to my role as the Director of Customer Contact & Technology, I was the 16

Director – iPower (SAP CCS Implementation) at PSE&G from 2008 - 2010. In this 17

role, I was responsible for implementation of a new SAP Customer Information 18

System. I led a team of approximately 125 internal associates and external resources 19

from the Utility Business Units, Information Technology, and the System Integrator 20

to replace the existing IBM mainframe system with SAP CCS. My project 21

responsibility including the implementation of a new Integrated Voice Response 22


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(“IVR”) unit, Business Warehouse, Gas Appliance Work Management and Dispatch 1

(“SAP MRS & MAM/MAU”), Electric Meter Technician and Field Collectors 2

Mobile Data Terminals and Work Management Systems. The implementation was 3

awarded the Best CIS Implementation Award for Large Company from industry 4

group CSWeek (a total of 11 utilities submitted for consideration). 5

My other significant utility experience includes leadership, management and 6

engineering roles at PSE&G in the electric and gas operations business units. 7

I hold a Bachelor of Science Degree in Electrical Engineering and a Masters 8

of Business Administration in Finance from Drexel University. I am a Licensed 9

Professional Engineer (PE) in the state of New Jersey. I am actively involved with 10

several utility industry groups, including Chartwell, CSWeek and JD Power. 11

Q. Ms. Brienza, please state your employer and business address. 12 A. I am employed by PSEG LI at 15 Park Drive, Melville, NY 11747. 13

Q. In what capacity are you employed by PSEG LI? 14 A. I am employed at PSEG LI as the Director of Revenue Operations in the Customer 15

Services organization. 16

Q. Please explain your role and principal responsibilities at PSEG LI. 17 A. I was named Director of Revenue Operations at PSEG LI in September 2013. At 18

PSEG LI, I am responsible for utility payment processing, credit and collections, and 19

revenue protection. In addition, I am responsible for providing cross functional 20

support and process improvement within Customer Services and lead the Customer 21

Services storm response enhancement effort through the Operations Support group. 22


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Furthermore, I am accountable for the implementation and review of Customer 1

Services Sarbanes Oxley (“SOX”) controls and achieving best-in-class customer 2

contact service level through Customer Offices. 3

Q. Please describe your educational and business experience. 4 A. Prior to joining PSEG LI in 2013, I held the position of Manager of LI Credit and 5

Collections at National Grid from February 2012 - September 2013 and Senior 6

Corporate Supervisor, LI Credit & Collections from January 2009 – February 2012. 7

As the Manager of LI Credit and Collections, I was responsible for the management 8

and supervision of the Long Island Credit and Collections for National Grid, the 9

implementation of various strategies to achieve all metrics under the Management 10

Services Agreement between LIPA and National Grid (“MSA”), the minimization of 11

bad debt and days sales outstanding through the implementation of strategic 12

initiatives and the development of interdepartmental relationships and improvement 13

of outside connections with governmental agencies, law firms and business leaders. 14

Prior to joining National Grid I was a practicing attorney. I worked as an 15

attorney in the areas of Collections, Real Estate/Banking, Mediation, Criminal 16

Defense, Matrimonial/Family Law, Personal Injury/Medical Malpractice, and 17

Bankruptcy. 18

I hold a B.A. in English from Hofstra University and a J.D. from Touro 19

College, Jacob D. Fuchsberg Law Center. I am a member of the New York State Bar 20

Association and am on the board of directors at the Family Service League in 21

Huntington. 22


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Q. Mr. Daum, please state your employer and business address. 1 A. I am employed by PSEG LI at 15 Park Drive, Melville, NY 11747. 2

Q. In what capacity are you employed by PSEG LI? 3 A. I am employed at PSEG LI as the Director of Customer Contact and Billing in the 4

Customer Services organization. 5

Q. Please explain your role and principal responsibilities at PSEG LI. 6 A. I have been employed in my current position since September of 2013. I am 7

responsible for overall customer satisfaction, operational, financial and internal 8

controls for Call Center, Workforce Management, Back Office Billing, and Billing 9

System / Print performance for PSEG LI. I also develop and oversee O&M and 10

capital budgets for Customer Contact and Billing and assure adherence to the plan, 11

balancing cost containment with customer satisfaction, operational excellence, 12

employee satisfaction and the overall business objectives. I work closely with the 13

Electric Transmission and Distribution (“T&D”), Systems Management, and 14

Information Technology (“IT”) groups to define, develop and implement technology 15

improvements that improve the customer experience as well as communications 16

during major events. 17

Q. Please summarize your professional experience and educational background. 18 A. From 2010 to 2013, I was Process Integration Manager Customer Contact- PSE&G, 19

Cranford, New Jersey. In this position I was responsible for forecasting, staffing, 20

training, quality assurance and operational management to meet service levels, 21

efficiency and financial targets for Inquiry and Inbound Collections. I provided 22


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leadership and support to the Customer Contact management team by optimizing 1

reporting and performance management processes to best align with business goals 2

and insuring that those processes are performed at a high level. In this position I 3

implemented the use of a third-party call center and at-home collection 4

representatives which reduced the cost per contact year over year for both inquiry and 5

inbound collections. 6

From 2007 to 2010 I was Operations Manager Meter Reading and Collections 7

- PSE&G, Audubon and Trenton, New Jersey where I was responsible for the 8

supervision of seven management associates and up to 150 union employees within 9

the East Gate and Trenton Districts for PSE&G’s Customer Operations Business 10

Unit. From 2003 to 2007, I was Senior Service Supervisor- PSE&G, Gas and 11

Appliance Department, Audubon, New Jersey and was responsible for the supervision 12

and operations of the Audubon Gas Service Department which is composed of 56 13

bargaining unit service technicians and three management supervisors. 14

From 2001 to 2003, I was Service Supervisor PSE&G, Gas and Appliance 15

Service Department, Trenton, New Jersey, where I supervised group of 18 service 16

technicians within the Trenton District. 17

I have an MBA from the Erivan K. Haub School of Business of St. Joseph’s 18

University and a BA in Business and Management Information Systems from 19

Fairleigh Dickinson University, where I was a member of the Phi Omega Epsilon 20

Honor Society. I have been an Adjunct Professor- Fairleigh Dickinson University 21

and Corporate College Services and have taken courses in Interest Based Bargaining 22


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from the Rutgers School of Labor Relations, MARC Industrial Relations Training and 1

NCCE Financial Training. 2

Q. Mr. Jimenez, please state your employer and business address. 3 A. I am employed by PSEG LI at 15 Park Drive, Melville, NY 11747. 4

Q. In what capacity are you employed by PSEG LI? 5 A. I am employed at PSEG LI as the Director of Customer Experience and Utility 6

Marketing in the Customer Services organization. 7

Q. Please explain your role and principal responsibilities at PSEG LI. 8 A. I was named Director of Customer Experience and Utility Marketing at PSEG LI in 9

September 2013. In this role, my primary focus is to lead the Company’s customer 10

satisfaction improvement program, with an ultimate objective of transforming PSEG 11

LI into a first quartile J.D. Power electric utility. My other responsibilities at PSEG 12

LI include utility marketing and sales for retail system expansion, retail customer 13

retention, and customer care and service programs, including all aspects of marketing 14

planning and implementation activities, promotion and communications, market 15

research and major account relationships. 16

In addition, I am responsible for achieving a high level of customer 17

satisfaction, including: determining the approach and methodology for measuring, 18

monitoring, and optimizing customer satisfaction; monitoring customer satisfaction 19

results; and overseeing the performance of perception-based and transactional-based 20

customer satisfaction surveys. Furthermore, I am responsible for maintaining and 21


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overseeing the "MyAccount" portion of PSEG LI’s Web Site and other electronic and 1

social media customer facing platforms. 2

Q. Please describe your educational and business experience. 3 A. Prior to joining PSEG LI in 2013, I held various senior leadership positions at Florida 4

Power and Light Company. During my tenure at Florida Power and Light, I held the 5

following positions: Program Manager, Smart Grid Initiatives, Customer Service 6

Business Unit (2009 – September 2013), PMO Manager, Smart Grid Initiatives, 7

Customer Service Business Unit (2008 – 2009), Program Manager, Storm Secure 8

Initiative, Distribution Business Unit (2006 – 2008) and Senior IT Project Manager, 9

Information Technology Business Unit (2004 – 2006). In my two roles on the Smart 10

Grid Project as Program Manager Unit and PMO Manager at Florida Power and 11

Light, I was responsible for the on-time, in scope, and on budget delivery of the 12

Smart Grid portfolio which consisted of 15 to 20 projects running concurrently with 13

an overall program portfolio budget in excess of $600 million. I was also involved in 14

the planning, design, construction, and implementation of all project deliverables for 15

the remote connect and disconnect benefits of the smart meter program. This 16

additional program delivered a $100 million net present value and had cross 17

departmental impacts on processes and systems in the Customer Service, Distribution, 18

Regulatory, Legal, External Affairs, and Marketing & Communications business 19

units. 20

Prior to my role in Florida Power and Light’s Smart Grid project, I worked in 21

the Electric Distribution Business Unit where I was responsible for organizing and 22


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leading work stream teams to develop project plans, activity scope, roles and 1

responsibilities, schedule, budget, assumptions, issues, risks, change management, 2

quality, and communications for the multi-year distribution grid infrastructure 3

hardening program at Florida Power and Light known as “Storm Secure.” 4

Prior to my role in Florida Power and Light’s “Storm Secure” initiative, I 5

worked in the Information Technology Business Unit as a Senior IT Project Manager 6

where I directed a team of IT professionals responsible for defining, designing, and 7

delivering technology solutions to internal clients in the Customer Service Call 8

Centers, Customer Service Field Operations, and Emergency Response business 9

units. 10

Before I joined the utility industry, I held various senior leadership roles in 11

project management and information technology capacity at WebMD, Precision 12

Response Corporation (“PRC”), London Bridge Software and Electronic Data 13

Systems (“EDS”), where my responsibilities included client portfolio management, 14

sales support, and operations management. 15

I hold a B.S. in Economics and an MBA with a concentration in Finance and 16

Marketing from the University of Florida. I am an EDS Certified Systems Engineer, 17

a Six Sigma Green Belt, and a PMI Certified Project Management Professional 18

(“PMP”). 19

Q. Mr. Walden, please state your employer and business address. 20 A. I am employed by PSEG LI at 15 Park Drive, Melville, NY 11747. 21


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Q. In what capacity are you employed by PSEG LI? 1 A. I am employed at PSEG LI as the Director of Meter Services in the Customer 2


Q. Please explain your role and principal responsibilities at PSEG LI. 4 A. I was named Director of Meter Services at PSEG LI in September 2013. At PSEG 5

LI, I am responsible for commercial and residential meter reads, move-in/move-out 6

service orders in support of billing operations, execution of field collection and field 7

services activities, field operations dispatch, installation, maintenance and 8

replacement of electric revenue metering equipment, meter engineering, support of 9

meter systems and technology, load research and retail settlement functions and 10

implementation of long term metering strategy. 11

Q. Please describe your educational and business experience. 12 A. I was named to my current position at PSEG LI in September 2013 and am 13

responsible for commercial and residential meter reads, move-in/move-out service 14

orders in support of billing operations, execution of field collection and field services 15

activities, field operations dispatch, installation, maintenance and replacement of 16

electric revenue metering equipment, meter engineering, support of meter systems 17

and technology, load research and retail settlement functions and implementation of 18

long term metering strategy. Prior to joining PSEG LI, I was Senior Vice President 19

Utilities Business and Utility Sales Executive at Tendril Networks from March 2012 20

to September 2013, responsible for all aspects of sales and delivery of Tendril 21

solutions to utilities including IOUs, rural electric cooperatives and municipalities in 22


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North America. From June 2010 to March 2012, I was VP Utility Services at 1

Constellation Energy Group, where I led a load response sales effort aimed at helping 2

IOUs, municipals, and cooperatives address regulatory and legislative mandates; 3

control wholesale power supply costs; improve reliability; reduce capital 4

expenditures; and enable retail customers to manage energy more effectively while 5

participating in RTO and/or utility-sponsored load response programs. From 2000 to 6

May 2010, I held various leadership roles at Dominion Resources, Inc. which 7

included: Director Advanced Metering Infrastructure (2008 – May 2010), Director 8

Delivery Metering Services (2003 – 2008), Director Business Performance (2003) 9

and Director Electric Metering (2000 – 2003). As the Director of Advanced Metering 10

Infrastructure (“AMI”), I was the AMI program director for that company’s electric 11

delivery business where I developed the program to support the next evolution in 12

metering and customer service and provided overall direction and leadership for the 13

implementation and operation of AMI technology, including the automatic collection 14

and processing of energy data for markets, customers, and company operations. 15

My other significant experience includes leadership positions for over 12 16

years with Baltimore Gas & Electric Company, as well as manufacturing positions 17

in the consumer products industry. 18

I hold a B.S. in Chemical Engineering from the University of Maryland, an 19

MBA from Loyola College and I have completed the Executive Program at the 20

University of Michigan Business School. 21


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Q. Mr. Nolau, please state your employer and business address. 1 A. I am employed by PSEG LI at 15 Park Drive, Melville, NY 11747. 2

Q. In what capacity are you employed by PSEG LI? 3 A. I am employed at PSEG LI as the Business Performance Lead in the Customer 4


Q. Please explain your role and principal responsibilities at PSEG LI. 6 A. I was named Business Performance Lead in the Operations Support organization in 7

Customer Services in January of 2014. In this position, I am responsible for the 8

management of the Customer Services O&M and capital budgets and the direct 9

interface between the line of business and finance organization. I interface with the 10

Utility Financial Planning organization regarding financial reporting/analysis and 11

cost/operating plan development for Customer Services. I also direct identification of 12

opportunities for performance improvement through benchmarking, best practices 13

identification, efficiency assessment, gap analysis and service level agreements. In 14

my role, I lead the development of business cases and cost/benefit analysis, as well as 15

business/operating plan, and act as a key contributor to the strategy development, 16

financial planning and business planning processes for the Customer Services 17

organization. I support the Customer Services Senior Leadership team on all strategic 18

initiatives and financial planning activities. 19

Q. Please describe your educational and business experience. 20 A. Prior to my current role at PSEG LI, I held the position of Business Support Specialist 21

– LIPA Transition – Customer Services team for PSEG. In this role, I provided the 22


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lead analytical support for the Customer Services transition team during the two-year 1

transition of service provider from National Grid to PSEG LI. I was responsible for 2

the development, maintenance and reporting of the 2012 and 2013 Customer Services 3

transition budgets and the development of the 2014 PSEG LI Customer Services 4

O&M and capital budgets. I developed and managed the Customer Services 5

transition project plan. I participated in several critical transition team projects to 6

review cost/benefit analysis of critical business functions and critical business 7

infrastructure. 8

Prior to my role on the transition team, I held the position of Business Support 9

Specialist – Business Solutions and Vice President- Support Organization at PSE&G 10

in New Jersey. In this role, I was responsible for supporting the senior leadership 11

team in various capacities including ad hoc analytical requests, benchmarking, 12

process improvement initiatives and special business projects. 13

I hold a B.S. in Business Administration with a concentration in Finance from 14

Montclair State University. I have a Lean Six Sigma/DMAIC Process – Green Belt 15

certification and have completed a Utility Finance and Accounting training program. 16

Q. What is the purpose of your testimony? 17 A. The purpose of our testimony is two-fold. First, we will explain the steps that PSEG 18

LI has taken to recast and reorganize the Customer Services function of LIPA in order 19

to prepare to meet the increasing Customer Services goals established under the OSA. 20

As mentioned, it is our intention to see that Long Island consumers are provided with 21

a “best in class” Customer Services organization and experience and our testimony 22


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describes the organization that we are building to meet that goal. Second, we will 1

explain and support the budgets necessary to meet the goals of the OSA and to 2

provide our customers with improved service. 3

II. CUSTOMER SERVICES ORGANIZATION 4

A. Introduction and Background 5

Q. Mr. Eichhorn, please provide background on the budgetary and operational 6 objectives of the Customer Services organization. 7

A. The Customer Services organization and the budgets that support it are intended to 8

achieve several main objectives: provide tariff-related services, establish appropriate 9

meter to cash controls, and achieve the OSA metrics, which measure the service 10

provided by PSEG LI. Customer Services contributes to these metrics in the areas of 11

Customer Satisfaction, Customer Services Key Performance Indicators (“KPI”), 12

Storm Response and Budget Compliance. 13

Customer Satisfaction is primarily measured via JD Power Surveys for both 14

Residential and Business customers, which contain measures in the following areas: 15

Power Quality and Reliability; Price, Billing and Payment; Corporate Citizenship; 16

Communications; and Customer Services. 17

Customer Services OSA contractual metrics include After Call Surveys, 18

Personal Contact Surveys, Average Speed of Answer, Abandonment Rate, Actual 19

Meter Read Rate, Timely Billing, Days Sales Outstanding, Net Write Off Per $100 20

Revenue, and Web Transactions Completed. All the aforementioned metrics listed 21

are considered improvement metrics with the exception of Net Write Off per $100 22

Revenue, meaning that 1st quartile results need to be achieved at the end of five years 23


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as per the OSA. Net Write Off is currently a maintenance metric as it was in the top 1

quartile benchmark in 2013. 2

Storm Response metrics that the Customer Services organization is 3

responsible for are measured via the New York Department of Public Service 4

(“DPS”) Storm Scorecard, which evaluates storm preparation, operational response 5

and communications. The Customer Services storm response organization is directly 6

involved in the preparation and communications sections within the DPS Storm 7

Scorecard. A more detailed explanation of our storm response effort is provided by 8

the Storm Response Panel. 9

Q. Why is there a focus on achieving the metrics? 10 A. There had been a widespread perception among customers, elected officials and 11

stakeholders that customer service needed to improve. For example, LIPA under the 12

MSA contract with the National Grid had generally ranked in the fourth quartile in JD 13

Power customer satisfaction, and the 2013 JD Power Residential and Business 14

Customer Satisfaction Surveys ranked LIPA in the fourth quartile of performance in 15

all categories. In no category was LIPA’s performance better than third quartile in 16

2013. The metrics in the OSA were designed to produce measurable performance 17

improvement in customer service and, as I mentioned above, the Customer Services 18

organization and the budgets that support it are intended explicitly to produce the 19

achievement of improved customer service as measured by the OSA metrics. 20


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Q. Did PSEG LI simply “take over” the Customer Services Program being 1 provided previously? 2

A. Not at all. PSEG LI assumed operation of the LIPA system on January 1, 2014, 3

taking over that function from National Grid. Because National Grid’s customer 4

service function had served both LIPA electric and National Grid gas operations, 5

many areas of customer services, such as the call center, meter reading, collections 6

and the like were split, with some employees coming with PSEG LI and others 7

staying with National Grid. Consequently, we were required to hire additional 8

employees to fill vacated positions as well as to build the organization necessary to 9

improve customer service and achieve the metrics under the OSA. Although this 10

presented challenges, it also presented us with an opportunity to evaluate all aspects 11

of the customer services function with a view toward making systematic 12

improvements. 13

Q. What did that process entail? 14 A. We previously discussed the fact that the metrics provide a measure of whether we 15

are providing excellent customer service. During the transition period before we 16

assumed operations of the LIPA system, the Customer Services transition team 17

analyzed all elements of the Customer Services function with the goal of improving 18

service and achieving the OSA targets. We staffed and structured our organization 19

based on keeping the best practices that already existed and adopting the best 20

practices from our New Jersey utility organization, which is rated in the top quartile 21

in customer satisfaction in the East Large region of JD Power. We also utilized 22


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industry benchmark data to make sure that we would be in the top quartile on an 1

employee per million customers served. 2

Q. How many people are employed in the Customer Services organization? 3 A. The Customer Services organization has 724 full time employees (“FTEs”) in the 4

base budget for 2015. As explained in this testimony, modest increases are forecasted 5

for headcount to 729 FTEs in 2016, 734 FTEs in 2017 and 740 FTEs in 2018. PSEG 6

LI’s Customer Services headcount is within an industry top quartile benchmark range 7

of 707-735 employees/million customers through 2017 and will rise only slightly 8

above that range in 2018. Consequently, we believe that we have the right amount of 9

employees necessary to achieve the top quartile results that are expected of us. 10

Q. Do you have further justification that your organization is right sized to 11 properly support the Long Island and Rockaways customer base? 12

A. Yes. During the transition year, a study was completed that benchmarked other 13

utility companies on a cost per customer basis. PSEG LI’s Customer Services 14

organization cost per customer in 2014 was $2.06 above the industry’s top quartile 15

but $10.26 below the industry median. There are several contributing factors that 16

separate PSEG LI from the top quartile companies which include: 17

• Companies with AMI have reduced their O&M expenses by an average of $5-18 7 per customer by the automation of the meter reading process and other 19 downstream processes. A large majority of the companies within the top 20 quartile have made significant investments in AMI while PSEG LI currently 21 only has a pilot project with a limited number of customers. 22

• PSEG LI has lost synergies that previously existed under LIPA’s MSA 23 contract with National Grid by serving both electric and gas customers. 24 Combination electric and gas utilities see synergy savings of 10-20% by 25 servicing dual commodity customers. 26


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Despite these “headwinds” that should have produced higher levels of 1

customer service-related costs, PSEG LI remains only slightly above the best, top 2

quartile companies on a cost per customer level and significantly below the median 3

level for customer service costs in the industry. 4

Q. Mr. Eichhorn, please describe the challenges your line of business faces 5 regarding the achievement of future performance metrics. 6

A. PSEG LI Customer Services faces many challenges in achieving the OSA targets. For 7

one, our OSA metrics have been benchmarked to 1st quartile performance by the end 8

of the fifth year of the contract. This will continue to stretch the business to find 9

ways to meet these targets, all while maintaining essentially a steady labor force in 10

terms of overall employee numbers. 11

In our testimony, we will discuss how Customer Services has been organized 12

and what steps we have taken to address the customer service problems of the past. 13

Q. What are the responsibilities of the Customer Services organization? 14 A. Under the OSA, in addition to providing all aspects of customer services, PSEG LI is 15

responsible for: 16

achieving a high level of customer satisfaction, including: determining 17 the approach and methodology for measuring, monitoring, and 18 optimizing customer satisfaction; monitoring customer satisfaction 19 results; overseeing the performance of perception based and 20 transactional-based customer satisfaction surveys for other service 21 providers; interpreting and communicating the results of customer 22 surveys; coordinating initiatives aimed at improving the product 23 portfolio, service delivery mechanisms, and overall customer 24 satisfaction across the full spectrum of services provided, such as 25 system operations and electronic transaction and self-help options, 26 customer interactions and back-office functions. 27

OSA Section 4.2(A)(2)(a). 28


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Consequently, we are required not only to provide all customers with services 1

attendant to a large electric service provider, but to track them and monitor them, 2

improve them and insure “overall customer satisfaction across the full spectrum of 3

services provided….” This testimony will describe the Customer Services 4

departments that are engaged in this task and their initiatives and programs designed 5

to produce the high levels of customer satisfaction demanded of them. 6

Q. Have you reviewed the management audit completed by NorthStar on the 7 previous service provider that provided recommendations for improvement to 8 customer services? 9

A. Yes – we have seen the findings and recommendations in the NorthStar Audit and 10

have incorporated the recommendations into Customer Services’ change initiative 11

plan where deemed applicable. There were 13 Customer Services dedicated 12

recommendations from the audit. The Customer Services organization has completed 13

11 of the 13 recommendations through 2014. The two outstanding recommendations 14

are to review customer rate class assignments and replacement of the Customer 15

Accounting System (“CAS”). The customer rate class assignments recommendation 16

is currently being reviewed in a Lean Six Sigma project being led by PSEG LI. 17

Initial planning for replacement of the CAS system will take place during the Rate 18

Plan period of 2016-2018 and is anticipated to be implemented thereafter. 19


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Q. Please describe PSEG LI’s Customer Services significant achievements in 2014. 1 A. PSEG LI has made tremendous strides in the first year of the OSA. PSEG LI has 2

honored our commitment to our customers to provide a noticeable improvement in 3

customer services within the first year of operations. Below are some of the 4

highlights that outline PSEG LI’s significant achievements in 2015: 5

• JD Power Surveys: 6

o Residential Survey – PSEG LI is currently the most improved utility 7

brand in the residential survey through the first two waves or midpoint 8

of the 2015 syndicated residential survey. PSEG LI has improved 74 9

points over last year’s midpoint results. 10

o Business Survey – PSEG LI was the named most improved utility brand 11

in the 2015 survey by JD Power and Associates (two waves fielded in 12

2014). PSEG LI improved 70 points in the survey from a baseline of 13

525 to a 2014 YE result of 595. 14

• OSA Metrics: 15

o PSEG LI has achieved the targeted results of 20 of the 21 targets as 16

outlined by the OSA. The Customer Services organization achieved all 17

operational metrics in the OSA with most achieving a three-year 18

trajectory to first quartile performance. 19

• Implementation of a new Outage Management System, providing: 20

o improved accuracy in identifying where outages have occurred, 21

o quick and accurate estimates of when service will be restored, and 22

o better ability to communicate restoration progress. 23

• Implementation of a new Emergency Response Escalation Tracker to enhance 24

emergency liaison with municipalities. 25


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• Implementation of a new IVR system and a launch of a new state-of-the-art 1

telephone system to end long wait times. 2

• Opening of two new Customer Service Centers in Seaford and Arverne. 3

• Implementation of award-winning energy efficiency programs – in its first year, 4

PSEG LI customers saved enough energy to equal the benefit of eliminating the 5

emissions of more than 70,000 cars. 6

• Installation of Long Island’s 10,000th rooftop solar PV system, with an 7

expectation to hit 15,000 in 2015. 8

Q. Are you sponsoring any exhibits as part of your testimony? 9 A. Yes. The Panel is sponsoring Exhibit ___ (CSP-1) which was prepared under our 10

direction and supervision. 11

B. Revenue Operations 12

Q. Please describe the Revenue Operations organization? 13 A. The Revenue Operations organization consists of six major groups: Back Office 14

Collections, Payment Processing, Revenue Integrity, SOX and Revenue Reporting, 15

Customer Offices, and Operations Support. The overall objective of the Revenue 16

Operations organization is to support the achievement of OSA metrics for Customer 17

Satisfaction, Customer Services KPI’s, and Storm Response. The Revenue 18

Operations organization is also jointly responsible for several aspects of the JD Power 19

Residential and Business survey scores. 20

Q. Does the Revenue Operations organization have responsibility for storm 21 response as well? 22

A. Yes. The Revenue Operations organization’s responsibility for Storm Response is 23

explicitly laid out in the DPS Storm Scorecard. The organization is responsible for 24

storm preparation, assuring the effective communication with Life Support 25


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Equipment and Special Needs customers, maintaining 24/7 coverage for the 1

Municipal and Escalation Hotline, as well as planning for the needs of affected 2

communities and opening Community Outreach centers, and DPS storm metrics 3

reporting. A further discussion of the organization’s role is provided in the Storm 4

Response Panel’s testimony. 5

Q. Please describe this organization’s work activities. 6 A. The Revenue Operations organization’s six major groups do the following: 7

• Back Office Collections – is responsible for the overall collections strategy 8 and process for PSEG LI. This group interfaces with many others across the 9 organization, including Revenue Integrity and Payment Processing to assist in 10 collection related activity. 11

• Payment Processing – is responsible for the timely and accurate processing 12 of customer payments, approximately $3.6 billion of revenue on behalf of 13 LIPA. 14

• Revenue Integrity -is responsible for the identification, prevention, and 15 correction of metering conditions causing potential lost revenue for LIPA. 16

• SOX and Revenue Reporting –is responsible for the improvement of service 17 level standards and operational efficiencies. The work activities for this group 18 include the review of all existing controls and implementation of new controls 19 for PSEG LI Customer Services. 20

• Customer Offices –is responsible for providing our customers with the ability 21 to transact different types of business face-to-face. For instance, some of 22 these transactions with customers include the handling of customer payments 23 and answering general inquiries. 24

• Operations Support – is responsible for providing operational analysis, 25 budgeting, and senior leadership support across Customer Services. 26

Q. Please describe how your organization is working to improve and meet the 27 standards of OSA. 28

A. The Revenue Operations organization has implemented a number of changes and 29

performance initiatives to help drive improvement and meet standards within the 30


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applicable areas of the OSA, comprising customer satisfaction, key performance 1

indicators and storm response. 2

The Revenue Operations organization embarked on an initiative to assess best 3

practices and strategies to reduce Days Sales Outstanding (“DSO”) and Net Write Off 4

per $100 Billed Revenue, improve JD Power Residential and JD Power Business 5

surveys, and improve service levels. The strategy called for the assessment and 6

review of outbound collections and the implementation of new application platforms 7

to allow for functional reporting to gauge the effectiveness of call campaigns. This 8

new strategy, coupled with the implementation of applications with supplementary 9

capabilities, enables our organization to better analyze and track our outbound 10

collections activity in order to optimize our processes and lower our DSO and Net 11

Write Off metrics. In addition, this initiative paved the way to begin the 12

implementation to accept credit cards as a payment option, creating an alternate 13

payment channel for our customers. Furthermore, the organization continues to 14

leverage outside agencies to assist and escalate our collection activity. 15

The Customer Offices organization has added two new locations within the 16

service territory. The two new Customer Offices include Seaford and the Rockaways 17

offices. The Seaford office was to replace the recently closed Bellmore office. The 18

Rockaways office is a new, 12th Customer Office that was delayed because of 19

Superstorm Sandy. The Seaford and Far Rockaway centers feature a new lobby 20

design and teller system that will streamline the customer’s experience. Media 21

enhancements, through the placement of televisions in customer office waiting areas, 22


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stream energy efficiency programs, storm restoration, and other marketing 1

promotions. In addition to opening those new offices, we redesigned our Hicksville 2

location, allowing the business to shave 66% off the average wait time for our 3

customers. Staffing augmentation and adjustments have also allowed PSEG LI to 4

reduce overtime spending and increase availability. Specific initiatives include 5

temporary staffing redistribution to cover long-term sick leave and vacancies and the 6

reduction of vacation allotments during holiday weeks. We have also made a 7

concerted effort to increase monitoring of interactions and performance. Surveys are 8

now conducted in-person in each of the Customer Office locations. This provides 9

supervisors and management personnel the ability to make immediate improvements 10

and give instantaneous feedback to the representatives. Moreover, the group has 11

increased management presence in Customer Office lobbies as a means to monitor 12

employees as well as increase productivity. 13

Q. Does the Customer Services business unit provide assistance to Low Income 14 customers? 15

A. Yes. The Customer Services business unit in the Back Office – Collections group has 16

four dedicated FTEs to support Low Income customer programs that provide 17

customers with utility bill assistance and relief. This organization provides support to 18

the following programs: Household Assistance Rate Program (“HAR”), 19

Residential Energy Affordability Partnership Program (“REAP”), Balanced Billing, 20

Project Warmth, 2-1-1 Long Island, Emergency Assistance (“LDSS”), LIHEAP, 21

Consumer Advocates, and the Advocacy Information and Referral Line. This group 22


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also works with additional external organizations to seek partnership opportunities to 1

secure more comprehensive outcomes in terms of customer support. 2

Q. Is Revenue Operations responsible for the attainment of certain metrics? 3 A. Yes. 4

Q. What are those metrics and are they being satisfied? 5 A. A detailed discussion of the metrics and PSEG LI’s current performance with respect 6

to the metrics is found in the testimony of the Metrics and Safety Panel. Regarding 7

Customer Services KPI’s, the Revenue Operations organization is responsible for the 8

performance of the following OSA metrics, and is currently meeting or exceeding 9

performance in all: 10

• Days Sales Outstanding – PSEG LI’s target for this metric in 2014 was 41.9 11 days. The baseline performance of this target was 43.5 days. PSEG LI 12 achieved the targeted performance level with a YE performance of 37.8 days. 13 This resulted in an improvement of 5.7 days over the baseline performance in 14 2013. 15

• Net Write Off Per $100 Revenue – This is a maintenance metric for PSEG 16 LI. Since this is a maintenance metric, PSEG LI needs to keep Net Write Off 17 per $100 Revenue under 1.00 to not be penalized and under 0.69 to achieve 18 performance points. PSEG LI achieved the targeted results of Net Write Off 19 Per $100 Revenue and the YE performance for this metric was 0.66. 20

• Personal Contact Survey – PSEG LI’s target for this metric in 2014 was 21 83.7%. PSEG LI achieved the targeted results with a YE performance of 22 90.7%. This is a 7 percentage point increase over the baseline performance in 23 2013. 24

C. Customer Contact and Billing 25

Q. Please describe the activities of the Customer Contact and Billing organization. 26 A. The Customer Contact and Billing organization’s five major groups, perform the 27

following activities: 28


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• Back Office Billing – This group manages bill exception processing, offline 1 billing and special billing. Furthermore, the Back Office Billing group 2 completes and responds to written correspondence from customers and 3 handles the process for updating our Customer Accounting System as needed. 4 Finally, this group assists the call center on the phones during periods of high 5 call volumes and during large outages or emergency events. 6

• Third-Party Billing and Bill Presentment – This group is responsible for 7 the day-to-day bill presentment operations, inclusive of data entry, testing and 8 verification, management of multiple key processes, including printing and 9 postage, and bill messages and inserts. In addition, this group is responsible 10 for the maintenance of the Billing Rate Structure in the CAS to insure 11 accurate customer billing via implementation and testing. The group works 12 closely with Information Systems to implement monthly, seasonal, 13 semiannual, and annual rate changes and modifications as needed. 14

• Billing Projects and Systems and Long Island Choice – This group is 15 responsible for the management of the Long Island Choice Programs, which 16 includes the Electric Retail Choice as well as Green Choice programs. In 17 addition, this group works on business continuity planning, specific storm 18 enhancement initiatives for the organization, and oversees major change 19 initiatives. 20

• Call Center Operations – This group is responsible for all calls related to 21 electric service and customer issues for the entire customer base, 22 approximately 1.1 million customers. The call center takes emergency and 23 outage calls 24/7 and billing calls from 8:00 A.M. to 8:00 P.M. Monday 24 through Friday. The types of calls this group handles include billing, 25 payments, collections, service initiation, outages and general customer 26 inquiries. 27

• Workforce Management, Planning and Forecasting – This group is 28 responsible for the scheduling of Call Center Operations and Back Office 29 Billing. In addition, this group is responsible for critical technology that 30 enables our workforce to perform their job duties. Moreover, this group is 31 responsible for the tracking of key performance indicators and reporting for 32 Call Center Operations, inclusive of Average Speed of Answer (“ASA”), 33 Abandonment Rate, and employee performance scorecards. 34

Q. Please describe how the Customer Contact and Billing organization is working 35 to meet and improve the performance standards of the OSA. 36

A. A number of customer service deficiencies had been identified under the MSA that 37

required remediation. For example, the ASA target was substantially below industry 38


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standards and many processes were deemed inadequate. The Customer Contact and 1

Billing organization has implemented changes and performance initiatives to better 2

serve our customers and meet standards under the OSA. In order to achieve these 3

goals, the organization has undertaken several significant initiatives aimed at 4

improving the customer experience and to create a culture of quality for phone calls 5

handled by our customer service representatives. 6

Q. Please describe a few of these initiatives that have been undertaken by PSEG LI. 7 A. We have undertaken several significant steps to improve our performance and 8

enhance our customers’ experience: 9

Upon the commencement of operations, PSEG LI noticed a heavy emphasis 10

had been placed on the representatives’ average time to handle a call. 11

Representatives had been encouraged in the event that they believed a call may run 12

longer than 350 seconds, to tell the customer that they will receive a call back to 13

address their issue. Also, average handle time was a component of the customer 14

service representatives’ appraisal criterion that was used to determine if the customer 15

service representative qualified to gain share payout. Because of the negative 16

incentives it created, the call center representative appraisal criterion was modified to 17

replace average handle time with representative Post Call Survey results as a 18

qualifying performance criterion in the gain share program. This reinforced the 19

commitment to call quality over call handle time. This resulted in a 23% reduction of 20

escalated call backs through September 2014 when compared to the same period in 21

2013. Our customer service representatives have responded very positively to the 22


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changes that we implemented. The customers’ post call survey results have been 1

extremely favorable, with monthly results in the high 80 to low 90 percent range with 2

over a five percent customer participation rate. It is worth noting that through 3

October 2014, the average handle time is 309 seconds, which compares favorably to 4

the 2013 level of 321 seconds, demonstrating that our representatives are now 5

resolving customers’ problems in the same time it previously took to defer them. 6

Further, we recognized the need to augment the organizational structure to 7

better incorporate the culture and vision of the Company. The organization increased 8

our lead groups through the addition of six team leads. This change has provided 9

greater coaching and feedback opportunities for the customer service representatives 10

and has resulted in greater customer satisfaction, as seen through our performance 11

levels in JD Power Customer Satisfaction surveys and After-Call surveys. 12

In addition to call backs, the team leads participate in the call quality process 13

and perform two evaluations on each customer service representative team member 14

each month. This approach improves the call quality process and supports the overall 15

initiative of improving the customers’ experience on the phone. 16

We have also implemented enhanced reporting that support our operational 17

excellence methodology. One of the first major reporting changes was to establish a 18

daily call center performance report. This report consists of major call center metrics 19

that directly impact the OSA performance. This report provides critical tracking and 20

trending information about the daily staffing and work management decisions of the 21

call center. The report includes call volume metrics for the customer service 22


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representatives, IVR, and High Volume Call Applications. Furthermore, and most 1

critically, it provides the daily, monthly, and year to date performance of the OSA 2

Abandonment Rate and Average Speed of Answer metrics. This report is emailed 3

each day to the entire customer services management organization so that necessary 4

adjustments to customer service can be made in a timely manner. 5

We have also implemented Post Call Survey reporting to track the 6

performance of the call center on a daily basis. This reporting provides the survey 7

results on daily, weekly, monthly and a year-to-date basis. The above allows the 8

organization to quickly identify weekly trending. Further, we have an Employee 9

Level Scorecard that provides each individual customer service and billing 10

representative and supervisor their statistical performance. The metrics on the 11

scorecards are the same metric and performance criteria that are on the employees’ 12

year end appraisals. This information is reviewed weekly to provide timely feedback 13

to both the employee and supervisor, ultimately allowing for corrections and coaching 14

opportunities. 15

A particularly important, change was made in March 2014, when we decided 16

to bring 20 At-Home Back Office Billing representatives physically to the call center 17

to take customer calls on Mondays. This had a significant, positive effect on Monday 18

key performance indicators. Previously, the Average Speed of Answer on Monday 19

was an unacceptable 169 seconds and the Abandonment Rate was 6.8%. These 20

metrics would trend down Monday to Friday as call volumes decreased, resulting in 21

varied customer wait times during the week. Following our implementation of this 22


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change and through the July reporting period, the Average Speed of Answer was 1

reduced to only 33.4 seconds for Monday with an Abandonment Rate on average of 2

less than 1%. 3

Q. Please describe the KPIs and the performance under them. 4 A. Regarding Customer Services KPI’s, the Customer Contact and Billing organization 5

is responsible for the performance of the following OSA metrics: 6

• Average Speed of Answer –– PSEG LI’s target for this metric in 2014 was 7 79 seconds. The baseline performance of this target was 93 seconds. PSEG 8 LI achieved the targeted performance level with a YE performance of 54 9 seconds. This resulted in an improvement of 39 seconds over the baseline 10 performance in 2013. 11

• Abandonment Rate – PSEG LI’s target for this metric in 2014 was 3.8%. 12 The baseline performance of this target was 4.2%. PSEG LI achieved the 13 targeted performance level with a YE performance of 2.6%. This resulted in 14 an improvement of 1.6 percentage points over the baseline performance in 15 2013. 16

• After Call Surveys – PSEG LI’s target for this metric in 2014 for the 17 residential and business surveys was 67.0% and 47.6%, respectively. The 18 performance level as of the end of 2014 for After Call Survey – Residential 19 was 87.4% customers satisfied. The performance level as of the end of 2014 20 for After Call Survey – Business was 81.6% customers satisfied. Both 21 surveys showed significant improvement over their baselines. 22

• Timely Billing – PSEG LI’s target for this metric for 2014 is 61.5%. The 23 performance level as of the end of 2014 was 88.4% of billing exceptions 24 completed within the prescribed time period. 25

D. Customer Experience and Utility Marketing 26

Q. Please describe the Customer Experience and Utility Marketing organization. 27 A. The Customer Experience and Utility Marketing organization consists of four major 28

groups: Account Management and Economic Development; Utility Marketing; 29

Customer Experience; and Systems and Change Implementation. 30


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• The Account Management and Economic Development group is responsible 1 for providing 24/7 support for account issues, billing questions, and power 2 problems for our largest commercial customers, accounting for over 50% of 3 all commercial revenue. The Economic Development division of this group 4 works in conjunction with our counties and towns to help support non-retail 5 customers seeking to relocate or expand operations in our service territory. In 6 addition, the division assists customers with commercial efficiency programs 7 and economic incentives available from New York State and other sources. 8

• The Utility Marketing group is responsible for outreach to every customer 9 throughout the year via various communication channels, such as in-bill 10 communications, e-mail blasts, direct mail, brochures/flyers, posters and 11 advertising. In addition, they provide support for internal customers, such as 12 Energy Efficiency, Call Center Operations, Electric Service, and others. 13 Furthermore, the group is responsible for 12 aspects of the Web Transactions 14 OSA metric, including paperless billing and e-pay. 15

• The Customer Experience group is responsible for examining policies and 16 processes from a customer point of view based on surveys and benchmarking 17 and oversees our complaint resolution process. In addition, this group works 18 directly with internal and external departments to provide guidance on process 19 improvement. 20

• The Systems and Change Implementation group is responsible for providing 21 support and enhancements for both internal and customer-facing systems, 22 such as our CAS, IVR, and MyAccount. In addition, this group is responsible 23 for training and change management for Customer Services. 24

Q. Please describe initiatives this group has taken to improve and meet standards of 25 OSA. 26

A. The Customer Experience and Utility Marketing organization has implemented a 27

number of changes and performance initiatives to help drive improvement and meet 28

standards within the applicable areas of the OSA. 29

We have established a Customer Satisfaction Steering Committee to provide 30

on-going direction, oversight and support for our Customer One Program. This 31

program brings together the organization’s senior leadership team to align customer 32

satisfaction initiatives among the three business units at PSEG LI. The steering 33


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committee has raised awareness across the entire PSEG LI organization regarding 1

Customer One Initiatives, and the on time and on budget delivery of all Customer 2

One milestones has increased due to increased monitoring and reporting. The 3

steering committee ensures that Customer One initiatives are in line with the overall 4

PSEG LI strategy as it continually evolves and helps to prevent duplication of effort. 5

In addition, the committee leverages our relationship with our New Jersey 6

counterparts to ensure that best practices are consistently followed. 7

This group also has dedicated resources to call center call quality assurance 8

along with billing, meter reading and electric quality assurance. These associates 9

work with each area to develop tracking and calibration mechanisms for quality 10

assurance to enable data gathering, analysis and performance improvement. 11

In January 2014, the quality team and call center management team 12

established new call evaluation forms, calibration processes and linked each area of 13

the call evaluation forms to the Post Call Survey questions, a key metric within the 14

OSA. These new processes began implementation in February 2014 and have been 15

reviewed and evaluated each month. In October 2014, the call quality process was 16

fully automated within the NICE Quality application. The NICE Quality application 17

is a platform that allows for the complete tracking of customer calls from initiation to 18

completion, inclusive of call monitoring, call listening, and call archival. The new 19

process automatically returns the calls to be evaluated based on preset parameters. 20

All of the evaluations, scoring, calibrations, and reporting are managed within the 21


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new NICE application. There are various dashboards provided at multiple levels of 1

management, which report, in real time, the call quality scores. 2

In addition to the change in technology, the call quality process has been 3

modified to include the call quality team, supervisors, and bargaining unit team leads, 4

which represents a significant change to the overall process. 5

The new Quality Assurance process will have each customer service 6

representative receive the evaluations from supervisors, who will perform two 7

evaluations every two weeks; the team leads, who will perform one evaluation every 8

two weeks; and finally, the quality team, who will perform one evaluation each 9

month. 10

Q. Have the efforts of the Customer Experience and Utility Marketing organization 11 been observed in the metrics? 12

A. Yes. Regarding Customer Services KPI’s, the Customer Experience and Utility 13

Marketing organization is responsible for the performance of the following OSA 14

metrics and results: 15

• JD Power Residential – PSEG LI’s target for this metric in 2014 was 542. 16 The performance level as of the end of 2014 in the JD Power Residential 17 survey was 571 compared to 519 as of the end of 2013. The JD Power Wave 18 3 survey period, January 2014 to February 2014, resulted in a score of 539. 19 The JD Power score for Wave 4, fielded in April 2014 and May 2014 was 20 556. The JD Power score for 2015 Wave 1, fielded in July 2014 and August 21 2014 was 597. The JD Power score for 2015 Wave 2, fielded in October 2014 22 and November 2014 was 584. The year-to-date residential score of 571 23 represents a weighted average of Waves 3 and 4 of the 2014 survey and waves 24 1 and 2 of the 2015 survey. PSEG LI as previously stated is currently the 25 most improved brand to date in the 2015 JD Power Residential survey through 26 the survey’s midpoint when compared to the results at the same point in the 27 previous year’s survey. PSEG LI has improved 74 points. 28


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• JD Power Business Survey – PSEG LI’s target for this metric for 2014 is 1 551. The performance level as of the end of 2014 in the JD Power Business 2 Survey was 595 compared to 525 as of the end of 2013. PSEG LI, as 3 previously stated, was the most improved brand in the 2015 JD Power 4 Business survey (fielded in 2014) with an improvement of 70 points over the 5 previous year’s survey results. 6

• Web Transactions Completed – PSEG LI’s target for this metric for 2014 is 7 a 5% improvement. The performance level as of the end of 2014 for Web 8 Transactions Completed was 10.6%, which exceeds both the year-to-date 9 target of 3.8% and the year-end target of 5%. This metric measures our ability 10 to drive our customer base to self-service options via our online and website 11 channels to aid in enhancing our customers’ experience and helps develop our 12 alternate channels for interaction. 13

E. Meter Services 14

Q. Please discuss the Meter Services organization’s activities. 15 A. The Meter Services organization consists of four major groups: Meter Reading; Field 16

Collections, Field Services, Planning and Dispatch; Measurement Services; and 17

Meter Systems and Technology. 18

• The Meter Reading group is responsible for reading residential and 19 commercial meters on monthly and bi-monthly schedules to ensure accurate 20 consumption measurement for customer billing. The group is also in charge 21 of the completion of field services orders for connection and disconnection of 22 residential service, special reads, change names, advanced consumptions, 23 collection reconnects and the establishment of new meter sets into meter 24 reading routes and billing schedules. 25

• The Field Collections, Field Services, Planning and Dispatch group is 26 responsible for field collection efforts on arrears and active account deposit 27 requests for both commercial and residential customers. This group is also 28 responsible for performing the following investigations: high-bill complaints, 29 shared metering, diversion of service, advanced consumption, switched 30 meters, rate verifications concerns, shared meters, electromagnetic field 31 complaints, and TV and radio interference. This group is further responsible 32 for dispatching field personnel to effectively manage workload including cut-33 on after lock for non-payment to support cut-on completions within a 24-hour 34 time frame outlined by New York state regulations. 35


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• Measurement Services is responsible for the purchase, installation, 1 maintenance, and testing of all electric metering devices for PSEG LI. 2

• Meter Systems and Technology is composed of two major organizations: 3 Meter Data Services and Meter Engineering. Meter Data Services has two 4 sub-groups: Meter Data Systems and Retail Settlement & Load Research. 5 Meter Data Systems is responsible for the operation of meter data acquisition 6 and management systems that provide accurate and timely meter data and 7 analysis to support company operations. The Retail Settlement & Load 8 Research group is responsible for the calculation and reporting of load data for 9 every Load Serving Entity on Long Island to the NYISO for the purposes of 10 settling the energy and capacity markets. Meter Engineering is responsible for 11 providing the specification, design, development and administration of 12 accurate, safe and reliable revenue metering for all PSEG LI customers and 13 inter-ties. 14

Q. Has the Meter Services organization taken action to improve and meet 15 standards required under the OSA? 16

A. Yes. The Meter Services organization has implemented significant change initiatives 17

and performance initiatives to help drive improvement and meet standards within the 18

applicable areas of the OSA. For example, the Meter Reading organization has made 19

significant improvements in its operations in 2014 to meet the group’s operational 20

obligations and metrics/targets. 21

Meter Reading has also launched an effort to reduce long-term estimates 22

(“LTEs”) on customer accounts. LTEs are defined as an account that has three or 23

more consecutive estimates. The meter reading organization has achieved a 17% 24

reduction of long term estimates through the 3rd Quarter of 2014 and will continue its 25

efforts in 2015 and through the Rate Plan years of 2016-2018. The group has also 26

identified 275 accounts under the existing AMI foot print that currently do not have 27

an AMI meter, and we plan to exchange the existing meters to support automatic 28

meter reading, thereby eliminating LTEs. 29


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Meter Reading also has updated the Multi-Vendor Meter Reading System 1

(“MV-RS”) application. This is a software and hardware system manufactured by 2

Itron that PSEG LI deploys for meter data collection and route management using 3

handheld computers, mobile collection systems, and optical probes. PSEG LI also 4

updated the compatible handheld devices to the most current version which replaced 5

unsupported hardware. This enabled the organization to replace old handheld 6

metering devices that were no longer under manufacturer support and increase 7

efficiency in overall operations. These new devices now allow our workforce to fully 8

utilize optical probes on hand-held devices for all large commercial meters. The 9

optical probe facilitates reading the meter in seconds and eliminates key punch errors. 10

Meter Reading also implemented an unsafe field condition remediation 11

program to identify and document unsafe field conditions at the meter premises. This 12

effort has led to the investigation and remediation of 400 unsafe conditions at 13

customers’ premises and will enable our employees to perform their work function in 14

a safe and reliable manner. This has resulted in positive customer interactions with 15

Meter Reading management and customers to remedy unsafe conditions and 16

eliminate LTEs as well, thereby providing accurate billing to customers. 17

Q. What are the metrics for which the Meter Services organization is responsible 18 and how is that organization achieving them? 19

A. The overall objective of the Meter Services organization is to support the 20

achievement of OSA metrics for Customer Satisfaction, Customer Services KPI’s, 21


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and Storm Response. For Customer Satisfaction, the Meter Services organization is 1

responsible for aspects of the JD Power Residential and Business survey scores. 2

Regarding Customer Services KPI’s, the Meter Services organization’s 3

performance is as follows: 4

• OSHA Recordable Incidence Rate (Customer Services Lead) – PSEG LI’s 5 target for this metric 2014 is 1.67. The performance level as of the end of 6 2014 for OSHA Recordable Incident Rate was 2.80 with an OSA requirement 7 of 1.67. The safety of PSEG LI’s customers and employees is the number one 8 priority of the Company. The Customer Services organization has developed 9 an enhanced safety program led by the Meter Services organization to analyze 10 historical safety data to identify opportunities and trends to drive safety 11 performance. This program will analyze best practices utilized at other 12 utilities nationwide to be incorporated into PSEG LI’s Comprehensive Health 13 and Safety Program. The Customer Services organization has designated 14 safety leads to drive overall safety culture improvements within the Customer 15 Services organization. 16

• OSHA Days Away Rate (Severity) (Customer Services Lead) – PSEG LI’s 17 target for this metric 2014 is 29.81. The performance level as of the end of 18 2014 for the OSHA Days Away Rate (Severity) was 29.16. 19

• Actual Meter Reading Rate – PSEG LI’s target for this metric in 2014 was 20 96.8%. The performance level as of the end of 2014 for Actual Meter 21 Reading Rate was 97.1% of meters read. The Meter Services organization has 22 met extreme challenges to support this metric in 2014 because of poor weather 23 conditions in January and February. In February there were two days where 24 meter readers were held in from the field because of unsafe weather 25 conditions. This led to approximately 40,000 meters to be estimated which 26 decreased the read rate to 90.5% for the monthly performance. Consequently, 27 the meter reading organization had to deliver performance that had never been 28 achieved - by reading 98+% of meters from March-July to get back on target 29 to hit the Actual Meter Reading Rate target in 2014. 30

III. CUSTOMER SERVICES O&M BUDGET 31

Q. Are you familiar with the PSEG LI O&M budgets that are being presented by 32 the Budget Panel in this case? 33

A. Yes, we are. The 2015 Customer Services O&M Budget presented in Exhibit ___ 34

(CSP-1), in summary fashion, was the baseline for the 2016-2018 rate period budgets 35


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which are presented in that same Exhibit. A more detailed presentation of the 2015 1

budget is described in the testimony of the Budget Panel. 2

Q. Please describe the process by which the budget was produced. 3 A. The starting point for developing the budgets for calendar year (“CY”) 2016 through 4

CY 2018 was the CY 2015 budget. Based on that budget, directors with 5

responsibility for each of the business service functions prepared detailed estimates of 6

the cost of delivery for each of the services projected to be required by PSEG LI to 7

meet OSA targets. 8

The overall results were reviewed by PSEG LI’s senior managers to determine 9

the overall reasonableness of the proposed budget. This review was conducted 10

through an iterative process that ultimately produced a budget that meets the needs of 11

individual PSEG LI managers for services in each business function, while also 12

achieving the overall budget goal for PSEG LI. 13

Q. Please explain the role you played in the budget process. 14 A. The Customer Services organization was responsible for generating the headcount 15

plan, overtime percentage levels, planning orders (O&M and CapEx workload 16

allocations) and non-labor spending associated with running the Customer Services 17

organization to support the 2015 baseline budget. Once the 2015 Customer Services 18

O&M Budget was developed, we used it as a baseline for the budgets that cover the 19

three years of the Rate Plan in this filing. The 2015 baseline budget, however, was 20

developed under the constraint of the LIPA rate freeze. This limited the 21

organization’s ability during the 2014 and 2015 business years to fully implement its 22


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strategic plan that would enable Customer Services to meet OSA targets, improve 1

customer satisfaction and provide more value for our customer base. The 2016-2018 2

budgets include the baseline plus additional programs that the Customer Services 3

organization believes are necessary to improve customer satisfaction. The additional 4

programs are discussed below. 5

Q. Please describe the major cost categories that make up the Customer Services 6 Base Year Budget and explain how they were developed. 7

A The Customer Services line of business has two major costs categories in the budget. 8

The two major categories are labor (inclusive of base labor, overtime spend, fringe 9

benefits and payroll taxes) and non-labor (outside services, vendor contracts, 10

materials and business expenses). The major components of the Customer Services 11

2015 budget and the Rate Plan budgets for 2016, 2017 and 2018 are shown on Exhibit 12

___ (CSP-1), page 1. 13

Q. Please describe the ratio of Customer Services budget components. 14 A. Our budget reflects the fact that our expenses are composed mainly of employee 15

expenses. The current ratio in the Customer Services organization is 80% labor (70% 16

for direct labor and 30% fringe benefits and payroll taxes) and 20% non-labor to 17

support outside service vendors, contractors, materials and other business expenses. 18

Q. Please describe the Customer Services O&M to capital labor breakdown to 19 support the workload. 20

A. The Customer Service business unit has a capital versus O&M labor split of 4.5% 21

capital to 95.5% O&M. The capital/labor split is a function of the amount of labor in 22

support of Customer Services IT capital projects, and Customer Services capital 23


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metering projects. Because the majority of the Customer Services labor supports 1

normal operations and is an O&M expense, the amount of capitalized labor is 2

relatively small. 3

Q. Do the Customer Services Budgets reflect additional expenses into the three 4 years of the Rate Plan? 5

A. Yes, they do. The Customer Service business unit has developed certain increases to 6

our baseline 2015 budget during the rate period to support new programs that the 7

Customer Services business unit has deemed necessary to implement to meet OSA 8

customer service obligations. One such increase is simply to capture the increases to 9

labor and benefits expense discussed by the Wages, Salary and Benefits Panel. There 10

has also been a productivity offset imposed in 2017 and 2018, as shown on Exhibit 11

___ (CSP-1) page 2. In addition, Customer Services is adding some discrete program 12

initiatives during the Rate Plan. 13

Q. Please describe these additional expenses and the associated programs. 14 A. The net expenses associated with these programs are shown on Exhibit ___ (CSP-1) 15

page 3 as follows: 16

• 2016 - $ 7,840,000 17

• 2017 - $ 8,130,000 18

• 2018 - $ 9,970,000 19

The funding is to support the following programs: Safety and Customer Culture 20

Enhancement Program; increased use of outside counsel to support collection efforts; 21

implementation of Customer Energy Usage/Management Engagement Vendor 22

Program; implementation of a Small/Medium Business Customer Contact Gate 23


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Program; increased FTEs to achieve ever increasing OSA targets; and additional 1

customer education materials and notices. 2

• The Safety and Customer Culture Program is a change management program 3 that will be implemented throughout the PSEG LI organization that focuses on 4 customer and employee safety and is discussed in the Metrics and Safety 5 Panel’s testimony. The change management program will also focus on 6 customer satisfaction and customer service improvements and the changes 7 that will need to be implemented in order to better serve our customer base 8 while meeting our contractual obligations. The cost of this program is 9 estimated at $1 million for each year of the Rate Plan – 2016, 2017, 2018. 10

• Increased use of outside counsel to support collection efforts is to support 11 collection efforts prior to revenue in arrears being written off. PSEG LI 12 believes that utilizing outside counsel is more effective than utilizing internal 13 counsel because the work volume does not support hiring a full-time in house 14 attorney to support collection efforts. The cost of this action is estimated at 15 $500,000 for each year of the Rate Plan. 16

• The Customer Energy Usage/Management Engagement Vendor Program is to 17 provide our customers with engagement tools around their energy usage and 18 consumption. This program will support energy efficiency efforts, customer 19 engagement, customer energy management, demand response and thermostat 20 management. The Customer Services organization believes this service will 21 have significant impact on our customer’s satisfaction and provide them with 22 the ability to manage their consumption with real time data and analytics. The 23 cost of this program is estimated at $2 million for each year of the Rate Plan. 24

• The implementation of a Small/Medium Business Customer Contact Gate 25 Program. This is a dedicated gate in the Company’s call center and is an 26 industry, as well as a JD Power, best practice. The implementation will 27 segregate customer calls by specific profiles in the customer contact center, 28 such as residential, large C&I and small/medium business. The cost of this 29 activity is estimated at $1 million for each year of the Rate Plan. 30

• Increase in FTEs to meet original full staffing plan developed to achieve OSA 31 targets and Customer Satisfaction targets in 2016, 2017, and 2018. The 32 additional staffing to full complement is necessary to achieve escalating 33 targets and support our obligations to our customer base. The cost of this 34 action is estimated at $750,000 for 2016, $1.5 million for 2017, and $2.5 35 million for 2018. 36

• Additional Customer Education Materials and Notices Program are essential 37 to ensure that our Customers are obtaining and aware of the full value of 38 PSEG LI’s offered services. We will educate our customers on services that 39


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will be available to help them better manage their electricity usage, self-1 service options and other offerings that will improve their customer 2 experience when dealing with PSEG LI. The cost of this activity is estimated 3 at $2 million for each year of the Rate Plan. 4

Q. There appears to be a large increase in the Customer Services budget between 5 2015 and 2016. Can you explain the reason for this increase? 6

A. Yes. Please refer to Exhibit ___ (CSP-1) page 3. There is an OPEB accrual of 7

approximately $17 million in each year of the Rate Plan that was not recognized in 8

2015. 9

Q. You previously stated that the Customer Services business unit utilizes overtime. 10 Please describe why the business unit utilizes overtime spend in running its 11 operations. 12

A. The Customer Services organization is constantly analyzing how to more efficiently 13

run our operations. Our business unit utilizes overtime because it can be more 14

economical than hiring additional staff to meet peak demand workload requirements. 15

It allows our organization to quickly respond to short-term variations in workload 16

and/or staffing variations, while only having to pay for the time needed. Clearly, 17

staffing for peak demand or absences is a far less viable financial option than using 18

overtime to fill in when necessary. 19

Q. Please discuss the 20% of Customer Services non-labor spending level. 20 A. The Customer Services non-labor spending level is primarily to support outside 21

service vendors. The Customer Services non-labor spend is also necessary to support 22

materials and other business expenses. 23


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Q. Why does the Customer Services organization utilize outside vendors to support 1 the organization? 2

A. The Customer Services organization uses outside vendors to support responsibilities 3

that are outside of our organization’s core competencies. An example would be our 4

organization’s bill print vendor, which is responsible for the printing, packaging and 5

archiving of more than 13 million bills annually. Another example is our 6

organization’s payment processing vendor, which is responsible for receiving and 7

processing $3.6 billion dollars of revenue annually. Although we do maintain 8

necessary supervisory people on staff to oversee the operational activities of these 9

outside vendors that perform these necessary business functions, we find that it is 10

much more efficient to utilize businesses that are experts in the related fields, rather 11

than to provide these services in house. 12

Q. Do the budgets developed for the Customer Services organization provide 13 adequate funding to permit it to meet its business obligations? 14

A. Yes. In light of the efficiencies and initiatives described in the above testimony 15

which outlines workload, metrics/targets and customer service initiatives, we believe 16

that the budgets do support the Customer Services organization’s overall mission of 17

providing top quartile Customer Satisfaction and Customer Service. That having 18

been said, we would point out that the organization is quite leanly staffed and that our 19

employees and management will need to continue to work ever smarter and more 20

efficiently to improve customer satisfaction, meet the high standards demanded in the 21

OSA and achieve our mission to become a “best in class” organization. 22

Q. Does this conclude this Panel’s testimony? 23 A. Yes, it does. 24

Documents

Customer Services - Budget and Operations