Report - Strategic Interventions for a Customer-driven Distribution Utility

7/28/2019 Report - Strategic Interventions for a Customer-driven Distribution Utility

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Strategic Interventions for a Customer-driven Distribution Utility

EXECUTIVE SUMMARY

The Electricity Act has given way for introduction of competition in the retail

markets in many forms a licensee developing parallel distribution infrastructure

in an area, customers having a choice in selection of their distributors under open

access provisions etc. This in turn requires distribution utility processes to

undergo major changes to evolve as a more customer friendly organisation. And

the business model would also have to change from being an asset and

engineering intensive business to a commercially driven customer oriented

businesses which derive their value from their ability to attract and retain

customers.

In order to achieve tangible improvements in the customer service, it is essential

to identify the typical steps that each customer will go through, which can be

termed as customer life cycle management process. The process starts with a

new customer seeking service. The next step is service provision, which includes

the basic service of providing reliable and quality power at affordable tariffs to

meet the demand, and the various ancillary services such as fault repairs, changes

in connected load, connection shifting etc. along with the value added services

such as cost reduction through DSM, energy audit services etc. For this a

proactive approach by the utility is important.

The next part of lifecycle covers the charges for the services given and the

collection of dues. This forms the most critical area of reforms and major

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dissatisfaction arouses out of this reason. Any inefficiency in the billing and

collection processes results in swift exit of customers.

Relationships in electricity business, not being time bound; so it is necessarily

required that instead of transactional relationship with the customers, the utilities

focus on process approach such as

process reorientation towards customer satisfaction identifying the

touch points with customers.

simplified entry procedures advance planning of networks to ease

subscription to consumers

use of integrated IT & MIS in improving customer relationships

electronic presentation, payment and reminder of bills, billing and

payment history, online resolution of simple bill disputes, online fault

booking etc.

value addition by providing ancillary services

innovative and customer friendly measures call centres, drop boxes at

their convenience

The project aims to bring forth such areas in which strategic actions when taken

can lead a utility to empower its customers and thus enhance its own value

Customer Issues

The concept of customer service is almost non-existent in most distribution

companies. In fact, there is a lack of a formal organization construct, unlike say

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the telecom industry, to address customer needs. This means that customers need

to interact with multiple entities for any service request. The result is that

customers frequently face long delays in resolving technical and commercial

complaints, encounter uncooperative attitude of staff and need to make unofficial

payments to resolve their issues.

Major issues by which a customer is not satisfied with the service of utility are:

Poor availability and quality of power

Multiple contact points

Tedious processes and bribery

Limited payment modes

Poor customer service

A survey was done amongst domestic consumers to reveal the level of

satisfaction they have from the distribution utility processes, procedures and

service standards

which revealed the following facts:

There is no provision to regularly monitor whether the time limits are

adhered to or not in case of non conformance to standards.

Reporting mechanisms are not strictly followed

Analysis of the survey's results clearly reflected the dissatisfaction, and

wide gap between expectations and services delivered.

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To the consumer the two most important aspects that emerged were

grievance handling and metering and billing.

Based on the above observations, following recommendations were made

Frequent interaction with the consumer forums must be done by the

distribution utility to yield areas of customer dissatisfaction and to act

upon such issues so as to increase overall effectiveness of the utility.

Distribution utilities in the state must arrange wider publicity to

Complaint Handling Procedure, drawing the attention of the consumers.

Procedures to be adopted for the complaints regarding interruption or

failure of power supply, voltage complaints, load shedding, scheduled

outages, problems in metering and billing, disconnection and reconnection

of power supply, delay in providing new connections must be provided by

the utility through any means like print advertising, direct mail, sales

literature, public relations, utilities website, etc.

All the distribution utilities must define Customer Service Standards

consisting of:

Overall Standards, i.e. the ability to restore supply after a failure of the

distribution system, management of voltage complaints, actual meter

reading, billing and response to customers petitions; and

Guaranteed Standards, involving the supply quality, time to connect

new customers, time to respond to customers requests and compliance

to the service conditions, and reconnection of supply in case of having

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been disconnected. For the guaranteed standards, penalization in terms

of fine can be established. The utilities will have to compensate

affected customers in case the guaranteed standards cannot be met.

There is a need to streamline the grievance redressal procedure, as a

consumer usually has to approach to various levels within a utility. Thus,

the process of grievance redressal is time consuming and cumbersome

Updation of customer information system with databases of customers,

regular updates of mapping system so that all of the customer's account

information is available when a customer calls in to 24-hour call center.

Another area which needs improvement is metering systems. Automated

meter reading system or AMR must be introduced in phases. This system

will automatically read meters so the utilities don't have to send their

employees into the customers' homes and backyards. Automated meter

reading will improve the quality of meter reading, help the utilities gain

operational efficiencies, and provide customers with timely energy

information.

Work management system of the utility must be made effective. This

system helps manage work at a company level. It gives a high-level view

of workload and helps offices communicate effectively to ensure that the

utility meets the customers' needs.

Customer Relationship management systems must be designed in such a

way that employees get information about customers' accounts when they

are out in the field meeting with customers.

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A step further in customer services area can be achieved by the utility by

centralizing a number of their field functions. This doesnt mean closing

field offices, but rather shifting the emphasis from addressing walk-in

customers' needs to more of an operationally focused field office.

Bill payment systems can be extended to forms like on-line payments,

payments directly from customers' bank accounts, or payment at pay

stations, etc.

Creation of an on-line access for the larger customers to provide them with

energy information tailored to their business environment can also be a

way to enhance customer service.

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INDEX

1. Introduction 1

1.1 Objective 5

1.2 Significance of the Problem 6

1.3 Review of the Literature 8

1.4 Conceptualization 13

1.5 Operationalisation of the Concept 14

1.6 Focus of the study 20

1.7 Limitations 21

2. Research Methodology

2.1 Research Design 22

2.2 Universe and Survey Population 23

2.3 Sample Size and Technique 24

2.4 Data Collection 25

2.5 Data Analysis 27

3. Strategic Interventions for Distribution Utility 28

4. Statistical Analysis 48

5. Summary 56

6. Recommendations 57

7. Conclusion 60

Annexure-I

Annexure- II

Bibliography

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1. INTRODUCTION

The distribution system in India is often characterised by inefficiency, low

productivity, frequent interruption in supply and poor voltage. Evidently, some

fundamental changes are imperative in the working of the power sector entities to

realise the vision of reliable, affordable and quality power for all by 2012. The

reform process is in progress in several states under the overall guidance of MoP.

It is aimed at bringing about sustainable improvements in the operations of the

utilities and making them viable businesses. The reforms have brought about

various improvements in operational structure, commercial

orientation, transparency in operation and overall customer orientation in several

states. However, there has been limited success in institutionalising these changes

and sustaining these improvements over a period of time. Therefore, the need of

the hour is to institutionalise the changes and bring about sustainable, pervasive

improvements.

WHO IS A CUSTOMER ?

A customer is the most important visitor in our premises.

He is not dependent on us. We are dependent on him.

He is not an interruption on our work. He is the purpose of it.

He is not an outsider on our business. He is part of it.

We are not doing him a favour by serving him. He is doing us a favour by giving

us an opportunity to do so.

-Mahatma Gandhi

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Most people in business serve three kinds of customers

Final customers- People who will use your product or service in daily life

and, you hope, will be delighted. Theyre also known as end users.

Intermediate customers- These are often distributors or

dealers who make your products and services available to the final

customer.

Internal customers- People within your organization who take your work

after youve finished with it and carry out the next function on the way

toward serving the intermediate and final customers.

CUSTOMER DRIVEN ENTERPRISE

A customer driven enterprise constantly challenges itself to answer four questions:

1. What are our customers needs and expectations, and which of these needs

and expectations matter most to them?

2. How well are we meeting those needs and expectations?

3. How well are our competitors meeting them?

4. How can we go beyond the minimum that will satisfy our customers, to

truly delight them?

Ways to become a customer driven organisation

Ask the customers how well you are currently serving them?

Give them a chance to tell you

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what they want,

where youre failing,

where youre succeeding

The companies that do so consistently and act upon their findings reap massive

benefits.

Because quality of service is hard to quantify, companies often fail to learn their

customers opinions about it. But a good guide is a structure described in five

dimensions which can be summarized with the acronym RATER:

Reliability: the ability to provide what was promised, dependably and accurately

Assurance: the knowledge and courtesy of employees, and their ability to convey

trust and confidence

Tangibles: the physical facilities and equipment, and the appearance of personnel

Empathy: the degree of caring and individual attention provided to customers

Responsiveness: the willingness to help customers and provide prompt service

Customer driven organization means moving

FROM TO

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motivation through fear and loyalty motivation through shared vision

an attitude that says its their problem ownership of every problem that affectsthe customer

the way weve always done it continuous improvement

making decisions based on assumptions

and judgment calls

doing it with data and fact-based

decisions

everything begins and ends with

management

everything begins and ends with

customers

functional stovepipes where departmentbase decisions solely on their own criteriacross-functional cooperation

being good at crisis management and

recovery

doing it right the first time

depending on heroics driving variability out of the process

a choice between participative or

scientific management

participative and scientific management

Building a customer-driven organization involves focusing on some key

dimensions like:

Information

Technology

End-to-end processes

Behaviour

Resources

Orgnanisation structure

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1.1 OBJECTIVE

Since the passage of Electricity Act 2003, developments in the power sector have

gained momentum. The most important and the irreversible change is the shift

from the monopoly business to the competition, with the utilities gearing up to

transform through internal reforms and restructuring. In this new environment,

only the customer orientation and service quality offered by the utility would

decide the eventual winner, i.e. the future of a successful electricity business

would be based on ownership of customer rather than ownership of assets.

This project aims to bring forth customer service strategies to be undertaken by

the distribution utilities (put forward as a result of survey conducted amongst

domestic customers) so as to evolve successfully into a business where customer

is the sole arbitrator of performance.

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1.2 SIGNIFICANCE

Customers in a distribution utility are faced with problems of quality and

reliability of service, power outages, billing and collection inefficiencies,

improper remittance handling measures, etc. There is an inherent gap in the

customer expectations of the service and the service actually delivered to him (as

depicted by the figure on next page). To bridge this gap, utilities need to focus on

various areas leading to customer satisfaction because it is the customer base, and

the customer service and retention measures of the utility which will be of prime

importance in near future of competitive electricity markets and these will help

decide the utilitys future performance.

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Principal Disparities Affecting Service Quality

Consumer

expectationsConsumer Perceptions

of Service Delivery

Service quality level

experienced by consumers

Consumer Expectations

Management Perceptions

of Consumer

Expectations

Intended Level of

Service Quality

Intended Level of

Service Quality

Management Perceptions

of Consumer Expectation

What is communicated

about the service to

consumers

Service quality level

experienced by consumers

GAP

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1.3 REVIEW OF THE LITERATURE

Excerpts from the Electricity Act, 2003

The Act specifies certain obligations for the distribution licensee or the utility

towards customers

Duties of distribution licensee

42. (5) Every distribution licensee shall, within six months from the appointed

date or date of grant of licence, whichever is earlier, establish a forum

for redressal of grievances of the consumers in accordance with the

guidelines as may be specified by the State Commission.

(6) Any consumer, who is aggrieved by non-redressal of his grievances

under sub-section (5), may make a representation for the redressal of his

grievance to an authority to be known as Ombudsman to be appointed or

designated by the State Commission.

(7) The Ombudsman shall settle the grievance of the consumer within such

time and in such manner as may be specified by the State Commission.

Duty to supply on request

43. (1) Every distribution licensee, shall, on an application by the owner

or occupier of any premises, give supply of electricity to such premises,

within one month after receipt of the application requiring such supply

Provided that where such supply requires extension of distribution

mains, or commissioning of new sub-stations, the distribution licensee

shall supply the electricity to such premises immediately after such

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extension or commissioning or within such period as may be specified

by the Appropriate Commission.

(3) If a distribution licensee fails to supply the electricity within the

period specified in sub-section (1), he shall be liable to a penalty which

may extend to one thousand rupees for each day of default.

The Electricity Supply Code

50. The State Commission shall specify an Electricity Supply Code to

provide for recovery of electricity charges, intervals for billing of

electricity charges disconnection of supply of electricity for non-

payment thereof; restoration of supply of electricity; tampering, distress

or damage to electrical plant, electric linesor meter, entry of distribution

licensee or any person acting on his behalf for disconnecting supply and

removing the meter; entry for replacing, altering or maintaining electric

lines or electrical plant or meter.

Consumer protection: Standards of performance

57. (1) The Appropriate Commission may, after consultation with the

licensees and persons likely to be affected, specify standards of

performance of a licensee or a class of licensees.

(2) If a licensee fails to meet the standards specified under subsection

(1), without prejudice to any penalty which may be imposed or

prosecution be initiated, he shall be liable to pay such compensation to

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the person affected as may be determined by the Appropriate

Commission

Provided that before determination of compensation, the concerned

licensee shall be given a reasonable opportunity of being heard.

(3) The compensation determined under sub-section (2) shall be paid

by the concerned licensee within ninety days of such determination.

Different Standards of performance by licensee

58. The Appropriate Commission may specify different standards under

subsection (1) of section 57 for a class or classes of licensee.

Information with respect to levels of performance

59. (1) Every licensee shall, within the period specified by the

Appropriate Commission, furnish to the Commission the following

information, namely:-

(a) the level of performance achieved under sub-section (1) of the

section 57;

(b) the number of cases in which compensation was made under sub-

section (2) of section 57 and the aggregate amount of the

compensation.

(2) The Appropriate Commission shall at least once in every year arrange

for the publication, in such form and manner as it considers appropriate,

of such of the information furnished to it under sub-section (1).

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Quality of service: role of regulators

The ERC (Electricity Regulatory Commission) Act 1998 enjoins upon the

central electricity regulator to seek advice from the central advisory

committee on "matters relating to quality, continuity, and extent of service

provided by the licensee;.energy supply and overall standards of

performance by utilities".

The OER (Orissa Electricity Reform) Act 1995 mandates the regulator to

"regulate the purchase, distribution, supply and utilization of electricity,

the quality of service,.". Similar provision exists in the Acts setting up

regulatory authorities in Karnataka, Gujarat, UP, and AP.

Some regulators have also taken certain initiatives to address issues of quality for

improvement of customer service. In Orissa, the electricity regulator through its

Distribution (conditions of supply) Code 1998, has set the service standards

required to be provided to consumers by a distribution utility. These standards are

backed up by provisions for imposition of penalties for violations, and penalties

prescribed are very high. There are also procedures for grievance redressal by the

utility and by OERC (Electricity Regulatory Commission). Similarly, overall

performance standards have also been set for distribution and retail supply: for

example, distribution companies have to bring down voltage variations within

declared limits within fifteen working days of complaint in 60 percent of cases.

Standards of service in Orissa

Sl.No. Type of service Time limit for rendering the service

1. Low voltage 15 days in case of local problems and 6 months

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requiring augmentation of distribution system

2. Restoration following

interruption/failure of powersupply

24 hrs. in all cases except in case of major

failures involving transformers and 11 KVfeeders including its terminal equipments, where

it shall not exceed a maximum of 7 days

3. Duration of load shedding or

scheduled shutdown exceeding 12

hrs./day or continuing for more

than 6 consecutive days

Prevent such recurrence within 72 hrs. of

complaint

4. Metering problems

a) Meter supplied by Licensee

Defect rectified within 30 days and if meter

needs replacement the said replacement has to be

made within 30 working days from the date of

removal of the meter

b) Meter supplied by Consumer Engineer required to advise the consumer

suitably for testing/repair/replacement within 7

working days of noticing the defect

Meter testing, if so desired by the consumer in

Licences testing laboratory, is to be done within

15 days of deposit of fees by the consumer

Engineer will install correct meter within 14

days of handing over of the said meter by the

consumer

5. Billing errors 60 days

6. Disconnection and reconnection

of power supply

30 days

Though we see quality of service provided by the distribution utility is laid

prime importance by the government and the regulators, and many states have

taken initiatives in this direction also, yet there is scope for improvement.

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1.4 CONCEPTUALISATION

Utilities, for the most part, are still monopolies, albeit regulated. Distribution

utilities have a 'captured' base of customers or consumers. Today customer care is

a primary focus of most utilities. All utilities are looking for ways to touch their

customers. Various kinds of customer satisfaction surveys are being conducted by

the utilities to find the overall satisfaction of the customers from the utilities

services.

But, we must realize that the 80-20 rule applies here too. Eighty percent of the

efforts in the customer care/customer service area are for 20 percent of the

customers. And, this may even be stretching it. Utilities and municipalities who

have attempted to measure these activities report that it may be fewer than 20

percent of our customers who generate over 80 percent of our customer care work.

It is important that utilities continue to provide excellent customer service to rest

80 percent group because, if they do become unhappy, even if they cannot

necessarily leave the utility and select another service provider, they can easily

join and ultimately increase the size of that 20 percent group, resulting in either a

lower level of customer service to this group, or increasing the utilities costs of

serving them. Either way it is something the utility does not want.

Another very important, and many times missed aspect, is to consider the other

group of customers who are the utilities internal customers. A utility has to

integrate its functions to work efficiently as a tool for the customer service

organization and back-office organizations like billing, collections, cashiering, etc.

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1.5 OPERATIONALISATION OF THE CONCEPT

OWNERSHIP OF CUSTOMERS

The electricity business is evolving from a monopoly to a competitive market and

the utilities are gearing up to face the challenge through internal reforms and

restructuring. Though this is certainly a step in the right direction, in this new

environment, only the customer orientation and service quality offered by the

utility would decide the eventual winner. The future mantra of a successful

electricity business would be the ownership of customer rather than ownership

of assets.

New order in distribution

Developments in the power sector have gathered momentum since the passage of

Electricity Act, 2003. Some major shifts in the external environment of the

distribution companies have already manifested, the most important change being

the irreversible move from being a monopoly business to a competitive market.

The Electricity Act has already created an enabling environment for competition

in bulk and retail power markets. Retail competition can now take many forms- a

parallel licensee with his own distribution infrastructure, or a consumer/ retailer

leveraging existing distribution assets under the open access provisions, or a

consumer setting up a captive power station without accessing a distribution

network at all. In each case, the customer will be able to choose his power

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supplier rather than being compelled to buy power from the distribution licensee

in his area.

The inevitability of competition is now evident from the fact that various state

electricity regulatory commissions (SERCs) have already issued draft guidelines

for distribution-level open access. What this means for the incumbent utilities is

the emergence of a new order where the customer will be the sole arbitrator of

performance.

Emerging business value drivers

With the changing environment, the processes in the retail selling side of

electricity distribution companies would undergo a major transformation. The

business model itself would change from being an asset- and engineering-

intensive business to a customer oriented and commercially driven business.

Though this may be new to the electricity distribution business- monopolies have

always experienced shifts in their value drivers when their industry has opened up

to competition. Monopolies derive value from their asset base- in the case of

distribution companies, this would mean infrastructure such as substations, lines,

geographic reach etc. However, competitive businesses derive value from their

ability to attract and retain customers. It is therefore not difficult to see that the

transformations required in the business are so far-reaching that they would affect

the core of the distribution business.

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Many reforming SEBs (and their newly created avatars- the unbundled

distribution companies) have started recognizing this change and a few have also

taken the first steps towards creating organizations that are customer friendly.

Customer life-cycle management process

In order to achieve tangible improvements in customer service, it is essential to

identify the typical steps that each customer will go through, which can be termed

as the customers life cycle with the organization. In electricity distribution

customer relationships are not time bound and hence, should not be seen with a

transactional approach but with a process approach.

The typical process starts with a new customer seeking service, wither by seeking

a new connection or by transfer of an existing connection to a new person.

The next step is service provision, which encompasses the basic service of

providing reliable and quality power at affordable tariffs to meet the demand.

Along with this, utilities could also provide various ancillary services such as fault

repairs, changes in connected load, connection shifting, name changes etc. as well

as value-added services such as assistance in cost reduction by demand-side

management, energy audit services etc.

The next part of the life cycle covers the charges for services provided and

collection of dues. This is often the most critical area identified for reform, with

the maximum potential for causing customer dissatisfaction. It has been observed

that a lacuna in billing and collection processes results in the swift exit of

customers.

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Process reorientation towards customer satisfaction- the real challenge

The best way to start improving customer processes is to identify the key touch-

points with customers. These are the key interfaces with the customers, such as a

customer coming to obtain a new connection, sending bills to customers, receiving

customer complaints, receiving payments from customers, etc. Improvements in

touch-points should be the first items on the agenda and each one should be

reviewed to make them simple, efficient and customer friendly. Often, in this

process, utilities will fine-tune processes and get the additional benefit of saving

their own time and costs.

Simplified entry procedures

The entry process for new customers assures prime importance in a competitive

environment, as customers tend to give a lot of weightage to the ease with which

they can subscribe to the services. Towards this goal, utilities need to make it easy

and convenient for customers to apply for new connections. In addition, the

company should also carry out advance planning of networks for reducing service

commencement time.

Framework to improve customer touch-points- use of informationtechnology

The companies would need to reorient the nature of management information

systems, and consequently, the use of information technology (IT) to improve

customer connectivity. An essential element in the customer-oriented approach is

the deployment of various IT systems to provide data to customers in a friendly

manner. It is important to provide facilities such as electronic presentation and

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payment of bills, billing and payment history, online resolution of simple bill

disputes such as arithmetical errors, online fault booking, etc.

Value addition by providing ancillary services

Offering ancillary services would leverage the technical expertise of the utility ina

manner that would bring advantage to both the utility and the customer. For

instance, by proper demand-side management it may be possible for the utilities to

flatten its load curve and would lead to savings by the customer. Providing

subsidized categories of customers with upgrades to more energy efficient

technologies to control their drawals is another example of such a win-win

situation.

Customer retention- innovative efforts

Many utilities have started the process of building on various customer-friendly

measures with the objective to retain valuable customers by offering them

maximum convenience.

A number of utilities have created call centers to create a central point to receive

customer complaints. A few have even centralized all customer interaction by

creating kiosks that handles all the activities, such as obtaining new connections,

excess billing complaints, etc. Some have started providing bills to customers in

the language of their choice, which also provide a basic idea of consumption

based on hours of usage of typical household gadgets.

Andhra Pradesh has introduced a bill presentation and payment system called e-

seva. This acts as a concentration point providing citizens access to bills and

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forms from various government departments, including the distribution

companies. The infrastructure created for this purpose allows for online payment

of electricity bills in addition to payment at any one of the e-seva kiosks, member

bank ATMs, drop boxes etc. The increased convenience in bill payment leads to

lower default rates.

The Gold Card scheme that was in practice in Karnataka is also a good example

of a customer outreach initiative. The scheme was designed to provide its large

customers with express privileges. Clear and transparent eligibility criteria were

developed considering past payment, annual consumption etc. Efforts were made

to provide quality services to these gold customers and ensure that they are

retained through a continuous feedback mechanism to identify and redress their

problems on a priority basis. Though the scheme is not in operation today, it was

quite popular and demonstrated an effective way of reaching out to the most

critical customers and ensuring their satisfaction.

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1.5 FOCUS OF THE STUDY

A monopolistic environment causes organizations to lose their customer focus.

However, the monopolies in the electricity distribution business have realized that

their sector is on the cusp of a competitive era where empowered customers will

be calling the shots. And like many other sectors, the winner in the new era will be

the entity that owns the maximum number of customers and not necessarily the

assets.

The main objective of this project is to obtain an overview of the customer focus

strategies of the distribution utility and to analyze the areas for improvement. This

is because for a utility, customer is regarded as a king.

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1.6 LIMITATIONS

The conceptualization of a competitive era in which customer is the main focus of

the utility will actually take some time to evolve in Indian distribution sector,

though to some extent, it is underway.

This report does not analyze the companys perspective, i.e. means to stop power

thefts, AT&C loss reduction etc. which are the main reasons for poor quality of

service to customers.

Time constraint and sample size can be considered other limitations of this

project. However a fairly good sample has been analyzed within prescribed time

limits.

The cost perspective for improving customer service strategies both at utilities and

the consumers end have not been analyzed in great details.

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2. RESEARCH METHODOLOGY

2.1 RESEARCH DESIGN

The research design is the conceptual structure within which research is

conducted; it constitutes the blue print for the collection, measurement and

analysis of data. As such the design includes an outline of what the researcher will

do from writing the hypothesis and its operational implications to the final

analysis of data. This research deals with the customer service strategies to evolve

successfully in this competitive era.

The basic purpose of the research is to see the customer services strategies in the

current scenario and suggest areas of intervention (from the consumers

perspective) for the same to improve the current shape.

This is an analytical kind of research study. Analytical research studies are those

studies, which are concerned with analyzing the characteristics of a particular

individual, or of a group after discussion with the individual/group. Here I have

obtained the primary data from the respondents in the form of a questionnaire and

then analyzed and interpreted the same as per my perceptions to reveal the status

of customer satisfaction in a distribution utility.

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2.2 UNIVERSE AND SURVEY POPULATION

All items in any field of inquiry constitute a universe or population. A

complete enumeration of all the items in the population is known as a census

inquiry. It can be presumed that in such an inquiry, when all items are covered, no

element of chance is left and the highest accuracy is obtained. But in practice this

may not be true.

The universe in this case includes all the customers

External customers or end-users: domestic, industrial, commercial,

temporary

Internal customers

Due to limited time it was difficult to cover the entire universe. In this research

only the analysis for the external customers has been done, that too under the

category of domestic.

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2.3 SAMPLE SIZE AND TECHNIQUE

As stated above, due to the considerations of time and cost almost invariably lead

to a selection of respondents i.e., selection of only a few items. The respondents

selected should be as representative of the total population as possible in order to

produce a miniature cross-section. The selected respondents constitute what is

typically called a sample and the selection process is called sampling

technique. The survey so conducted is known as sample survey.

For the study, we use area-sampling technique. In area sampling the total

population is divided into a number of relatively small subdivisions which are

themselves clusters of still smaller units and then some of these clusters are

geographically selected for inclusion in the overall sample. In other words, cluster

designs, where the primary sampling unit represents a cluster of units based on

geographic area, are distinguished as area sampling.

Sample size: I have collected in total 25 samples.

Technique: Random Sampling

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2.4 DATA COLLECTION

The task of data collection begins after a research problem has been defined and

research design/plan chalked out. Data can be categorized into two types of data

viz., primary and secondary.

Primary data are those, which are collected afresh and for the first time, and thus

happen to be original in character. Common ways of collection of such data,

depending on the need of the research are:

Consumer / Customer Telephone Interviews

Executive Telephone Interviews

Focus Groups In-depth One-on-One Interviews

Intercepts

Mail Surveys

Mini Groups

Panel Research

Email Surveys

Internet Research

Usability Tests

Secondary data are those which have already been collected by someone else and

which have already been passed through the statistical process. The researcher

would have to decide which sort of data he would be using (thus collecting) for

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his study and accordingly he will have to select one or the other method of data

collection.

COLLECTION OF PRIMARY DATA

We collect primary data during the course of doing experiments in an

experimental research but in case we do research of the descriptive type as is our

case, then we can obtain primary data either through observation or through direct

communication with respondents in one form or another or through personal

interviews (unstructured). For this project report, data was collected through

questionnaires and interviews.

The questionnaire and the name of persons with their age groups and profile have

been attached asAnnexure-I & II.

COLLECTION OF SECONDARY DATA

When the researcher utilizes secondary data, then he has to look into various

sources from where he can obtain them. In this case secondary data from the

documents and survey reports has been utilized.

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2.5 DATA ANALYSIS

The data, after collection, has to be processed and analyzed in accordance with the

outline laid down for the purpose at the time of developing the research plan. This

is essential for a scientific study and for ensuring that we have all relevant data for

making contemplated comparisons and analysis.

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3. STRATEGIC INTERVENTIONS FOR A CUSTOMER

DRIVEN DISTRIBUTION UTILITY

The utility industry has been on a roller coaster ride for much of the past few

years. Caught in the midst of aging infrastructure, higher than ever demand, and

the need to cut costs, increase operational efficiency, and return value and

dividends; the utility enterprise must continue to focus on delivering the highest

quality of service and care to its customers.

The utility customer service imperative is simple and straightforward. Utilities

must provide reliable, affordable electric power to customers while also

communicating, billing, and collecting payment from customers in a courteous,

efficient, and proactive manner. Although this customer service imperative is

simply stated, in the world of utility operations this easy to state mission entails

complex business processes and creates multiple challenges for utility

management, staff, and information technology (IT) systems.

For many years, distribution utilities have been devising new information

technology strategies and spending millions on computer systems, software, and

business design to streamline operations, drive down internal costs, and create

new revenue opportunities. While there are many success stories and many more

lessons learned from across the industry, the majority of utilities are still not fully

customer service focused organizations despite their best efforts to improve

customer service, many utilities still see it as a business function rather than a core

business process. Truth be told, the distribution utilities still needs to understand

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that customer information and customer care are among the most important

functions of the utility enterprise and that customer information systems (CIS) and

customer care (often called Customer Relationship Management or CRM) really

do have bearing on every aspect of utility operations and utility planning and

decision making.

Over the past decade, utilities have invested substantial resources in CIS, CRM,

and other customer care systems and architecture. However, the distribution

utilities are only now beginning to realize that effective and efficient customer

service rests not only on hardware but on selection and deployment of customer

care applications (software) and customer service optimized business processes.

This same hardware- or systems-centric mode of investment has created an

environment in which many utilities possess a critical mass of customer care

technology, yet they are not realizing the level of cost savings, efficiency, or

customer satisfaction expected after making investments in CIS and customer care

infrastructure. This has led some utilities to the erroneous conclusion that

customer information and customer care systems are not worth the large

investment, and therefore, should not remain a high priority in the enterprise. On

the contrary, all indications are that customer service and customer care must be

the top priority in the utility enterprise.

Common Areas of Investigation for Utility Organizations:

1. Customer Satisfaction Analysis

2. Awareness and Satisfaction Toward Services Offered

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3. Perceptions Towards Core Services

4. Perceptions Toward Conservation Issues

5. Perceptions Toward the Utility

6. Commercial Customer Perceptions and Issues

7. Consumer Customer Demographic Analysis

8. Communications / Advertising Issues

9. Community Involvement Issues

10. Pricing / Billing Issues

11. Budget Billing

12. Power Outage Issues (Electrical Utilities)

CUSTOMER ISSUES

The concept of customer service is almost non-existent in most distribution

companies. In fact, there is a lack of a formal organization construct, unlike say

the telecom industry, to address customer needs. This means that customers need

to interact with multiple entities for any service request. The result is that

customers frequently face long delays in resolving technical and commercial

complaints, encounter uncooperative attitude of staff and need to make unofficial

payments to resolve their issues.

Major issues by which a customer is not satisfied with the service of utility are:

Poor availability and quality of power

Multiple contact points

Tedious processes and bribery

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Limited payment modes

Poor customer service

Challenges before a utility to improve their performance and enhance customer

satisfaction are in the following areas

Information

Technology

End-to-end processes

Behaviour

Resources

Orgnanisation structure

WHAT DOES THE CUSTOMER WANT?

The key needs of the customer are depicted in the figure below. These need to be

the focus of the IT applications.

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The focus of IT applications for customer benefit

The service levels to customers in the areas mentioned in the above figure could

be improved by monitoring the following parameters:

Quality and reliability of supply

Scheduled and unscheduled outages

Communication from SEBs on possible outages and outage time

Accuracy of bills

Inaccurate meter reading or no meter reading

Meter reading taken but not reported

No posting of collection

Changed meter status

Wrong calculation

Payment mechanisms

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Bill not delivered in time to make payment

Waiting time for bill payment

Preferred vs. available mode of payments

Complaint handling

Demand vs. provision of new connections

Responsiveness to bill queries

Preferred vs. available facilities to log complaints

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3.1 ROLE OF INFORMATION/COMMUNICATION IN CUSTOMER

SERVICE

It is important to make the contact that customers have with their utility company

- previously more of a bureaucratic nature - as attractive and as simple as possible.

The basis for this contact consists of efficient front-office functions in the utility

company's customer information system, which provides the customer with a one-

stop service facility and enable the utility company to apply the "one-face-to-the-

customer" principle. Call center solutions can further increase the efficiency this

brings.

The ultimate in customer focus can be achieved if customers are also able to use

their private Internet connection to accomplish service transactions and make

requests quickly and effortlessly, at the same time having access to useful

information about other services provided by their utility company.

Information to the customers from the utility can pass through following means

Dissemination of press releases, articles or special reports

Production of short documentaries on the distribution utilities of the state

to be broadcast on TV and radio programs.

Posters/ Slogans/ Phrases to be hanged/ pasted in the utilities offices

Disseminating the information of planned outage through rickshaws/ jeeps

etc. running in all localities to be affected by the outage.

How information flow in the utility help it in achieving customer service

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Benefits of Information Flow across the Organisation

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3.2 ROLE OF TECHNOLOGY IN CUSTOMER SERVICE

Technology Issues

Most distribution companies despite having to process large volumes of data are

sub-optimally supported by IT systems and automation. Use of electronic meters

and data loggers/ handhelds is rare. Most IT systems are homegrown packages

that lack integration, parameterization and robustness. Hardware and IT security

prevent issues on data integrity.

Benefits of improvement in IT technologies can enhance utilities value also. For

example, the South African power distribution utility has converted a majority of

its low value consumers to prepaid metering. This move has reduced their

administrative costs and also dramatically reduced the collusion between meter

readers and consumers at prepaid locations.

The gap in IT adoption globally and in the Indian power sector is apparent and

glaring and even the rate of overall technology adoption in India is on the lower

side. Globally IT is being used to enable operations at a transaction level thus

providing advantages like in-built process controls, workflow enabled

transactions, single point of data capture and support for timely strategic decision

making. On the other hand, in India, the core operations are still manual and

therefore face issues like adhoc decision making, poor data quality, long decision

making cycles and under utilisation of IT investments. In order to reap the benefits

of IT, the wide gap between India and global best has to be bridged.

How IT can help distribution utility to cater customer services

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Benefits of IT applications to customers

Customer benefitIT applications

The implementation of IT initiatives, though not an easy task, will result in

improvement in reliability and quality of supply, increased productivity, reduced

technical and commercial losses, customer satisfaction and a fundamental change

in the work culture. The computerised system will revolutionise the way that

utilities conduct their business by reducing operating cost, improving customer

service and increasing employee efficiency.

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3.3 PERFORMANCE OF END-TO-END PROCESSES TO ENHANCE

CUSTOMER SATISFACTION

The ultimate in customer focus can be achieved if customers are able to use their

private Internet connection to accomplish business transactions and make requests

quickly and effortlessly, at the same time having access to useful information

about other services provided by their utility company.

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3.4 ENHANCING EFFECTIVENESS OF DISTRIBUTION

COMPANIES THROUGH HRD

Customer care and service must be an inherent part of the value-added chain of

the utility.

Management Issues

These issues become even more complicated and challenging because of the

management style and work culture prevalent in these organisations. There is a

complete lack of accountability and while the technical skill-set available is

adequate, the availability of commercial skills and business acumen is inadequate.

As a result, focus on commercial issues and performance, which is critical to

shoring up the financial parameters is inadequate. Over manning and lack of cost

control also have contributed to creating unsustainable cost structures. Any

attempt to tighten up operations, is severely hampered by the absence of timely,

accurate and reliable management information because of weak data capture and

analysis.

Managing performance effectively to achieve business goals inquires continual

implementation and execution of the following tasks:

(a) developing and maintaining high quality of leadership,

(b) preparing right strategies to implement business plans,

(c) developing feasible and relevant goals and pragmatic action plan to implement

the same,

(d) intensifying performance monitoring, measurement and follow up

(e) basing rewards, penalties, promotions and transfers on performance;

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(f) stimulating the most capable, helping those who have unrealized potential

and terminating the incapable;

(g) conducting active and focused management by managers and of managers.

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3.5 MANAGEMENT OF RESOURCES TO ENHANCE CUSTOMER

SATISFACTION

The business model of distribution company should be viewed from the synergy

created by various perspectives in the distribution companies such as Customer,

Financials, Human Resources and Institutional Processes and Systems.

Today success will depend on the ability of a company to mobilise and exploit its

tangible as well as intangible assets to perform better and live up to the

expectations of the stakeholders. The intangible assets include capability to

provide timely quality power and services, motivated and skilled employees,

distinctive internal capabilities, andsatisfied and happy consumers/ customers.

Intangible resources and assets enable the distribution companies to:

Develop customer relationships that build trust;

Increasingly serve new customer segments;

Introduce innovative and services and options;

Ensure customized highquality power supply and services at low cost and

with short lead times(i.e. possible to manage high value customer at off

peak hours at low rates);

mobilize employee skills for continuous improvements in process

capabilities, quality, and response times;

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3.6 HOW TO ALIGN ORGANIZATION STRUCTURE TO ENHANCE

CUSTOMER SATISFACTION

Integrating Employee and Customer Perspectives

CustomersServiceCenter

Employees

Product ServiceDevelopment

Employees

Innovative

A leader inthe industry

Reliable

Upholding HighQuality Services

Forwardthinking

Dependable

SalesGroup

Employees

While employees havingdirect contact with

customers see yourcompany as a company

that isreliable/dependable.

..but customersperceive your company

as Innovative andForward thinking

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3.7 QUALITY

Customerexpectations for service quality are rising, not only in regions where

they perceive more choice in the energy marketplace, but also because

experiences with service providers outside the energy industry are setting new

standards for performance. Infact, service that's not up to customer expectations

can have a quick and negative impact on a utility's bottom line.

Managing service quality cost-effectively raises difficult questions:

How do physical measures of service reliability and power quality relate to

customer satisfaction?

What other aspects of service drive satisfaction?

Improvement in quality of service implies

Stable voltage and frequency

Enhanced customer experience

Quality and reliability of supply can be improved with proper system maintenance

and faster action on outage complaints. For this, electric flow in the system should

be monitored on a real-time basis. The real-time information ensures that the

official concerned (distribution point) is aware of any breakdown / disruption at

the same time as the consumer. The customers affected with any outage should be

immediately identified and informed of the outage or a possible outage as well as

the approximate duration. This results in prompter action and better customer

relationship. Following are some of the IT applications, which can help in this:

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SCADA to start with and then progressing to distribution automation

Outage and work management system including trouble call management

system

for faster restoration of outages

GIS (Geographical Information System) for identifying area and

equipments

CIS (Customer Information System) using Internet, phones, call-centres,

etc.

IVR for complaints and call back on restoration of supply

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3.8 STANDARDS OF PERFORMANCE

Customer Perceptions: Achieving strong satisfaction requires understanding

how the customers perceive your companys performance

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3.9 PAYMENT MECHANISMS

Payments are currently made in person in most of the places. Only in few places,

payments can be made online or through the ATM. SEBs should adopt other

payment

mechanisms such as:

Electronic payments, including direct debit payments

Prepaid metering

Bar coding facility even when payment is made in person, for faster

payment

Multiple payment locations and not restricted to a particular division or

subdivision

For providing electronic payments, use of IT would be required for providing

interfaces with entities like banks and building Internet-based payment processing.

At present, SEBs allow only full payment and the system for providing credit

facility (part payment) is quite ad hoc. SEBs could put a system in place for

providing credit and monitor it. SEBs could also provide various payment options

such as budget payment (average payment) and seasonal payment depending on

the customers preference and credit rating. This requires credit analysis of

customers and segregation of good paying customers from bad customers.

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3.10 COMPLAINT HANDLING

At present, consumers find it very difficult to log their complaints. In most cases,

they have to go to the substation for supply related complaints and the concerned

offices for bill related complaints. Contact centres can reduce this kind of trouble

for customers. SEBs/Utilities should have:

Call centres with IVR for outages and bill related complaints

Call back from IVR on restoration of supply or redressal of any bill related

complaint

New connection is a major problem in all the SEBs. There is no suitable system in

most SEBs for availability of information or monitoring of application status.

SEBs must implement a system to enable the customers to know the status of their

applications in a transparent manner. On the process side, regulators could set

standards for SEBs in terms of timelines to provide new connections. All the basic

information for new connections should be easily and publicly available to the

customers either through a website or other communication channels.

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4. STATISTICAL ANALYSIS

1. Frequency and Duration of Outages(a) Is your power supply interrupted

never 0

rarely 7

sometimes 9

frequently 9

never

0%rarely

28%

sometimes

36%

frequently

36% never

rarely

sometimes

frequently

(b) If yes, what is the normal duration of such outage?

few minutes

24%

1 hr.

24%

2-4 hrs.

40%

>5 hrs.

12%

few minutes

1 hr.

2-4 hrs.

>5 hrs.

(c) Are you given prior notices of such outages?

never 3rarely 11

few minutes 61 hr. 6

2-4 hrs. 10

>5 hrs. 3

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sometimes 8

always 3

never

12%

rarely

44%

sometimes

32%

always12%

never

rarely

sometimes

alw ays

Remarks: It was observed that there are frequent power cuts occurring in

the customers premises occurring for generally one hour oreven more.

One major reason cited for this cut was the onset of summer,

but there were respondents who told that such power cuts are

daily occurrences and no prior notice is given of such outages.

Customers have to assume such occurrences based on routine

repetitions. Sometimes, newspapers and radio are used as a

medium to communicate such outages.

2. Do you encounter frequent high or low voltages?

never 6rarely 7

usually 10

always 2

never

24%

rarely

28%

usually

40%

alw ays

8%

never

rarely

usually

always

Remarks: Frequent drop in voltages is a major occurrence in many

customers premises. Due to this many are not able to use their

appliances at night times in summer. But this problem was

majorly observed in areas of SEBs operation.

3. Standardized billing procedure and format

(a) Is the bill formateasy to understand 11

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complex 5

difficult to understand 7

can't say 2

easy to

understand

44%

complex

20%

difficult to

understand

28%

can't say

8%easy to

understand

complex

difficult to

understand

can't say

(b) Is your bill generally

less than expected 3

as per expectations 10

more than expected 10

can't say 2

as per

expectations

40%

more than

expected

40%

can't say

8%less than

expected

12%

less than

expected

as per

expectations

more than

expected

can't say

(c) Do you prefer paying bill through

cash counter 8

drop boxes 6

online/ credit 8

any other means 3

drop boxes

24%

online/ credit

32%

any other

means

12% cash

counter

32%

cash counter

drop boxes

online/ credit

any other means

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(d) What is the average time taken to redress complaints related to meters

and bills?

within few hrs. 4

within 1 day 9

2-3 days 4

>3 days 8

>3 days

32%

2-3 days

16%

w ithin 1 day

36%

w ithin few

hrs.16%

w ithin few hrs.

w ithin 1 day

2-3 days

>3 days

Remarks: This is one area of prime concern for the utility as well as

customers. The bill format was generally understandable,

though some faced difficulty.

The expectations with the bill were met to a less extent.Dissatisfaction was apparent due to the use of the electronic

meters which gave rise to more bill amount than expected by

the customer.

It was clear from the survey that the customers want to opt out

of waiting in queues for bill payment and they want to opt for

other options depending upon the time and the risk involved.

Resolution of metering and billing disputes also raised concern

in minds of customers towards the utility because such

incidents consumed much of their working hours and so many

people opted for not complaining if the difference is not too

large.

4. Notices to consumers of their rights to seek relief at the commission

At what intervals does your utility issue notices for your information to

seek help of NGO, Govt., or Commission

once a month 5

six monthly 3

once in a year 5

never 12

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once a

month

20%

six monthly

12%

once in a

year

20%

never

48%

once a month

six monthly

once in a year

never

Remarks: The notices never get noticed to the consumers. Hardly are thecustomers made aware of where they can seek relief in case the utility

defaults.

5. Has your utility asked you to undertake various energy efficiency

programs?

always 11

usually 9

never 3

can't say 2

can't say

8%never

12%

usually

36%

alw ays

44%

alw ays

usually

never

can't say

Remarks: The energy efficient slogans and phrases find their place in

consumers bills and utilities offices. Some customers opt out

of choice using energy efficient lamps but many are forced to

use them because of problem of drop in voltage.

6.

7. Delays in establishing new service connections

(a) Do you observe delays in establishing new service connections?

yes 20

no 5

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yes

80%

no

20%

yes

no

(b) If yes, how many days delay was there?

1 week 4

2-4 weeks 11>1 month 6

2-6 months 4

1 w eek

16%

2-4 weeks

44%

>1 month

24%

2-6 months

16%

1 week

2-4 w eeks

>1 month

2-6 months

Remarks: Service connection delays are very common for customers, the

period ranging from 1 week to 1 month

8. What is your utilitys repair/ safety response times?

1hr. 8

2-6 hrs. 81 day 6

>1 day 3

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1hr.

32%

1 day

24%

>1 day

12%

2-6 hrs.

32%

1hr.

2-6 hrs.

1 day

>1 day

Remarks: Generally repair work is completed at the optimum time

depending on the situation and the intensity of the repair.

9. At what intervals your utility conducts specific maintenance programs

(of meters, service poles, service transformers)?

every month 5

2-3 months 6

breakdown occurs 14

every month

20%

2-3 months

24%

breakdow n

occurs

56%

every month

2-3 months

breakdown occurs

Remarks: The maintenance programs are generally undertaken once

breakdown occurs. No regular update of service connections

provisions are maintained at customers premises. Many a times, the

meter checker observes the meter related problems at manylocations but with outsourcing of such activities being done now,

we can assume the technical capability of such a person to look for

such disruptions.

10. Business office performance

(a) Are the employees in the customer care center helpful and

friendly?

always 7

usually 13

rarely 3

never 2

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alw ays28%

rarely12%

never

8%

usually

52%

alw ays

usually

rarely

never

(b) Are your calls in the customer care centers answered promptly, ie.

what is the average hold time?

30 sec 6

1-5 min. 13

>5min 4

>10 min 2

30 sec

24%>5min

16%

>10 min

8%

1-5 min.

52%

30 sec1-5 min.

>5min

>10 min

Remarks: This is one area where the utility is functioning well. The

customer care centers personnel co-operate with the employee

problems and try solving them but better integration of such

personnel with customer databases and records is required to

reduce the hold time.

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5. SUMMARY

There is no provision to regularly monitor whether the time limits are

adhered to or not in case of non conformance to standards.

Reporting mechanisms are not strictly followed

Analysis of the survey's results clearly reflected the dissatisfaction, and

wide gap between expectations and services delivered.

To the consumer the two most important aspects that emerged were

grievance handling and metering and billing.

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6. RECOMMENDATIONS

Frequent interaction with the consumer forums must be done by the

distribution utility to yield areas of customer dissatisfaction and to act

upon such issues so as to increase overall effectiveness of the utility.

Distribution utilities in the state must arrange wider publicity to

Complaint Handling Procedure, drawing the attention of the consumers.

Procedures to be adopted for the complaints regarding interruption or

failure of power supply, voltage complaints, load shedding, scheduled

outages, problems in metering and billing, disconnection and reconnection

of power supply, delay in providing new connections must be provided by

the utility through any means like print advertising, direct mail, sales

literature, public relations, utilities website, etc.

All the distribution utilities must define Customer Service Standards

consisting of:

Overall Standards, i.e. the ability to restore supply after a failure of the

distribution system, management of voltage complaints, actual meter

reading, billing and response to customers petitions; and

Guaranteed Standards, involving the supply quality, time to connect

new customers, time to respond to customers requests and compliance

to the service conditions, and reconnection of supply in case of having

been disconnected. For the guaranteed standards, penalization in terms

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of fine can be established. The utilities will have to compensate

affected customers in case the guaranteed standards cannot be met.

There is a need to streamline the grievance redressal procedure, as a

consumer usually has to approach to various levels within a utility. Thus,

the process of grievance redressal is time consuming and cumbersome

Updation of customer information system with databases of customers,

regular updates of mapping system so that all of the customer's account

information is available when a customer calls in to 24-hour call center.

Another area which needs improvement is metering systems. Automated

meter reading system or AMR must be introduced in phases. This system

will automatically read meters so the utilities don't have to send their

employees into the customers' homes and backyards. Automated meter

reading will improve the quality of meter reading, help the utilities gain

operational efficiencies, and provide customers with timely energy

information.

Work management system of the utility must be made effective. This

system helps manage work at a company level. It gives a high-level view

of workload and helps offices communicate effectively to ensure that the

utility meets the customers' needs.

Customer Relationship management systems must be designed in such a

way that employees get information about customers' accounts when they

are out in the field meeting with customers.

A step further in customer services area can be achieved by the utility by

centralizing a number of their field functions. This doesnt mean closing

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field offices, but rather shifting the emphasis from addressing walk-in

customers' needs to more of an operationally focused field office.

Bill payment systems can be extended to forms like on-line payments,

payments directly from customers' bank accounts, or payment at pay

stations, etc.

Creation of an on-line access for the larger customers to provide them with

energy information tailored to their business environment can also be a

way to enhance customer service.

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CONCLUSION

Every Customer Interaction Counts!

Thus its very important for any distribution utility to maintain service standards

and provide quality service to the customers to sustain in this competitive era.

Finally the single most important thing to remember about any enterprise is that

there are no results inside its walls. The result of a business is a satisfied

customer, inside an enterprise there are only cost centers. Results exist only on

the outside.

-Peter Drucker

Documents

Report - Strategic Interventions for a Customer-driven Distribution Utility