Revenue Protection Revenue Protection Process Options with Process Options with

Relation to Smart MetersRelation to Smart Meters

Mission StatementMission Statement

A cross functional team was formed to review A cross functional team was formed to review the current revenue protection process at Gulf the current revenue protection process at Gulf Power Company and the potential impact the Power Company and the potential impact the implementation of Smart Metering would have implementation of Smart Metering would have on this process. The team’s mission was to on this process. The team’s mission was to utilize historical data, first hand knowledge of the utilize historical data, first hand knowledge of the function and data gathered from Gulf Power and function and data gathered from Gulf Power and sister companies to recommendsister companies to recommend options options regarding the revenue protection process in the regarding the revenue protection process in the future at Gulf Power Company. future at Gulf Power Company.

Team MembersTeam Members

T. Lynn Smith – Staff Investigator Panama City DistrictT. Lynn Smith – Staff Investigator Panama City District

Ron Grissom – Fort Walton Customer Service SupervisorRon Grissom – Fort Walton Customer Service Supervisor

Ricky Martin – Panama City Customer Service Team LeaderRicky Martin – Panama City Customer Service Team Leader

Pete Rose – Staff Investigator Fort Walton DistrictPete Rose – Staff Investigator Fort Walton District

Gretchen Brubaker – Human ResourcesGretchen Brubaker – Human Resources

Paul Talley – Metering Services Supervisor Pine ForestPaul Talley – Metering Services Supervisor Pine Forest

Carrie Wyatt- Customer Service Rep Corporate SecurityCarrie Wyatt- Customer Service Rep Corporate Security

Jennifer Ness – Dispatch Operator Pine ForestJennifer Ness – Dispatch Operator Pine Forest

Bobby Cutler – Field Service Representative PensacolaBobby Cutler – Field Service Representative Pensacola

Becky Brewer – Customer Accounting OperationsBecky Brewer – Customer Accounting Operations

Bill Goodwin – Customer Service Associate Call CenterBill Goodwin – Customer Service Associate Call Center

General InformationGeneral Information

EEI estimates that a utility’s loss due to theft runs between .5% EEI estimates that a utility’s loss due to theft runs between .5% to 2% of annual revenue. In 2009, Gulf had annual revenues of to 2% of annual revenue. In 2009, Gulf had annual revenues of 1.1 billion dollars. This would result in a loss between 5.5 to 22 1.1 billion dollars. This would result in a loss between 5.5 to 22 million.million.

In 2009, In 2009, Gulf Power’s Security Department identified $183,808 in Gulf Power’s Security Department identified $183,808 in

theft,theft, which is .0017% of the 2009 annual revenue.which is .0017% of the 2009 annual revenue. Gulf Power’s recovery rate of the identified theft was 32%.Gulf Power’s recovery rate of the identified theft was 32%.

With recommended improvement changes, the identified theft With recommended improvement changes, the identified theft and recovery percentages can be increased.and recovery percentages can be increased.

Current ProcessCurrent Process

The Field Service Representatives (FSR) work approximately 98% of possible theft The Field Service Representatives (FSR) work approximately 98% of possible theft cases as a Check and Seal order in ARMS.cases as a Check and Seal order in ARMS.Security Investigators work approximately 2% of the theft cases on a Revenue Security Investigators work approximately 2% of the theft cases on a Revenue Protection order.Protection order.There will be approximately 15 to 45 days of unauthorized usage on a meter, There will be approximately 15 to 45 days of unauthorized usage on a meter, because of the reading cycle, priority to work order, and man-power.because of the reading cycle, priority to work order, and man-power.Completed orders are referred to the Security’s Customer Service Representative Completed orders are referred to the Security’s Customer Service Representative (CSR) to calculate the amount to collect and note the account in CSS.(CSR) to calculate the amount to collect and note the account in CSS.Security’s CSR creates a Diversion Investigation Management System (DIMS) case Security’s CSR creates a Diversion Investigation Management System (DIMS) case on the completed Check and Seal orders.on the completed Check and Seal orders.The Investigator receives the FSR’s completed Check and Seal order to determine The Investigator receives the FSR’s completed Check and Seal order to determine who is responsible. This is accomplished by a phone call or visit to the address.who is responsible. This is accomplished by a phone call or visit to the address.The Investigator will complete the DIMS case and forward the information back to the The Investigator will complete the DIMS case and forward the information back to the Security CSR.Security CSR.The Security CSR will close and file the DIMS case and update the case if the The Security CSR will close and file the DIMS case and update the case if the customer pays.customer pays.Recovery is attempted when future customer contact is made.Recovery is attempted when future customer contact is made.If customer sets up an active account before account is noted, Security CSR will bill If customer sets up an active account before account is noted, Security CSR will bill the responsible customer the identified charges. the responsible customer the identified charges.

Drawbacks to the Current ProcessDrawbacks to the Current Process

High labor cost of working a case (reduce Investigator’s High labor cost of working a case (reduce Investigator’s involvement). involvement).

Revenue Protection duties are often shifted to a lower priority (wire Revenue Protection duties are often shifted to a lower priority (wire theft, storm duty). theft, storm duty).

Orders are not worked in a timely manner.Orders are not worked in a timely manner.

Accounts are not being noted in a timely manner.Accounts are not being noted in a timely manner.

Multiple organizational owners.Multiple organizational owners.

Insufficient resourcesInsufficient resources

Labor Cost related to Revenue Protection (current)Labor Cost related to Revenue Protection (current)

Labor cost (includes salary, benefits, .. ; not including transportation, IT and Labor cost (includes salary, benefits, .. ; not including transportation, IT and other overheads) of employees associated with revenue protection duties other overheads) of employees associated with revenue protection duties are:are:

Sr. FSR $31.84 per hour.Sr. FSR $31.84 per hour. Sr. CSR $34.87 per hour.Sr. CSR $34.87 per hour. Staff Investigator $60.62Staff Investigator $60.62 per hour.  per hour. 

Average time spent on a case is:Average time spent on a case is: FSR at 15 minutes.FSR at 15 minutes. CSR 15 minutes.CSR 15 minutes. Investigator 30 minutes.  Investigator 30 minutes. 

In 2009, the cost to work, calculate, and investigate 1,673 cases that were In 2009, the cost to work, calculate, and investigate 1,673 cases that were worked by FSRs and forwarded to the Security Department (Investigator worked by FSRs and forwarded to the Security Department (Investigator and Security CSR) was $78,614.   and Security CSR) was $78,614.   The cost for investigators to work 300 cases was $11,709.The cost for investigators to work 300 cases was $11,709.

Cost SummaryCost SummaryIn 2009, 1,973 cases cost $92,323.In 2009, 1,973 cases cost $92,323.The amount collected was $60,258.The amount collected was $60,258.For every $1.00 we spent we collected $.65.For every $1.00 we spent we collected $.65.

OptionsOptions

Option 1Option 1

Continue current process using remaining FSRs Continue current process using remaining FSRs and Security personnel. Security personnel.

As noted before, Issues with this process are:As noted before, Issues with this process are:

High labor cost of working a case.High labor cost of working a case.Revenue Protection duties are often shifted to a lower priority. Revenue Protection duties are often shifted to a lower priority. Orders are not worked in a timely manner. Orders are not worked in a timely manner. Accounts are not being noted in a timely manner.Accounts are not being noted in a timely manner.Multiple organizational owners.Multiple organizational owners.Insufficient resources.Insufficient resources.

The following options include: The following options include:

1.1. Reinstituting an Inspector position with the following skills: Reinstituting an Inspector position with the following skills:

Working knowledge of personal computers.Working knowledge of personal computers.Field interviewing and investigative skills.Field interviewing and investigative skills.Excellent customer service and communication skills.Excellent customer service and communication skills.Working knowledge of Customer Service System.Working knowledge of Customer Service System.Understanding of our electrical system, meters, and revenue protection Understanding of our electrical system, meters, and revenue protection

..

2.2. Number of Inspectors needed will be 2 in Pensacola, 1 in Fort Number of Inspectors needed will be 2 in Pensacola, 1 in Fort Walton and 1 in Panama City. These numbers may increase Walton and 1 in Panama City. These numbers may increase when Smart meter deployment increases.when Smart meter deployment increases.

Option 2 Option 2 District Customer Service Operation Owns the ProcessDistrict Customer Service Operation Owns the Process

Incorporate the CSR revenue protection duties with existing CSRs in Customer ServiceIncorporate the CSR revenue protection duties with existing CSRs in Customer Service

ProsProsSingle management/ownership over processes and resources (coordinated with three District Single management/ownership over processes and resources (coordinated with three District Managers)Managers)Inspectors will be dedicated field resources.Inspectors will be dedicated field resources.Inspectors will have the responsibility of completing the investigations.Inspectors will have the responsibility of completing the investigations.CSRs workforce can share the back office duties.CSRs workforce can share the back office duties.Lower cost per case by reducing Investigators involvement.Lower cost per case by reducing Investigators involvement.Advanced knowledge of Customer Service considerations of customer issues.Advanced knowledge of Customer Service considerations of customer issues.

ConsConsThe chance of the prescribed field and back office processes being administered differently in The chance of the prescribed field and back office processes being administered differently in each geographical area.each geographical area.Limited knowledge of revenue protection.Limited knowledge of revenue protection.Increased responsibility and work load for CSRs.Increased responsibility and work load for CSRs.Potential Revenue Protection duties will be low priority.Potential Revenue Protection duties will be low priority.Additional FTE CSR for back office revenue protection duties required.Additional FTE CSR for back office revenue protection duties required.

Option 3Option 3

Corporate Security Owns the ProcessCorporate Security Owns the Process

Add at least one additional CSR to Security and create the Inspector Add at least one additional CSR to Security and create the Inspector positions in the Security Department.positions in the Security Department.

ProsProsSingle management/ownership over processes and resources Single management/ownership over processes and resources (Corporate Security Manager).(Corporate Security Manager).Dedicated field and back office resources.Dedicated field and back office resources.Process adhered to company wide.Process adhered to company wide.Security’s advanced knowledge of subject matter.Security’s advanced knowledge of subject matter.Lower cost per case by reducing Investigator involvement.Lower cost per case by reducing Investigator involvement.Facilitate knowledge transfer.Facilitate knowledge transfer.

ConsConsAdditional CSR FTE associated with back office revenue protection Additional CSR FTE associated with back office revenue protection duties required.duties required.

Option 4 Option 4

Share Ownership Corporate Security / District Customer Service Share Ownership Corporate Security / District Customer Service OperationsOperations

Field work completed by Inspectors under Corporate Security.Field work completed by Inspectors under Corporate Security.Back office work completed by CSRs under Customer Service.Back office work completed by CSRs under Customer Service.

ProsProsSingle management/ownership over each process and resources (Corp. Security Single management/ownership over each process and resources (Corp. Security Manager/Customer Service District Managers). Manager/Customer Service District Managers). Dedicated field and back office resources.Dedicated field and back office resources.Process adhered to company wide.Process adhered to company wide.Security’s advanced knowledge of subject matter.Security’s advanced knowledge of subject matter.Customer Service’s knowledge of subject matter.Customer Service’s knowledge of subject matter.Lower cost per case by reducing Investigator involvement.Lower cost per case by reducing Investigator involvement.Facilitate knowledge transfer.Facilitate knowledge transfer.Common goal across organization.Common goal across organization.CSRs workforce can share the back office duties.CSRs workforce can share the back office duties.

ConsConsThe chance of the prescribed field and back office processes being administered differently in The chance of the prescribed field and back office processes being administered differently in each geographical area.each geographical area.Increased responsibility and work load for CSRs.Increased responsibility and work load for CSRs.Additional FTE CSR for back office revenue protection duties required.Additional FTE CSR for back office revenue protection duties required.

AssumptionsAssumptions

In 2009, if the amount of time to investigate a loss was reduced from 30 In 2009, if the amount of time to investigate a loss was reduced from 30 days to 10 days, there would have been a 66% savings on the service, days to 10 days, there would have been a 66% savings on the service, reducing our 2009 identified theft fromreducing our 2009 identified theft from $183,808 to $62,495, there would $183,808 to $62,495, there would have been a savings of $121,313.have been a savings of $121,313.

By just removing the Investigators involvement in the 1673 FSR cases. The By just removing the Investigators involvement in the 1673 FSR cases. The cost of cases goes down to $39,615, a savings of $50,708.cost of cases goes down to $39,615, a savings of $50,708.

For every $1.00 spent we would have collected $1.52.For every $1.00 spent we would have collected $1.52.

An existing company vehicle will be utilized by the inspectors.An existing company vehicle will be utilized by the inspectors.

Existing management will be utilized.Existing management will be utilized.

Revenue protection orders should increase as Smart Meters are deployed.Revenue protection orders should increase as Smart Meters are deployed.

New systems will need to be developed to utilize SmartMeter data.New systems will need to be developed to utilize SmartMeter data.

Analysis of data will become a bigger part of the job.Analysis of data will become a bigger part of the job.

Customers will become more creative when it comes to stealing, so we will Customers will become more creative when it comes to stealing, so we will need to be growing and learning everyday to limit this liability.need to be growing and learning everyday to limit this liability.