Agenda Date: December 9, 1998 Item Number: 2A Docket: UE-960195 Company Name: Puget Sound Energy Staff: Heather Laughlin, Utilities Rate Research Specialist Doug Kilpatrick, Electric Industry Coordinator Recommendation: 1. Approve the second supplemental stipulation regarding establishment of Service Quality Indices (SQI’s) in its entirety as agreed upon by Puget Sound Energy (“PSE” or “the Company”), Commission Staff, and Public Counsel. 2. Waive the balance of the 1997 penalties in accordance with the December 31, 1997, Commission Order Accepting Stipulation to Mitigate Penalties. Background: As part of the requirements for the merger between Puget Sound Power and Light and Washington Natural Gas Company, the Commission ordered that the merged company, Puget Sound Energy (PSE), meet benchmarks for customer service quality. One of the main concerns at the time was that the company not achieve merger savings at the expense of its customers. The benchmarks and associated penalties for not achieving those benchmarks were set forth in a supplemental stipulation regarding the Customer Service Program in Docket UE-960195. Under the stipulation, the Company is required to report to the Commission each year regarding its achievement or non-compliance with the service quality indices and associated performance. The reporting period is from October 1 to September 30 each year from 1997 to 2001. The supplemental stipulation also deferred setting of two indices or benchmarks until sufficient data could be collected to set them appropriately. That data was collected and presented by the company to Staff and Public Counsel. The second supplemental stipulation that is being presented for approval today would set those two benchmarks. In its order acknowledging the first annual report, dated December 31, 1997, the Commission instructed the Company that the $253,723 of penalties for the 1997 reporting period would be permanently waived if the Company was able to meet the SQI targets for indices number 5 and 6 during the 1998 annual reporting period. Discussion: The Company has successfully met all eight of the Service Quality Indices for this reporting period. Therefore, no penalties are proposed for this reporting period. PSE has proposed to set benchmark number 1, Overall Customer Satisfaction, at 90%. That is, 90% of customers surveyed by the Gilmore Research Group rate the Company 5 or better on a 7 point scale when asked how satisfied they are overall with the Company. There are no penalty amounts associated with this benchmark. Public Counsel and Staff agree that this Docket UE-960195 December 9, 1998 Page 1 is a reasonable benchmark. The Company’s performance for the past reporting period showed 92% of customers ranked the Company a 5 or better on a 7 point scale. The last benchmark to be established is number 10, Missed Appointments. This benchmark has proven to be more challenging. When Public Counsel, Staff, and the Company reviewed the missed appointment data that had been collected, it was determined that the reporting system the Company was using was not able to track excused appointments as directed in the 1997 supplemental stipulation. After numerous discussions about how best to proceed, Staff and Public Counsel recommended that the Company implement a new script for their call center to make sure customers were fully aware of their right to receive a $50 payment if PSE could not keep previously scheduled appointments. In addition, we proposed to add a series of questions to the customer survey by Gilmore to see if customers remembered being told about that offer. This solution bypasses the difficulty of having PSE’s computer system reprogrammed to track the excused appointments as originally planned, but still guarantees that customers receive the quality of service envisioned in the original stipulation. The parties have agreed in the second stipulation, that if there is a problem with customers not knowing about the service guarantee, then recommendations for solutions would be brought before the Commission for approval. In December 1997, the Commission agreed to allow PSE to partially mitigate the penalties imposed due to the lack of Call Center performance (indices 5 and 6). The mitigation was proposed based on the fact that performance for the first half of the reporting period was below the standard but the during the second half it had significantly improved. To acknowledge significant efforts made by PSE employees to improve Call Center performance before the end of the first reporting period, the Commission assessed penalties only on the first half performance of the period. The balance of the penalty was waived pending the performance of the Call Center during the 1998 reporting period. The Commission ordered that if compliance was achieved on indices 5 and 6 for the 1998 reporting period, the balance of the penalty would be permanently waived. Since PSE has met the requirement for indices 5 and 6 for 1998, Staff recommends the balance of the accrued penalty, $235,723, be permanently waived. Considerations and recommendations: Staff recommends the Commission approve the second supplemental stipulation in its entirety and permanently waive the balance of the 1997 penalties in accordance with the December 31, 1997, Commission Order Accepting Stipulation to Mitigate Penalties.