ELECTRIC UTILITIES

New class of utility executive puts focus on customer

In one of his first acts as Oncor Electric Delivery Co.'s chief customer officer, Mike Guyton took to social media to talk to a frustrated patron.

The customer had asked Oncor to reimburse him for expenses incurred during a recent outage and was furious when the company declined. When Guyton took over as Oncor's second chief customer officer last summer, he offered his contact information and an open ear.

"He didn't like it, but he understood," Guyton said of his conversation with the customer. "We didn't make a friend, but we heard his comment."

Such is the call of the chief customer officer, or CCO, a role that has appeared in the executive ranks of a handful of electric utilities nationwide. Driven by new developments in smart metering, energy efficiency and social media, the opinion of the customer -- the "ratepayer" of yesteryear -- is becoming a top-of-mind consideration at utilities.

"The industry is starting to rethink its relationship with customers," said David Kolata, executive director of the Citizens Utility Board in Chicago. "In the past, customers were viewed as ratepayers, a very mechanical, cash machine approach. New trends are putting pressure on that relationship."

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CCOs, whether or not they're known by that title, provide the foundation for reshaping that bond, said Curtis Bingham, founder and executive director of the Chief Customer Officer Council. Large companies tend to organize themselves internally, and if there's no senior executive dedicated to customer concerns, there will be no one to provide a counterbalance to the pull of other business demands, such as efficiency and profits, he said.

Research published this year by the council shows that the utility industry has a higher density of CCOs than any other sector. Bingham attributes that fact to the industry's reliance on regulatory approval for rate increases. Utilities can't shed undesirable customers, and when they appear before public utility commissions for rate cases, they are partly at the mercy of feedback from the people they serve.

"There's a really strong correlation with customer satisfaction and revenue through rate increases that's much stronger than at other companies," Bingham said.

Bellwether of change in deregulated markets

Aside from Oncor, electric power companies that have added customer-focused senior staff include Northeast Utilities, San Diego Gas & Electric Co. and Duke Energy Corp. Like Guyton, their positions have only existed at their respective companies for about four to six years, and all say the evolution of smart grid technologies has played an integral role in defining their jobs.

Caroline Winn, vice president of customer services and chief customer privacy officer at SDG&E since 2010, said smart meters changed the way utilities engage with consumers. Residential customers can sign up to receive a text when their usage level bumps them into a different tier of the rate structure. They can view a bill forecast that shows them halfway through a given month what their bill might be at the end of the cycle. They can check out how their energy usage stacks up against that of their neighbors.

It's a level of service customers have come to expect in a world where shippers provide text notification of package delivery, banks offer mobile check deposit and search engines put information at users' fingertips.

The availability of choice, convenience and control over electricity usage is a "groundbreaking" development for utilities and their customers, she said.

In Texas, where Oncor operates, power service has been unraveled into three parts: generation, transmission and retail. Customers are able to choose among companies like Reliant and TXU to be their electricity provider, spurring a race among those firms for name recognition. Reliant has a football stadium named after it. TXU has splashed service offers reminiscent of phone service promotions -- free electricity on nights or weekends -- on billboards.

"They're always looking for new ways to attract customers and differentiate themselves from their competitors," said Texas Public Utility Commission spokesman Terry Hadley.

Regardless of provider, Texas residents still rely on the same companies for generation and transmission. In the Dallas-Fort Worth area, Oncor is the company that maintains the infrastructure and sends the electrons through the power lines. During an outage, its employees are responsible for repairing the damage.

When Texas first started uncoupling its power services in the 1990s, Oncor pulled back on customer contact. Guyton said that in the early days of the transition, Oncor executives thought they would never talk to a customer again. That view soon changed, Hadley said, when grievances started coming to the PUC.

"They realized they'd rather handle it with the customers on their own, rather than hear a complaint through us," he said.

After Oncor shifted its focus back to the individuals in its service area, the company introduced its first chief customer officer, Brenda Jackson, in 2010.

"We thought that customers needed a voice, someone they could depend on," Guyton said.

Situations like Oncor's could become increasingly common, even in regulated markets, as customers take advantage of third-party technologies and renewable-powered microgrids. There are a lot of services and subsidies that are baked into a utility rate, and those costs could be spun out as different players enter the field, said Becky Harrison, CEO of the coalition Gridwise Alliance.

Utilities need to serve as a trusted adviser through those types of transitions. They need to maintain infrastructure reliability as best they can and keep customers apprised in situations when they can't, she said.

"Whether they're providing the service or not, they have an opportunity to provide customers with guidance on the things they need to think about when they make decisions," Harrison said.

It's a delicate balance that will force utilities to help customers understand some of the magic behind the light switch, she said.

The explanation won't always be well-received.

Responding to criticism

Alexander Edsel, a marketing professor at the University of Texas, Dallas, has been an outspoken critic of Oncor's social media strategies. About two years ago, his family went without electricity for 10 hours in 104-degree heat, and Edsel complained about it on Facebook. He took the company up on an offer of direct contact but came away from the interaction dissatisfied.

"[T]hey called just to repeat their boilerplate that Oncor is not responsible. What is the point of the call?" Edsel wrote in an email. "Oncor calls that resolution. I call it wasting my time and more aggravation."

He said he holds up Oncor to the same standard as entities like L.L. Bean, a company that he says is "truly customer centric." Edsel recalled his experience buying a shirt from his order history only to see that the garment, which carried the same item number as his past order, had a different pattern. He posted a complaint on Facebook and said he was impressed with the response, which included a refund, return label and $25 gift certificate.

Many utilities are still working to calibrate complaint response, and though social media exposes companies to a new inflow of criticism, the increase in feedback offers new opportunities for resolution, said Penni McLean-Conner, senior vice president and CCO at Northeast Utilities in New England.

Last week, she received an update from the finance department that said the influx of complaints -- and their subsequent infusion into all aspects of the business -- has not only helped the company better respond to problems, but also transform the processes that lead to difficulties for customers.

That bit of feedback demonstrates that the utility has moved beyond a vision of user satisfaction as solely the job of the customer service team, McLean-Conner said.

"The company has recognized that, no, it is everybody's job to be passionate and to advocate for the customer," she said.

Recruiting with the customer in mind

At Duke, customer engagement is being embedded into the recruiting process.

One of the utility's long-term goals is to hire with social media and customer service skills in mind, said Gayle Lanier, senior vice president and CCO for Duke. It's a different skill set from what the company traditionally looks for, but it's one that is taking priority among hiring managers.

Part of that effort will be recruiting candidates from customer-focused industries, she said. Lanier herself worked in telecommunications before coming to Progress Energy Inc. She took her current position following the 2012 merger between Duke and Progress.

Other Duke employees have experience at cable providers, banks and other businesses that are shifting focus toward the customer, Lanier said.

Utilities that have recently formed teams focused on advanced metering infrastructure might disband and reform those groups to talk about what customers can do with those technologies now that they're in place, said Smart Grid Consumer Collaborative Assistant Director K.C. Boyce. Many utilities on the West Coast, for example, don't tout the smart grid anymore, he said. The systems are there. Now the focus is on using the infrastructure to meet specific goals and to give customers more interaction with their energy usage.

Utilities are often focused on their own internal problems, Boyce said. But "consumers don't resonate with that. What they do care about are the things that affect them."

CCOs as translators

Part of that conversation is simply helping customers learn what options are available to them -- and presenting those options in terms they can understand, said David Bonar, public advocate for Delaware electric consumers.

Lots of materials from utilities are written in language that "Joe Six-Pack doesn't understand," Bonar said. "You want to have someone on your staff who can relate to the average customer in common, everyday terms."

That's another job for the utility customer advocate. For a segment of customers, an electricity bill accounts for a relatively small percentage of their living expenses, and they won't put forth the effort to understand an industry that for most of the year -- outages excluded -- is a small blip on their radar.

SDG&E is working to provide programs that encourage engagement. Enabled by smart technology deployments, the utility last year launched the first phase of a new social platform that allows customers to not only see how they're using energy, but also earn points toward Starbucks and Home Depot gift cards just for being active in the program.

Winn said the idea stemmed from her and other SDG&E staffers' experience as consumers -- a perspective that she said is key in the development of new initiatives.

Expect to see more engagement strategies of that nature emerge in the near future, said Jason Cigarran, vice president of marketing and communications at energy usage optimization firm Comverge Inc.

Utilities have spent billions on smart metering, he said. Now that the technology is here, power companies will have to show users why it was worth the cost.

Twitter: @pamelalauren | Email: pking@eenews.net

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