CenterPoint Energy Pipeline Customer Satisfaction

1. CenterPoint Energy Pipeline Customer Satisfaction PHASE II Summary Analysis and Findings March 10, 2005

2. Where we are today Phase III: Supporting Implementation Phase I Phase II 2 weeks 2-3 weeks 2-3 weeks 3-4 weeks 1 Meet with key stakeholders. Assess current strategies and business objectives, customer & employee value propositions. 4 Conduct interviews of customer-facing staff and non-customer-facing staff to understand drivers of satisfaction and dissatisfaction 6 8-12 one-on-one interviews with transportation purchase decision-makers at key clients 9 Collaborate with management to refine short-list of strategic options. 10 Carefully analyze pros and cons of each option including investment required and risk incurred. 2 Conduct interviews with executives and management team to understand needs and assess competencies of the organization. 5 Structured observation of customer interactions and “ride-alongs” in-person and on-phone with marketing, operations, etc. 7 Combine external and internal data into integrated diagnostic framework 11 Develop detailed action plan for operational and communication improvement 8 Go forward options and executive working session. 3 Analyze customer histories and operation records, historical and current expenses, and existing key performance indicators. Design KPIs/ satisfaction management system. 12 External Research and Analysis Action Planning and KPIs Internal Analysis Assessment

3. Gaps to fill to improve the internal and external connections that drive customer loyalty The Gaps Where We Are Where We Want to Be • Able to drive higher profitability through delivering the right level of service to specific customers. • Employee satisfaction, morale and motivation are high because we have the insight, resources and systems to make customers easier to serve. • Ongoing validation, measurement and management of customer and employee satisfaction key performance indicators keep us a top-10 pipeline. • Our plan and P&L includes timelines, budgets, milestones, etc., for business development and CS. • All management and staff understand their role in delivering value to the customer though saving customer time, lowering operating costs, reducing economic risk or lowering the average commodity price. The best statement of clarity about the CEGT – MRT business so far is that you “Provide services associated with capacity sold and invoiced.” 3

4. Highlights of stakeholder findings You need to develop more clarity around the business model and how much you are willing to do for the customer. Management focus and accountability could be improved by focusing your leaders and resources on fewer priorities and initiatives. You need to make it clear that senior managers are expected to engage with the customer. You don’t have a clear customer value proposition. Having one would help focus management and staff activities. CEGT and MRT have varied customer segments and definitions—a common language and process for thinking about customer-focused investments would help improve decision-making. It’s unclear who owns what part of the customer relationship and under what circumstances. There is very little capture and tracking of customer information, and customer satisfaction issues and plaudits. More planning, information sharing and communications are needed for customer meetings and events. A more specific definition of customer service is needed. There are no SOPs for surfacing, handling, categorizing and resolving issues.

5. Highlights of employee findings • Some apathy to “Always There – It’s My Job.” Many believe this will die on the vine because management won’t follow through or a new priority will replace it. • Employees are not uniformly aligned around a business case for this initiative. They don’t see a connection to WIIFM for CNP or themselves. • Employees are skeptical about customer surveys in general and will need to be educated about their real purpose and value. • Views around owning and being rewarded (or not) for the customer’s satisfaction vary widely and need alignment. Many don’t have a stake in what happens upstream or downstream of their job. There is no consistent view on what customer service means. • Employees think that both sides, customers and CNP staff, could gain from learning more about each other’s business and environment. • Employees suggested several specific tools and/or staff support they believe would help them be more successful at serving customers: • Improved PALS model/system, better access to technology (e.g., Instant Messaging), clear guidance on customer email & fax rules, and reassessment of roles and staffing levels of Marketers, CSRs and Measurement personnel.

6. Customer priorities vs employee priorities do not match 8. Please rate these attributes on a scale of 1 to 4, where 4 means the attribute is an extremely important reason for choosing or continuing to do business with a pipeline, and 1 is the least important. 7. What are the top 3 factors that influence your decision to do business on a particular pipeline? • Without prompting, customers stress economicand relationship factors as important influencersof choosing a pipeline, rather than transaction-oriented attributes of customer service.

7. Customers’ stories on best/worst service focus on economic and relationship issues

8. Bringing it all Together • At CNP, taking customer service to a higher level is likely to come from broadening the emphasis from transactional activities to higher economic value activities that drive more bottom-line benefits to the customers. • From the customer’s perspective, the study shows that high-quality transactions are only considered the ante in the gas transportation game. • Responsive reps, knowledgeable staff and a highly functional online system are the minimum level of service and support expected from pipelines. Maintaining high-quality day-to-day transactions (e.g., clearer, faster online user interfaces, accurate bills, timely contracts, quick and efficient problem resolution, etc.) is the expected norm in doing business today. Continue to ensure reliable service at competitive cost. • However, transactions alone deliver limited economic value because they tend to impact customer staff time, a small economic driver. ASIDE: Bill this whole business is about reliability and perception…not customer staff time. If you cannot keep the small things under control – you do not get a shot at the big things. • Examples of higher-value customer service that should and could be captured include lowering operating costs, reducing economic risk, and lowering the average commodity price. • Delivering (and discussing) value in these ways will require investing in training and systems, but the upside could be significant if it helps CNP breakthrough barriers caused by our own commodity mindset.

9. Caveats and recommendations • Mastio’s inability to provide CNP adetailed analysis ofthe surveyed attributes makes its ratings difficult to use. Treat it as a useful qualitative barometer of change, and not as a definitive measure of customer satisfaction. • The value of the CNP-Qittitut study is in the insights achieved from key stakeholders, employees and important customers. While not statistically valid, it has assessed gaps and should provide plenty of fuel for healthy debate and consensus-building internally. • Even though customer satisfaction levels are viewed as good to excellent for 11 out of 13 customers interviewed, we should continue to invest in customer service as a means to drive higher profitability for CNP. We should be investing enough to retain profitable customers and to vary the value proposition in some way to make unprofitable customers profitable. • Transaction-focused customer service activities are defensive in nature. They are the “table-stakes” we pay to be in the game. Gains here will not make us the Network of Choice in customers’ eyes. • To differentiate ourselves we must instead invest in economic- and relationship-focused activities. These offensive initiatives will drive competitive advantage and open up new business opportunities. • Use the business model as a focal point for training employees and for understanding the workflows, processes and systems that are needed to deliver more economic- and relationship-focused value.

10. Do we need to broaden our customer satisfaction research and programs? ? Not sure where this fits… * Includes dotted line responsibilities