Regulatory Monitoring of Service Quality in Michigan

1. Regulatory Monitoring of Service Quality in Michigan Energy Regulatory Partnership Program Abuja, Nigeria July 14-18, 2008 Ikechukwu N. Nwabueze, Ph.D. Director, Regulated Energy Division Michigan Public Service Commission

2. Rationale and Objectives of Performance Monitoring Process Performance monitoring is necessary to ensure that the mission of the Commission is implemented: • To regulate investor-owned natural gas and electric utilities and rural electric cooperatives • To ensure that Michigan’s utility customers have safe and reliable utility service at reasonable rates

3. Objective of Performance Monitoring Process • To ensure that utility companies comply with the Commission’s rules and the company’s tariffs • To ensure that customers are treated fairly • To ensure that customers receive the service promised by the utility company in a safe and reliable manner • To ensure that company personnel treat customers with the respect that they deserve. • To ensure that all Michigan citizens have the opportunity to have utility service during the cold Michigan winters

4. Role of Regulator in Monitoring of Service Quality • To listen to concerns of utility customers and provide answers to their questions • To ensure that the utility companies provide quality service to customers • To determine if the utility complies with its service standards established by the Commission • To ensure that the company is following the Commission’s rules • To develop incentives for company compliance with the rules and tariffs

5. Methodologies and Types of Monitoring • Monitoring is done by the Commission’s Service Quality Division • Toll-free telephone numbers for state-wide access to the Commission allows customers to contact the Commission at no cost • Staff receives complaints from customers that are resolved by the company / staff • The major gas and electric companies established, at the Commission’s direction, Executive Customer Assistance Centers staffed by company reps with the authority to cross departmental lines to solve customer problems referred to the company by the staff

6. Methodologies and Monitoring (Continued) • Staff looks for trends in complaints to determine if the complaint is an isolated incident or a systemic problem • Computerized complaint tracking system is used to log complaints and analyze data (Goldmine) • Utility companies provide reports to the Commission on customer service activities including: • Number of disconnection notices issued • Number of customers actually disconnected

7. Methodologies (Continued) • Number of customers who received payment assistance • Number of customer accounts in arrears and dollar amount of arrears • Number of informal utility hearings held with customers • Number of settlement agreements written • Total number of complaints handled and disposition of complaints • Total number of customers accepting the company resolution

8. Availability of Technical and Operational Data • Data readily available due to in-house computerized complaint tracking system • Service Quality staff available to design different types of data reports requested by the Commission or others • Complaint tracking system easy to manipulate so complaint handling staff can prepare reports of number and types of complaints handled • Complaint tracking system regularly updated to capture latest information about complaints • Service Quality staff complaint handling often leads to Commission investigation of utility company practices

9. Effects of Competition on Service Quality • MPSC has adopted generally applicable service and reliability standards for the transmission and distribution systems of electric utilities • Michigan is a hybrid market – it is not fully competitive, and it is not a fully regulated • Standards governing the form and content of all disclosures, explanations, and sales information disseminated by persons offering or selling any retail electric service within the State of Michigan. (U-12487) • Customer Billing can be done by either the Utility or the AES • Utility is the only entity who may physically shut off services to a choice customer • AES must follow service requirements as set forth in the ROA tariffs • Impact on choice customer if they do not meet minimum two year term requirements and/or failed to provide written notification requirements, as they have to pay a market based rate • No effect on service quality as the utility remains the provider of last resort

10. Case Study • Designing an effective monitoring process • Example: outage investigation.

11. Questions?