13. Service Quality indicators

SoCalGas and SDG&E propose to standardize the service quality indicators and reward mechanisms for the two companies; this stance is consistent with many other facets of these applications where past differences are now aligned. Since the adoption of service quality indicators in 1997, SoCalGas has met or exceeded benchmarks for most incentive-related indicators in each year, though performance did fall below the benchmarks (but within the deadband) for a few indicators in 1997 and 1998. SoCalGas did not incur any penalties.¹⁰² In the period 1999 through 2002, SDG&E earned rewards of
$2.960 million and has paid out less than $28,000 to customers for missed appointments.¹⁰³

SoCalGas's proposed 2005 penalty/reward service quality indicators¹⁰⁴ are summarized below:

SoCalGas Indicators	Target	Deadband	Maximum Reward/Penalty
Phone/Office Contact Satisfaction	83.4%	+/- 1.0%	+/- $1,500,000
Field Visit Satisfaction	94.1%	+/- 1.0%	+/- $1,500,000
Field Service Orders Appointments Provided/Percent Made	Varies	50-55% provided 98% Met	+/- $4,500,000
Call Center Responsiveness	80% within 60 Seconds	+/- 2%	+/- $2,000,000

SDG&E's proposed 2005 penalty/reward service quality indicators¹⁰⁵ are summarized below:

SDG&E Indicators	Target	Deadband	Maximum Reward/Penalty
Phone/Office Contact Satisfaction	78.1%	+/- 1.0%	+/- $500,000
Field Visit Satisfaction	92.4%	+/- 1.0%	+/- $500,000
Field Service Orders Appointments Provided/Percent Made	Varies	35-40% provided 99% Met	+/- $600,000
Call Center Responsiveness	80% within 60 Seconds	80.0% - 85.6%	+/- $1,500,000

In addition, SoCalGas and SDG&E propose different lists of monitor-only indicators.¹⁰⁶

Proposed Indicators	SoCalGas	SDG&E
Level of busy signal	_	_
Estimated meter reads	_	_
Leak response time	_
Missed appointments	_
Problem resolved on first visit	_
Elapsed time	_	_
Percentage of abandoned calls		_
Shortest time to CSR		_
Gas emergency response time		_
Electric emergency response time		_
Complaints		_

For SoCalGas, ORA proposes a set of revised performance indicators that are monitor-only with a remediation trigger. No rewards or penalties would be included. ORA also recommends that the Commission adopt a service guarantee similar to one in place for SDG&E customers. ORA recommends that the Commission adopt specific SDG&E performance standards of Phone/Office Contact Satisfaction, Field Service Order Satisfaction, Field Service Order Elapsed Time, and Call Center Responsiveness. ORA also argues these indicators should change from penalty/incentive mechanisms to a monitor only framework. ORA argues that SDG&E has not shown that ratepayer funded financial rewards are warranted to ensure that SDG&E provides safe, reliable and adequate service to its customers.¹⁰⁷

According to TURN, the existing system of incentives were successful in focusing management attention on service quality through monitoring the indicators, avoiding penalties, and earning rewards. But TURN argues there is no definitive indication that rewards have provided any better incentive to maintain appropriate service quality as compared to reasonable Base Margin funding, monitoring requirements, or penalty-only indicators. Thus TURN recommends either a monitor only or penalty only mechanism.¹⁰⁸

Aglet provides a thorough theoretical summary of incentives generally as adopted by this Commission in the past, and specifically opposes incentives as applied to SoCalGas and SDG&E:

"Aglet opposes approval of performance incentives that would allow financial rewards and penalties for SoCalGas or SDG&E. Aglet supports monitoring of utility performance, to remind utility managers of the Commission's interest in specific areas of their operations.

Narrow, targeted incentives might be justified in order to correct specific utility problems, but the showings in this proceeding have not identified any such problem. Even then, targeted incentives should be limited in scope and duration.

Aglet opposes approval of performance incentives that would allow financial rewards and penalties for SoCalGas or SDG&E. Aglet supports monitoring of utility performance, to remind utility managers of the Commission's interest in specific areas of their operations." (Aglet Opening Brief, p.22.)

We are not convinced like Aglet or ORA that financial incentives are not effective for improving performance by SoCalGas and SDG&E. Monitoring alone is not likely to lead to improvement and it lacks any enforcement teeth if there is no penalty.

a. Service Guarantee

ORA proposes to add a service guarantee for SoCalGas, similar to the existing one for SDG&E. Both companies argue the mechanism is ineffective, and is a disincentive to offering appointments. They contend that the mechanism "unduly micro-manages utility operations, and by focusing only on the dimension of timeliness, provides incentives to prioritize utility services improperly."¹⁰⁹ SoCalGas argues that it would cost $1.0 million to implement a guarantee and points to the low payout by SDG&E as proof that it would not be cost-effective. Based on current tracking systems, SoCalGas has improved its
on-time arrival percentage from 93.9% in 1999 to 98.5% in 2003. (Ex. 164, p. 26). This was done without a service guarantee. We are not convinced that a payment to an individual customer is a reasonable penalty when our goal is to improve performance for all customers. A minor cash payment has not been shown to be satisfactory compensation for the annoyance of a missed appointment. If SoCalGas and SDG&E miss enough appointments then an appropriately sized penalty should get management's attention, just as an appropriately sized reward would.

We will not adopt a service guarantee for SoCalGas and we will terminate the SDG&E program. SoCalGas and SDG&E have shown that this mechanism is not necessary, and the other performance mechanisms are adequate to ensure reasonable performance by the applicants.

b. Adopted Service Quality Mechanism

What is not at all clear is why we should set different levels of performance as targets and different rewards for SoCalGas and SDG&E. This is an open question for all incentives, but operational incentives such as safety measures would have unique risks for the two companies. Customer satisfaction, especially for the four highly generic measures proposed by SoCalGas and SDG&E, ought to be more closely aligned considering the companies have essentially one management structure.

We recognize the two companies are of different size, but as ORA points out, we already adopt just and reasonable rates that are sufficient to fund safe and reliable service; therefore any reward or penalty is solely an incentive to improve (or not backslide). There is no convincing argument that the rewards and penalties need be of different sizes for SoCalGas and SDG&E. The incentives are for achieving a certain level of service. SoCalGas and SDG&E did not justify the differential in the penalty or reward and we will allow the same amount as sufficient to focus attention on improving service and avoiding any penalty.

Adopted Indicators SoCalGas and SDG&E	Target	Deadband	Maximum Reward/Penalty Each Company
Phone/Office Contact Satisfaction	83.4%	+/- 1.0%	+/- $500,000
Field Visit Satisfaction	94.1%	+/- 1.0%	+/- $500,000
Field Service Orders Appointments Provided/Percent Made	Varies	35-40% provided 99% Met	+/- $600,000
Call Center Responsiveness	80% within 60 Seconds	+/- 2%	+/- $1,500,000

In addition we will adopt the monitor-only measures, but we see no reason to excuse either SoCalGas or SDG&E from the full set, except for the unique electric measure, so we adopt the following list applicable to both companies:

Adopted Indicators	SoCalGas	SDG&E
Level of busy signal	_	_
Estimated meter reads	_	_
Leak response time	_	_
Missed appointments	_	_
Problem resolved on first visit	_	_
Elapsed time	_	_
Percentage of abandoned calls	_	_
Shortest time to CSR	_	_
Gas emergency response time	_	_
Electric emergency response time	N/A	_
Complaints	_	_

In the next proceeding applicants and interested parties may draw any appropriate conclusions based on the data. Absent a good reason at that time to continue the tracking, we will consider dropping the reporting requirements as unnecessarily burdensome.

¹⁰² Ex. 333, pp. 8-5.

¹⁰³ Ex. 333, pp. 9-17.

¹⁰⁴ Sempra Opening Litigation Brief, p.67.

¹⁰⁵ Sempra Opening Litigation Brief, p. 68.

¹⁰⁶ Sempra Opening Litigation Brief, pp. 67-69.

¹⁰⁷ ORA Opening Litigation Brief p. 79.

¹⁰⁸ TURN Opening Litigation Brief, p. 46.

¹⁰⁹ Sempra Opening Litigation Brief, p. 89.