New Study from Navigant Consulting and Center for the Advancement of Energy Markets Demonstrates Growing Debate over Standards to Regulate Utility Customer Service Quality.

Energy Editors/Business Editors

CHICAGO--(BUSINESS WIRE)--Jan. 13, 2004

Gaps Identified in Perception of Regulators, Utilities and Customers

Concerning CSQ Standards

Standards to measure customer service quality are an issue of growing debate in the utility industry, according to a new study released today by Navigant Consulting (NYSE:NCI) and the Center for the Advancement of Energy Markets (CAEM). The study also found that the topic of standards is extremely complex because of their role at the nexus of utility operations, customer expectations and regulatory issues. The timing of the study comes as recent utility industry events, such as the Northeast Blackout, outages caused by Hurricane Isabel, merger activity and cost-cutting measures, have caused regulators to examine how to strengthen customer service quality.

Though much research has been available about customer service quality in the utility industry, the NCI-CAEM study fills a void by focusing on the impact of "standards" on customer service quality, based on interviews with more than 150 regulators, utility executives and other industry officials. Entitled "Customer Service Quality Standards in the Utility Industry," the study discusses current trends and alternative approaches to measuring, reporting and regulating standards for customer service quality (CSQ). The research focuses on CSQ measures that are identified with the utility industry, including call handling, billing, metering, complaint handling and customer satisfaction measurement. The research was designed to provide support to decision-making for future CSQ regulation and to help utilities formulate their own CSQ strategies.

"The ability to standardize customer service performance in the utility industry is particularly difficult," according to Jamie Wimberly, President of the Center for the Advancement of Energy Markets. "Customers don't readily differentiate the quality of energy delivery (such as outage restoration) from how the call center handles their inquiries--and these are very different issues for the industry to manage. Regional variations, differences in customer and regulatory expectations, and cost issues all raise questions about how to standardize quality service." According to Wimberly, "Regulators and utilities need to carefully define how CSQ standards can help the customer--and shape approaches to standardization by those customer objectives."

"We see a troubling gap separating regulators from utilities and their customers in how to measure and standardize the quality of customer care," said Peter Shaw, Director, Navigant Consulting. "For example, regulators tend to focus on how much time it takes for a customer to reach someone in the utility's call center as a key indicator of service quality, while customer research shows that the 'quality' of the call is a better determinant of customer satisfaction. Penalizing utilities for occasional non-compliance with answer call-time targets sends a message to utilities to focus on meeting speed targets rather than ensuring high-quality interactions."

Anecdotal information gathered through more than 150 interviews with regulators, utility executives and other officials provides interesting snapshots into attitudes about customer service quality regulation. For example, more than half those interviewed believe that utility customer service has improved in the past five years, and two-thirds agree that gas and electric utilities genuinely strive to provide good customer service. But opinion was divided as to whether setting minimum CSQ standards improves service quality in a significant way. Regulators were more inclined to see standards as an effective tool than were utility executives.

For more information about the study, please contact Patricia Mahon, Energy Practice, Navigant Consulting, at 781.564.9744 ([e-mail]) or Jamie Wimberly, President, Center for the Advancement of Energy Markets, at 202.483.4443 ([e-mail]).

The public study, "Customer Service Quality Standards in the Utility Industry," is available at www.navigantconsulting.com.

About the Center for the Advancement of Energy Markets

The Center for the Advancement of Energy Markets (CAEM, pronounced kay-em, www.caem.org) is a non-profit, independent think tank founded in 1999 to promote market-oriented solutions to the challenges that confront the energy industry, other network industries, and the nation. CAEM's expertise covers the entire energy market, but with a particular focus on electricity and natural gas, both wholesale and retail. CAEM also promotes network policies and business practices in other industries that interface with the energy industry, including telecommunications and water. CAEM is not a trade association, a consulting firm, or a lobbying group. CAEM is primarily a think tank developing intellectual capital for moving toward new public policies and regulation, new business models, and new technologies driven by competitive energy markets.

About Navigant Consulting

Navigant Consulting, Inc. (NYSE:NCI) is a specialized independent consulting firm providing litigation, financial, restructuring, energy and operational consulting services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change. The Company focuses on industries undergoing substantial regulatory or structural change and on the issues driving these transformations. "Navigant" is a service mark of Navigant International, Inc. Navigant Consulting, Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant International, Inc. and NCI's use of "Navigant" is made under license from Navigant International, Inc. More information about Navigant Consulting can be obtained on the Company's website address, www.navigantconsulting.com.