Potomac Edison/Mon Power Billing & Meter Reading Investigation Evidentiary Hearing

The WV PSC's evidentiary hearing in the General Investigation of Potomac Edison and Mon Power Meter Reading, Billing and Customer Service Practices was held in Charleston December 17 -18.  If you didn't have an opportunity to watch the hearing live, never fear, we drove 12 hours, spent 2 nights in a hotel, talked to people we don't particularly like, fended off icy stares, and stayed awake for the entire thing in order to generate 13 pages of notes just so you can find out what happened.  The media took no notice of the event, even though FirstEnergy media personality Toad Meyers was there to act as their personal hearing interpreter.  Maybe they're waiting for him to share his notes...

If you've never watched one of these hearings, let's set the stage.  It's a quasi-judicial, court-like proceeding, sans robes and much of the formality.  This was an opportunity for the Commissioners to consider evidence and examine witnesses.  Witnesses sponsored by the parties to the case filed written testimony and rebuttals in advance.  At the hearing, the witnesses took the stand to have their testimony officially recognized and to give opposing parties a chance to cross examine them.  The Commissioners also took the opportunity to ask the witnesses questions.  The parties to this case are FirstEnergy's Potomac Edison and Mon Power utilities, the Staff of the PSC, and the Consumer Advocate Division of the PSC.  Between them, they produced 6 witnesses, 4 from the company, and one each from the Staff and the CAD.

FirstEnergy's first witness was John Hilderbrand, Director of Operations Support for Mon Power, who was grilled by the attorneys for CAD and Staff, and the Commissioners, for more than three hours.  From my notes:

1. Exigent circumstances prevented the company from making bi-monthly reads as directed in its tariff.  The dreaded "exigent circumstances," or "EC" were defined as:  weather, access issues, unplanned absences and equipment failures.  Weather = ice, snow, rain, flooding that impedes access to meters. Access issues include a broad range of items such as new gates being erected, no keys being provided, meters on the interior of the home, animals, such as dogs.  Unplanned absences = sickness or illness, or 3 personal convenience days that can be used w/24 hour notice.
2. Because the company has limited resources, they don't attempt to read in the month following a missed read, when an estimate is scheduled.
3. Company now has 7 substitutes, or "rovers" to cover for unplanned absences.  This process began several months ago,  However, the company did not have substitute meter readers before that.  But, there may still be missed reads due to "EC" because there are only 7 rovers.
4. The company was not adequately staffed to read meters for some period of time due to merger organization and that contributed to the problem.
5. As a result of the merger, meter readers are devoted to meter reading only.  (Despite the fact that FirstEnergy was recently recruiting for meter readers that would also perform collection activities and disconnects and reconnects.)
6. When meter readers transferred to other positions after the merger, FirstEnergy had to shift resources to read meters and catch up on missed reads.  FirstEnergy shifted resources 8/15/11 and again 4/2/2012.
7. It takes 6 months to train a meter reader (but the company wants YOU to read your own meter with no training whatsoever!)
8. Company has not researched how the storms affected other power companies, but AEP didn't have the same problems because their meter reading is automated and is a different process.
9. The proposal to read meters every month for one year would increase the cost to WV ratepayers $5M.  But who said WV ratepayers would be paying for that?  Nobody.
10. Renumbering is a "short term inconvenience to customers" but will make the process better in the long run.  Why not a short term inconvenience to the company?  It's good utility practice to see that reading is as efficient as possible.
11. The company added renumbering to the existing staffing, merger transition and storm problems.  But it results in cost savings (for the company!)
12. Readers hired since mid 2012 must use their own vehicles.  Decision was made as part of merger integration aligning practices across FE and the company always evaluates ways to deliver product cost effectively. 
13. Meter readers using their own vehicle are paid IRS mileage rates and must carry certain insurance, although the FirstEnergy witness doesn't know how much.  "Most" personal vehicles used by meter readers are all-wheel drive, however that is not a requirement.  The supervisor inspects the vehicle monthly to ensure the vehicle can complete the route.  If a personal vehicle breaks down the company may facilitate getting it back on the road with a tow or a jump, but does not normally provide a back-up vehicle.  If a meter reader has continued vehicle issues, that affects the ability to get the job done.  Meter readers are not compensated if they don't get the job done.
14. When asked about missed readings due to the Derecho, Hilderbrand's logic came up short.  Staff attorney John Auville walked him through a typical storm-altered read schedule:  The Derecho caused a missed read in the first half of July.  The August read was a scheduled estimate.  The meter should have been read in September, but was not.  Hilderbrand said the company was still not recovered from the Derecho and able to read meters in September.  Hilderbrand started talking about the dreaded EC again.
15. On renumbering:  When you reorganize routes and shift between even and odd cycle reads, that results in some customers being estimated when due an actual read, or some customers receive back-to-back reads (is there anyone this happened to?  I'm still waiting for someone, anyone, to tell me they got back-to-back reads due to renumbering).  It was a poor decision to renumber the Eastern Panhandle in the winter.  Why didn’t FirstEnergy think of that beforehand?  The FirstEnergy staff had never renumbered before, so they didn’t understand it.
    
16. FirstEnergy has selected 10,000 residential accounts for monthly reads between Nov. 2013 and Jan. 2014.  FirstEnergy has approximately 445,000 customers in WV.  At most, this provides one, maybe two additional reads for these customers.
17. FirstEnergy has 16,920 "annual read" customers in WV.  An annual read customer is one whose meter is read only once per year.  Reasons for an account being designated "annual read" include:  Safety, access, customer request and seasonal.  The company is reviewing these accounts to make sure designation is correct, but has no plans to notify the customers of the review, the results, or notify them of their right to appeal the determination.  Maybe that would be a good idea.
18. When a meter reading is considerably higher than expected based on prior reads, the reader's hand-held computer unit emits an audible tone that causes the reader to do an immediate re-check.  However, it's up to the reader and supervisor to set the parameters of error allowed.
19. It would take up to a year to get staff in place to read every meter every month.
20. If a reader has access issues, one of several form letters is sent to the customer to remedy the access issue.  If the customer fails to respond, the company may be more aggressive in turning off service.
21. The company has a 3-day read window for each account during a scheduled read month.  If an unplanned absence occurs on the last day of the read window, it cannot be made up.  Note that the company can read your meter at any time within that 3-day window.
22. Commissioner McKinney vigorously questioned this witness about meter readers driving their personal vehicles and identifying themselves and asked the company to look hard at providing some sort of "work around" in the case of a missed read.  Then he started in about renumbering, observing that the company could have chosen to read all meters during renumbering, but they didn’t choose to do that.  That’s a resource issue from Commissioner McKinney's perspective.  It was something the company made an intentional decision to do.
23. Commissioner Albert wanted to know what was going on with the Maryland PSC billing investigation, but couldn't get a straight answer from the witness.
    

Second witness was Kaye Julian, Director of Customer Management.

1. The system has calculated expected consumption and if it falls outside expectations, then it goes to billing personnel for review.  This is supposed to catch a large true up.  They could send a re-read order or a billing rep. would catch an obvious error.  But, if the reader has verified the reading (see #18 above), then they release it for billing.  Customer is not notified of the reason for such a high bill, but the company is considering doing that, along with giving the customer payment plan options.
2. If a customer's history contains "bad data" (defined as inaccurate estimates) then it’s possible that the estimated reading is going to be inaccurate.  If there are more than 4 estimates, then "we do have issues."  The company has a levelizing routine for 4 estimates and are confident it’s correct.  But if there are more than 5 estimates in a row, it does not work.  Those customers go through an estimation routine that uses prior month usage to calculate current month estimate.  If the prior month was estimated, this would make the current estimate based on "bad data."
3. The company's estimation routine did not perform as they intended it to.
4. In April 2012, a computer system change (result of the company's merger) was made that changed the estimation routine.  Although Allegheny's estimation routine worked well, FirstEnergy "enhanced" it because it was not possible to retain the old and support the business environment we’re in.  In order to share resources it’s best to all be on the same platform – it’s about managing costs and best practice.
5. Agrees that adding additional months to the levelizing routine may only add more "bad data" and that an average is only as good as the data used to create it.  If data is off, then estimate will be wrong.
6. EPRI study of company estimation routine expected January 6.  EPRI has been meeting with FirstEnergy "team" and needs more time.  Weekly/daily meetings on review that began in July.  EPRI is trying to simulate estimation routine with good data and creating other scenarios with additional estimates.  EPRI will tell them how to improve. Too early to say if the company will do whatever EPRI recommends because the company doesn’t know how much it may cost.  Could reject EPRI's recommendation if it’s too expensive for the company.
7. Regarding the 10,000 "special" customers who will receive monthly readings between Nov. & Jan. -- The system picked them based on the following criteria:  5 consecutive estimates in 2012 and more than 25% variance after an actual read.  Only accounts with 5 consecutive estimates because the company believes its levelizing routine for 4 or less estimates is accurate.  The purpose of actual reads is to replace "bad data" and high true-ups with actual reads because they could not be levelized.  The company will reassess these accounts at the end of January.  
8. Doesn't think actual reads for a year would be necessary based on how the system works and based on read rates.  Not all customers were impacted like that. Not all accounts need special handling, just "anomalies" (10,000 accounts).
9. Believes there's a difference between a high bill inquiry and a complaint.  Maybe the customer called simply because they didn't understand something about their high bill.
10. FirstEnergy applied its own estimation routines used for monthly read accounts to Allegheny's bi-monthly read system, but doesn't believe that exacerbated the estimation problems.
11. Chairman Albert asked what are "we" going to do with this thing?  Lots of customer issues, lack of confidence in the company’s processes.  To what extent is somebody going to suggest to us what needs to be done?  Julian responded that the company has discovered that their bills are confusing for customers.  Will enhance customer messaging on bill to let them know why there is a huge variance in the bill.  "Little idiosyncrasies"  came out.  Chairman Albert asked again about the Maryland PSC case and still got no answer.
    

FirstEnergy counsel helps out by asking witness on redirect if there is a similar billing problem in FirstEnergy's West Penn Power territory.  Julian says there is not because WPP didn't suffer the consequences of Hurricane Sandy.

Next witness was Gary Grant, FirstEnergy's Director of Customer Contact Centers:

1. Companies have voluntarily implemented modified guidelines for payment plan procedures for high bills with no financial qualification.  Gives the customer a repayment period similar to the estimation period that caused the high bill.  Customer Service Reps. offer payment plans as an "opportunity" for customers, but only when they call and ask because each customer is "unique".  Hand-out refers to customers as "business partners."
2. West Penn Power doesn't have high bill payment plans "at this scale" (not that they don't have the same high bill problems - see paragraph above).
3. Disagrees that customers got rude treatment from customer service reps. Wait times at call center have decreased, and the company's robust quality assurance process ensures CSRs are not rude.  But did customers in fact express concern during the public hearings?  Yes, they said that.
4. The company does not inform new customers about the company's bi-monthly reading practices, and if they did it would be an additional cost.
5. Commissioner Palmer questioned this witness about hold times once initial contact is made.  These hold times are not counted in the company's ASA statistics.  The company tracks handle time for individual reps. as well as overall call center, and any hold time would count in the handle time metric.  They don't keep track of how long customers are on hold once answered.  The supervisor can see how long customer is on hold.  When asked if there will be any changes to the process, the witness said just payment plan and high bill refreshers for the CSRs.
6. Chairman Albert asked what the harm was in informing the customer about bi-monthly reading when they apply for new service over the phone.  The witness said it would add seconds to the call.  Chairman Albert speculated that it would add about 3 seconds.
   

Next witness was Kevin Wise, Director of Rates and Regulatory Somethingorother:

1. Witness claimed he had not seen the lawsuit filed by Potomac Edison customer John Kilroy in Jefferson County the day before.
2. Said the company would never accept the $5 customer refund for a missed reading, even if exceptions were made for exigent circumstances.  Was asked how many times the company would be paying this fine.  Said there will always be meters that aren't read and would be estimated.
3. Commissioner Palmer asked if the company had future renumbering projects planned.  Witness has no idea what the company's future plans may be.
   

Next witness, Suzanne Akers, Utility Analyst with the Consumer Advocate Division, was cross examined by FirstEnergy's counsel.

1. Acknowledged that if the company were to read meters monthly for a year, it would take time to increase staff.  Could not answer if the cost of the extra readings would be recoverable in rates.  
2. Was asked what she would do with those extra meter readers after the year.  Said perhaps they may still be needed.  Was asked if she would lay off those meter readers, because that might affect FirstEnergy's ability to hire workers.  (Hey, I didn't write this comedy, I'm just reporting here.)  Akers noted that many current meter readers are contract employees.

Final witness was Michael Fletcher, Deputy Director of Consumer Operations Section at the PSC:

1. Part of his concern about changing to FirstEnergy's new estimation routine is that under Allegheny’s estimation process, the company did an analysis on the specific customer and had 5 estimating routines to fit different scenarios.  Allegheny used to look at what routine is appropriate and current system does not.
2. Concerned that sequence of estimates are adjusted for weather, until there are too many estimates and then the routine changes to levelized midstream.
3. FirstEnergy's counsel asked if the linear routine uses prior year historic data, and witness said it varied, either prior year or prior month, but neither estimate may be accurate.
4. Witness said that the weather-adjusted estimates were put in place in a settlement in the 1990s and if the company wants to change them they should file a new tariff.
5. The customer supplied meter reading should be used as supplied if within the company's 3-day read window.  (Note #21 under Hilderbrand.)  However, the company has been adjusting the customer-supplied reading to their scheduled read date within the window and then marking it as an estimate on the customer's bill.  The tariff supports Fletcher's interpretation.  Fletcher said that when the customer calls in a reading and the bill shows a different number coded as an estimate, that increases customer anger and complaints.
6. FirstEnergy counsel asked Fletcher about several missed read situations and whether they would count as missed reads where the $5 refund applied.  Fletcher agreed that some would be exceptions.  Fletcher said the company needs to have enough back up meter readers to cover absences.  Sick or vacation excuses for not reading meters are not acceptable.  He understands the company can’t plan for every eventuality, but needs additional rovers to take up the slack for planned absences. If it’s the same problem that has brought us here because of poor planning, then the refund would apply.  The company says they have increased meter readers and fixed all the other problems, and if they have, it wouldn’t apply to anyone.
7. The $5 customer charge includes the cost of reading, billing, maintenance, and parties may agree to include charges in there that are not direct customer costs. However, it's primarily related to those items in the Uniform System of Accounts that can be tied to the customer, even if the customer had zero usage.  The company’s cost to serve that customer, according to Wise’s testimony says the cost of meter reading is $1.19 (or $1.56 later in the testimony).  Meter reading has a $3.7M yearly cost.  There are other costs recovered in addition to meter reading.  Fletcher is not trying to compensate customer for company’s cost – he was picking easy number to reference ($5).
8. FirstEnergy's counsel contends that the $5 refund is performance rate making (where there are penalties and rewards), but Fletcher's proposal has no reward.  Fletcher said the reward is not incurring the penalty. 
9. Fletcher said if a customer got 5 consecutive estimates, it sends incorrect signals to the customer about energy use and is not fair to the customer.
10. Chairman Albert questioned witness about exigent circumstances (EC) and whether or not EC can be verified how do we avoid more EC circumstances and whether discount should apply.  Aren’t we setting up a system with a penalty that would result in a bunch of contested cases?
    

If you found this summary interesting, or laughable, check back for links to the hearing transcripts, when they are available.

And now we wait for the Commission to issue an Order to fix this mess.  At some point, FirstEnergy has to right its wrongs and make amends to its customers.  Otherwise, this saga will simply continue in another venue.