State tells KU, LG&E to improve customer service

Fix urged at KU, LG&E to deal with their poor performance

ssloan@herald-leader.comSeptember 15, 2011 

The state Public Service Commission on Wednesday unveiled the findings of a nearly yearlong audit that takes Kentucky Utilities and affiliated company Louisville Gas & Electric to task for worsening customer service that has led to more complaints in recent years.

The audit, by The Liberty Consulting Group of Quentin, Pa., makes more than 50 recommendations for KU and LG&E, the state's two largest utilities, to implement. The audit attributed the decline in customer service to issues including switching software, understaffed call centers and "an overriding corporate focus on the bottom line."

Executives at the utilities said Wednesday they began taking action to fix the concerns during the audit and would continue to do so. The next step is for the consulting group to form an action plan with the utilities, which provide electricity to more than 900,000 customers in 86 Kentucky counties and natural gas to 320,000 customers in 21 counties.

The audit "concluded that we should have been spending more money faster on customer service initiatives, and now we're following those recommendations," said utility spokesman Chip Keeling.

Keeling's colleague Chris Whelan said the utilities had invested in new software that was launched in 2009 because "that's a lower-cost way to serve our customers. What we realized is we probably moved a little too fast."

The software sought to unify certain technical systems for both KU and LG&E, which had been operating on separate systems. But in combining the systems and the different policies of the two utilities, such as those related to late charges, the software created a number of problems, the audit found.

The utility began to disconnect service in error more often, the audit found. "Not only is this costly rework for field crews and taking them away from other work, it has a very negative impact on customer satisfaction," the report found.

Compounding the issue was that when customers called about issues including those stemming from the new software, they found it difficult at times to get through to telephone representatives.

"Their call center operations simply were not positioned to deal with the issues that arose in respect to the integration of the two companies' billing systems," said PSC spokesman Andrew Melnykovych.

The audit found that the utilities' three shared call centers didn't meet their internal goals of dealing with concerns quickly. They also shed staffers, despite not meeting those goals. In 2008, the call centers had 162 workers; by 2010, there were 151.

The report noted that complaints to various organizations including the PSC and Better Business Bureau nearly doubled from 2007 to 2008 and peaked in 2009. They have decreased since, but "complaint levels remain high and still well above 2007 levels," the report found.

The increased complaints spurred the PSC to order the audit last year, Melnykovych said.

To help remedy the concerns, the utilities previously announced they would open a call center in Morganfield and employ 50 people there, plus fill vacancies at other sites.

The audit noted that KU and LG&E have been willing and working toward improving but stated that "executive management needs to follow up its expressed commitment to change by addressing fundamental culture and resource issues."

The Liberty Consulting Group questioned how much some of the issues might have stemmed from KU being looked at as an investment by E-ON, the German company that owned it at the time. A distant parent company can be "focused on financial return," the audit noted.

KU representatives, though, framed it as a dedication to keeping rates low that led to lower spending on customer service.

The companies have since been purchased by Pennsylvania utility PPL, which pledged to "maintain superior quality utility service."

The audit noted, though, that "the commitment to 'maintain' superior service risks missing the point. Superior service has been lost; it therefore cannot be maintained. Instead it needs to be 'regained.'"

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