Service Quality

• How does one define the "service" to be protected in a restructured electric/natural gas industry;
• How does one measure the quality of service offered to low-income consumers;
• How does one determine whether the quality of service impacts are acceptable or unacceptable.

The immediate concern of state regulatory commissioners and staff responsible for quality of service provided by regulated monopolies is that preparing the way for competition may directly or indirectly lead to a decline in service quality. Downsizing is a trend, perhaps even a fad, throughout the American economy. Companies about to face rivalry are likely to be particularly concerned with cutting labor costs.\1\

Quality-of-service has important efficiency and equity implications. In monopoly environments, the firm's profit-maximizing quality selection is often inconsistent with a social welfare optimum and can result in inferior price-quality choices for low demand customers.\4\

Particularly in circumstances where there is substantial competition for one set of customers (e.g. large users) and little or no competition for a different set of customers (e.g., small users), "minimum quality standards prevent the monopolist from excessively degrading the price-quality combinations it offers to low-demand customers to prevent high-demand customers' switching."\5\ One inevitable impact of electric/natural gas restructuring is a reduction in the workforce of electric/natural gas utilities. According to the Energy Information Administration, from 1986 to 1995, "employment at major IOUs decreased by about 20 percent, a reduction of more than 100,000 employees. . .

In an increasingly competitive industry, staff reductions and downsizing are likely to continue. Many utilities have announced plans to revamp their organizational structure, streamline their operations, and reduce staff." There are both direct and indirect customer service implications to these staffing cutbacks. Staff reductions can have a direct impact on reduced customer service quality. In the telecommunications industry, for example, a "competitive" U.S. West reduced its workforce by 9,000 persons and consolidated its 560 customer service centers in its 14 state region to 26 centers in 10 major cities. One analyst reported that "following this re-engineering, customer service disintegrated to the point where state regulators were inundated with thousands of customer complaints. Regulators in Colorado, Washington, Oregon, New Mexico, Arizona, Montana and Minnesota required that US West pay millions of dollars in fines, penalties, and reparations for poor service." In light of this experience, the following questions are explored with respect to service quality from a low-income perspective.  

DISCUSSION OF THE ISSUES

1. Subsidiary issue #1: Can "service" be somehow generically defined? Before beginning an evaluation of the impacts that electric/natural gas restructuring might have on the service delivered to low-income customers, it is necessary first to define what activities make up the "services" provided by an electric/natural gas company. Traditionally, regulators have tended to view the "service" provided by an electric/natural gas utility as solely the provision of kWh through wires to the consumer. This view is too narrow. A better approach is to consider an electric/natural gas utility as the distributor of a "manufactured" product and adopt the manufacturing concepts of "product" and "service." In the manufacturing world, a company's offering to its market is composed of both a physical product and a bundle of related or supporting services. A simple example would be the appliance manufacturer that offers free delivery, free installation and a 90-day warranty with the purchase of any appliance. The delivery, installation and warranty comprise the "service" component of this offering. Applying these concepts to an electric/natural gas utility leads one to define the kWh provided to consumers as the "product" component of the company's market offering.

All other activities related to the provision of electricity or supporting the provision of electricity would be the "service" component. From a low-income perspective, the service that is delivered to the low-income consumer can be tied to the flow of the customer through the utility system. The flowchart displayed in Figure 1 helps to define the service component of an electric/natural gas utility's offering to low-income customers from this perspective. As this Figure indicates, every interaction between a company and its customers consists of an offering of a product or service (by the company) and a consumption of that product or service (by the customer). Therefore, it is valid to define the product and service components of an electric/natural gas utility's market offering by identifying the various company/customer interactions that occur. If a company activity directly affects a consumer in one of the processes identified in Figure 1, that activity should be considered a "customer service" for quality of service purposes.

2. Subsidiary issue #2: What services are subject to public oversight as part of a company's regulated service offering? One of the issues faced by telecommunications regulators upon the advent of interexchange competition involved how to define a regulated service subject to public oversight by the state utility commission (as opposed to an interexchange service regulated by the Federal Communications Commission or a service which was unregulated entirely). If a local telephone company collected a deposit for an interexchange carrier, was that activity a part of the regulated local telephone service or the unregulated interexchange service? The mere fact that the activity was undertaken by the regulated company was not, unto itself, determinative of whether the activity was an activity subject to regulation at the state level. Clearly, if the activity directly threatens or places at risk the right to receive regulated service, it should be an activity subject to state regulation.

Thus, if regulated service is placed at risk because a local distribution company collects bills for a third party supplier, that collection activity will be a regulated activity. If electric/natural gas distribution service can be denied due to a failure to pay a security deposit that contains third party supplier deposit requirements, that activity of collecting deposits should be a regulated activity. Not all activities are so clear, however. If a regulated company bills for a third party supplier, and the customer has a billing dispute, is the dispute with the supplier or with the regulated utility? The delivery of information about available winter heating assistance may not directly place regulated service at risk. The elimination of neighborhood community pay stations (such as banks and grocery stores) may not directly place a customer's regulated service at risk. The refusal to cash third party checks may not directly place a customer's regulated service at risk. Nonetheless, at some level, each of these activities is generally (and reasonably) considered to be an element of customer service by the local distribution utility.  

Figure 1 Again turning to the telecommunications industry for guidance, the Massachusetts Department of Public Utilities (DPU) faced the task of defining "service" for quality of service purposes. While ultimately not needing to definitively settle on a definition, the DPU favorably commented on a proposal by the Attorney General's office to adopt a "revenue requirement" test for defining service. Under the revenue requirements test, any action of a company, the cost of which is included in its jurisdictional revenue requirement to consumers, is part of the "service" offered to ratepayers. Numerous regulatory principles lead to this conclusion. First is the principle of causation. If the ratepayers caused the company to incur particular costs, those costs are chargeable to ratepayers. If, in contrast, actions are not caused by serving ratepayers, the costs of such actions are non-jurisdictional and are not includible in revenue requirement. By definition, therefore, if a local distribution utility is including the costs of certain activities in its jurisdictional revenue requirement, the actions must in some sense be part of the "service" being provided to those jurisdictional ratepayers.

3. Subsidiary issue #3: What is a "rate" and what is a "service." One aspect of electric and natural gas restructuring is the economic deregulation of non-distribution sales. The term "economic regulation" is generally construed to reference only the regulation of rates. Other aspects of a utility's business -- whether it is environmental regulation, work place safety, or consumer protection -- remain subject to public oversight and control. This distinction between the economic regulation of energy suppliers and other types of regulation may be critical in defining what aspects of customer service are subject to state control or not. One aspect of electric and natural gas restructuring discussed elsewhere involves the probable increase in the type, incidence and magnitude of fees. For example, is the imposition of a late payment fee a rate issue or is it a customer service issue? Is the imposition of a "field collection" charge a rate issue or a customer service issue? In many instances, these distinctions will not matter. If imposed by a local distribution company, even in a retail choice environment, the charge will be regulated (irrespective of whether it is a rate or customer service issue). Similarly, legislation can define these supplemental fees to be customer service charges subject to regulatory oversight. In other instances, the distinction will be determinative. If not directly addressed legislatively, low-income advocates should at least be aware of the fact that similar supplemental charges in the cable television industry have been held to be customer service issues subject to regulation by local governments, not "rates" the local regulation of which has been explicitly denied by statute.

Under the framework established by Congress for competitive cable television companies, local governments are barred from exercising ratemaking authority over the provision of cable television service when such service is provided in markets that are workably competitive. Local governments, however, were explicitly authorized to make and enforce "customer service requirements" by Section 632 of the Cable Act (47 U.S.C. §552). The term "customer service requirements" was defined to mean "the direct business relationship between a cable operator and a subscriber," with specific references to the interruption of service, disconnections, and rebates and credits. The conclusion that, under this statutory language, service fees fell within the regulated ambit of "service" rather than the unregulated ambit of "rates" has been confirmed by the courts.  

1. Subsidiary issue #1: What role does customer satisfaction play in measuring quality of service? Many utilities offer "customer satisfaction surveys" as evidence of their claims of providing a high quality of service. Customer satisfaction surveys of persons who have no contact with a utility other than receipt and payment of a bill, however, offer no meaningful information on service quality. Barbara Alexander, a consumer protection specialist, perhaps stated it best, when she noted that "the general survey of customers that have done nothing more than receive a bill and pay it is not as good a predictor of service quality as the responses of those customers who initiated a request for service or called the utility with a question or concern on their bill. These transaction-based surveys should be done routinely. . ." Other analysts refer not to "transaction-based" analysis but rather to "consumer contact" surveys. This reference means simply that the survey is done of customers having recent contact with company customer service personnel. In an NRRI assessment of how to measure service quality, the role of customer satisfaction surveys was considered to be limited as well.

2. Subsidiary issue #2: What role does measuring universal service outcomes play in assessing service quality? Whether in the telecommunications, natural gas or electric industry, the utility itself is the institution that is ultimately responsible for whether or not it is ensuring universal service in its service territory. While programs such as rate discounts, energy efficiency programs, arrearage forgiveness, and the like, can help a company attain that goal, it should be the company that bears the ultimate responsibility for precisely which mix of programs should be implemented. The electric/natural gas industry has (or should have) the knowledge, the marketing capability, and the technical capability to provide universal service for all of its customers. In measuring the quality of service offered in support of the particular needs of low-income consumers, it is appropriate to consider universal service outcomes rather than universal service activities. In measuring outcomes, the measurement focuses not on the question "what does the utility do," but rather on the question, "whatever the utility does, does it work?" If one adopts this philosophy, regulators who adopt service quality criteria upon which to base electric/natural gas rates generally should incorporate outcome-based criteria into the review of an electric/natural gas company's universal service efforts specifically. More specifically, these outcome-based criteria should recognize that affordable electric/natural gas service does not exist for many low-income households, but that utilities can take affirmative steps toward achieving that goal. The company should then be judged not on what steps it took to achieve its goal of providing universal service, but on what actual progress it has made toward that goal. Conversely, if increased credit and collection efforts are all that is needed, the impacts of such efforts should be reflected in improved universal service performance.

This section describes how an outcome-based criterion regarding universal service might be designed and implemented. The purpose here is not to create a benchmark through which a company's performance is measured vis a vis the industry generally. Instead, this indicator is to allow a performance review of whether universal service performance for a particular company is improving or degrading vis a vis previous performance. Such a review will allow policymakers to determine whether performance is being sustained in a variety of circumstances: e.g., in a post-restructuring environment, in a post-merger environment, and the like. In addition, the performance review will allow policymakers (both inside and outside the company) to determine whether the implementation of a particular universal service program is having a positive impact on the attainment and maintenance of universal service. A universal service performance review indicator for these purposes should involve the following components:

Termination of service: Every residential customer who experiences an involuntary termination of service for nonpayment represents the ultimate failure of a company to adequately address universal service problems. In addition, the disconnection of service represents not only a social problem for those households disconnected, but represents a business problem for the company as well. The company must spend money on the physical act of disconnecting service. Moreover, the disconnection of service represents a loss of a future revenue stream to help offset fixed company costs. Accordingly, the rate of service disconnections should be used in the determination of a utility's universal service performance. The performance of the company is to be measured by the "termination rate."

Payment agreements: The success rate of deferred payment agreements is another measure of company performance. Unsuccessful payment plans not only impose a social cost on the household, but impose a business cost of either requiring the company to negotiate a new payment agreement or to pursue other credit and collection measures against the household. A successful completion of a deferred payment agreement involves a customer that retires his or her arrears without need for renegotiation of the agreement and without need for the disconnection of service. Given the general mandate that utilities enter into only "reasonable" deferred payment agreements, virtually all deferred payment agreements presumably should be successfully completed. The second component compares the performance of the company in a specified time period to the deferred payment plan success rate in a base period.

Money at risk: The money at risk to a utility provides insight into the total financial exposure that the company experiences due to nonpayment of current bills. Collectability rates of 95 percent and more should be expected for current bills, while collectability rates for arrears of older than 60-days drop sharply. The rate at which money is placed at risk is calculated by summing the total dollars in arrears along with the total dollars subject to deferred payment arrangements. The summed dollar figure for the study year is then indexed to a base period.

Customer in arrears: To the extent that customers do develop past due bills, a utility should be willing and able either to collect those bills immediately or to place those customers in reasonable deferred payment agreements. The existence of households in arrears represents a failure in both of these processes. Households that are in arrears, but that have not entered into a deferred payment agreement, represent a serious risk of loss to a utility. Moreover, by entering into a deferred payment plan, the risk that the customer will ultimately lose its utility service is lessened. One aspect of universal service involves both getting --and keeping-- late-paying customers on deferred payment arrangements. The rate at which customer service is placed at risk due to nonpayment is calculated by summing the total customers who are in arrears but who have not entered into a deferred payment agreement.

Weighted arrears: In addition to the number of accounts in arrears, the amount of money in arrears is an indicator of the extent to which customers have their service in jeopardy because of non-payment. Comparisons of arrears between companies (as well as between time periods), however, can be misleading because of differences in bill sizes. For this reason, a weighted statistic is calculated so that the effect of different average bills is taken into consideration. More specifically, the score used in this performance indicator is a weighted arrears for all customers who are not in deferred payment agreements. It is calculated by dividing the total monthly arrears not subject to deferred payment agreements by the average monthly customer bill.\6\ Weighted arrears that exceed the base period level point to a practice of allowing household arrears to persist without placing such households on to deferred payment agreements.

All five components are necessary to reach the desired results of universal service performance measurement without creating perverse incentives to pursue counter-productive collection strategies. Consider:

• To create rewards for reducing arrears without creating penalties for increasing shutoffs would lead a utility to refuse to negotiate reasonable payment plans with those least able to pay. The utility would then follow with the termination of service. The end sought, however, is not simply the reduction of arrears, but rather the pursuit of universal service.
• Similarly, to create an incentive for increasing the number of payment plans without penalizing high proportions of unaffordable plans would lead a utility to place customers on deferred payment arrangements without regard to the chance of those plans to succeed. There is not only a need to get payment-troubled customers on deferred payment arrangements, but to get them on affordable plans with a reasonable opportunity for success.
• To create an incentive for maximizing the percent of customers on deferred payment arrangements, without creating an incentive to minimize total customers in debt at the same time, may well divert resources from the overall goal of full and timely payment. The first step, of course, is to minimize overall levels of debt. To the extent there is debt, that debt should be made subject to a deferred payment arrangement.

The five components discussed immediately above should comprise an additional performance indicator to be included in any proposal for quality of service measurement. Implementation of such a system is appropriate for electric/natural gas companies interested in universal service in a competitive environment.

3. Subsidiary issue #3: Are there some aspects of service quality that low-income consumers have an interest in distinct from residential consumers generally? Certainly. The development of a specific quality of service index is not a legislative task. Deciding which aspects of service quality to measure, as well as the specific indices to use, is certainly a regulatory initiative. Legislative language can be crafted, however, to recognize the importance of service quality issues within a competitive environment. Such language would direct regulators to adopt specific quality of service metrics. Proposed language should have three important components beyond the general directive to develop the quality of service metrics: (1) the metrics must be developed by a date certain; (2) the metrics must cover all aspects of customer service (not merely the traditional technical aspects of outages and reliability); and (3) the metrics must be reported back to the legislature. One aspect of utility service quality that should be tracked, for example, is the extent to which utility programs respond to commission mandates. Referred to as "regulatory performance measurements," two illustrations help explain how "quality" can become an issue in this context.

First, quality of service measurement can assess the extent to which electric/natural gas utilities are complying with specific regulatory program mandates. The service quality issue is the extent to which a utility has engaged in those activities "required" by regulatory rule or order to ensure that low-income consumers have the ability to maintain service. Consider the case of Central Maine Power company (CMP) with respect to a specific program requirement. Regulations of the Maine public utilities commission created a particular category of deferred payment arrangements called "special payment arrangements" (SPAs) that were to be offered to low-income customers. The PUC further required that Maine's electric utilities integrate their offer of low-income energy efficiency measures with these deferred payment plans. In 1989, however, while CMP had 21,376 special payment arrangements, the company had installed or accomplished only 194 energy management service measures for these customers. Based on this data, the PUC staff asserted in a 1991 CMP rate case that CMP had engaged in "ineffective marketing" of its energy management services to low-income customers. The state Office of Public Advocate agreed, saying that not only would the successful integration of the energy efficiency and SPA programs have helped the low-income consumers, but the utility would have saved as much as $2 million a year "if CMP ha[d] been successful in delivering its Insulation Plus and Bundle Up programs to its special payment arrangement customers." Even more critically, the PUC agreed and directed the company to take remedial actions.\7\ Beyond regulatory directions with respect to specific programs, a quality of service index could and should measure compliance with general regulatory policy as well. One example might involve service termination policies. As Alexander has observed:

A utility driving toward a more competitive environment may pursue tougher collection policies, permit fewer payment extensions, and require swifter disconnection for nonpayment with stiff reconnection requirements. This suggests the need for closer monitoring of payment arrangements and disconnections, particularly with respect to residential and small-business customers.\8\

Any aspect of utility service that involves the telephone should be closely monitored. This is true for two reasons. First, there is a clear disparity in access to telephone service in the United States. In 1991, while fewer than one out of 100 upper income families did not have a telephone, roughly 25 out of 100 low income families did not. Amongst low-income households, telephone penetration rates are dramatically low: (1) of households on public assistance, 35 percent lack telephones; (2) of households receiving food stamps, 31 percent lack telephones; (3) of households receiving energy assistance, 21 percent lack telephones. Indeed, of those households completely dependent on public assistance, the penetration rate of telephone service is only 43.5 percent (leaving more than 56 percent without service).\9\ Second, this disparity in access to telephone service has a unmistakable impact on access to home energy service. A study for the Maine state utility commission, for example, found that 80% of the households that lost their service due to a winter disconnection for nonpayment also lacked telephone service. The study found that the lack of service not only interfered with the ability of the customer to contact the company, but impeded the ability of the customer to seek out home heating assistance and other public benefits to help address the inability-to-pay problem. Accordingly, quality of service measures such as level of telephone busy signals, the time a company takes to answer a phone call, and the number of "call backs" are all particularly relevant to low-income consumers. In addition, the lack of access which low-income consumers have to financial services has a carryover effect to utility service as well.

Research abounds showing that poor households are substantially less likely to have checking and savings accounts. Not only do low-income consumers have fewer discretionary dollars to keep in bank accounts, but the monthly fees imposed upon small accounts do not make them financially feasible. According to the National Consumer Law Center, "race and chronically low household income. . .account for the major difference in the use of financial services markets by consumers. Blacks, Hispanics and other minorities (regardless of income and age) and low-income households are much less likely to use checking accounts, the principal financial service used by the majority of Americans." Indeed, when race and income are combined, NCLC says, the lack of access is magnified, with the percentage of low-income minority families not having checking accounts reaching 80 percent and increasing. As a result, a variety of service quality issues will have particular implications for low-income consumers. One important quality of service measure would involve the time between a cash payment toward a bill at a community pay station (e.g., drop box, grocery store, drug store) and the date that payment is posted. A failure to ensure timely postings may unnecessarily result in late payment fees imposed on low-income consumers. Moreover, a substantial cutback in the right of a consumer to cash a third party check at a utility office, making payment out of that check, would represent a substantive restriction in service that has traditionally been offered. Some service quality issues would involve the ability of a customer on a fixed income to make timely payment. A high percentage of estimated meter readings, which results in large "make-up" bills to be paid by consumers imposes a hardship on the low-income household. A high percentage of bills that are not, in fact, mailed on the "date of billing" restricts the time that a low-income consumer has to make payment (when due dates are set as 20-days from the "date of mailing"). Some service quality issues affect the low-income consumer in their status as a part-time or other low-wage hourly employee. The percentage of missed appointments, as well as the percentage of customer problems resolved on first service call, for example, both affect the low wage employee who may find it more difficult (or more expensive) to take time off from work due to the lack of flexibility in work hours, child care, and similar daily restrictions.  

1. Subsidiary issue #1: What is the concept of non-degradation? One objective of quality of service performance measurement might be to maintain service at the level that existed prior to some event or date. The event might, for example, be the advent of retail competition. The date might be the date of the closing of a merger or acquisition. In these circumstances, the service quality should be held to a standard of non-degradation. A company's quality of service should be maintained, at a minimum, at levels no worse than existed prior to the designated event. In applying a no degradation policy, the "pre" event (e.g., pre-retail choice) environment is not necessarily best measured by the period immediately preceding the event. Most states, for example, have a period of time in anticipation of retail choice. If a statute is enacted on July 1, 2000, for example, to begin retail choice on January 1, 2002, service quality levels should be measured in the period preceding July 2000. Under this philosophy, the minimum acceptable level of performance would comply with a principle of no degradation. The principle of non-degradation counsels that, at a minimum, a move to a competitive electric/natural gas industry should result in no degradation in the accessibility, or adequacy, of service to low-income consumers. Meeting this minimum performance standard would require that, whatever the performance of the electric/natural gas industry today, the performance as measured by the indicators described and defined below would not get worse. If performance does deteriorate, it will be incumbent on state and/or federal policymakers to implement appropriate remedial action through legislation, regulation or funding. Some low-income advocates believe that it is already "too late" to establish an appropriate base case scenario. Many adverse impacts, such as the closure of neighborhood offices, have already occurred. Be that as it may, it does not appear possible to retroactively create a base case scenario. This observation simply emphasizes the importance of developing a base case data set sooner rather than later. At the least, it must be recognized that without backcasting to find out what was, the data that is now collected may not accurately reveal direction of movement, if the movement has already begun. The data could significantly understate the impacts. As discussed above, however, the question which marches forward involves identifying the specific "things" to measure in light of these concepts. In 1999, the U.S. Department of Health and Human Services, Administration for Children and Families, identified a series of indicators to determine whether electric/natural gas restructuring resulted in a "degradation in the provision of reasonably adequate service." That report stated:

Reasonably adequate utility service involves the reliable provision of kWh to low-income consumers. . .and more. The traditional regulatory view frequently is that the service provided by an electric/natural gas utility is simply the provision of energy through wires to the consumer. That approach, however, is too narrow. Reasonably adequate electric/natural gas service includes a full range of supportive customer services in addition to merely the supply of kWh. For purposes here, these services include those that are used sufficiently frequently by low-income consumers to be of particular concern to the low-income community.\10\ Low-income-specific services such as crisis fuel funds, low-income energy efficiency programs, and rate discounts are examples. Services also include offerings such as shutoff protections during extreme (e.g., hot, cold) weather as well as the provision of personal contact through customer service representatives.

Identification of the performance indicators: Six indicators are proposed for purposes of tracking the impacts of electric/natural gas competition on the provision of reasonably adequate service. The indicators are limited to those services which are used sufficiently frequently by low-income consumers to be of special concern to low-income consumers:

Indicator #5: Crisis fuel funds: This indicator measures the provision of crisis assistance funding as a means to prevent the disconnection of service due to nonpayment.

Indicator #6: Low-income rate discount: This indicator measures the provision of bill affordability assistance in the form of discount rates or bills.

Indicator #7: Low-income energy efficiency: This indicator measures the provision of bill affordability assistance in the form of energy efficiency investments.

Indicator #8: Extreme weather shutoff protections: This indicator measures the provision of shutoff protections at times during which consumers exhibit particular vulnerability to harms resulting from the loss of service.

Indicator #9: Customer service contacts: This indicator measures the provision of individual contact with a company in a manner reasonably designed to resolve payment and other customer service problems in a timely fashion.

Rationale for the performance indicators: The most salient features of low-income "service" that can be directly measured involve the participation of service providers in explicit low-income protections. Four service offerings are measured in these performance indicators, including crisis funding through fuel funds; low-income rate or bill discounts; low-income energy efficiency; and extreme weather shutoff protections. In addition, aside from basic affordability service issues, low-income service providers have expressed concern about access to basic supportive services such as company offices where personal contact can be made with customer service representatives, community offices where low-income customers without checking accounts can make cash payments, and adequate telephone customer service representatives to ensure prompt and appropriate responses to telephone service inquiries. In considering quality of service, it is important to realize that low-income service concerns are not simply that electric/natural gas restructuring may threaten the existence of supplemental customer services. It is rather that the quality of the service or the time required to obtain the service may degrade as well. Consider an illustration from Colorado as explanation. One service offered to residential consumers by Public Service Company of Colorado (PSCO) involves what are called "standard payment plans." Low-income advocates consider both the quality and timeliness of this service at risk as Colorado restructures its electric/natural gas industry. Little question exists but that PSCO will still offer such plans, as well as that the terms of such plans will remain unchanged. Even today, however, low-income service providers report that plans are more difficult to obtain (e.g., takes more effort, more personal resources). These reports indicate, as well, that plan timeliness has also degraded because it simply takes longer to reach the company by telephone. Recent research in Colorado reported, for example, that:

• Some customers who are entitled to a 60-day hold on service termination upon a utility being notified that the customer has applied for federal fuel assistance were being denied that "right" when fuel assistance staff could not make telephone contact with utility customer service representatives.
• Some customers, who must obtain historical billing data from a utility as part of the fuel assistance application, could not complete their application because telephone calls to the utility result in busy signals or lengthy waits accompanied by recorded messages.
• The data proposed to be collected in support of the above-stated indicators of reasonably adequate service included:

Indicator #5: Crisis fuel funds: The data on crisis fuel funds measures both magnitude and a yes/no toggle. The sought-after data first measures whether there exists either shareholder or customer contributions to a low-income fuel fund. This yes/no "toggle" is evident from an answer reporting that no fuel fund contributions are made. An increase in the number of instances where no shareholder or customer contributions are made indicates a degradation in service to low-income consumers. In addition, the data also measures the magnitude of both customer and shareholder contributions that are made. Decreasing levels of contributions also indicate a degradation in service. Crisis fuel funds involve dollars contributed by shareholders, or by customers (or both), and made available to income-eligible consumers facing the potential disconnection of service for nonpayment. Benefits are provided to pay the bill and thus avoid the shutoff. Two pieces of data are recommended to measure the impact of electric/natural gas restructuring on the operation of fuel funds. To place constraints on the time period, data is limited to the immediate past 12 months:

5-1. The dollar contribution made by shareholders of electric/natural gas service providers to a low-income fuel fund. 5-2. The dollar contribution made by customers of electric/natural gas service providers to a low-income fuel fund.

Indicator #6: Low-income discounts: The data on rate or bill discounts available to assist low-income consumers measures both magnitude and a yes/no toggle. The sought-after data first measures whether a low-income rate or bill discount exists. The yes/no "toggle" is evident from an answer reporting that no discount exists. An increase in the number of instances where no discount program exists indicates a degradation in service to low-income consumers. A yes/no toggle will be used, also, to measure the criteria which form the basis of the availability of rate or bill discounts. To illustrate, it is not so important, for example, that there are 10,000 customers who are taking a rate discount limited to disabled elderly consumers. It is the fact, standing alone, that the discount is limited to disabled elderly consumers in the first instance which is important. The data on rate or bill discounts also measures magnitude. It is not only whether a rate discount exists, but the extent to which low-income consumers participate in the discount, which is important. Two pieces of information are recommended to measure the impact of restructuring on the availability and operation of low-income rate discounts. To make reporting uniform, data should be requested as of a date certain. 6-1. As of December 31 of the immediate past year, the number of customers who were participating in a program (this number may be 0), the eligibility for participation in which is determined by income, where:

(1) Electric/natural gas rates are set equal to a percentage of household income. (2) Electric/natural gas "customer charges" are waived. (3) A discount is provided off of the total bill. (4) A discount is provided on an initial block of consumption. (5) A form of arrearage forgiveness or arrearage credit is provided. (6) Some other discount or rate reduction is provided (with the type of discount specified).

6-2. As of December 31 of the immediate past year, the following criteria were used to establish eligibility for participation in a low-income rate discount program, if one exists:

(1) Customer must have an annual income below a specified level (with the income or poverty level actually used specified). (2) Customer must be elderly. (3) Customer must be disabled. (4) Customer must have minimum level of arrears (with the level of arrears actually used specified). (5) Some other criteria were used to establish eligibility (with the criteria actually used specified).

Indicator #7: Low-income energy efficiency: Like rate discounts, the data on energy efficiency programs available to assist low-income consumers first measures whether a low-income energy efficiency program exists. The yes/no "toggle" exists is evident from an answer reporting that no program exists. An increase in the number of instances where no program exists indicates a degradation in service to low-income consumers. A yes/no toggle will be used, also, to measure the criteria which form the basis of the availability of a low-income energy efficiency program. It is not so important, for example, that there are 1,000 customers taking energy efficiency benefits limited to elderly homeowners. It is the fact, standing alone, that the energy efficiency program is limited to elderly homeowners in the first instance which is important. The data on energy efficiency finally measures magnitude. It is not only whether an energy efficiency program exists, but the extent to which low-income consumers participate, which is important. Two pieces of information are recommended to support this inquiry. To place constraints on the time period, data is limited to the immediate past 12 months: 7-1 The magnitude of dollar expenditures made on energy efficiency programs targeted exclusively to low-income consumers,\11\ which programs offer:

(1) Exclusively "energy education" services. (2) Weatherization investments in electric/natural gas space heating systems. (3) Weatherization investments in space heating systems irrespective of fuel type. (4) Energy efficiency investments in electric/natural gas non-space-heating systems.

7-2. The following criteria were used to establish eligibility for participation in a low-income energy efficiency program, if one exists:

(1) Customer must have an annual income below a specified level (with the income or poverty level actually used specified). (2) Customer must be a homeowner. (3) Customer must have been a resident for a minimum of 12 months at his or her current address. (4) Customer must use electric/natural gas space heating. (5) Some other criteria were used (with the criteria actually used specified).

Indicator #8: Extreme weather shutoff protections: The data on the existence of extreme weather shutoff protections measures a yes/no toggle. The sought-after data measures whether a company offers shutoff protections during extreme weather. The number of customers who actually take advantage of such protections is less important. Five pieces of information are recommended to support this inquiry.

8-1. Whether the company offers protections against shutoffs during times when temperatures are, or are projected to be, below a certain level. 8-2. Whether the company offers protections against shutoffs during times when temperatures are, or are projected to be, above a certain level. 8-3. Whether the company offers protections against shutoffs during certain months of the year irrespective of the temperature (specifying the months). 8-4. Whether, in those instances in which a company offers shutoff protections during cold weather, the company is required by state regulation or statute to do so. 8-5. Whether, in those instances in which a company offers shutoff protections during hot weather, the company is required by state regulation or statute to do so.

Indicator #9: Customer service contact: Data on the ability of low-income customers to make personal contact on customer service issues measures magnitude. The data measures the extent to which low-income customers have the opportunity to transact certain types of business through designated mechanisms. A decrease in the availability of these designated mechanisms is deemed to be a degradation in service. Four pieces of information are recommended to support this inquiry.

9-1. The number of company offices where a customer may walk-in to and, in person, engage in all of the following transactions: (1) make a cash payment; (2) negotiate a deferred payment arrangement for arrears; (3) arrange a reconnection of service at the same address (e.g., after a disconnection); (4) make an application for service, along with determining and making payment of any required security deposit; and (5) make an account inquiry, including but not limited to submitting billing disputes and obtaining billing and payment histories. 9-2. Number of locations other than a company office (e.g., a bank, drug store, grocery store) where a customer may make a cash payment toward a company bill. 9-3. Whether the company provides the following services:

(1) Allows customers to make bill payments to field staff who come to disconnect service. (2) Allows customers to cash third party check at a company office and make cash payment from proceeds of check. (3) Payment or budget counselling. (4) Makes available special deferred payment arrangement terms for arrears, when the customer seeking to pay the arrears has an income below a specified level.

9-4. Fulltime equivalent staff positions per 1000 customers devoted exclusively to responding to customer-originated telephone calls relating to customer service or collection inquiries.

2. Subsidiary issue #2: What is the concept of non-divergence? A second quality of service objective might be to maintain service for low-income consumers at levels no different than service for non-low-income consumers. In these circumstances, the appropriate action is to adopt a non-divergence rule. It is not only possible, but likely, that a state will wish to adopt both a non-degradation policy and a non-divergence policy. One certainly does not preclude the other. A non-divergence policy can be implicated in several ways. On the one hand, there can be an explicit measurement of the service provided to low-income consumers. Are low-income consumers offered the equivalent payment plan opportunities for arrears? Are low-income consumers offered the equivalent billing options as non-low-income customers? Are there significantly greater delays in posting cash payments made at community pay stations than posting checks mailed to company offices? Are service calls or outage times different in low-income neighborhoods (or low-income zip codes)? The refusal to provide service is much akin to the refusal of some industries to provide the infrastructure necessary to serve a community. For example, one study of the investment practices by the Regional Bell Operating Companies (RBOCs), those holding companies which own the local Bell telephone companies, found a distinct pattern of geographic redlining in this regard. According to the United Church of Christ Office of Communications:

Over the years, the RBOCs have come to believe that households with the greatest disposable income are the most receptive and reliable customers for advanced communication services. Even when confronted with evidence to the contrary, this rule of thumb significantly influences marketing strategy. . .Despite facts that confirm the existence of market demand for advanced communication services among minority and low-income customers, RBOC test marketing and deployment plans are designed to capitalize on the high-income customer.\12\

The offer of new high technology services by the RBOCs depends in large part on the installation of appropriate infrastructure. The provision of video dialtone (VDT), for example, requires the installation of new cable. In its study of the deployment of VDT, the United Church of Christ found that:

• Bell Atlantic's Maryland VDT test trial focused on consumers with a median household income of $54,809. The percent of minorities in Montgomery County (where VDT was test marketed) is 11.6 percent compared to 25.9 percent throughout all of Maryland.
• Consumers test trialed in Falls Church, Virginia have a median income of $51,011 and are 7.5 percent minority compared to $33,328 and 19.8 percent for statewide data.
• Richardson, Texas in Southwestern Bell's region has a median income of $50,240 compared to $27,016 statewide. The percentage of minorities in Richardson is 10.7 versus 20.6 percent for the state of Texas.

In this situation, in other words, the RBOCs did not refuse to provide service altogether, but instead refused to provide the same level of service to low-income and historically Black communities.\13\ The policy of non-divergence was violated.

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\1\ Vivian Witkind Davis, et al. (1996). Telecommunications Service Quality, at 4, National Regulatory Research Institute: Columbus (OH).

\2\ Telecommunications Service Quality, supra, at 2 - 4.

\ 3\ Telecommunications Service Quality, supra, at 1, quoting, Leslie Cauley, "Baby Bells Face a Tough Balancing Act: Reputation for Service is on the Line Amid Deep Staff Cuts," Wall Street Journal, 4 January, 1996, A2.

\4\ Michael Clements (1998). Quality-of-Service and Market Implications of Asymmetric Standards in Telecommunications, iii, National Regulatory Research Institute: Columbus (OH).

\5\ Quality-of-Service and Market Implications, supra, at iii.

\6\ This is sometimes known as a "bills behind" statistic. This statistic calculates the number of average bills contained in an average arrearage. Hence, if one customer has an arrears of $400 and an average monthly bill of $200, that customer has a weighted arrears of 2.0 "bills behind." If a different customer has an arrears of $400 and an average monthly bill of $140, that customer has a weighted arrears of 2.86 bills behind. The second customer, and thus the utility serving that customer, is in more serious payment trouble. As BCS observes, use of a weighted arrears measure "permits comparisons to be drawn between companies by eliminating the effects of different customer bills on arrearages." Without such a measure, "the interpretations of average arrearages, either over time or in comparison between companies presents some difficulties." Bureau of Consumer Services, Utility Payment Problems: The Measurement and Evaluation of Responses to Customer Nonpayment, Pennsylvania Public Utility Commission:Harrisburg, PA (October 1983).

\7\ In Re. Central Maine Power Company Proposed Increase in Rates, Docket No. 90-076, Decision and Order (May 15, 1991).

\8\ How to Construct a Service Quality Index, supra, at 49.

\9\ Id.

\10\ The initial inquiry involved an attempt to define services that were used exclusively or predominantly by low-income consumers. An electric utility, however, generally has no idea of the income of persons using their various service processes. The inquiry must therefore be: "what services are used sufficiently frequently by low-income consumers to be of particular importance to the low-income community?"

\11\ This would include any component of a general residential program involving funds set aside or earmarked for low-income consumers.

\12\ In Re.: A Notice of Inquiry Concerning Universal Service and Open Access, Comments of the Office of the Office of Communications, United Church of Christ, at 4, 6, in National Telecommunications and Information Administration Docket No. 940955-4255 (December 14, 1994).

\13\ The significance goes beyond the mere illustrations cited here. The redlining found by the United Church of Christ did not involve isolated incidents. Indeed, the United Church of Christ investigation found that in only two of the ten market trials of video dialtone did the characteristics of the communities resemble the household income and racial composition of consumers statewide. Id., at 6. The investigation also looked, for example, at the Ameritech deployment of video dialtone in 28 Illinois communities. ". . .of the 28 municipalities that Ameritech proposes to serve in Illinois. . .over 90 percent of them significantly exceed the median household income of the state. . .Racial minorities account for less than the state average in 22 of the 28 municipalities. . .In many instances, the proposed deployment area exactly borders communities with high concentrations of low-income and/or minority people." Id., at 9.