VICE PRESIDENT-LIPA TRANSITION
PUBLIC SERVICE ENTERPRISE GROUP
PUBLIC HEARING ON
THE FUTURE OF LIPA
THE COMMITTEE ON INVESTIGATIONS AND GOVERNMENT OPERATIONS
THE COMMITTEE ON CORPORATIONS, AUTHORITIES, AND COMMISSIONS
NEW YORK STATE SENATE
FEBRUARY 27, 2013
Good Morning. My name is David Daly, Vice President – LIPA Transition for PSEG Long Island LLC, a Public Service Enterprise Group Incorporated (PSEG) company. I want to thank Chairs Marcellino and Ranzenhofer, and Committee members for the opportunity to appear before you this morning. I am the lead executive responsible for managing PSEG Long Island’s Transition and Operations Services Agreements with the Long Island Power Authority (LIPA). As you may be aware, PSEG Long Island is scheduled to assume management of LIPA’s electric transmission and distribution system on January 1, 2014. In the time allotted, I’d like to provide some background on my company our core competencies, and how we plan to deliver high levels of service and improve customer satisfaction for Long Island’s 1.1 million electric consumers.
PSEG is one of the nation’s largest energy companies and we’re also a neighbor. We own Public Service Electric and Gas Company (PSE&G), New Jersey’s oldest and largest electric and gas utility company. PSE&G serves 2.2 million electric customers and 1.8 million gas customers in a 2,600 square mile service territory similar to Long Island. We joined New York’s business community in 1999 when our electric generation business, PSEG Power, acquired the Albany Steam Station, an aging 450-megawatt electric generating plant located just south of Albany in Bethlehem, NY, and transformed the facility into the state-of-art BethlehemEnergyCenter. In the process, we doubled the site’s electric generating capacity while making dramatic reductions in air and water environmental impacts. We’d be happy to have you visit this facility here in the Capital District.
In total, PSEG has approximately $29 billion in assets and we employ almost 10,000 men and women. About two-thirds of our employees are represented by unions and we are proud of our strong relationships with the unions representing our employees. We own about 13,000 megawatts of generating capacity and we’re industry leaders in promoting and investing in energy efficiency and renewable energy.
What may be of particular importance to Long Island residents is that our work has gained considerable recognition by national, independent organizations for electric system reliability, storm response, and customer satisfaction. We’ve been cited as America’s most reliable electric utility five out of the last eight years and the most reliable in the Mid-Atlantic region for 11 consecutive years. The Edison Electric Institute, the industry’s national trade association, cited PSE&G for outstanding work restoring service after Hurricane Irene and Super Storm Sandy, and JD Power Associates recently ranked PSE&G second in the eastern U.S. region for residential customer satisfaction. It is this track record and the experience and expertise associated with it that we intend to bring to Long Island.
Most of PSEG’s assets and investments are focused in the Northeast and Mid-Atlantic. We consider New York part of our core market for business growth and investment and we viewed the opportunity to compete for the LIPA Operations Services Agreement in this context.
As you may know, LIPA selected PSEG Long island in December, 2011 after a two-year, competitive procurement process, to manage its electric transmission and distribution system and provide customer services, for a 10-year period beginning on Jan. 1, 2014. Both the Operations Services Agreement and the Transition Services Agreement have been approved by the New York State Attorney General and the State Comptroller. We’ve been working diligently on the transition for more than a year.
Importantly, the Operations Services Agreement is structured in a way that aligns LIPA’s and PSEG Long Island’s interests. We will receive a flat fee for providing the management services, with a potential to earn financial incentives keyed to achieving significant improvements in customer satisfaction and other performance metrics. For example, there are incentives in the contract – and our plan is to achieve – a first-quartile customer satisfaction ranking within five years. Also, any cost savings and efficiencies that are achieved in the process will flow through to Long Island customers. In short, our success will be closely linked to our ability to improve the customer experience.
PSEG has created PSEG Long Island as a separate subsidiary dedicated to managing its Long Island responsibilities. This subsidiary, its management team, and the assets required to manage operations will be located on Long Island, an arrangement that will increase transparency and focus attention on the needs of Long Island’s electric customers. It is also our intention to incorporate the current workforce into our Long Island operations. Our management team will live on Long Island and will be visible and available. PSEG and its family of companies have a long history of involvement with the community and community service and this will be a core value of our Long Island business.
As noted, we bring to this task an established record of performance, reliability, and customer satisfaction. We’ve been hard at work in the transition and we think we understand the challenges. We’ve identified specific areas for improvement and we are developing the plans and processes to address them. We will be ready to make a difference on Day One. In consultation with LIPA and subject to its approval, we’ll implement:
- Improvements in Customer Service and Customer Satisfaction:
- New call center and state-of-the-art customer-facing technologies
- Enhanced customer and stakeholder communications using multiple channels of communications and all available media technologies
- Best-in-class customer service Quality Assurance and Quality Control (QA/QC) processes
- Proven storm restoration processes:
- State-of-the-art outage management technology
- Enhanced storm planning and a management structure that better consolidates and coordinates outage management and storm response
- Logistical plans necessary to make the most efficient use of outside work crews and marshal the equipment and resources necessary for responding to a major storm
- Best industry practices in transmission and distribution (T&D) electric system maintenance and operations
- Data-driven analytical tools, including lean six sigma and a balanced scorecard process, to optimize T&D asset management
In the area of customer operations, we’re implementing over 80 recommendations to improve service and customer satisfaction. LIPA has approved our recommendation to replace the existing call center Interactive Voice and Response (IVR) system and we’ve mapped plans for replacing the current Customer Information System (CIS) and for implementing a new Enterprise Resource Planning (ERP) system.
We’ve also proposed a new Outage Management System (OMS) that will more quickly and accurately assess and locate system damage, direct work crews, and provide critical information on status of repairs.
Our experience in New Jersey during Super Storm Sandy provides some guidance on how technology, processes, and planning come together to benefit customers:
Sandy knocked out electric service to almost 2 million of our utility‘s 2.2 million electric customers. About a third of our system’s major switching stations and 40% of our substations were affected, many by significant flooding. And about 33% of our transmission circuits were damaged.
About 1,000 out-of-state workers arrived in New Jersey in advance of the storm and that number grew to more than 4,500 during the restoration effort. We were able to make sure that all of these workers were housed, fed, and their vehicles had fuel. These workers knew where they were going, had work orders in hand, and were able to get on the road with little wasted time. All of our workers had the material and supplies they needed. We never ran out of poles, transformers, wire, or fuel.
We restored electric service to more than one million customers in three days. Over the two-week period that included the Nor’easter that hit on the heels of Sandy, PSE&G restored power to more than 2.1 million customers. This is more than in any storm in the history of any electric utility in the nation. We accomplished these service restorations at a cost of approximately $295 million.
And all through this process we worked diligently to provide as much and as accurate information as possible to customers, public officials, the news media, and other stakeholders. In particular:
- In advance of the storm, pre-emptive calls were made to more than 700 municipal officials to provide points of contact for use during restoration
- Daily conference calls were held that linked our electric operations divisions, regional public affairs managers, and municipal officials to provide updates on restoration planning and progress
- Ralph LaRossa, PSE&G’s president and chief operating officer, and other senior executives, held face-to-face meetings with more than 100 state legislative leaders and mayors
- Two conference calls a day were conducted with New Jersey Governor Chris Christie
- Company executives held daily news media conference calls
- Newspaper, radio, internet ads, and email blasts were used to communicate storm preparation, damage assessments, outage updates, and restoration progress
- Social media played a key role in customer communications
It is this kind of effort –planning, logistics, up-to-date technology, proven processes and procedures, analytics, and communications – bound together by a relentless focus on the customer that PSEG Long Island is bringing to the task of managing Long Island’s electric system. We think we know what needs to be done and we look forward to the opportunity to serve the people of Long Island.
Thank you and I’d be happy to respond to your questions.