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Managing Credit and Collections to Increase Customer Satisfaction
Interview with Daniel Murray, Vice President of Customer Affairs at Philadelphia Gas Works
Dan Murray, Vice President of Customer Affairs at Philadelphia Gas Works (PGW), is an executive with over fourteen years of extensive Utility industry knowledge and a successful track record in developing, managing, and delivering high quality business process, operational strategy, and business integration solutions for mid-sized and large Utility organizations. He has proven success in achieving both operational and financial performance improvements in the areas of customer service, billing, collections, operations, and finance.
Mr. Murray answered a series of questions written by marcus evans before the upcoming 3rd Annual Utility Customer Experience Management Conference, February 8-10, 2012 at the Hotel Contessa in San Antonio, TX. All responses represent the view of Mr. Murray and not necessarily those of Philadelphia Gas Works. (Note that the responses have been approved by Philadelphia Gas Works.)
What types of payment options does Philadelphia Gas Works offer to low-income customers?
DM: PGW offers traditional payment options to all of its customers, including the ability to pay online, in person, over the phone, and by direct debit. From a payment program perspective, PGW offers budget billing, payment arrangements, and third party notification. PGW also offers programs specifically tailored for our low-income customers. PGW’s Customer Responsibility Program (“CRP”) helps low-income residential customers who have household income at or below 150 percent of the Federal Poverty Level (“FPL”) to afford and maintain their gas service. Applicants must provide proof of income and social security cards for everyone in the household. Participants receive a discounted bill based on their gross household income. There are three agreement types:
PGW Annual Bill Household Income
8% of income
9% of income
10% of income
The minimum payment under a CRP agreement is $25 per month. Customers with pre-program arrears must pay a $5 monthly co-payment toward the arrears, in addition to their monthly CRP budget amount. If they pay their bill on time, PGW provides forgiveness of pre-program arrears in the amount of 1/36th per month. PGW also participates in or partially funds other assistance programs that are intended to help low income customers pay their bills.
The Federally funded Low Income Home Energy Assistance Program (“LIHEAP”) provides grants to households to ensure continued utility service. PGW’s low-income residential gas consumers may apply for assistance through the Pennsylvania Department of Public Welfare. PGW district offices and many community organizations throughout Philadelphia offer assistance with the application process. The LIHEAP program consists of two grant components: Cash and CRISIS grants. The main difference between the two grant types is that CRISIS grants are offered only to eligible customers whose utility service is off or in danger of termination. Awarded grants are paid directly to PGW for crediting to the customer’s account.
PGW supports a Vendor Payment Program for a group of customers known as Scattered Site Tenants of the Philadelphia Housing Authority (PHA). The customers occupy dwellings, usually single family homes owned by the PHA, for which the Federal Government provides rent and utility subsidies. Under agreement with the PHA and the Scattered Site Tenants, the tenant’s monthly utility allowance is paid by PHA directly to PGW on behalf of the tenant.
Lastly, PGW participates in the Utility Emergency Services Fund (“UESF”), which is a private fuel fund set up with the assistance of PGW, the City of Philadelphia, the City’s Water Department, the local electric company, individual contributions, and private foundations. Under this program, customers at or below 175 percent of the FPL may combine a LIHEAP grant with a UESF grant, which PGW matches, and their own payment if necessary to pay off all arrearages and avoid termination or restore service.
With the downturn of the economy, what has been your greatest struggle with customer billing activity?
DM: The greatest challenge has been maintaining our collection rate. Obviously the state of the economy directly impacts our customers’ ability to pay.
What initiatives has Philadelphia Gas Works taken to identify customers' payment patterns? What are some strategies that you have developed or implemented to help with this?
DM: PGW has implemented a risk based collections strategy, which assigns all customers a score that is calculated using historical PGW payment information. This initiative has allowed PGW to increase the efficiency and effectiveness of our collection event timeline, by using a risk score to determine the probable impact of a collection action. PGW has experienced a reduction in operational costs, a decrease in customer delinquency, an increase in the collection rate, an increased ability to forecast payment projections, and an increase in customer satisfaction.
Are there any technologies that you have utilized to help forecast these patterns?
DM: PGW utilizes a third party to calculate the risk-based scores described above based on the customers’ PGW payment history.
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