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Conectiv recasting its faded image Customer relations crumbled in 4 years By BILL YINGLING Staff reporter 03/13/2000

Conectiv, once well-respected by customers across the Delmarva Peninsula, has watched its public image fade in recent years.

In the four years since Delmarva Power & Light Co. said it would become Conectiv, the utility has closed walk-in customer-service centers in favor of an automated telephone system, shut off customers' power during a heat wave and installed a new computer that has churned out incorrect bills.

Complaints about the company prompted the Delaware Public Service Commission last month to open a formal case to resolve widespread problems with Conectiv's billing and customer-service operations.

The company has promised to make amends.

And while Conectiv stands alone today in selling electricity on the residential market, it could have at least 16 other competitors by Oct. 1. That leaves the company seven months to restore its relationship with customers before competition begins.

"If they have customer- service agents taking irate calls when competition begins, they've got big problems," said Jerry Alderson, president and chief executive officer of Wattage Monitor, which analyzes competition in the electricity industry.

Howard Cosgrove, Conectiv's chief executive, acknowledged that his company has not provided accurate and timely bills or effective customer service. And he understands the public outrage about his company's performance during the past three months.

"I think the public had a right to react the way they reacted," Cosgrove said in a recent interview. "It's our responsibility. We didn't do what we should have done."

Sigfrid Hellstrom of Wilmington is one of the unhappy customers.

Hellstrom traces the start of his billing problems with the utility back to 1998 after Delmarva Power & Light merged with Atlantic Energy Inc. to form Conectiv.

"It was great working with Delmarva," said Hellstrom, a retiree who complained to state regulators about Conectiv's billing and payment practices. "But right now, the whole thing is in shambles. I've never seen a company like this in my life."

The list of events that have marked the disruptions at Conectiv include:

Closing various walk-in service centers across the Delmarva Peninsula and opening a call center in Carneys Point, N.J. Cutting the annual dividend to 88 cents from $1.54 and shifting its business strategy to bulk power sales, telecommunications, Internet and unregulated services such as heating, ventilation and air conditioning. Imposing blackouts July 6 during a heat wave to keep the peninsula's electricity supply system from collapsing. The company said outages were unavoidable. Regulators said the utility cut costs during the last decade and left the peninsula vulnerable to outages. Selling power plants that produce electricity around-the-clock for the peninsula and surrendering that niche to larger companies based outside Delaware. Converting to a new computer billing system in December before fixing all of its programming flaws. In 1996, the Delmarva Power & Light Co. had a strong relationship with its customers, according to a report issued in October by the staff of the PSC.

The company had 14 district offices where customers could meet with company representatives. Five of the offices were in Delaware: downtown Wilmington, Newark, Harrington, Millsboro, and Rehoboth Beach.

But as governments prepared to introduce competition to the electric power industry, Delmarva announced its plan to merge with Atlantic Energy Inc. The change added 500,000 customers in southern New Jersey and essentially doubled the size of the company.

The companies joined to survive competition. Changes included phasing out the district offices, consolidating operations in a call center, cutting staff and introducing an automated phone system. Conectiv told regulators the changes would save the company between $12 million and $15 million through 2000.

In 1997, stockholders of Delmarva and Atlantic approved the merger. The company began focusing on other lines of business including telecommunications, heating, ventilation and air conditioning.

PSC investigators found that changes in the company had taken a toll on Conectiv's customer service by 1998. The PSC staff's report said that the company's customer care declined "fairly rapidly" in the months immediately following the commission's approval of the merger on Sept. 23, 1997.

By July 22, 1998, Conectiv's senior management set up a team to restore the quality of customer service, the PSC staff report said.

Conectiv has since struggled to improve its public image. Many customers said they will leave the utility the first chance they get.

"At this point, I really don't trust the company," said customer Dina Tartaglia of St. Georges, who claims she has been trying for three months to get an accurate and timely Conectiv bill. "I would just like to get my bills on time."

Lyncoya Simpson, a resident of Dartmouth Woods in Brandywine Hundred, said he hopes customer choice will make Conectiv more responsive.

"Competition really makes you look at things you can do more efficiently," he said. "If you're the only player in town, you can pretty much do what you want to do."

Conectiv's customer-service problems were aggravated during the July 6 blackouts. Customers said they could not reach the company by phone during the outages.

The company said it was caught off balance. It had chosen that long holiday weekend to move into its new call center in New Jersey.

The failures prompted a PSC investigation into the reliability of Conectiv's electricity supply system and into its customer-service operation.

In early December, Conectiv converted to a new computer billing system without first eliminating all of the programming flaws. Conectiv mailed thousands of inaccurate statements to customers.

Customers spent two times longer than usual on the phone -- about seven minutes -- asking questions and disputing their bills, Cosgrove said. Longer calls jammed the company's telephone lines and left many people stuck in the automated telephone system, waiting on hold.

"You've got to break through the front line to get through to somebody who will help you," said customer Nancy Huston, manager of Pebble Hill Apartments in Wilmington.

Cosgrove said by the time executives realized they needed to increase staffing to handle the problem, it was too late.

While the telephone system backed up, so did the stream of bills.

Ordinarily, Conectiv has a backlog of about 15,000 bills that it delays mailing. But during the recent computer conversion, the company built up a backlog of about 61,000 bills -- out of 1 million it sends each month -- that disrupted many customers' billing schedules.

Brian Gallagher, regulatory policy adviser in the office of the Delaware Public Advocate, said he believes Conectiv is trying to solve its problems as well as improve its image.

"They've had good customer service for a lot of years, and now people don't have that perception anymore," he said.

Cosgrove said managers are brainstorming ideas to develop a recovery plan to do more than fix problems with the computer billing and customer-service systems.

Cosgrove had a news conference apologizing for the company's failures in February. He also sent a letter to customers. The company advertised on radio, television and in the newspaper to reassure customers they're trying to solve the problems.

Cosgrove said the company's finances would not be hurt if large numbers of customers defected once competition begins because Conectiv is making money in other lines of its energy business. But he still wants to improve Conectiv's relationship with its customers.

"We're concerned when we don't have the right kind of relationship with our customers," he said. "We value the relationship."

Meryl Gardner, a business professor at the University of Delaware who specializes in consumer behavior, said it may not take much to restore customer confidence. As long as Conectiv fixes its current problems and doesn't make any more mistakes, Gardner predicted the company could rehabilitate its image.

Electricity is not like perfume or home decor, Gardner said.

"Very few people would say they love their power company," she said. "Very few people would even think about their power company until it doesn't


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