(PG&E-5)
PACIFIC GAS AND ELECTRIC COMPANY
CHAPTER 7
Billing, revenue, and records
A. Introduction
1. Scope and Purpose
The purpose of this chapter is to demonstrate that Pacific Gas and Electric Company’s (PG&E or the Company) expense and capital expenditure forecasts for its Billing, Revenue, and Records (BR&R) programs are reasonable and should be adopted by the California Public Utilities Commission (CPUC or Commission). The BR&R activities described in this chapter include the issuance of customer bills, maintenance of customer account information, payment processing and revenue reporting. In 2004, PG&E issued over 66 million customer bills and 10million late payment notices.
Commission adoption of forecasted BR&R expense and capital expenditures is necessary to continue to provide accurate, timely and efficient service to customers in 2007.
2. Summary of Dollar Request
PG&E requests that the Commission adopt its 2007 expense forecast of $92.1million for BR&R programs.[[1]] This request is less than 3percent higher than recorded adjusted BR&R expenses of $89.8million in 2004, which reflects that BR&R is generally able to offset labor and non-labor escalation and other cost increases with technology advancements and process improvements. PG&E further requests that the Commission approve the 2004 recorded capital expenditures for BR&R of $0.1million and adopt the 2005 through 2007 forecast capital expenditures of $6.7million to replace billing-related equipment.
3. Support for Request
PG&E’s expense and capital expenditure forecasts are reasonable and fully justified because BR&R:
· Continues efficient operations management;
· Complies with all regulatory and legislative mandates;
· Seizes opportunities to implement process improvements and automation to control expenses and improve overall performance; and
· Anticipates a 6 percent increase in 2006 postage expenses.
4. Organization of Remainder of This Chapter
The remainder of this chapter is organized as follows:
· Program Management Process;
· Estimating Method;
· Activities and Costs by Major Work Category (MWC);
· Translation of Program Expenses to Federal Energy Regulatory Commission (FERC) Accounts; and
· Cost Tables.
In addition, Appendix 7A to this chapter provides a report on various commitments made by PG&E in the area of billing, revenue and records in the 2003 GRC (D.04-05-055) and other regulatory proceedings.
B. Program Management Process
PG&E manages its BR&R programs—both expense and capital expenditures—using a centralized program approach administered by an individual program manager. This program manager is responsible for activities reflected in threeexpense MWCs and twocapital MWCs. Nearly 600employees perform work in these MWCs (see Table 7-1).
Table 7-1
pacific gas and electric company
BR&R Program Employees – 2004
1 / Bill Print, Mail and Payment Processing / DA/DB / 121
2 / Records / FT / 246
3 / Billing / DA / 123
4 / Revenue Control / DA / 24
5 / Business Systems and Application Requirements / DA / 57
6 / Directors Office / DA / 2
7 / Total / 573
The programs in BR&R include a wide variety of activities, such as:
· Calculating, producing and mailing customer bills;
· Billing of direct access customers for energy service providers (ESPs);
· Receiving and processing customer payments;
· Reporting revenue and paying utility user taxes and franchise fees;
· Maintaining customer billing records; and
· Planning and analyzing system business requirements that support billing and payment activities described above.
All of these activities are discussed below by MWC.
Table72 displays the MWCs that are managed under the BR&R Program. At the end of this chapter, Table76 shows the 2004 recorded capital expenditures and 2007 forecasted capital expenditures for MWCs80, 87 and 88. Table 7-7 shows the 2004 recorded expenses and 2007 forecasted expenses for BR&R MWCs.
Table 7-2
Pacific Gas and Electric Company
Billing, Revenue, and Records
major work categories
MWC /
Title
1 / Expense MWCs
2 / DA / Process Customer Bills
3 / DB / Receive and Assure Revenue
4 / FT / Customer Services Office Transactions
5 / Capital MWCs
6 / 80 / Computer Network Facilities
7 / 87 / Office Equipment
8 / 88 / Office Furniture
1. Program Activities
a. Process Customer Bills (MWCDA)
(1) General Activities
Within MWCDA there are fourmajor activities: (1)printing and mailing customer bills that have been calculated in PG&E’s main customer information system (known as CorDaptix, CDx, or the Customer Care and Billing (CC&B) system); (2)calculating complex customer bills via the Advanced Billing System(ABS); (3) reporting revenue and managing cash and tax/franchise payments; and (4)analyzing and planning future billing business system requirements.
(a) Bill Printing and Mailing
PG&E’s Bill Print, Mail and Payment Processing(BPM&PP) Center, located in WestSacramento, prints and mails customer bills and credit notices, prints checks (payroll, accounts payable, and customer refunds), and prints and distributes performance and control reports such as lists of customers not billed, meters with zero usage, and accounts needing rate analysis.
In 2004, the center processed 66.6million customer bills (264,347per day) and issued 10.2million late payment notices (40,329per day), which notify customers that their accounts are delinquent.
(b) Calculating Complex Bills
The Billing section of the BR&R department is responsible for calculating bills for customers taking service under complex rate schedules and non-energy related services. The Billing section includes the following groups:
Technical Support Group: A Technical Support group maintains the ABS, which calculates bills for customers with non-standard metering (e.g., interval) or complex rates schedules (e.g., E-19 and E-20 Non-Firm, E-NET, Standby, and noncore gas rate schedules).
Industrial Power Billing Groups: The Electric Industrial Power Billing group is responsible for managing electric bills (using the ABS) for: (1)PG&E’s largest full-service electric customers (SchedulesE19 and E20); (2) direct access electric customers taking service under PG&E’s consolidated bill service for energy service providers; and (3) full-service electric customers on specialized tariffs (including Non-Firm, Standby, E-NET, E9, EBIO, Departed Load, Critical Peak Pricing, and Community Choice Aggregation). The Gas Industrial Power Billing group is responsible for managing gas bills for PG&E’s noncore gas customers. Additionally, within the Gas Industrial Power Billing group, there is a group that manages PG&E’s Electronic Data Interchange (EDI) process, which replaces bill printing and mailing with electronic transactions.
The following table summarizes customers and revenues billed via the Industrial Power Billing groups:
Table 7-3
pacific gas and electric company
Billing Section Customers and Revenues Billed – 2004
1 / Electric Industrial Power / 17,542 / $2.0 billion
2 / Gas Industrial Power / 2,246 / 0.4 billion
3 / Total / 19,788 / $2.4 billion
Non-Energy Billing (NEB) group: The NEB group is responsible for billing charges not directly related to the sale or delivery of electricity and gas service. These services include third-party damage claims (vehicle or facility damage), special facilities charges (per Rule 2, Section I), rentals, leases, and non-energy related ESP service fees. In 2004, the nonenergy group issued 80,926bills and collected $469million.
(c) Reporting Revenue, Managing Cash and Computing Tax/Franchise Fee Payments
The Revenue Control and Statistical Reporting section includes threeunits: Revenue Reporting, Cash, and Taxes and Fees/Customer Refunds.
Revenue Reporting Unit: The Revenue Reporting unit is responsible for the balancing of approximately $1.0billion per month of revenues, cash, and sundry adjustments and the calculation of certain accounts receivable reserves. This unit is also responsible for calculating daily remittances to the Department of Water Resources (DWR). It also supports the monthly revenue closing process by providing revenue data to PG&E’s Corporate Accounting Department and other internal departments.
The unit generates and distributes monthly billed revenue reports to the U.S. Department of Energy, the CPUC, the California Energy Commission (CEC), the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and to city and county governments. In 2004, the Revenue Reporting unit produced and delivered 37revenue and statistical reports to assist in compliance requirements by internal PG&E departments. Finally, the unit develops and distributes eight annual financial and sales reports to various city and county governments and to regulatory agencies.
Cash Unit: The Cash unit is responsible for the cash account reconciliation for the Company’s four primary customer depository cash accounts. Through these accounts, the Company collects approximately $1.0 billion per month.
Taxes, Fees/Customer Refund Unit: The Taxes, Fees/Customer Refund unit calculates and remits approximately $200 million in annual utility users taxes to 69city and county governments (paid in monthly installments) and approximately $125 million in annual franchise fees to 279city and county governments. This unit is also responsible for monitoring and reconciling the customer refund liability general ledger account.
(d) Analyzing and Planning Billing Business Systems and Application Requirements
The Business Systems and Application Requirements (BSAR) Department assesses various legislative and regulatory changes on the measurement, billing, and payment process. BSAR also supports CDx and revenue reporting system development and maintenance, the teleprocessing system(TP), the OnLine Billing History System(OLBH), the Automated Rate Analysis Program(ARAP), the Balanced Payment Plan (BPP), the Automated Payment Service (APS), and the Medical Baseline Program. The BSAR Department verifies the accuracy of rates in the billing system, ensuring that rates match the approved tariffs whenever rate changes occur; provides quality assurance; and provides bill design expertise.
(2) Service and Process Improvements
(a) Improved Efficiencies
PG&E’s efficiency at the West Sacramento Bill Print, Mail and Payment Processing Center is improving. Although there was a small decrease in efficiency during 2003 during the stabilization period after the roll-out of CDx in late 2002, the numbers of bills processed per FTE are well above 2002 levels. This performance is shown in Table 7-4 below.
Table 7-4
Pacific Gas and Electric Company
Bills Processed PER FTE PER MONTH
1 / Bills processed per FTE per month / 226,803 / 203,309 / 246,012
The improvements in 2004 were partly attributable to PG&E’s installation of a replacement print server that uses Hewlett-Packard hardware and software. This replacement was necessary because the original server system was out-dated and no longer supported by its vendor. The replacement print server allows faster downloads of data and provides backup in the event of a network failure. This new server was fully operational in July 2004.
(b) Bill Redesign
In 2007, with Commission approval, PG&E will implement a redesigned customer bill. The objective of the bill redesign effort is: (1)to examine customers’ current comprehension of their monthly bill; and (2)to incorporate customer feedback on what information will best meet their energy management needs.
In 2004, PG&E conducted several focus groups among residential, commercial, agricultural, and large business customers to obtain qualitative customer feedback and recommendations regarding the energy statement.
Customers indicate that the energy statement is confusing, hard to understand, and does not provide useful energy consumption information. The key findings from the surveys identified several recommendations below:
Residential customers prefer: a one-page bill; a tear-off payment stub at the bottom; summary information on the front page in a column or “box” as well as detailed information, if possible; graphs of 12 (or 13) months’ usage for both gas and electricity; useful, brief messages (e.g., alerts regarding rate changes, rebates, saving money); explanation of key utility terms such as baseline, therm multiplier, and tiers; and “customer-friendly” descriptions of the items on the back of bill.
Mid-sized, large and agricultural customers prefer: a bill on 8-1/2 X 11” sized paper with a stub on the bottom to increase ease of bill storage and filing; a business-sized return envelope to accommodate larger checks; special account representative business contact telephone numbers on the front of the bill; line-item calculations for fixed charges (e.g., meter, customer); graphs of 12 (or 13)months’ usage for both gas and electricity; additional summarized information to help them manage multiple accounts, if the customer had service at multiple premises; and “customer-friendly” descriptions of the items on the back of bill.
Based on such customer feedback, PG&E will develop new bill prototypes that will undergo further customer review in 2005 and 2006 before implementation efforts of a redesigned bill commence.
b. Receive and Assure Revenue (MWCDB)
(1) General Activities
Approximately 62 percent of PG&E’s customers mail payments to the Company. Activities falling under this MWC include: (1)removing the payments from envelopes and preparing bank deposits; (2)applying payments to individual customer accounts; (3)researching and responding to payment inquiries; and (4)reconciling payments deposited with amounts credited to customers’ accounts.
In 2004, PG&E processed 37 million payments by mail representing $8.6 billion in incoming revenue, a daily average of more than $34.0 million. Currently, PG&E deposits 99.6percent of these customer payments within 24hours of receipt and posts payments to these customers’ accounts within 48hours of receipt.
(2) Service and Process Improvements
PG&E continues to create new and convenient options for customers to pay their monthly bills. Although a majority of PG&E customers pay with checks via the U.S. Postal Service, PG&E offers a broad range of convenient payment alternatives. The following table shows the variety of customer payment options that are available to meet customers’ differing preferences:
Table 7-5
Pacific gas and Electric company
2004 Customer Payment OpTions
(000s) / Customer Use (%) / Amount Collected
(000s)
1 / US Mail (PPC) / Payments mailed by customer. / 37,214 / 62.20 / $8,638,665
2 / Local Office Front Counters / Payments made at local office front counters. / 5,267 / 8.80 / 1,950,120
3 / Pay Stations / Payments received at authorized retail locations throughout PG&E service territory. / 5,110 / 8.50 / 696,330
4 / APS / Automatic Payment Service-Payments deducted from customer checking account automatically. / 4,326 / 7.20 / 511,643
5 / EDI / Electronic Data Interchange-bank to bank payment type used by business customers. / 654 / 1.10 / 554,606
6 / Pay-By-Phone / Payments made by phone through Call Center utilizing debit card. / 501 / 0.80 / 88,428
7 / Wire Transfer / Money wired by large customer to PG&E bank account followed by account listing of payment detail. / 1 / >0.01 / 27,692
8 / ACH / Automated Clearing House-Money wired by customer to PG&E bank account followed by account listing of payment detail. / 19 / 0.03 / 552,808
9 / E-Bill (12month projection) / Payments made by personal computer via internet directly to PGE.COM. / 1,170 / 2.00 / 135,528
10 / Home Banking / Payments made by personal computer through customer's internet provider. / 5,587 / 9.30 / 637,341
11 / Total / 59,851 / 100.00% / $13,793,160
While E-Bill payment processing costs are slightly higher than processing payments arriving via U.S. Mail, customers who choose EBill service have opted for paperless billing. Consequently, the overall cost of providing this service is less expensive than other options.