Billing and Payment

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Billing and Payment

• Allegheny Power
• Angie Toothman, Manager, Customer Billing

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Who are we?
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Who are we?

• 2,500 employees
• 56 work locations across 4 states
• 1.5 million electric customers

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Allegheny Power Service Area
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What do we do?

• Allegheny Power is the energy delivery business
  of Allegheny Energy and delivers low-cost,
  reliable electric service to about 1.5 million
  people in Maryland, Pennsylvania, Virginia and
  West Virginia.
•  

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Allegheny Power Operating Facts

• 4,535 miles of electric transmission lines
• Up to 500,000 volts
• AP owns and maintains PJM West directs
  operations
• 67,778 miles of electric sub transmission
  distribution lines
• About 33,000 new customers annually
• Load growth is about 2.0 per year
• Peak electric demand 8,824 MW
• Set Tuesday, July 26, 2005

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Billing Facts

• Monthly billing
• PA, MD
• Bi-Monthly billing
• WV, VA (except budget billing customers are
  monthly)
• Over 1 million payments processed per month

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Cash Processing Centers

• Consolidated utility operations under Allegheny
  Power name in 1996 but some separate sites
  remained
• Greensburg, PA
• Former West Penn Power HQ
• Hagerstown, MD
• Former Potomac Edison HQ

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Allegheny Cash Processing Staff-Before

• Hagerstown, MD
• Manager
• Technician
• 7 Cash Processors
• 594K payments/month

• Greensburg, PA
• Manager
• Technician
• 7 Cash Processors
• 541K payments/month

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Consolidated Cash Processing Staff-After

• Greensburg, PA
• 1 Manager
• 11 Cash Processors
• 1 Temporary employee
• Reduction 1 Manager
• 2 technicians
• 3 Cash Processors
• 1 Temporary

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Cost Savings

• Courier Service
• PO Box Rental
• Salaries
• Benefits

• Maintenance
• Wausau
• Opex
• Rental Space

Total Savings 390k per year
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Process Changes in Cash Processing

• While the consolidation resulted in significant
  changes, there are also a number of other process
  changes that have been done to provide additional
  benefits.

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Process Changes

• Consolidated number of bank relationships
• Reduced number of bank accounts
• Reduced redundant files and reports from banks
• Implemented zero balance account structure all
  accounts zeroed with remaining money placed into
  single account
• Reduced/eliminated sending daily wires to several
  different accounts
• Physical checks deposited into correct legal
  entity (it was previously deposited in West
  Penns Account and moved to other companies based
  on Accounting instructions)
• Implemented ARC (Accounts Receivable Conversion)

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ARC Implementation

• Physical checks are converted to electronic
  payments (checks are not returned to banks or
  customers)
• 83 of checks received are ARC eligible
• Customers have the right to opt out but less than
  1 have exercised this option
• Increased working capital by reducing check float
• Reduced banking fees (banks charge more for
  checks)
• Streamlined internal processes Automated
  internal out-of-balance conditions
• Deposit fees reduced
• Implemented check encoding
• Enabled Automated return check processing
  (previously was a paper/manual process)

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Other Cost Saving Initiatives

• Increase use of lower cost billing and payment
  channels
• Shift cost to consumer where higher cost options
  are selected

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Electronic Debit (PowerPay)

• Changed to a 10 day withdrawal
• 10 days after bill date, rather than on the due
  date)
• Increased customer awareness
• Bill inserts
• Bill messages
• Envelope messages
• IVR Options and messages
• CSRs required to offer to new customers
• 27 increase since 2001 (9 in 2005 alone)

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Electronic Bill Presentment Payment

• Increased customer awareness
• Much of cost sponsored by EBPP vendor
• Bill inserts
• Bill messages
• Envelope messages
• IVR Options and messages
• Increased by 25.6 in the past year

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Check/Credit/Debit by Phone

• Vendor solution, IVR and Web only
• 100 paid for by consumer fee
• 1 for checks
• 5.95 for debit and credit
• Zero cost to Allegheny Power
• Automated account activities such as
• Stopping collections activities
• Documenting account
• Notifying field of payment
• Nearly Doubled in past year to over 700,000
  payments

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Electronic Data Interchange (EDI)

• Encouraged participation through direct contact
  and via mail
• Decreased cost by eliminating the VAN and moving
  to direct FTP

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Cash processing Cost Savings

• Payment Agency Network
• Consumer fee in 3 of the 4 states we serve
• Final state (West Virginia) currently piloting a
  consumer fee
• Agencies now receive about half of the volume
  they did 6 years ago and our cost has decreased
  substantially.

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Electronic Payments Tripled Since 2001
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Conclusion

• The changes have reduced costs and improved
  convenience for customers
• Cash processing continues to be an efficient
  in-house operation and with the consolidation,
  there are no plans to outsource this function

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Questions