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Electricity is often taken for granted, yet it is essential to quality of life. Unlike many other businesses, we have a profound responsibility to our customers to deliver our product safely, reliably and on demand, whenever and wherever it is needed.

Part of this responsibility relates to affordability. This is a concern to all customers, but especially those living in poverty and who are paying a high percentage of their disposable income for energy. In eight of our states , an average of 16 percent or more of the population lives below the poverty level. This condition is often reflected in their ability to pay their bills.

No one should have to choose between basic human necessities and electricity, but if electricity prices rise suddenly and dramatically to cover the cost of compliance with new environmental regulations – possibly as much as 35 percent – or for other reasons, some of our customers will be forced to make very difficult choices about what they can afford. We believe in the need for cleaner energy, but we also feel strongly that the associated costs need to be considered.

Many customers already need assistance paying their bills. The recession and slower-than-expected recovery have taken a toll on many individuals and businesses that were already struggling. We provided approximately $74 million in federal and private energy assistance in 2011, which was almost 2 percent less than in 2010. We also provide other types of aid. In Ohio, for example, our Neighbor-to-Neighbor Program helps customers who are behind on their bills but whose incomes disqualify them for government assistance. The funds for this program come through customer contributions as well as AEP grants.

Customer delinquency rates are a barometer of the general health of the economy. Despite the slow recovery, we are seeing fewer delinquencies. Although still higher than 2008 and 2009 levels, residential customer delinquencies decreased noticeably as of December 2011, down 9.1 percent from December 2010. For nonresidential customers, delinquent account balances declined 14.6 percent from 2010. Although there was improvement in delinquency levels, we did see an increase in the year-end balance of customer payment arrangements year after year, a trend that remains a concern for AEP. Payment agreements do not guarantee ultimate collection of payments and remain an area of focus for our credit and collections efforts.

AEP prides itself on quick, responsive and consistent customer service. Last year, our call centers received 1.5 million more customer calls than in 2010. We believe this is due to customers having difficulty paying their bills because of the slow economy; questions about higher electric rates; questions about the increased gridSMART® activities in Ohio, Oklahoma and Texas; and initial plans for competition in Ohio.

Our average speed of answer (how long it takes to answer a call) decreased by 10 seconds from 2010, while the average length of time on the phone with customers decreased by five seconds. This decrease may be directly related to the increase we saw in online customer transactions.

Assistance Provided

In 2011, more than 1.8 million customers, primarily residential, were conducting online transactions with us. We also saw a 19 percent growth in paperless billing, with approximately 515,000 residential, commercial and industrial customers receiving their bills electronically. An integrated marketing plan to encourage online transactions – including incentives, targeted emails, a systemwide bill insert, bill and envelope messaging, and new dynamic online promotions – helped us to increase these numbers. Online bill pay and electronic billing is a sweet spot for us and our customers; it is more efficient and eco-friendly and enhances customer satisfaction.

We conduct customer satisfaction surveys through third-party vendors on a quarterly basis with residential and small commercial customers and semiannually with large commercial and industrial customers. We benchmark these results relative to national peers and the results are blended into a Customer Satisfaction Benchmarking Index. At the end of 2011, we placed in the 78th percentile relative to our national peer group in overall customer satisfaction, a slight decrease compared with our 2010 results. AEP placed in the first quartile in the small commercial (84th percentile) and managed/key accounts (78th percentile) surveys, but in the second quartile in the residential (73rd percentile) survey.

Customer communications and outreach played a big role at Kentucky Power in 2011. Confronted with customer discontent about a record-cold winter and lingering negative perceptions of a 2010 rate increase, as well as major environmental investments at its Big Sandy Power Plant, the company launched a public outreach campaign to inform customers about the issues it faced. 

The company first undertook and instituted a media campaign to educate customers about increasing electricity costs, steps the company was taking to control them, and the efforts customers could take to help limit their impact. The company also implemented an outreach schedule that included open houses in each of its service districts throughout the summer. The open houses allowed customers to learn about issues in more detail, tour company facilities, discover how the company responds to power outages, ask questions about their service and/or accounts, and view electrical safety demonstrations.

In the fall, with the Big Sandy Plant environmental retrofit announcement pending, the company conducted another outreach effort to discuss what lies ahead. In the end, the goal was to be forthcoming with customers about the inseparable issues facing them and the company.

  • For more data, please see the PR section of AEP's Global Reporting Initiative G3 questionnaire.