Improving Operational Efficiency

1. Improving Operational Efficiency While Improving Customer Satisfaction April 2013 Joseph A. Forline Vice President, Customer Solutions

2. Public Service Electric & Gas PSE&G is the largest electric and gas distribution and transmission utility company in New Jersey Weather normalized - estimated annual growth per year over forecast period. ** Transmission Load Growth CAGR utilizes 2007 as base year. *** Specific projects approved for incentive rate treatment with additional ROE.

3. Utility Customer Service • How do you deliver significant cost savings in your Meter To Cash Process? • What is the magnitude of Cost Savings you can Achieve? • Can it be done without impacting Customer Satisfaction?

4. The $30M Challenge in 2009 / 2010 Internal benchmarks indicated a $10 cost per adjusted customer gap PSE&G High Customer Operations $39M-$43M Mark outs $3M-$5M Confidence Level Electric System Maintenance $25M-$32M Low 4th 1st Cost Performance Quartile

5. How to Achieve this Challenge? • Drill down into high level benchmarks • Understand cost drivers and cost gaps at a more granular level • Assemble best practices by process • Identify opportunities in the organization’s design • Evaluate opportunities for Business Process Outsourcing • Look at Union Negotiations • Analyze Customer Impact of Each Activity • Develop Multi-Year Action Plan and Adjust

6. Cost Competitiveness Improved Customer Operations O&M/Adjusted Customer 2010 Top Quartile 2011 Actual 2012 Forecast 2016 Projected Top Quartile 2016 Plan 2007 Actual

7. Recommendations out of the Deep Dive • Walk in Center Restructuring: staffing and the use of technology such as payment kiosks • Call Center: align hours of operation with call volumes • Meter Reading Productivity: rerouting technologies and full 8 hour workday • Meter Service Integration: working more efficiently when multiple parts of the organization touch the meter • Account Management: efficiency gains through consolidation of organizations and the level of support provided to business customers • Staffing Strategies: effective use of external resources needed to meet seasonal workload peaks • Negotiations: align work rules and pay structure with competitive benchmarks • Workload Reduction: use Lean Six Sigma to identify opportunities

8. Accelerate the Use of Technology

9. While Benchmark Gaps Closed

10. Impact on Satisfaction

11. PSE&G uses various listening posts to monitor satisfaction Perception Impact Modeling/Tracking JD Power Residential and Business Studies Customer Perception (CPI) Escalated Inquiries Moment of Truth Transaction Surveys Internal Metrics External Factors

12. Statistical modeling is used to build the mathematical relationships among the factors. Business Drivers a Appliance Service Offerings Sub-Drivers EF • Offering WorryFree appliance repair contracts Field Work Communications b Field Service Satisfaction • Keeping customers informed about planned work on and around their property Key Customer Drivers CDEF • Satisfaction with the entire field service contact or potential field service contact Goals and Outcomes b Telephone Satisfaction c A Telephone Access Electric Costs • Satisfaction with most recent or potential call to PSE&G EF • Being easy to reach by phone • Reasonableness of electric costs • Keeping electric rates as low as possible Value d Outage Access and Information cd • Value of electricity -- product • Value of natural gas -- product • Customer service value • Value of community involvement B Natural Gas Costs • Provide accurate estimates of power restoration • Being accessible during an outage situation Meter Reading • Reasonableness of natural gas costs • Keeping natural gas rates as low as possible CEF • Sat. with meter reading service • Reading your meter every month • Providing accurate estimates when your meter is not read Electric Service Interruptions e Electric Delivery C h • Keeping momentary outages to a min. • Keeping longer outages to a min. CE • Providing reliable electric service • Power quality • Restoring power in a timely manner Customer Communications Customer Perception Index • Keeping you informed about how to read and understand information on the energy bills • Keeping you informed about ways that you can control your energy costs • Communicating improvements that they make in order to provide better customer service f Dist. System Maintenance D • Making sure power lines and poles are well- maintained C Natural Gas Delivery • Overall satisfaction with PSE&G • PSE&G compared to the ideal utility company • PSE&G meeting expectations • Providing reliable delivery of natural gas g Dist. System Safety CD • Helping customers use energy safely E Company Reputation abcdefghij • Being a good corporate citizen • Being well managed • Being a company you can trust h Billing • Having bills that are easy to understand • Providing accurate bills • Providing customers with flexible payment alternatives, such as online payments, equal monthly billing, and alter. payment plans Employee Experience • Having knowledgeable and well-trained employees • Having friendly and courteous employees • Having employees who follow through on promises to customers • Having employees who listen to customer concerns Reputation ABEF F Customer Service Reputation • Overall favorability • Being concerned and caring • Being easy to do business with • Doing things right the first time i Community Involvement E • Being committed to the local community • Helping local economies and businesses abcdefghij Residential Customer Model DSM Offerings j • Helping customers save money on their energy bills • Having programs to help customers save energy ABEF

13. Customer Perception Trend: 2005 to Present $30M in Cost Reductions Financial Crisis Hurricane Irene/ October storm Superstorm Sandy SAP Nor’easter

14. Residential Benchmarking Trend – National (page 1 of 2) Quartile Position 1st 2nd 3rd 4th