Pepco Best Practices Study

2 Best Practice Superior performance within an activity, regardless of industry, leadership, management, or operational approaches, or methods that lead to exceptional performance; a relative term that usually indicates innovative or interesting business practices that have been identified during a particular benchmarking study as contributing to improved performance at the leading organizations....Gregory Watson, Strategic Benchmarking, 1993

Overall Summary

4 Overall Electric T&D Performance TARGETS Cost Performance Industry Results 1st QuartileMean1998 (1997 YE)Q Expenditures per Customer$161$236$2383 Expenditures per MWh$6.80$9.70$7.052 Expenditures per Asset$0.06$0.09$0.051 O&M Expense per Customer$75$104$983 O&M Expense per MWh$2.50$4.50$2.912 O&M Expense per Asset$0.03$0.04$0.021 Capital Additions per Customer$86$130$1402 Capital Additions per MWh$3.60$5.20$4.142 Capital Additions per Asset$0.04$0.05$ (1997 YE) Pepco

5 Distribution Best Practice Summary Best Practices—1998 Industry Results (97YE) Note: Best practices were identified through presentation by companies identified as best performers Distribution Operations Outage Management System SCADA Patrol/Inspect Programs Distribution Maintenance PM System Predictive Maintenance UG Cable Testing/Replacements Vegetation Management Pole Testing/Replacement “Worst Circuit” Improvement Infrared (Thermography) “Wildlife” Mitigation  Pepco System Improvement QA Program AM/FM/GIS CADD Shared Locations Automated Design Field Computing (PENDING) Analysis Software Designer Training       Pepco            

6 Customer Service Performance Tracking – “Pepco at a Glance” 1998 (1997 YE) 1st Quartile1998 (1997 YE)Q Call Center Call Processing Time (minutes)4.02 Percentage of Call Abandoned4% Percent of Calls Answered within 30 Seconds77% Pepco % 61% Call Center FTEs per 100k Customers Calls per Agent per Day

7 Best Practices–INDUSTRY RESULTS 1998 Overall Customer Service List of Practices Telephone Center Virtually Connected 24 Hours/7 Days a Week IVR/VRU Variable Staffing Forecasting Empowerment Workflow Software (PENDING) Employee Training CIS LAN System Integrated Systems    Pepco N/A      

Call Center

9 Benchmarks–“Out of Industry” Comparisons Best Practices  Strategy: –Successful call centers play an integral part in the fulfillment of corporate mission* Highly integrated into corporate communication systems Create customer focused employees valuable to the corporation as a whole  Service: –All employees are accountable for customer satisfaction*  Technology: –The best have specific strategies for the incorporation and maintenance of technology*  Employee: –Screening and hiring is viewed as a key vehicle for effecting customer satisfaction* Training is comprehensive and integral to development of both hard and soft skills Provide consistent and meaningful opportunities for employee involvement Evaluate employees…using a multifaceted approach  Operations: –Long hours and seasonal shifts require innovations in hiring, scheduling and training* –Facilities play a role in employee and customer satisfaction* Metrics  Average speed of answer: 20 seconds**  Average talk time: 2 minutes**  Average abandoned calls: 5%**  80% customer dissatisfaction if wait exceeds 90 seconds***  Employee dissatisfaction at 80% of companies**** Sources *APQC call center survey **Purdue University ***Teleprofessionals **** Wall Street Journal 10/26/98 Call Centers

1010 *Includes talk time, processing time, wait time between calls. Call Centers Pepco Telephone Cost per Customer Call Processing Time (minutes)* Calls per FTE per Day Call Center FTEs per 100k Customers Percentage of Calls Abandoned Time to Answer Calls by Rep (second)      Call Center Best Practices 

1 Call Centers Virtually Connected (ONE CENTER) 24 Hours/7 Days a Week IVR/VRU Work Flow Software Empowerment Training Overflow Contracting (PENDING)   Pepco N/A    

1212 Pepco  After hours emergency answering 38% dispatcher  Alternatives to VRU message during outage 43% provide outage information  Call customer back during outage 31% No  Who calls customer 41% phone rep  Communication with field crews 46% telephone Telephone Answering Practices During Outages     

Technology

1414 Focus Area: Outage Management Outage Management Definition Benchmark Group Pepco Outage Management Software Development Not Reporting 7% Purchased Software 9% In-House Software 43% No Outage Management System 41% Information Available to Dispatchers from Automated Systems Work Assignment/Status37% Priority Customers Affected41% Grouping of Calls51% Circuit Devices Affected53% # of Customers Affected55%    Under Review     

1515 Focus Area: SCADA  SCADA automationAbout 50% of distribution feeder breakersAll non 4KV Circuit Feeders  Switches per circuit Average is 2.5  Future plans for controlling switchesN/AIn Place  Plans for distribution feeder automation 48% install fault indicatorsFault Indicator in place  Plans for distribution capacitor automation 22% two-way communication *Enhanced SCADA capability is being planned for transmission and substation areas of business. Benchmark Group Pepco* SCADA DEFINITION          

Vegetation Management

1717 Focus Area: Tree Trimming Best Practices PracticesBenchmark GroupPepco  Inventory treesYes, 46%No  Average number of trees managed80 per Pole MileN/A  Allocation of resources 70% Schedule Work80% Scheduled Work  Different unit costs per tree typeNo, 74%No  Contract typesTime and equipment is most prevalentLine Maint. & Quality  Contract length3 years3 years  Analysis after outagesWeather Condition, 51% Yes  Prune service lines on a scheduleNo, 62% Yes  Growth of dominant tree species Oak, 71% at 2 ft per year Oak at 2 ft per year  Top clearance objective4 feet 2 years growth  Vines included in tree related outagesYes, 66% Yes  Lines mechanically trimmed (how much)50% use mechanical trimming, No with an average of 30%  Tree trimming cyclesRural 5 years, urban 4 years2 Years  Tree removal and replacement programYes, 51% (managed by company)Yes

Distribution Maintenance

1919 *Sometimes called condition or diagnostic based maintenance Distribution Maintenance Maintenance Practices— 1998 Industry Results Preventative Maintenance Systems Predictive Maintenance UG Cable Testing / Replacement Vegetation Management Pole Testing / Replacement Resource Leveling “Worst Circuit” Improvement Pole Inspections - 10 year program Infrared of Overhead system and Padmounts Annual field regulator operational tests 2 year capacitor inspection 3 year network protector and transformer program 4 times/yr recloser operational test 5 year ground resistance testing program Yearly manhole inspection, 5 year joint inspection Twice a year sump pump inspection Yearly ROW inspections PepcoPlus Pepco deploys the following:                 

2020 Maintenance Cost—1998 Industry Results TARGETS Distribution Maintenance 1st QuartileMean1998 (1997 YE)Q Distribution Maintenance Cost Maintenance Expense per Customer$30.54$42.00$ Maintenance Expense per MWh$1.04$1.77$1.322 Pepco 1998 (1997 YE)

2121 * Anthony Smith, Reliability Centered Maintenance. Focus Area: RCM Reliability Centered Maintenance — 1998 Industry Results  The principles of RCM*: –Preserve system function –Evaluate loss of function –Prioritize the importance of failure mode –Determine if PM task is effective  Benefits described by participants: –Consistent targeted maintenance with a sound technical basis. –Decreased maintenance costs with no decrease in reliability. –Reduced maintenance intervals and buy-in by field personnel.  44% of companies have introduced RCM into substation area.  Most are in planning stages (27%); only 9% in pilot and 14% in rollout.  Obstacles include: computer systems, lack of historical data, costs/resources, data storage.  RCM system development: in house 35%, EPRI 11% Pepco Comments Pepco has looked at the EPRI model and is currently changing the work schedule so that it is based on performance. The Failure Mode does not work for Pepco due to the redundant design.