Is the Traditional Utility-Customer Relationship Obsolete? October 2, 2011

Page 2 Who is Puget Sound Energy (PSE)?

Page 3 Who is PSE? Puget Sound Energy (PSE) was founded in 1886 PSE is a privately owned utility, providing gas and electric services to 11 counties in Western Washington PSE’s corporate headquarters are in Bellevue, Washington (a suburb of Seattle) PSE has approximately 1,000,000 electric customers and about 700,000 gas customers PSE has approximately 3,000 overworked employees

Page 4 PSE’s Mission, Values, Strategy, and Risks OUR MISSION: Serve our customers and the community by providing safe, dependable, and efficient energy solutions OUR VALUES: Work together openly Provide honest dialogue supported by analysis, different perspectives, and respectful challenge of ideas, issues, and concerns Seek the best outcomes for our customers and the community OUR STRATEGY: Serve our customers with safety, dependability, and efficiency Achieve our business objectives through continuous improvement OUR RISKS: Manage our business challenges Accept responsibility for understanding and managing our Company’s risks

Page 5 PSE Serves 11 Western Washington Counties

Page 6 Who Are PSE’s Customers?

Page 7 Household Income: Urban Areas Most Prosperous Urban Rural Urban Rural

Page 8 Household Income: Including Low-Income Residents

Page 9 Increasing Diversity Across the Region King County is Washington State’s most populous county Nearly 1/4 of King County residents do not speak English at home PSE regularly distributes customer information in nine different languages

Page 10 Residential Customers: Energy Attitudes

Page 11 The PSE-Customer Relationship

Page 12 What Do Our Customers Think of PSE? Residential and Business Customer Surveys JD Power Utility Customer Satisfaction Studies PSE 2011 Residential and Small Business Perception Survey Bourke Customer and Constituent Feedback Survey

Page 13 JD Power Customer Satisfaction Studies Keys to Improvement: Power Quality and Restoration:  Reduced outage frequency and duration  Accurate restoration times Billing and Payment:  Greater alternative payment options Communication:  Better information about outage restoration times, call-backs after outage restoration, safety, price changes, and utility plans for the future Corporate Citizenship:  Increased awareness of energy efficiency, renewable energy, environmental efforts, and community involvement

Page 14 PSE 2011 Customer Perception Survey Strengths: Customers see PSE as: Dependable Trustworthy Responsive Weaknesses: Customers see PSE as: Expensive Not highly innovative Not strongly customer focused Opportunities: Customers are interested in new services: Self-service energy monitoring and outage reporting Electric vehicles Solar

Page Bourke PSE Industrial Customer and Constituent Satisfaction Surveys “I have a customer representative that is readily available. I don’t have to call an 800 number. Jacoline Stewart is an excellent representative for PSE.” “John Campion has a great deal to do with these very high scores. He is a role model for the rest of the utility industry... “ “George Pohndorf... embodies the customer service focus that makes PSE so special.” High satisfaction, but driven by direct access to account executives unavailable to most PSE business customers:

Page 16 The Customer Engagement Strategy Connecting with the Customer

Page 17 Defining an Integrated Customer Plan What is the Integrated Customer Plan (ICP)? The ICP is a strategy for aligning customer, community, and company interests in order to achieve PSE’s Business Plan What do we want the customer service experience to be? The desired customer service experience is marked by four attributes: Clear – customers know what PSE can do for them Easy – customers get what they want simply Choices – customers have options Success – focusing on customer’s success versus PSE’s convenience The desired customer experience results in customers who: Select – cost-efficient channels Receive – a consistent, actionable message Understand – the value and benefits of having PSE as their energy service provider

Page 18 What We Learned: Key finding #1: Our customer demographics vary widely Key finding #2: We lack connection with small- and mid-size businesses Key finding #3: Customers are uncertain of the services provided by PSE Key finding #4: Customers do not see PSE as an innovative solution provider PSE’s Customer Engagement Strategy

Page Strategic Objectives: Objective #1: Closer connection to local communities Objective #2: Deeper engagement with small- and mid-size businesses Objective #3: Clear customer understanding of PSE services Objective #4: Provide customers with integrated energy solutions PSE’s Customer Engagement Strategy

Page 20 Today Customers Must Find Their Own Way Through Processes Designed for Our Needs – Not Their Needs Electric Vehicles Local Offices Subcontractors Energy Efficiency Customer Renewable Generation Field Services Claims Process Energy Advisors Mobile Access Community Relations Communication Web Access Green Power Options Customer Access Center New Customer Construction; they direct her to our... Safety Concerns This is Megan, a new PSE customer building her first house. She attempts to contact PSE...

Page 21 The Front Office and Back Office Transform the Customer Experience Web Voice In Person Electric Vehicles Local Offices Subcontractors Energy Efficiency Customer Renewable Generation Field Services Claims Process Mobile Access Communication Web Access Green Power Options Customer Access Center New Customer Construction Energy Advisors Community Support Safety Concerns

Page 22 No Customer Engagement Strategy Model Electric and Natural Gas Market Development New Products Product + Service Delivery Customer Access Center Field Services and Service Providers Community Services Business Services Marketing Communications

Page 23 ? No Customer Engagement Strategy Model Electric and Natural Gas Market Development New Products Product + Service Delivery Customer Access Center Field Services and Service Providers Community Services Business Services Marketing Communications

Page 24 Customer Engagement Strategy Model Vision & Culture – Customer Strategy Committee Continuous Improvement – Customer Working Group Leveraging – IT Investments for Customers Leveraging – Operations Services Planning Front Office Engagement Customer Energy Solutions Back Office

Page 25 Objective: Closer Community and Small Business Connections External functions aligned to meet customer demographics and density Central PSE Function-Based Alignment Local Government Major Accounts Energy Efficiency North West Community & Business Service Teams South Customer and Community-Based Alignment

Page 26 Objective: Customer Understanding of PSE Services Unified Communications, Marketing, and Research Functions PSE Function-Based Alignment Customer-Based Alignment Research Marketing Communications In Person By Voice Web + Media All Right, PSE! All right, PSE!

Page Q32011 Q Phase IPhase III Customer Strategy Committee Community & Business Service teams Unified Customer Market Strategies + Communications Customer Working Group Customer Energy Solutions Development Product analysis Support IT projects Phased Implementation Leverage IT projects for customer communication and self-service Phase IIPhase IV

Page 28 PSE’s Corporate Affairs Department

Page 29 Newly Organized Energy Efficiency Services NEW TITLE VP Customer Energy Solutions

Page 30 PSE is a Work in Progress... Who is PSE?