1. Multi-Sourcing Payment Options A Case Study Bill Dow Senior Project Manager Arizona Public Service October 17, 2007

2. Agenda A little about APS... Current payment programs Costs and Benefits Q & A

3. A little about APS….. Investor owned utility held by PinnacleWest Capital Corporation Covers majority of Arizona and shares the Phoenix valley with SRP Customer Base is 1,000,000+ Arizona is a semi-deregulated market

4. Technology Objectives –Provide Multiple Payment Options –Improve Customer Satisfaction –Manage Costs Deployed Options & Technologies –Web –Automated IVR phone system –Integrated C-Store kiosk network –Electronic Data Inter-exchange – EDI –Automated File Transfer Protocol –Office Cashier System –Authorized Walk-in Payment Stations –NCO Credit Card Processing

5. Payment Sources Electronic –Web site aps.com –IVR automated phone system –Integrated C-Store kiosk network –Electronic Data Inter-exchange – EDI –Automated File Transfer Protocol w/ACH Record –NCO Credit Card Processing –SurePay & AutoPay –CheckFree Walk-in –30 Local Offices –Authorized Payment Stations Central Payment Processing - Mail & Lockbox

8. How does this compare to Industry Standard? Payments by Channel: APSIndustry 2 Mail or CPP39.2%67.9% Offices10.4%12.6% Automatic Bank Debit12.2%8.6% Web Payments 1 17.5%6.9% On-line 3rd Party10.1%6.6% Walk-up Pay Stations2.6%6.4% IVR or Telephone5.1%3.9% EDI0.7% 1 Includes AutoPay, aps.com, and kiosk payment 2 Chartwell’s Guide to Bill Presentment and Payment 2007

10. Average estimated cost of customer service, by contact channel: ? How does this compare to Industry Standard?

11. Benefits to APS by Channel Electronic –Ease of use –Low cost –Availability Credit Card Processing –Customer Convenience –Lower cost to APS Walk-in –Customer Convenience Central Payment Processing – Mail –Customer Convenience –Bulk Processing

12. Customer Satisfaction Electronic - Highest level of satisfaction –Convenience and access (24X7 in most cases) Credit Card - Lowest level of satisfaction –Cost of Service –Limited Card Options Walk-in - Medium –Wait times –Locations –Get Receipts Central Payment Processing – Medium –Slow or late delivery –Check or Money Order writing –Pay all bills at one time

13. Walk-in Pay Stations and Pre-Billers The Players Walk-in: CheckFreePay IPP MoneyGram Western Union ACE Pay-O-Matic E-Money Global Express Fidelity Express Prebillers: Incomm Pre-Solutions ??

14. Walk-in Pay Stations and Pre-Billers The issues… The Prepaid and Postpaid walk-in bill payment market is very fragmented with the largest player controlling less than 13% of the market Five types of competitors in the walk-in bill payment space: –Bill payment companies –Money transfer companies –Wireless phone top-up providers (Prepaid) –Money order companies –Check cashers Prepaid bill payment market is outpacing Postpaid

15. The Players Visa Master Card NCO PayPal BillMatrix ?? Credit Card Payments:

16. Credit Card Payments The issues… –Transaction fees –Impact to other primary payment channels –Charge-back activity –Back-office support needs to manage and interface with vendors –Impact to call center –Promoting this payment option to customers –Regulatory involvement (are costs recoverable; is it viewed as subsidization) –Payment due dates --- i.e. shorten the number of days to improve days sales outstanding (DSO) –In-house versus third-party biller –??

17. Kiosks and Kiosk Networks The Players TIONetworks EPOS ChoicePay IPP ??

18. Kiosks and Kiosk Networks The issues… –Payment Methods (Cash, Check, Credit/Debit Card) –Costs Customer paid vs. Company incurred Per payment method vs. single fee –Other payment options available –Real-time, batch, or combination –Charge back processes & costs –Regulatory involvement –??

19. Q & A

20. Bill Dow IS Sr Project Manager 602-250-2110 William.dow@aps.com