Utility to pay up when it goofs up

Pepco and Conectiv pledge good service after their merger

May 12, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

The 1.8 million customers of a merged Potomac Electric Power Co. and Conectiv Inc. can expect fast and reliable service - or get paid for the aggravation.

The merger, which is expected to be completed in 12 months, will create the largest electricity-delivery company in the mid-Atlantic region. To reassure state and federal regulators that the newly merged company will have a commitment to good service, the companies are proposing four guarantees to customers in Maryland, Delaware, New Jersey, the District of Columbia and Virginia:

Get $25 if a utility worker doesn't show up for an appointment within the promised four-hour window.

Get $50 if power isn't restored within 24 hours after a routine, nonmajor storm outage.

Get $100 if you qualified as a new customer and service isn't installed within 10 days.

And get $5 just for having to deal with the headaches of an inaccurate bill.

"We want to reassure the relevant regulatory agencies of our continuing commitment to customer service and reliable service, and that won't change after the merger," said Kirk Emge, vice president of legal services for Pepco. "We believe we can offer these services in an even better way after we combine forces. Of course, our goal is not to pay out because under those standards, we believe customer service will be achieved 100 percent of the time.

"But if we're less than perfect, we're willing to pay for it."

The proposed guarantees were outlined in filings yesterday with five state commissions. The companies are also expected to file Monday with the Federal Energy Regulatory Commission.

Washington-based Pepco announced in February that it agreed to acquire Conectiv, a Delaware power and telecommunications company, for $2.2 billion in cash and stock.

In the transaction, which will create a new holding company that has yet to be named, Pepco will pay Conectiv stockholders $25 a share in cash or stock. Pepco stockholders will receive one share of the holding company for each share of Pepco stock they hold.

The merger is awaiting regulatory approvals and a vote by shareholders, which is expected to take place at meetings July 17 for Conectiv and July 18 for Pepco.

"The merger of Pepco and Conectiv will allow the companies to provide enhanced levels of service to our customers that neither could achieve separately," said Howard E. Cosgrove, Conectiv's chairman and chief executive who is expected to retire after the merger.

"These service guarantees are one benefit of combining two strong regional allies and underscore our commitment to customer service and reliability." Cosgrove said.

The companies are proposing several other service guarantees that will measure annual performance in key areas such as call center assistance and the frequency and length of power outages. These guarantees will be backed up by reports to regulators, company officials said.

If approved, the program will take time to implement, company officials said.

Guarantees based on specific customer interactions will take effect 90 days after the merger closes.

Annual commitments, such as the measure of how often outages happen and how long they last, will take effect after the merger closing and one year after the company enhances their outage-management systems. The guarantees will not apply during major storms, company officials said, and other limitations and exclusions may apply.

The companies have asked that the commissions review the guarantees in 2005 for possible changes.

Shares of Pepco rose 11 cents on the New York Stock Exchange yesterday to close at $22.05. Conectiv shares dropped 4 cents to $21.97.

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