Copyright 1997, Danialle L. Weaver. All rights reserved.

The following article appeared in the July-August 1997 issue of Public Power Magazine. For copyright or reprint information, please contact the author at the address listed below.

By Danialle Weaver

In the brave new world of competitive energy and telecommunications markets, a good offense may well be the best defense many public power systems could devise against competitors intent upon luring away their choicest customers. Officials at the Kissimmee (Fla.) Utility Authority hope the most effective arrow in their quiver will be their key accounts program, designed to give the utility a better understanding of the power needs of its largest customers.

"We started the program about a year-and-a-half ago, when we realized that some of our top managers had never talked with a customer before," says Jim Welsh, KUA's President, CEO and General Manager. "We have a tremendous management team, but we were probably not unlike a lot of other utilities, in that their job functions entailed no contact with the customer. We wanted to be customer-oriented and customer-focused, and we thought it was high time for a change."

Retaining large customers "is more important than ever--and more challenging," says Chris Beck, KUA's director of customer relations, who will head up KUA's marketing efforts beginning in October.

KUA is the seventh-largest municipal utility in Florida, serving about 43,000 customers in Kissimmee, just southwest of Orlando. The area is home to many tourist attractions, including various Disney complexes, as well as Universal Studios and Sea World. For more than a century, the Kissimmee River Valley area has been the heart of Florida's billion-dollar cattle industry, the second-largest east of the Mississippi. Beck, who grew up in nearby Winter Park, says one of her favorite childhood treats was visiting the Kissimmee hardware store that had a life-sized model of a cowboy on a horse out front. "That was where the cowboys were," she remembers.

While many of those sprawling cattle ranches remain, a great number have disappeared. The Kissimmee area is experiencing a frenzied construction boom, as the remaining undeveloped areas of Osceola County become sites for new housing communities, hotels and public buildings. Not surprisingly, KUA's likeliest competitors for that load are neighbors--the Orlando Utilities Commission and Florida Power Corp. Even low-cost north Florida utilities, such as Southern Company's Gulf Power Corp., are potential threats. Power marketers are not, however, because Florida is a peninsula and electricity imports "will be limited until more transmission lines are constructed across the state line," Beck says.

The Florida Municipal Electric Association estimates retail competition will not occur in Florida's commercial and industrial energy sectors until 2001. KUA opted not to wait until then to begin protecting its non-residential customers, which accounted for about 47 percent of the authority's $68 million in revenues in fiscal 1996.

In a competitive environment, "the loss of a few key accounts can lead to a 'death spiral,' in which the fixed costs of the utility must be paid for by a decreasing number of consumers, driving prices up and forcing more customers out of our service territory," explains Beck, who celebrated 10 years at KUA in January 1997. "We began to realize the need and importance of getting to know all of our customers better and understanding their energy needs."

The concept for the program was developed in November 1995. Underlying it are four key assumptions. First and foremost: customer loyalty will never outweigh significant, long-term price differences. Second, KUA may not always be the low-cost provider. Third, customers will recognize value-added services that contribute to the bottom line--and that an ongoing relationship with KUA is valuable. Fourth is the recognition that KUA already had many of the tools it needed to implement the program.

Planning only took about two months because KUA's management recognized the key accounts program as the first, essential step toward ensuring the utility's future success. Also, Beck had attended a national key accounts seminar and already knew the general structure of such programs. She wrote several worksheets to control the paperwork from the visits, including a sheet delineating the assigned duties and responsibilities of each of the 24 KUA employees involved in site visitations. She developed a customer profile form to provide key customer statistics at a glance. She also devised a pre-call planning checklist, as well as a post-visit survey form.

In January 1996, 12 two-member teams began fanning out for the first of 211 site visits completed during the first "shakedown" year. Each team includes a customer service manager who can review the account in depth before the visit, and a department head with the authority to address any problems the customer has--on the spot.

Under the original version of the program, the teams would visit a hospital one month and then visit a hotel the next. There was no continuity, and no way to assemble a body of knowledge about a specific industry. Now, teams are assigned to one of 12 industry categories, such as banks, churches, auto dealerships, manufacturers or fast food outlets. Team members are encouraged to bone up on their assigned industries in several ways, such as by reading industry-specific trade magazines, company annual reports and the business section of the local newspapers, as well as tracking stock prices. Industry familiarity should help team members begin to anticipate the problems or concerns of a given industry, Beck says.

The first year's worth of visits revealed at least one unexpected lesson. KUA knew from reading various industry publications that power quality is now a major issue for manufacturers, and thus expected to hear a great deal about the issue from their largest customers. After all, manufacturing equipment is so sensitive these days that any fluctuations in power quality can bring product assembly lines down or cause computers to reboot. However, only 15 customers expressed power quality concerns. Nonetheless, KUA has already as accelerated the installation of squirrel guards on area distribution lines, stepped up an already-aggressive tree-trimming program, and provide back-feeding capabilities for hospitals and others where power supply is critical. KUA also has created a troubleshooting database for problems that can develop on feeder lines and developed followup procedures to ensure feeder line problems are addressed and do not recur.

"I guess we did enough screaming to get their attention," quips Jim Pimpenella, executive vice president of the East Balt Bakery. He laughs. "We run a unique business--we're a high-speed bakery that makes nothing but hamburger buns for all the Florida stores of a major fast-food chain," he explains. "A 10- or 15-second blip in electricity cause us a considerable amount of money--several thousand dollars."

KUA suggested the installation of a second feeder line for the bakery, which has taken care of the lion's share of the problem, although there are still occasionally problems during particularly stormy spells, he says. Chris Gent, KUA's director of communications, says the utility is exploring the possibility of installing an uninterruptible power supply inside the bakery, and that KUA might be setting up a cost-sharing program for those sorts of site improvements.

Beck says one of the biggest successes of the program to date is the completion of a two-way feed system at two area health care facilities, Florida Hospital Kissimmee and Columbia Medical Center Osceola. Before the new systems were installed, both hospitals had been subject to lightning strikes and equipment failures. The new systems should resolve anthe new hospital operated by Columbia Medical Center Osceola, says Tim Cook, the center's CEO. "They've been very responsive to our needs," he says.

"It's nice to be a key account," says Kenneth Bradley, administrator of Florida Hospital Kissimmee. "It's certainly a breath of fresh air for a public utility to put customers first. Their emphasis and ideas in this area are very, very wise and very market-driven. The future of the power industry is very competitive, compared with the almost-monopoly they have today. In fact, both the electric industry and the hospital industry are going through many changes, and the customer focus, no matter what the changes will all turn out to be, will hold them in good stead. It puts the company in an excellent light."

Bradley also lauded KUA's willingness to be a "corporate citizen" in the community, citing sponsorship of local music festivals and contributions to area charities. "As a fellow corporate citizen, that's appreciated very much," he says. He also speaks highly of KUA's willingness to run interference with other local government agencies, as well at its track record of providing contacts elsewhere in government to help solve non-utility problems.

Still, he would like to see rates come down a bit.

Anticipating the need to bring electric rates in line with other providers, KUA is currently reviewing its rate structure, Beck says. But one must also realize there are plenty of other intangibles that affect the relationship between the customer and the utility, such as reliability, energy efficiency and the speed with which power is restored following major outages, she adds.

Goals for 1997 include fostering personal relationships with the local manager or CEO of each company located in KUA's 85-square-mile service territory. The utility also plans to set up a database for refining customer requests and problems, so issues are acted upon more quickly, and to begin contacting corporate headquarters offices if officials are outside outside Central Florida.

KUA also is setting up its new marketing department. Students enrolled in the executive MBA program at a local college are drafting plans for the marketing program. KUA also is working closely with the local economic development commission to provide referrals to key accounts that wish access to special financing assistance for new or expanding companies.

"Although KUA is a small utility, we now feel we have developed a top-notch program that has passed its infancy and is rapidly reinventing itself as we gain knowledge and experience," Beck says.