The term “audit” has many connotations and not many of them are positive. It conjures images of medical check-ups and tax investigations. However, simply put, an audit is an examination of your actions (and facing the potential consequences). So if you conducted yourself well in the time leading up to an audit, the audit itself shouldn’t be dreaded. The same is true in the utility industry. Whether undergoing a regulatory audit or an insurance audit, if you’re properly prepared, then an audit can be a stress-free process. In fact, an audit can help you improve stakeholder relations as well as your financial position.
In the utility industry, the key to audit preparation begins with public safety outreach. A well-designed and executed public safety program—one that’s data driven and integrated with your company’s goals—not only meets audit requirements but adds value to your business. Remember, the audit isn’t the driver, successful business management is. A public safety program that’s an essential part of the overall business plan enhances the entire organization from corporate communications and operations to claims and legal. It produces data and establishes metrics that benefit the business and exceeds auditor expectations.
When you step into an audit with meaningful metrics that include key information about your public, show positive impacts based upon solid research and statistics, establish benchmarks that show your progress and demonstrate how your organization stacks-up within the industry, and represent a sustainable plan for ongoing improvement, then you instill great confidence and exemplify good corporate governance. The benefits that this sort of program has on stakeholder relations are clear.
First, consider the auditor-auditee relationship. When you display transparency, cooperation, and are proactive, you show respect and indicate that you’ve taken your commitment to the safe and reliable delivery of energy seriously. According to the American Institute of Certified Public Accountants (folks who know a little about audits), “It pays to be able to talk in an open and honest way during an audit.” Auditors in many industries identify both preparation and open communication as keys to a successful audit. These factors build trust and establish a strong relationship with your auditor. Why is this important? Well, a study by the General Accounting Office reports that stability in an audit relationship translates into significant process efficiencies and cost savings.
The other key stakeholder in public safety outreach, as well as the audit process, is of course the customer or the public. They’re the receiver of outreach communications and a major influencer in the audit process—which incidentally are closely tied. Regular, useful communications—like public safety outreach—is documented to improve public opinion and customer satisfaction, and in turn, audits and regulatory proceedings. In fact, one industry study notes that, “new data strongly suggests a positive relationship between a utility’s customer satisfaction levels and its regulatory experience, including financial metrics, disallowance amounts, and the time it takes to complete a rate case (regulatory lag).” Furthermore, “utilities with higher proportions of satisfied customers received rate increases closer to their requests than utilities with low customer satisfaction scores.”
It’s all part of establishing good relations. Properly designed outreach programs and related success measurements are crucial to establishing and maintaining a good relationship with all of your stakeholders. Analysts advise that “most public utility commissions have already put into place performance metrics” and, “in some cases, additional factors that influence customer satisfaction—such as communications and other customer enhancements—may also be configured into measureable performance metrics that are part of an incentive or penalty model in regulatory proceedings.”
Finally, an industry study entitled Aligning Customer Satisfaction and Utility Regulation concludes, “A tactical plan to improve customer satisfaction often requires investment in multiple customer outreach programs,” and, “a successful customer engagement program will result in a measurable improvement in overall customer satisfaction levels.” Both of these points bear out in our research as well. In our experience developing integrated outreach programs, we’ve found that our partners reap many rewards including fewer incidents and claims, lesser payouts and insurance premiums and, of course, more favorable audits.