Turning Around the “Most Hated Company in America”

Restoring the Reputation of Pepco Holdings, Inc.Myra Oppel, Regional Communications Vice PresidentApril 23, 2014

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About Pepco Holdings, Inc.

Approximately 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey • Atlantic City Electric, Delmarva

Power and Pepco provide regulated electricity service– Delmarva Power also provides

natural gas service • Pepco Energy Services is a

non-regulated subsidiary that provides energy efficiency and renewable energy services

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“The Most Hated Company in America”

VIDEO PLACEHOLDER

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Customer Satisfaction Time Line

November 2009: Pepco and PHI customer satisfaction at acceptable levelsFebruary 2010: “Snowmaggedon” storm hits

July 2010: Another major storm hits

August 2010: Maryland PSC launches investigation into Pepco reliability

August 2010: Pepco announces $500M; 5-year Reliability Enhancement Plan

November 2010: Pepco customer satisfaction drops 10 points December 2010: Washington Post – “Why Pepco can’t keep the lights on”

April 2011: MD legislature passes reliability legislation

June 2011: Pepco named Most Hated Company in America

August 2011: Pepco customer satisfaction plummets 13 more points

August 2011: PHI begins building new communications staff; Hurricane Irene hits

September 2011: Pepco customer satisfaction bumps up 10 points November 2011: Pepco launches customer education/advertising campaign (Year 1)

December 2011: Maryland PSC imposes $1 million fine on Pepco

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Customer Satisfaction Time LineJanuary 2012: Pepco launches customer education/advertising campaign (Year 2)

May 2012: Pepco customer satisfaction ticks back up to 2010 levels

June 2012: Derecho hits, affecting customer satisfaction across the PHI footprint

October 2012: Hurricane Sandy hits

October 2012: Washington Post – “Inside Pepco: How the Utility Kept the Lights on During Hurricane Sandy”

November 2012: Pepco customer satisfaction jumps 20 percentage points from summer 2011; the highest level since 2009

February 2013: Pepco launches customer education/advertising campaign (Year 3)

December 2013” Pepco customer satisfaction is now 23 percentage points higher than summer 2011

Winter 2013-2014: Series of storms and extreme cold hits PHI footprint with very minimal outages

February 2014: Winter storm Pax dumps snow; electric system remains resilient

March 2014: Pepco launches customer education/advertising campaign (Year 4)

March 2014: PHI honored as Energy Company of the Year by EnergyBiz

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Laying the Groundwork

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Building a High-Performing Communications Team

Established a new communications team• Experienced, high-performing team

– Leveraged team expertise to build foundation and capacity • Strategic communications focus and depth of experience in the

key areas of:– Customer communications– Thought leadership – Advertising, marketing and social media– Media relations – Internal communications– Research

Developed over a dozen communications strategies internally to align key initiatives and operations objectives

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Strategic Approach to Communications

Driven by research • Nothing is arbitrary in a strategic communications plan: Every tactic

has a purpose and an opportunity to influence metrics • Customer perception drives messaging, approach, tactics and

design Tools that inform us

• Phone surveys, quarterly customer focus groups, online testing• Broad-based and targeted

Putting the learning into action• Show customers – prove to them – what we’re doing• Engage them through words, photography, faces of the company• Teach them about our industry, business, investments, successes

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Hurricane Irene: The First Real Test In August 2011, Hurricane Irene was the first real test of

infrastructure improvements and improved communications tools Proactive outreach to media and customers helped to manage

expectations 80% of customers thought Pepco did good job handling

Hurricane Irene• 77% thought Pepco did good job preparing, 78% thought Pepco did

good job responding and 76% thought Pepco did a good job communicating

The Washington Post reported Pepco “passed the test”

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June 29: Derecho Devastates Service Region A derecho storm caused widespread damage with little warning,

leaving in its wake a 700-mile trail of death and destruction, including 34 fatalities, and significantly impacting more than 4 million electric customers in multiple states• Approximately 57% of Pepco customers (over 480,000) lost power

at peak• Hundreds of downed poles, trees and wires; massive destruction

Pepco’s restoration timeframe and mutual assistance resources were in line with other utilities• However, media and political criticism was harsh and unrelenting• Customer satisfaction plummeted

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Media and Political Reaction Following the Derecho

“Pepco owes its customers some real answers”7.7.12

“O'Malley Has Boot Up Pepco's Backside” 7.1.12

“Delmarva Power Continues Restoration Effort Following Powerful Storms” - WBOC TV 16

“Few people realize the effort it took to restore power to the region after powerful storms” (7.8.12)

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Adjusting Communications Strategy Post-Derecho

Strategic communications partner brought in to help navigate the media market and current political atmosphere

Increased proactive outreach to and relationship building with local media

• Comprehensive education on key issues• Increased focus on transparency to help shift tonality of

media coverage and tell our story Shift in approach to storm communications

• Increased focus on the restoration process Introduced messaging around changing weather patterns and

their impact on the overhead system Continued focus on research, strategy and an integrated

approach to all communications All of these tactics were tested and proven during Hurricane

Sandy in 2012

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Hurricane Sandy Media, Political and Customer Reactions

Inside Pepco: How the utility kept the lights on during Hurricane Sandy 10.30.12

Props to Pepco!10.30.12

“I don’t know what they could have done better…I really think that Pepco was ready and did a great job.”

- D.C. Mayor Vincent Gray

Pepco satisfaction post-Hurricane Sandy increased 16 points and was up a total of 20 points since Summer 2011

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February 13, 2014: Pax Pummels East Coast As part of a series of 2013-2014 winter storms, Pax significantly

impacted nearly all of the East Coast• 22 fatalities• Approximately 1.2 million lost power • Total snowfall in the Pepco area ranged from 11 to 20 inches

Pepco’s outages were extremely limited considering the severity of the storm• Maryland total outages just over 8,500 and fewer in DC

While the media was not as quick to applaud our efforts as they were post-Sandy, there were no negative reports

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Impacts on Customer Perceptions

Communications with customers during the storm revealed their perception of Pepco is changing

Customers are aware of our reliability efforts and recognize they are paying off

They are willing to voice their appreciation for the system’s increased reliability in public forums

Customers are beginning to trust Pepco as their energy supplier

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Industry Recognition

PHI was honored in March 2014 as Energy Company of the Year by EnergyBiz

This prestigious award recognizes Chairman, CEO and President Joe Rigby’s positioning of the company to succeed now and in the future through business and technology innovation, insight, and achievement

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Tactics and Communications Campaigns

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Tactics for Integrating and Aligning PHI’s Communications

Focus communications on topics that research shows are important to customers:• How rates relate to system improvements• How customers can save money• Reliability and restoration efforts• Giving back to the community• Efforts to protect the environment

Integrate communications in order to reach customers on multiple channels• Bill inserts, customer newsletters, websites, social media, etc.

Utilize templates and key messaging to ensure brand and messaging consistency, especially in crisis communications• PowerPoints, press releases, fact sheets, etc.

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PHI’s Reliability Enhancement Plan (REP) Working to improve customer service and reliability Now investing more than $5.8 billion over five years primarily in

distribution and transmission systems and technology For Pepco, from September 2010 – February 2014

• 7,056 miles of trees along power lines trimmed

• 239 feeders upgraded• 1,020 miles of underground line

upgraded• 87 system growth projects• 99 advanced control projects

Metrics reveal dramatic turnaround and significant improvementon feeders that have been upgraded

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2012 REP Communications Campaign Robust, recognizable advertising focusing

on front-line employees and the work being done to improve reliability• “Gritty feel” captured by reality-style

photography, videography and black/white color scheme

Strategic, consistent messaging and tactics aligned with research

Integrated approach using an array of media to ensure message saturation• Television, print, web sites, outdoor/metro,

social media Advertising campaign extended into internal

employee engagement campaign Look and messaging evolved throughout the

campaign

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Emergency Response Improvement Project (ERIP)

Launched in October 2010 to improve the customer experience before, during and after a storm• Improving emergency preparedness and response• Improving restoration times• Enhancing communication to customers, media and elected officials

Examples of improved communications include:• Launched first version of smartphone app in November 2010;

updated in 2012; additional update planned for 2013• Developed Storm Center for website in 2011 with outage maps;

overhauled after the derecho to streamline information for easier use • Developed new customer education materials including emergency

preparedness handbook, bill inserts, fact sheets and videos explaining power restoration process

• Prepared press release templates and approved messaging to be ready for emergency situations

• Created TV and radio advertising – before, during storms

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Adjusting ERIP Communications Post-Derecho

Enhanced customer communications• Acting on customer feedback, PHI developed

a new “Storm Center” for utility website homepages, featuring streamlined information in a customer-friendly layout

• New “Restoring Power” video explaining restoration process

• Updated Storm Prep handbook and Facebook tab

Updated advertising focuses on the restoration process as well as safety• Process begins once conditions are safe for crews

to begin work• Hospitals, schools and public safety facilities top

restoration priorities• Safety information for customers

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Enhanced Crisis Communications during Hurricane Sandy Maximum preparedness of both

operations and communications• Launched the new Storm Center on

website, social media active and engaged 24/7

Proactively communicated about our preparations and updates• Took new approach to advertising by

releasing updates on radio, TV and social media during restoration process to keep customers informed– Ads invited feedback to engage customers,

increasing engagement • Promoted tweets used for first time to

share our Storm Prep Handbook with customers

Sandy Update Ad

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Hurricane Sandy Customer Communications Statistics

Online Engagement: • 24/7 social media monitoring; extremely

positive engagement from over 11,000people who engaged with us on Facebook and over 1,300 new Twitter followers

• Videos posted to YouTube viewed over 114,000 times

• Nearly 500,000 visits occurred to our websites, 30,000 mobile app downloads

Advertising • 8 radio, 2 TV and 3 print ads across PHI

footprint before, during and after storm Outbound Customer Calls

• Approximately 1.25 million calls went out to residential customers across footprint

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About the 2013 REP Campaign

2013 campaign continued the successful approach from the 2012 campaign of highlighting proof points• Campaign reframed reliability so

customers see we are making progress and learn about external factors that impact the system

Ads addressed a variety of topics: changes in technology, infrastructure, customer service and new focus on climate change

In employees’ own words, radio and print/transit ads focused on how we are changing to keep up with a changing world

Pepco’s campaign focused on a “changing Pepco” Proof points highlighted to illustrate continuous improvement

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About the 2014 REP Campaign

Pepco’s REP campaign continues to evolve in 2014 Replaced the transit portion of the campaign with customer

letters and bill inserts• Focused mailing to customers most interested in the information• Letter signed by someone directly accountable for REP program• Bill insert focuses on REP data, to which customer respond very

positively, and includes specific results for the area May consider positively received postcard later in the year Customers’ positive response to radio ads, which tell stories

and give specific details, solidified this medium’s place in the campaign

New Radio Ad

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Telling our Story: Enhancing Relations with Elected Officials and the Media

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Earned Media Strategy

Presents a framework to build better relationships with media Provides a foundation for proactive outreach on critical issues More balanced, positive news stories will:

• Provide better communications with our stakeholders• Help reshape our credibility, reputation and image• Position PHI as an industry leader

Allows us to achieve greater efficiency and consistency by leveraging tactics and best practices across the PHI footprint

Research informs everything• Shows us that our stakeholders turn to the media for information• Highlights key issues, opportunities to leverage our efforts

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Strategy Recommendations

Through timing, strategy and relationships, we can begin to influence coverage about our company with these recommended changes:• Targeted relationship development with media and press

counterparts• Cultivation of fair and balanced coverage on negative issues• Proactive media outreach and comprehensive education on key

issues• Consistent messaging and branding across the subsidiaries• Focus on issues key to customer satisfaction, success of key

company initiatives Transparency is the key to achieving these goals

• Reliability enhancement projects• Storm embeds• Rate briefings

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What is an Embed and Why Are We Doing This?

We are allowing newspaper, TV and radio reporters to see our operations and internal restoration efforts firsthand

They will report on:• How our incident command structure works• How we manage and coordinate internal and mutual assistance

crews at staging areas• How our CSRs work with customers• How we engage customers through social media• How the priority of restoration is implemented

We want these stories told so our customers, regulators and government officials understand how hard we work for them during an event

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Embedding Media During Hurricane Sandy More than 10 reporters embedded

across PHI footprint• Reporters signed an agreement to

comply with safety rules and procedures (including protective equipment use), restrictions for certain areas, and confidentiality of customer information

• Allowed newspaper, TV and radio reporters to see our operations and internal restoration efforts firsthand

Embedding lets viewers see employees working to get the lights on and enabled members of the media to establish relationships with company experts, giving more depth to understanding of core issues

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Turning a Corner: Hurricane Sandy

Provided unprecedented media access, further increasing transparency • Told the story from the inside out• Significant impact on media coverage

and tonality• Customers, elected officials and the media

recognized our swift response to the storm and our proactive and sustained communications

Media Engagement• 8 press conferences and briefings, over 35 press releases and

media advisories issued and hundreds of interviews conducted • Media embeds proved so successful we have standing requests for

embeds in future storm events– Other utilities are calling and visiting to find out what we did to get those

headlines

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“The Most Hated Company in America” (cont.)

VIDEO PLACEHOLDER

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Restoring our Reputation:Where We Go from Here

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Our Work Continues Continued focus on our customers Continued transparent, proactive approach

• Building capacity in media and presentation skills training for company leadership and ambassadors

Further enhancement of tools customers can use to get information, both day to day as well as in emergencies• New version of mobile app

– Updated interface– My Account integration– AMI Data– Pay/view Bill– News and updates– Social media integration– Streetlight outages (Pepco)

• New website to launch in 2014

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Key Takeaways Manage expectations by proactively communicating with

customers and other stakeholders• Be consistent and transparent with information• Encourage customer engagement and act on their feedback• Leverage templates to ensure that customers can access accurate

and aligned information through multiple channels To tell your story, give the media more access

• Increasing transparency can boost customer engagement and improve relations with elected officials and the media

• “Opening up” allows the media to establish relationships with experts in your company, putting a face on the company and giving more depth to understanding of core issues

Practice and prepare for emergencies• You won’t always know when your next “storm” is coming

– Make a plan, host drills, frequently update communications materials, and let customers know what you’re doing to prepare

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Q & A

Slide Number 1About Pepco Holdings, Inc.“The Most Hated Company in America”Customer Satisfaction Time LineCustomer Satisfaction Time LineSlide Number 6Building a High-Performing Communications TeamStrategic Approach to CommunicationsHurricane Irene: The First Real TestJune 29: Derecho Devastates Service RegionMedia and Political Reaction Following the DerechoAdjusting Communications Strategy Post-DerechoHurricane Sandy Media, Political and Customer ReactionsFebruary 13, 2014: Pax Pummels East CoastImpacts on Customer PerceptionsIndustry RecognitionSlide Number 17Tactics for Integrating and Aligning PHI’s CommunicationsPHI’s Reliability Enhancement Plan (REP) 2012 REP Communications CampaignEmergency Response Improvement Project (ERIP)Adjusting ERIP Communications Post-DerechoEnhanced Crisis Communications during Hurricane SandyHurricane Sandy Customer Communications StatisticsAbout the 2013 REP CampaignAbout the 2014 REP CampaignSlide Number 27Earned Media Strategy Strategy RecommendationsWhat is an Embed and Why Are We Doing This?Embedding Media During Hurricane SandyTurning a Corner: Hurricane Sandy“The Most Hated Company in America” (cont.)Slide Number 34Our Work ContinuesKey TakeawaysSlide Number 37