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Trends in Benchmarking

Evaluating System Performance

Prepared for:

September 26-28,2017

MWU Presentation 9.26-28.17

CONFIDENTIAL

2

Today’s discussion

• Introduction

• Topics for Discussion

o Infrastructure Condition

o Utility Personnel

o Financial Tracking

• Benchmarking Process

Agenda


CONFIDENTIAL

3


• Introduction



o Utility Personnel



Agenda


CONFIDENTIAL

4

There are a number of drivers for utilities seeking to pursue system automation

programs

• Improve the effectiveness of customer service

• Reduce customer service costs (meter read labor, truck rolls, collections, etc.)

• Increase distribution operations efficiency

• Increase capital efficiency

• Enhance customer satisfaction

• Manage non-revenue water (NRW)

• Support or enhance conservation

• Increasing billing frequency

• Aging meters

• Foundation for utility of the future

AMI/Smart Water


CONFIDENTIAL

5

While many utilities think of the immediate applications, there exists an

opportunity to significantly transform many utility operations

Next Generation Water Utility


CONFIDENTIAL

6Leak Detection

For example, AMI-based acoustic leak detection helps non-revenue water

management


CONFIDENTIAL

7Technology

New technologies and service offerings are now changing the nature of water

utility automation projects

• Non-moving part meters

• Second generation acoustic leak detection

• Customer portals

• Data analytics

• Hosted software

• Network management

• Meter reading as a service

• Remote control shut-off

• Pressure and temperature sensors

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=52G-WTY62P-2_M&tbnid=vZtG6GZKU5jPoM:&ved=0CAUQjRw&url=http://telecomuncovered.com/category/vendors/ericsson/&ei=xs_8U4-8POTLsQTfnIDADg&bvm=bv.73612305,d.cWc&psig=AFQjCNEMZEp6gyxFMv6odCIanVO99ffHFg&ust=1409163467929587

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=52G-WTY62P-2_M&tbnid=vZtG6GZKU5jPoM:&ved=0CAUQjRw&url=http://telecomuncovered.com/category/vendors/ericsson/&ei=xs_8U4-8POTLsQTfnIDADg&bvm=bv.73612305,d.cWc&psig=AFQjCNEMZEp6gyxFMv6odCIanVO99ffHFg&ust=1409163467929587

http://www.google.ca/url?sa=i&rct=j&q=Sensus+iperl&source=images&cd=&cad=rja&docid=vfIP7qzpWWFGlM&tbnid=MmXDREvau1gAoM:&ved=0CAUQjRw&url=http://www.ventous.com/work-sensus.php&ei=fvzBUdGyNYrj4AOi2ICACw&psig=AFQjCNGB-gN5txeqRh79GU1No-RTP3uoGg&ust=1371753947875869

http://www.google.ca/url?sa=i&rct=j&q=Sensus+iperl&source=images&cd=&cad=rja&docid=vfIP7qzpWWFGlM&tbnid=MmXDREvau1gAoM:&ved=0CAUQjRw&url=http://www.ventous.com/work-sensus.php&ei=fvzBUdGyNYrj4AOi2ICACw&psig=AFQjCNGB-gN5txeqRh79GU1No-RTP3uoGg&ust=1371753947875869


CONFIDENTIAL

8Key Findings

The new wave of AMI and smart water programs are showing more value returned

to utilities

• 60-70% of the value of past AMI projects was left on the table

– Primarily used for simple meter reading

– Much valuable data lost in the shuffle

• Today, AMI projects are oriented toward a data centric model

– Complex data management and analysis systems are being designed to maximize benefits and enable

more complex functionality.

– 10-15% of project costs are now focused on system integration due to the complexity of the system

– Projects are being undertaken with the goal being asset management and the data analytics are the

drivers


CONFIDENTIAL

9Current State of Technology

The maturity of newer system is a key driver in returning value to water utilities

and the communities they serve

• Deployments have been going on for a long time, and we are in 3rd to 5th generation of technology

• Systems are moving way beyond billing information into utility management

• Cost versus benefits in most cases supports moving to the new systems

• Product constraints/environmental issues require better management of utility systems

• Advanced metering improves customer relationships


CONFIDENTIAL

10Water AMI

For many, AMI serves as the starting point for broader water system automation

initiatives

• Advanced metering should be an asset management tool in the utility segment

• A significant cost reduction in data collection and customer service

• It offers a significant change in the ability to utilize utility staff and capital based on data driven events

– Engineering design issues

– Capital budgets outlays

• It is a network that is expandable for other city services, or can connect to existing networks


CONFIDENTIAL

11Coming Attractions

Emerging technology offers the potential to further increase the potential reach for

water utilities

• Pressure sensors build into the water meter

• Water quality AMI sensors

• Composite digital mag meters

• Integrated disconnect meters (no plumbing)

• Improved battery lifecycle

• Acoustic sensors becoming a more integrated part of the smart water systems


CONFIDENTIAL

12Integrating Systems

One of the challenges that water utilities face is dealing with a water distribution

system that is far from uniform

1920 1st Phase

$20M (06 dollars)

1932 2nd Phase

$8M (06 dollars)

1940 3rd Phase

$ 20M (06 dollars)

1960 4th Phase

$160M (06 dollars)

1980 5th Phase

$65M (06 Dollars)

2007Total Infrastructure= $265M

Water Loss = 30%


CONFIDENTIAL


For an increasing number of water utilities, the AMI network serves as the core of

a new asset management system


CONFIDENTIAL


The new AMI system can now be used to identify water loss and other problem

areas

Old pipe from

1920s

Leaks near

commercial

areas with 1960s

clay pipe

Low-pressure

in 1980s

Plastic pipes


CONFIDENTIAL

15Data Analytics

Clear value propositions can be achieved from managing/using the data correctly

• 60-70% of the value of past AMI projects was left on the table

• However, many utilities today are seeking more integrated approaches to capture additional value

– State of the art 24/7 monitoring of accounts worth over $15 million in revenue per year and over $265

MM in fixed asset replacement value

– Reduction in customer service costs and service issues by up to 75% within 3 years

– Real time emergency response to account issues

– Elimination of safety issues in reading meters

– Daily sales revenue from key accounts

– Continual improvement on asset performance

– Proactive customer service


CONFIDENTIAL

16System Architecture

The Meter Data Management System is typically used as a central repository of

data that can be accessed by a myriad of supporting systems


CONFIDENTIAL

17Business and Data Models

The optimal approach calls for integrating business and data models


CONFIDENTIAL

18Future State Workflows

Value is created when future state workflows take advantage of the new

technologies and systems that have been put in place

Water Meter

Data: (Meter

Read)

MIU GatewayAMI Server

(MDM)

Operations

Billing/CIS

Usage Profile

Bill Generation/

Customer Calls

Water Meter

Data: (Tamper

Alarm)


(MDM)

Operations

Billing/CIS

Site Investigation

Bill Generation/

Customer Calls

Security Team

Water Meter

Data: (Leak

Detection)


(MDM)

Billing/CIS

Work

Management

Customer Calls

Repair Kits

USER FUNCTIONSDEPARTMENTMETER & AMI SYSTEM


CONFIDENTIAL

19Customers

In addition, water utilities now have new tools to communicate with customers on

an ongoing basis


CONFIDENTIAL

20Potential Programs

There are quite a few different sources of value that water utilities may consider

• Business Process Engineering

• Line Loss Program Implementation

• Business Analysis

• C&I program Management

• Customer Communication

• Cyber Security Implementation

• Data Analytics Design

• Systems Engineering Program

• Water Management

• MDMS Configuration

• Meter Data Mapping

• Meter Specification & Configuration

• Conservation Program

• Theft deterrent program

• Prepay Implementation

• Web-Portal Implementation

• Social Media

• Project Management

• Kiosk Implementation


CONFIDENTIAL

21

Advanced metering applications are the most popular among utilities because of

their ability to reduce costs and improve operations, while providing more value

to customers

• Many utilities are looking at options in advanced metering to streamline operations, enhance financial

flexibility, and support smart grid potential for the future

• Utilities with a rural component are more likely to pursue advanced metering efforts than purely

urban/suburban utilities due to their rural reach and customer service orientation

Advanced Metering

• Tamper, theft and outage detection

• Consumption patterns can be tracked

and analyzed to provide more accurate

forecasting of trends

• Improved customer service

• Value added services can be offered to

customers

• Asset management

OPPORTUNITIES


CONFIDENTIAL

22Automatic Meter Reading

Advanced metering reduces costs through operational efficiency, more accurate

billing, and greater consumption control

• In addition to using this to reduce meter reading costs, utilities are taking advantage of having a sensor on

the distribution network; some are even using it to send reads from gas and water meters

Automatic Meter

Reading

Prepaid Metering

Basic Facts Benefits

• Automatic, real time data

collection from metering devices

transfers data to central

database for billing and analysis

• Technologies have included

handheld, mobile and network

devices based on wired and

wireless, radio, and power line

transmission networks

• Attainable data includes tamper

and leak detection, battery life,

reverse flow data, interval data,

meter events

• Operational efficiency achieved by

preventing the need for employees

to visit customer locations each

month

• Offer customers actual readings

instead of estimation or self-reads

• Accurate load data from remotely

accessible meters helps to balance

the supply portfolio

• Furthermore, data can be used to

control ToU with load profiling and

customer usage patterns

Advanced

Metering


CONFIDENTIAL

23Prepaid Metering

With prepaid pricing, consumers pay for service prior to delivery and as they use

electricity their balance is reduced each day until exhausted

• This feature is becoming more popular among consumers in many utility territories


• Advanced meters support this

customer-controlled usage by

providing real time data

regarding usage, dynamic

costs, etc. via a web-based

interface or in-home display

• Prepaid pricing helps to eliminate accounts

receivable and late fees because service is

automatically disconnected when the balance

runs out

• Cash flow improvement

• Greater customer relationship management as it

helps customers to directly control costs and

consumption levels

Automatic Meter

Reading

Prepaid Metering

Advanced

Metering


CONFIDENTIAL

24Smart Pumping

Time-stamped AMI data can be used to improve the accuracy of the current

distribution system model, which results in better predictive planning related to

water treatment, pressurization, pumping and storage

• The addition of pressure monitors to the system could help a utility reduce pumping when higher

pressures are not needed


• One of the benefits of an AMI

system is the ability to leverage

the hourly meter data being

gathered several times per day

• Because one of the largest cost

line items in the water budget is

its electric bill in support of

system operation, utilities can

utilize meter data to optimize

their pumping schedules

• By avoiding peak electric

consumption periods, utilities can

realize electricity consumption

savings

• As an electric utility as well, the

benefit is only realized at the

wholesale power level

Water Operations

Smart Pumping

Leak Detection


CONFIDENTIAL

25Leak Detection

The desire to identify and reduce leak adjustments is a main benefit of a

dedicated water leak detection program

• An automated system can support the ability to provide customer-side leak detection to improve customer

satisfaction and to reduce costs associated with leak adjustments


• One approach involves a

comparison of an interval of

time-stamped meter

consumption data from a

specific area against the data

from a district metered

area/zone

• Another approach is to deploy

acoustic leak detection devices

(ALD) and/or institute a leak

detection survey program

• Proactive customer-side leak

notification, “watch dog” service

• Opportunity to provide higher level

of pressure management, acoustic

leak detection, water quality

management

Water Operations

Smart Pumping

Leak Detection


CONFIDENTIAL

26


• Introduction



o Utility Personnel



Agenda


CONFIDENTIAL

27

The utilities industry mirrors a national trend towards work force aging

Situation Complication Key Questions

• In the US, life expectancy has

risen dramatically since the

beginning of the century to 78.4

years for the average adult, white

male from 47.9 years.

• While the aging workforce is a

national phenomenon, the

median age for workers in the

Utilities industries is 3.3 years

higher than the national average.

The Utilities industry is “older”

than the national average.

• At stake for Utilities are losses of

critical knowledge and skills due

to impending retirements.

• There are not enough young

people to replace the wave of

“Baby Boomers” approaching

retirement.

• Employers need to find new ways

to retain older workers in order to

forestall loss of expertise

• Human Resources report

difficulty in recruiting young

people, especially for craft

positions.

• Many positions within the Utilities

industry are highly specialized,

both managerial and labor,

requiring years of intensive

training.

• Investments are needed to make

the work place flexible and

accessible for older workers.The

National Organization on

Disability reports a 11.5 percent

chance of developing a disability

in people aged 45 to 54. This

figure jumps to 21.9 percent for

those 55 to 64 years.

• Recent years of economic

distress have made the

necessary investments hard to

actualize.

• Do Utilities companies recognize

the need to act now in order

minimize negative consequences

of an aging workforce?

• What programs can be

implemented to attract younger

workers?

• How can incentives be

established to attract and retain

experienced workers?

• How can utility companies

establish a succession strategy to

ease “passing of the torch”?

• What benefits will Utility

companies realize by addressing

the aging work force issue now,

before the retirement wave

peaks?

Industry Age Demographics Overview


CONFIDENTIAL

28

Median Age of U.S. Industries

25

30

35

40

45

Agr

iculture

, for

estry

, fishing

and

hun

ting

Pub

lic A

dministra

tion

Utilities

Tran

spor

tatio

n an

d war

ehou

sing

Edu

catio

n an

d he

alth ser

vice

s

Man

ufac

turin

g

Mining

Other

Ser

vice

s

Fina

ncial a

ctivities

Pro

fess

iona

l bus

ines

s se

rvices

Inform

ation

Con

stru

ction

Who

lesa

le and

Retail T

rade

Leisur

e an

d ho

spita

lity

National Median, 40.4 years

Utilities are among the oldest of US employment sectors

• Only “Agriculture, forestry, fishing and hunting” and “Public Administration” median ages are higher


Source: US Bureau of Labor Statistics


CONFIDENTIAL

29

The Utilities Industry median age is increasing with time

• Over a period of nine years, the median age of Utilities Industry employees has risen from 41.1 to 43.7 years

• By 2050 the US total over-65 population will swell from its current 30-plus million people to an astonishing 80

million

• By that point a utility worker currently 25 years of age will be 71

• Barring massive retention of older employees, the low rates of employee replacement mean there will be

smaller numbers of people to handle work-load.


Source: US Bureau of Labor Statistics, NWPPA

Utilities, Increasing Median Age

39.0

39.5

40.0

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003


CONFIDENTIAL

30Industry Age Demographics Overview

Source: US Bureau of Labor Statistics

Age Distribution among Utility Employees

0.8%

4.4%

15.3%

30.4%

34.5%

12.4%

2.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

16-19 Years 20-24 Years 24-34 Years 35-44 Years 45-54 Years 55-64 Years 65+ Years

The 45-54 year old age group represents a large percentage of utility population

and represents a group whose loss will most severely impact the industry

• For utilities as a whole, 148,000 employees currently fall in the 55-64 years age group, another 26,000 are

over age 65

• A combined number of 172,000 utilities employees are eligible for retirement now, or 14.4%

• More significantly, approximately half of the “Boomer” group will be within range of retirement in five years,

another 17.2%

Over one-third of

workforce lies in the

critical “pre-retirement”

stage


CONFIDENTIAL

31

The demographics of utility workforce shows a clear image of a wave moving

toward retirement

• APPA describes an “Age Bubble”, a ballooning population of workers at one end of the age continuum,

followed by a deep dip in the next generation and a modest rise in the work force’s youngest members


Sources: US Bureau of Labor Statistics, American Public Power Association

Percent of Workforce Age Curves

0%5%

10%15%20%25%30%35%40%

16-1

9 ye

ars

20-2

4 ye

ars

25-3

4 ye

ars

35-4

4 ye

ars

45-5

4 ye

ars

55-6

4 ye

ars

65 y

ears

and

ove

r

Utilities

US Total


CONFIDENTIAL

32

Chief among concerns dealing with the issue of an aging workforce is the loss of

knowledge base

• By far the issue of most concern to all within the utilities industry is the loss of critical knowledge and skills due

to massive numbers of retirements

– Losses are anticipated across the entire scope of organizations

– Not only are people with unique technical knowledge about to depart, but executive managers and skilled

workers as well

• The challenge facing the industry is successful transfer of knowledge from a large number of experienced

people to a limited pool of young replacements, to condense many years of knowledge into digestible form

– This must be done in coordination with advancing technologies, that themselves impose increasing

demands upon resources

– A knowledge objective is finding ways of employing new technologies to ease burdens rather than

increasing them

• Unlike other industries, utilities have the added responsibility of protecting the public welfare

– The unique knowledge and skill-sets of utility workers may be considered public assets

Effects of Aging Workforce on Utilities


CONFIDENTIAL

33

Business challenges and opportunities present themselves as the work force

ages

• An informed and competent work force is increasingly critical to an organization’s financial well being as

technology advances

– Failures in an automated power grid scenario hit the bottom line in terms of loss of immediate revenue, damaged reputation, increased competitive pressure, and possible fines

– Managing knowledge transfer and skills development as part of a successful succession strategy clearly impacts utility companies’ future financial viability

• The cost of workforce turnover is significant, typically ranging from 25 to 200 percent of an employee’s annual compensation

– Costs associated with employee replacement will escalate during the next decades

– Companies find it is financially advantageous to encourage employees to work past the traditional retirement age, for two reasons;

· First to forestall and better manage the cost of employee replacement

· Secondly to allow greater time for transfer of knowledge to the younger generations

• It makes good business sense to invest in accessible and assistive technologies allowing older workers to remain in the work place

Effects of Aging Workforce on Utilities

Source: Energy Pulse, Microsoft, AgeLight Marketing Consultancy

“ Companies that figure out how to manage (the rise in the average age of the work force) will

have a clear competitive advantage over those who let the demographic trend wash over them.”

George Bailey, Global Director of the Human Capital Group


CONFIDENTIAL

34

Aware, not

implementing

plans

Aware,

implementing

plans

Not aware

U.S. firms are beginning to recognize the need to retain older workers

• 61% of surveyed U.S. firms are aware of the effects of demographic changes

– However, of those aware, 55% reported that they are not actively implementing strategies to retain or

attract employees over the age of 50

Survey and Case Studies

39% 34%

27%

Source: Energy Pulse, Microsoft, AgeLight Marketing Consultancy


CONFIDENTIAL

35

Survey responses reveal a strong industry awareness of aging workforce issues

• To the question, “Would you say that there is an awareness in your organization of the current and pending

effects of workforce aging?”, 93% responded that there is an awareness

– Thus the survey finds a general industry understanding that demographic aging trends are impacting and

will continue to impact, the Utilities Industry

– Lack of awareness does not seem to be related to company size

92.9%

7.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No


Source: UTC Analysis

- Awareness of Workforce Aging Effects -


CONFIDENTIAL

36

Smaller companies tend to be more proactive in addressing aging issues than

larger corporations

• Of the companies aware of age demographic trends, to the question, “Does your company have in place

procedures to minimize the detrimental effects of lost experience by retirement?”, 56% answered ”Yes”

– The smaller companies tend to be more proactive about tackling the issues



56.4%

43.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No

- Procedures in Place to Minimize Retirement Effects -


CONFIDENTIAL

37

Most utility companies do not specifically address retention of older workers

• Of the companies aware of demographic trends, to the question, “Does your organization have in place

procedures to retain or attract employees over the age of 50?” 28% answered “Yes”


28.2%

69.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No


- Program in Place for Retention/Attraction of Employees -


CONFIDENTIAL

38

As to those facing retirement shortly, the survey indicates percentages in keeping

with the statistics for the entire nation

• To the question, “Within the next five years what percentage of your workforce will be eligible for retirement?”

most respondents, over half expect to lose 16-30 percent of their work force to retirement within five years

• BLS statistics indicate that 14.4% of Utility employees are within retirement range now, with another 17.2% of

Baby Boomers eligible in five years.


Sources: US BLS and UTC Analysis

Percent of Utilities Work Force Eligible for

Retirement in Five Years

<5%

(3%)

6-10%

(9%)

11-15%

(11%)

16-20%

(28%)

21-30%

(26%)

31-40%

(11%)

41-50%

(9%)

51-60%

(3%)


CONFIDENTIAL

39

Answers varied widely regarding individual company expectations in retirement

patterns and preparations

• One respondent reported that 60% of the company’s employees are facing retirement within 5 years

– This company does not have in place program to address the problem

• Similarly, a large utility expects 50% of its work force to retire within the 5 year window, but it has programs in

place to address the transition

• A third company of note is a small water company with 32 employees that expects to lose 50% of its work force

within 5 years

– This company has no contingency plan in place


Sources: UTC Analysis


CONFIDENTIAL

40

Position Categories likely to be Impacted by Loss of

Skills Due to Retirements

2%

2%

34%

62%

Across Entire

Organization

Executive Management

Non-Union, Professional

Bargaining Unit, Craft

Respondents expressed the most concern over losses in craft positions

• When asked to name business areas in which losses of experienced personnel are likely to impact operations, the

majority of survey respondents named bargaining unit, craft positions

– By contrast, AWWA studies named executive management as the top area of concern

• Of the Non-Union, Professional group the positions of concern were mainly in Engineering and IT. Also mentioned

were Long Term Planning, Human Resources and Design




CONFIDENTIAL

41

• A number of companies have

formed “Employee Project

Development Teams” and are

currently studying internal work

force aging issues

• Several company respondents

stated that “intern” or “apprentice”

programs have been implemented

with local technical schools. Upon

completion of two year programs

the students stand to be hired by

the utility company

• Of interest are the efforts of a large

electric and gas company to work

closely with several local schools,

mainly in urban areas, to improve

basic math and reading skills so

that pre-employment tests might be

passed

Survey responses were enlightening in regards to self assessment and mitigation

actions taken

Chevron

• Many companies expressed deep

appreciation of the impending loss of

knowledge and experienced workers

• One respondent stated firmly that (s)he

foresees no problems with age

demographics and that the strengths of

the company will be sufficient to attract

young workers for years to come

• A large company stated that despite

proactive mitigation efforts they

anticipate impact to service levels to

customers, both in response time and

the ability to fix a problem right the first

time

• An experienced planning engineer

facing retirement himself in 12 months

stated that the engineers being hired in

his company are technician/clerk level

rather than qualified engineers and

“…lack the sense of what is possible

and advisable”

• Concerns over the loss of corporate

culture were expressed. This is a

significant point as older workers

may wish to preserve strong ethical

values and a heightened sense of

responsibility towards public welfare

• There was an expression of doubt

about a company’s ability to retain

employees in the wake of work

force reductions, that is, employee

loyalty has been shaken



Self Assessment Mitigation Other Issues


CONFIDENTIAL

42

Retirement Projections: mitigation plans should be designed around a utility’s

unique workforce needs

• Utilities should not rely on general data to understand their possible employee loss

• Before a mitigation plan can be developed, utilities should engage in a number of efforts

– Identify the number of workers that will be retiring over a certain period

– Retirement numbers can be obtained by tracking retirement patterns as well as employee age

– Identify what specific positions will be vacant and when they are likely to be vacated

– Some companies have found success through employee surveys asking employees when they

plan to retire

Source: APPA


CONFIDENTIAL

43

Projected knowledge loss involves identifying what skills retiring employees will

be taking with them

• Retirement projections should be more that pure numbers

– Utilities should develop a clear picture of the void in skill set that will occur as their older, more

experienced workers retire

– Understanding what skills will be lost is essential in accurately determining what skills must be cultivated

in the new workforce

Determining skill loss may be a matter

of asking the right questions

At least one utility has found success in

conducting interviews asking employees to

identify their most valuable contributions to

the company as well as what unique tasks

they perform

Utilities have also initiated open

meetings where employees discuss

problem-solving techniques

Such communication forums enable

management to determine what specific

skills need to be replaced with human

capitol and what should be replaced with

new technology or outsourcing


CONFIDENTIAL

44

• Benefits Packages

– Utilities should develop a clear

picture of the void in skill set that will

occur as their older, more

experienced workers retire

– Signing bonuses

– Flexible scheduling options, such as

flextime or telecommuting

– Tuition reimbursement

• Family-friendly work environments

– Utilities should develop a clear

picture

– Family-leave programs

– Workplace daycare options

– Financial counseling

– Wellness programs

As the population ages, attracting younger workers from an increasingly small

workforce pool will require competitive practices

Mitigation Actions

Source: APPA, Social Funds

• Attracts younger, more talented workers

• Encourages employee loyalty and

reduces turnover

• Reduces absences

Competitive Benefits

Implications


CONFIDENTIAL

45

Internship programs allow utilities to get a jump-start on training while giving

students an opportunity to gain work experience

• Utilities can form alliances with local communities to begin recruiting from universities as well as community

colleges and technical schools

• Internships enable utilities to train and mentor future employees

• Students also have the unique and valuable opportunity to gain work experience prior to graduation

• Certain positions open to full-time students

• When students have graduated and worked as interns for two full school years, they can be hired

without the usual competitive process facing new employees

• Since the inception of the formal internship program in 2001, no job offers extended to interns have

been rejected

Success Story: Colorado Springs Utilities


CONFIDENTIAL

46

Companies that spend significantly more than average on employee training

through “Fast Track” programs often find improved results

• Fast Track Development programs are designed to identify future leaders and groom them to take over

leadership positions

• Different from the traditional philosophy of waiting until upper management retires and hoping to fill vacant

positions, fast track development enables utilities to more quickly prepare younger employees to take over

leadership roles

• Classroom teaching and job-related assignments give hiring management an

opportunity to watch employees in action

• Management has the opportunity – and the need – to identify strong leadership

candidates

• Employees who are identified as future leadership candidates are then rotated into

further development and mentoring programs or trained to takeover specific positions

Key Issues


CONFIDENTIAL

47

Fast Track Development is increasingly seen as a critical component to ensuring

that maximum talent and capabilities are kept in house

• Identifying specific talents within the organization not only enables a company to identify who its future leaders

may be, but also provides feedback on how to improve efficiency within the organization

• Utilities that have established a fast track development program report improved communication between

supervisors and employees as well improved customer service

• Some programs focus on overall leadership skills, rather than preparation for a particular position

– They include intensive leadership study for new employees to develop such skills as problem-solving and

team building

Mitigation Actions


CONFIDENTIAL

48

As health care costs rise, a great majority of those nearing retirement age say they

plan to continue working to help off-set costs as well as to find fulfillment, leading to

issues concerning gradual retirement practices

• One alternative to the loss of expertise resulting from retiring employees to delay retirement or rehire certain retired

employees, enabling utilities to retain certain skill sets for a longer period of time

Mitigation Actions

Opportunity Programs

Gaining additional access to retiring

workers through mentorship initiatives

• Flexible schedules

• Part time work

• Job sharing

Preventing physical impairments from

limiting the access to valuable expertise

of experienced workers

• Technology-assisted workplace

Utilizing technology to capture decision-

making skills of more experienced

workers

• Use of automated tools


CONFIDENTIAL

49


• Introduction



o Utility Personnel



Agenda


CONFIDENTIAL

50Internal Operations

Internal operational issues addressed the potential to streamline the day-to-day

activities

Issues Raised

• Limited ability to use current system to engage in detailed system modeling

• Scheduling and logistics are limited in today’s environment

• Billing and metering operations impact distribution operations as well

Key Considerations

• Reduction in bill auditing can reduce operating requirements

• Enhanced system data can improve system modeling

• Can improve scheduling and logistics

• Reduced challenges resulting from metering delays


CONFIDENTIAL

51Billing

Billing issues extend beyond just the need to send accurate bills to customers

Issues Raised

• Metering delays from last February still causing drag on operations and receivables

• Bi-monthly billing a burden on water and wastewater departments as well as customers

• High degree of re-reads and audits

Key Considerations

• Reduction in read-to-bill cycles can improve organizational cash flow

• Customers would welcome switch to monthly billing

• Reduced and/or eliminated need for re-reads and audits

• No further need to catch up on metering backlog


CONFIDENTIAL

52Connect/Disconnect

The cost of disconnects and reconnects coupled with the risks associated with

bad debt make the continued development of solutions in connect/disconnect

appealing

Issues Raised

• Significant cases of meter theft

• Operational procedures result in repeated offenses and long cycles to address

• Potential bad debt issue present

• Significant percentage of transient customers

Key Considerations

• Reduced operational demand placed by non-pay customers

• Reduced bad debt• Reduced incidents of stolen

meters• Need to establish/refine

operational procedures• Ability to more quickly

respond to turn on/turn off


CONFIDENTIAL

53Customer

Each utility always strives to deliver high customer service

Issues Raised

• Customers operate on bi-monthly billing cycle today

• Limited information provided to customers on consumption or billing

• Legacy metering platform leads to certain level of read errors

• Higher than desired call abandonment rates

Key Considerations

• Establishment of customer portal to empower customers and deliver information

• Reduction/elimination of read errors

• Lower demands on call center due to bill complaints/special reads


CONFIDENTIAL

54On Cycle/Off Cycle Reading

In addition, we also unearthed a number of issues related to on cycle/off cycle

meter reading

Issue Notes

Potential billing on one date

Need to avoid bottlenecks; might want to stagger billing dates

Move in/move outCan use system to grab billing data on exact date

requested

System interactionNeed to consider impacts to existing systems;

need to account for portions

Deployment timingMight want to select certain routes for early

stage deployment

Bill auditsNeed to consider impacts to implausibles, re-

reads, work orders, outsorts, EMMAs

High bill inquiriesHow can we use system to make inquiries; any

changes to policy?


CONFIDENTIAL

55Collections/Move In & Out/Non-Pay

Collections and other issues also often plague water utilities

Issue Notes

Leak detection$1-1.5M per year in leak adjustments; could be

reduced by as much as 75%

Connect/disconnectDelays exist in cut-on/cut-off due to order

volume and geography

Retail servicesPotential to work with plumbers to deliver home

inspection services

Third party DunningProvide cut off of water service for non-pay of

sanitation fees

Stolen metersNeed to address issue of stolen and relocated

meters

InspectionsSwitch to AMI may result in lower ability to

monitor field conditions

Billing and collectionsCustomers may be able to maintain current

status better due to portal data

Billing dateAbility to select billing date could help customers

meet billing obligations

Billing date flexibilityPotential to charge customer fee to self-select

billing date


CONFIDENTIAL

56Project Scope Example

A number of technical, operational, and financial characteristics need to be

addressed to make sure the optimal strategy is uncovered

Technology

Drivers

•Operating Costs

•Customer Service

•Non-revenue

Water Mgt.

•Conservation

•Etc.

Vision, Goals &

Objectives

Financial

Situation

Requirements

•Interval Meter

Reading

•Data Reporting

Interval

•Tamper, Leaks,

Backflow, etc.

•RC Shutoff

Ownership and

Implementation

Plan

Deployment

Strategy

Economic/

Financial

Impact

Existing

Systems

•Meter Reading

•CIS

•SCADA

•GIS

•Etc.


CONFIDENTIAL

57Financial Modeling

It is always wise to develop a financial assessment of the proposed program to

make sure the system you deploy is designed accordingly

System Automation Business Model

Prepared for: Prepared by:

Business Case Results

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Benefits

Meter Reading 148,205$ 300,857$ 458,055$ 440,249$ 446,853$ 453,555$ 460,359$ 467,264$ 474,273$ 481,387$

Engineering & Planning 16,320$ 33,129$ 50,439$ 51,196$ 51,964$ 52,743$ 53,535$ 54,338$ 55,153$ 55,980$

Leak Detection 80,200$ 162,807$ 247,873$ 251,591$ 255,365$ 259,196$ 263,084$ 267,030$ 271,035$ 275,101$

Smart Pumping 4,601$ 9,341$ 14,221$ 14,435$ 14,651$ 14,871$ 15,094$ 15,320$ 15,550$ 15,783$

Total Benefits 333,998$ 977,174$ 1,651,643$ 2,382,056$ 3,180,684$ 3,590,800$ 3,678,645$ 3,758,318$ 3,838,997$ 3,913,652$

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Pro Forma Financials

Benefits 249,327$ 506,134$ 770,589$ 757,471$ 768,833$ 780,365$ 792,071$ 803,952$ 816,011$ 828,251$

OpEx -$ 132,485$ 182,831$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$

EBITDA 249,327$ 373,648$ 587,758$ 524,294$ 535,656$ 547,189$ 558,894$ 570,775$ 582,835$ 595,075$

Depreciation 132,485$ 182,831$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$ 233,176$

Net Income 116,841$ 190,817$ 354,581$ 291,118$ 302,480$ 314,012$ 325,718$ 337,599$ 349,658$ 361,898$

CapEx 1,324,855$ 503,455$ 503,455$ -$ -$ -$ -$ -$ -$ -$

Cash Flow (1,075,528)$ (129,806)$ 84,303$ 524,294$ 535,656$ 547,189$ 558,894$ 570,775$ 582,835$ 595,075$

(3,199,042)$ (653,140)$ (229,263)$ 198,876$ 659,932$ 2,074,486$ 2,086,914$ 2,083,082$ 2,094,971$ 23,887,224.37$

Financial Metrics

NPV 3,461,285$

IRR 33.9%


CONFIDENTIAL

58Implementation Support

The roadmap and implementation scenarios developed help to ensure project

success

Integration / Architecture Business Transformation

Customer & Stakeholder Engagement

Implementation Services


CONFIDENTIAL

59Benefits

Cumulative ten-year benefits come to $11.5 million

AMI, $5,168,337

Prepaid Metering, $3,128,199

Electric Operations, $2,849,775

Water Operations, $324,273

Gas Operations, $0

Ten Year Benefits


CONFIDENTIAL

60Earnings

The forecast calls for strong earnings impact

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Net Income

Total Benefits

Total OpEx

EBITDA

Net Income


CONFIDENTIAL

61Cash Flow

Annual cash flow turns positive after the deployment period and full payback is

achieved in year 8

$(4,000,000)

$(3,000,000)

$(2,000,000)

$(1,000,000)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Cash Flow

Cash Flow Cum Cash Flow


CONFIDENTIAL

62CapEx

Total CapEx over the deployment period is estimated at $7.3 million

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

CapEx

AMI

Prepaid Metering

Electric Operations

Water Operations

Gas Operations


CONFIDENTIAL

63Business Case

By targeting only programs that offer positive value, we can reduce CapEx by 21%

and increase program value by 67%

Full Deployment Optimized Deployment

Ten Year Benefits $12.3 $11.5

Ten Year CapEx $9.8 $7.7

NPV $2.4 $4.0

IRR 15.8% 24.2%


CONFIDENTIAL

64Direct Benefits

Benefits can be evaluated over the life of the forecast period based on the

characteristics of program design

AMR AMI Enhanced AMI

Internal Operations

Meter Reading Labor 7,002,295$ 14,004,590$ 14,004,590$

Smart Pumping -$ -$ 425,521$

Leak Detection - System -$ -$ 93,331$

Displaced Capital 7,140,000$ 7,140,000$ 7,140,000$

Meter Accuracy 9,148,001$ 9,148,001$ 9,148,001$

Accidents 709,202$ 2,836,810$ 2,836,810$

Salvage 465,888$ 465,888$ 465,888$

Billing

Read-to-Bill 324,385$ 648,770$ 648,770$

Bill Audit Reduction 298,858$ 398,477$ 398,477$

Re-Read labor -$ 597,716$ 597,716$

Connect/Disconnect

Bad Debt Reduction -$ -$ 1,202,807$

Field Collection Reduction -$ -$ 1,772,628$

Cash Flow Acceleration -$ -$ 4,525$

Customer

Call Center Support 2,608,821$ 3,261,026$ 3,261,026$

Leak Detection - Customer -$ -$ -$

Total Direct Benefits 27,697,450$ 38,501,278$ 42,000,091$

Direct Benefit Comparison (Twenty Years Cumulative)


CONFIDENTIAL

65Deferred Direct Benefits

This water utility also recognized the potential to avoid the forecasted costs

associated with moving from bi-monthly to monthly reads


Deferred Direct Benefit 13,316,958$ 13,316,958$ 13,316,958$

Deferred Direct Benefit Reduction 304,111$ 608,222$ 608,222$

Net Deferred Direct Benefits 13,012,847$ 12,708,736$ 12,708,736$

Deferred Direct Benefit Comparison (Twenty Years Cumulative)


CONFIDENTIAL

66Indirect Benefits

We also considered the potential to augment the business by evaluating “soft”

benefits

• Increased system modeling capabilities

• Network support for planned smart city effort

• Enhanced technology development in support of city strategic plan and economic development

• Enhanced employee safety/reduced claims

• Others?


Customer Satisfaction 3,535,573$ 7,071,145$ 7,071,145$

Carbon Impacts 20,209$ 50,522$ 50,522$

Leak Detection 5,673,620$ 14,184,049$ 14,184,049$

Conservation 465,081$ 1,162,703$ 1,162,703$

Total Indirect Benefits 9,694,483$ 22,468,420$ 22,468,420$

Indirect Benefit Comparison (Twenty Years Cumulative)


CONFIDENTIAL

67

Two of the more important functions of a utility are billing and operations

• It is inefficient and risky to have multiple sources of data floating from more than two applications

• These should either be consolidated into one, more robust application or chose multiple applications that all pull from one main

database of information

Information Management – Minimize Complexity


CONFIDENTIAL

68

After defining the information architecture and adopting standards for

interoperability, it will be important to evaluate the future framework for a utility’s

systems

Information Management – Future Applications

• GIS – Trimble

• MDM – MPower

• SCADA

• Electric – Survalent

• Water – Land

• Gas – None

• CIS – local system

The ultimate systems approach will depend on the vendor(s) chosen. Nevertheless, a likely scenario

will involve continued use of Survalent for electric SCADA and Trimble for GIS. MPower (MDM) may

be usable, but will need to be determined.


CONFIDENTIAL

69Information Management - Mobile Data

With the increased use of mobile workforce applications comes the need to

ensure a number of elements in wireless data networks

Security

Data encryption to protect data from being read by an

unintended recipient

Authentication

Only valid users are allowed on the

network to prevent eavesdropping and unauthorized use of

the data network

Mobility

Seamless and automatic roaming

between a number of wireless networks

IP Connectivity

The ability to establish and maintain

IP connectivity in a mobile environment

MVPN (Mobile Virtual

Private Network)

A secure tunnel

between the client and

customer enterprise

network that persists

as the user roams

Application Steering and Blocking

Steer or block applications from specific networks

Data Compression

Enables higher

bandwidth data or

capacity for more

users on the network

Application Session

Persistence

Maintains TCP/IP

sessions if user loses

coverage, or during

PC device power

savings mode


CONFIDENTIAL

70


• Introduction



o Utility Personnel



Agenda


CONFIDENTIAL

71

We have developed a seven-step process that allows for the effective

benchmarking of different utility functions across a diverse set of comparisons

Project Methodology

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation


CONFIDENTIAL

72

The first step involves interviews with XYZ and XYZ staff to collect data on key

processes, work functions, and output levels

Internal Data CollectionInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Key Issue: Identify performance levels and key tasks performed at XYZ

Approach: Conducted interviews with all subject matter experts, including specialists in short term planning,

long term planning, network maintenance, digital network, land mobile radios, network monitoring, network

provisioning, engineering, and finance. Collected data from each and identified key organizational

responsibilities.

Rationale: In order to complete the benchmarking process, it was necessary to start with the XYZ’s data

points. Furthermore, in order to assure the delivery of the best comparison possible, we needed to fully

understand the nature of the job requirements associated with the way in which XYZ worked. Furthermore,

this step was critical in providing initial hypotheses regarding the establishment of appropriate cost drivers.

Result: A thorough understanding of XYZ’s organizational structure was gained, which led us to focus on the

network monitoring function.

Internal Data Collection


CONFIDENTIAL

73

Detailed headcount data was collected to start the process

Internal Data CollectionInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Organization HC Cost Driver(s)

Second Level Support 8• Number of projects

• Size of network

ITMC 11• Number of projects

• Number of network elements and network size

Field Team 4• Number of projects

• Size of network

Land Mobile Radio Maintenance 6• Number of sites

• Size of network

Project Management 10• Number of projects

• Number of network elements

Provisioning 3• Number of circuits


System Design 21• Number of projects

• Size of network

Engineering, Planning 59• Number of projects

• Number of network elements and network size

Contract Labor 92.5• Number of projects

• Size of network

Engineering 4• Number of projects


3• Number of projects

• Number of network elementsOutside Plant


CONFIDENTIAL

74

Once the initial data is gathered, it is then important to determine the correct

benchmark approach

Benchmark Method

Key Issue: Identify the appropriate way to compare work loads of very different utility telecommunications

operations

Rationale: The initial goal involved benchmarking total costs; however, it was quickly determined that there

were too many variables that came into play – some of which were controllable and others not. Due to the

potential differences in labor rates, cost allocation methodologies, and burden factors outside the control of

XYZ, we chose to determine efficiency levels based on full time equivalents (FTEs) of work load rather than on

pure dollars.

Result: A view toward comparing the work loads of network monitoring functions for benchmarking was

developed.

Benchmark Method

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Approach: Interviews with XYZ Telecom and some of the early stage benchmark companies were held to

determine the commonality of group functions and overall work structure and process flow


CONFIDENTIAL

75

Based on the initial interviews, we were able to identify a set of specific definitions

for the network monitoring function that were common to all electric utilities

involved in the benchmarking effort

Cost Drivers / Activity Definitions

Key Issue: Identify a common denominator dealing with benchmarked companies.

Rationale: Once it was determined that an activity-based benchmark approach was needed, it was important

to identify the appropriate way to segment work function. Given that there appeared to be six key areas of

activity for each company (planning, maintenance, network monitoring, provisioning, engineering, and land

mobile radio), those tasks were defined.

Result: Specific definitions for each task were developed.

Activity Definitions

Approach: Extended primary research was conducted based on common areas of focus – labeled as key

activity areas – that served as unifying work functions.

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation


CONFIDENTIAL

76

Monitoring activities are focused on ensuring seamless operation of the

distribution network

Network Monitoring Definition

Network Monitoring Characteristics

• Ensuring physical and logical security of network

• Conducting remote fixes of network when available

• Major alarm investigation

• Client services associated with network monitoring

• Monitoring technology platforms within network

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

Method

Cost

Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation


CONFIDENTIAL

77

In order to establish benchmarks and compare values, data needs to be collected

from each of the target utilities

External Data Collection

Key Issue: Collect information from benchmark companies for comparison to XYZ.

Rationale: In order to ensure collecting the proper depth of information, it was important to have discussions

directly with each of the target utilities. Furthermore, in order to ensure access to as much information as

possible with as many of the key people needed, meetings at the utility locations were arranged.

Result: Data was collected from each of the three utilities in each of the areas sought. Follow up discussions

focused primarily on the network monitoring activities.

External Data Collection

Approach: Interviews with subject matter experts at three utilities were conducted at the utilities’ offices.

Additional discussions regarding changes and updates to operations or network monitoring activities since the

original benchmarking effort will continue with each iteration of this report.

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation


CONFIDENTIAL

78

Besides XYZ, three other utilities have been selected for comparison

• They were selected for their scope of operations and number of electric customers served

External Data CollectionInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

ABC DEFXYZ GHI

68,972 58,958150,000 61,861Customers

1,535,843 1,294,441640,000 283,350

Service

Territory (sq.

km)

166,700,000 54,000,000153,200,000 32,144,000System

Capacity

Note: While an attempt was made to select utilities that offered comparative value, none of the

utilities profiled provided an exact match to XYZ


CONFIDENTIAL

79

External data was gathered to support the benchmarks

• This type of organizational data helps to develop algorithms for comparing different types of operations

• By looking at overall workload, network size and complexity, we can establish calculations to balance the

research data prior to analyzing the results

External Data CollectionInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Hydro OneManitoba

Hydro

Hydro

QuebecBC Hydro

Number of Large Projects 15 3 28 13

Number of Medium Projects 30 10 38 6

Number of Small Projects 250 150 5 1

Network Elements 3,255 2965 13,462 1250Cate

gory


CONFIDENTIAL

80

Weighting factors will be applied prior to comparing values in order to normalize

the data

Weighting FactorsInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Key Issue: Establish weighting factors in order to make comparisons across companies’ activity levels.

Rationale: Since the number of network elements and the number of projects were deemed to provide even

contributions to overall workloads, the weighting factors preserved that 50/50 relationship while using an index

to tie it to a single value. The resultant weighted values will be more meaningful when compared against one

another because they are all indexed off a single value.

Result: Values appropriate to compare the work loads of other utilities to XYZ’s operations.

Weighting Factors

Approach: Initial interview results identified project related work and the number of network elements were

both significant factors in determining work load for the network monitoring function. Weighting multiples were

then established to arrive at an expression of relative workload whereby each factor accounted for 50% of the

total.


CONFIDENTIAL

81

Weighted

Projects

Network

ElementsInitial Units Final Units

BCH 350 1250 455 1.00

MTB 244 2965 493 1.08

HQC 857 13046 1954 4.29

HON 745 1250 850 1.87

484 5754

Initial Weighting 1 0.08

Final Weighting 0.00220 0.00018

Org

aniz

atio

n

Network Monitoring

For network monitoring activities, it was concluded that 50% of the work load

stems from projects and the remaining 50% by the number of network elements –

applying appropriate weighting factors accomplishes this

Weighting FactorsInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

A) Weighted projects

are calculated based

on time allocations

B) Information on the

network elements is

collected

D) Initial units are

calculated based on

weights

C) Weightings are calculated so that

average values are driven to the

desired ratio based on interviews

with target utilities

E) Final units are

based on

recalibrations


CONFIDENTIAL

82

Weighted

Projects

Network

Elements

Initial

Units

Final

Units

BC Hydro 350 1250 486 1

Manitoba Hydro 244 2957 566 1.16

Hydro-Quebec 857 13046 2279 4.69

Hydro One 580 1375 730 1.5

Average 508 4657

Initial Weighting 1 0.11

Final Weighting 0.00206 0.00022

Network Monitoring

HC UnitsUnit

Cost

HC at

HOT

HC in Excess of

HOT Efficiency

Level

BC Hydro 11.75 1.00 0.09 15.84 8.99

Manitoba Hydro 6.71 1.16 0.17 8.09 1.24

Hydro-Quebec 16.81 4.69 0.28 7.26 0.41

Hydro One 6.85 1.50 0.22 6.85 0.00

Network Monitoring

Scaling factors are also used to compare differing levels of activities

• The original interviews we conducted identified the network monitoring job functions at each of the utilities

• The procedures from Step 5, where we calculated weighted project values, established the amount of work

completed by each group

• With these two pieces of information the unit costs – headcount per work unit – can be calculated

• However, before comparing the values they must be adjusted to account for differing efficiency levels, which

is accomplished through the use of scale curve calculations

Scaling FactorsInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation


CONFIDENTIAL

83

The use of scale curves allows us to make comparisons even when operating

volumes differ widely

Scaling FactorsInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Network Monitoring Efficiency Levels

8.00

10.00

12.00

14.00

16.00

18.00

20.00

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

Work Units

FTE

s/W

ork

Uni

t

HON

HQB

BCH

MTB


CONFIDENTIAL

84

Finally, revisions are made where collected information seems suspect

ValidationInternal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Internal Data

Collection

Benchmark

MethodCost Drivers

External

Data

Collection

Weighting

Factors

Scaling

FactorsValidation

Network Monitoring Benchmarking Model

Prepared for: Prepared by:

Company A Company B Company C Company D Company E

Large Projects 50 7 33 17 5

Medium Projects 122 16 11 140 17

Small Projects 231 265 4 18 78

Network Elements 5,892 3,876 1,852 4,500 1,750

Ntwk Mntr Headcount 14.95 8.00 14.75 15.61 13.43

Weighted Projects 1,969 504 873 1,003 271

Network Elements 5,892 3,876 1,852 4,500 1,750

Initial Units 3,492 1,506 1,352 2,166 723

Final Units 4.83 2.08 1.87 2.99 1.00

Initial Weighting - Projects

Initial Weighting - Elements

Final Weighting - Projects

Final Weighting - Elements

Unit Cost 3.10 3.84 7.89 5.21 13.43

Comparable FTEs 9.35 9.30 18.57 13.88 26.81

FTEs above Industy Avg. -4.00 -4.05 5.22 0.54 13.46

% from Industry Average -29.93% -30.31% 39.14% 4.02% 100.83%

1.00000

0.25853

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