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Driving Electric
Distribution Excellence
January 2014
Introducing PwC power & utilities advisory practice

• 30%+ CAGR since 2007; recognized leader in operations consulting by analysts

• Solve client’s most complex problems by applying a portfolio of connected capabilities: financial, customer, regulatory, asset and
work management, human assets, and risk
• Dedicated utilities practitioners focused on “changing the way company operates, sustainably”
Recent Utility Consulting Clients Connected Power & Utility Model Transform Methodology
Strategy Design Construct Implement Operate
& Assess & Review
Assets Employees
Driving
Integrated programme and benefits management
Change
Core X1

Core Drivers of Operational

Customers excellence Regulation Core
Value in the Modules
Integrated change management and communications
Core X2

Utility Industry
Roll out and stabilise
Understand the Embed operating model
Risk Cost business need, generate
Design operating model
changes to optimise
Build and test operating
model changes needed to
operating model
changes and plan changes into business as
insights and provide usual, realise benefits and
management effectiveness options for change
benefits realisation deliver benefits subsequent
benefits delivery continuously improve

Core 1 Core 2 Core 3 Core 4 Core 5

Fiscal Integrity Commodities

Customer
Offering
Capabilities Each value driver requires different set of capabilities
Delivering +
Process
Change

Strategy
Technology

Structure Information

Scope
Connected People
+
specific Organisation
Modules
Dimensions Process + People
Capabilities

+ Corporate
Technology Structure

Competency toolkits and methodologies

Data

Lean Distribution Benchmark

Quantitative Benchmarks Quantitative Benchmarks Analytics
Analysis of key performance and Process and system maturity via s Data cleansing, analysis, insights
financial metrics structured assessment model and presentation

Extensive client experience and benchmark database

Specific T&D Operations Improvement Opportunities and Quantitative Value Propositions

January 2014
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Our perspectives on distribution improvement levers

Opportunities Distribution Efficiency levers Improvement range based on PwC experience*

• Troubleman and off hour crew coverage • 10 – 15% reduction in restoration OT spend
Crew productivity — • Shift filling • 30 – 40% reduction in O&M restoration stand-by
restoration • Restoration response process and crew size cost (shift to capital)
• Troubleman stand-by time • Improved CAIDI

• Crew size optimization

Crew productivity — • Unproductive time minimization
• 15 – 25 minute improvement in productivity per
maintenance and • Scheduling effectiveness
crew per day
construction • Design constructability
• Contractor spend management

• Contractor unit cost reduction

• Change control/adder reduction • 7 – 10% reduction in unit cost pricing
Contract management
• Lump sum guidelines • 20% reduction in contractor adders
• Internal/contract resource optimization

• Tightened criteria for Inspectors creating and/or prioritizing • 5 – 10% reduction in time spent on corrective
Work planning and initiation
follow-on work “tickets” maintenance work

• Focused expenditures
Reliability planning • Centralized program management • ~10% reduction in discretionary reliability spend
• “Biggest bang for the buck” prioritization

• Reduction in number of approved variations for key OH and

• 5 – 10 minute increase in M&C Crew productivity
UG asset types (poles, transformers, switches, conductor)
Standards simplification per crew per day
• Reduced variability in construction methods for simplified
• 5 – 10% reduction in material costs
asset standards

* Improvement ranges shown are based on similar PwC engagements at other utilities.
January 2014
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Our capabilities and experiences in driving distribution improvement

Asset Technology Regulatory

Work Management
Management Enablement Compliance

Client Problem statement Results

Large Southeastern US Crew productivity improvement needed to meet 11% increase in productive crew hours, resulting in $4.5M savings in reduced
Electric Utility O&M cost reduction goals contractor spend
Central US Utility Needed a reduction of $400K in crew overtime to Implemented solution saved $1.1M via reduced crew/T-men holdover and T-
meet budget men shift fill
South Central US Gas Implementation of mobile work mgmt. system to Improved cost effectiveness (cost/activity) by 3%; Achieved 8% saving in fuel
and Electric Utility improve crew productivity costs; Reduced payroll growth by $19M over 5 years
Large Western US Large, growing backlog of electric distribution Within the first year, reduced compliance maintenance backlog by 30%,
Electric Utility maintenance work orders, budget overrun, and reduced new maintenance work initiation by 50% due to tighter criteria, and
compliance risk achieved no steady state past due work orders; 50-60% O&M savings in cost of
minor repair work; 30-40% clerical support reduction
Large Western US Crew schedule not filled with construction-ready Crew schedule attainment improved by 66%; Material overdraw rate (material
Electric and Gas Utility work resulting in unproductive and idle crew time delivered but not used) improved by 30%
Large Western US Declining customer satisfaction, poor schedule 50% reduction in call center volume via web self-service; 25% improvement in
Electric and Gas Utility attainment and high cost of service for short on-time job completion and 50% reduction in cycle time
cycle new business work
Large Western US Needed to build a systematic means to achieve Built an Electric Operations continuous improvement center of excellence using
Electric and Gas Utility $100M in cost savings committed in rate case lean six-sigma; $30M in cost efficiencies in 1st year
Midwestern US Electric Electric unit was “rev-locked” on unsupported Brought the electric and gas units together onto a single CGI ARM Suite
and Gas Utility version of ARM Suite; gas unit had no single platform where all work and asset data was in a single system
system for asset and work data
Midwestern Gas Utility Insufficient technology platform and process Implemented Maximo 7.5, Oracle CC&B and Oracle EBS; solution enabled
standards to grow through acquisition acquisition of another gas co. to become largest in the state

January 2014
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Distribution improvement requires an end-to-end approach, with
consistent metrics

Initiate Design/ Schedule/ Execute Close

Plan Assign
Work types

Construction

Maintenance

Customer Orders

Restoration

Work and Resource Management

January 2014
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PwC’s view on work and resource management/scheduling

Workload Resource

Construction WRM/Scheduling Process Regular Time

Work Priorities
Workforce

Workforce Supply (hours)

Planned
Work Demand (hours)

Strategic
Preference
(Economics) overtime (OT)
(Annual)
Maintenance
Budget Tactical
Fixed Bid Contract
(monthly)
Constrains Standard Unit Price
Operational Contract
Customer Orders (Weekly/Daily
Workforce Time & Materials
Work to Balance Work/Resources, Set/Adjust Preference Contract
be done Plan/Schedule, Monitor Results (Skills)
Restoration Unplanned OT

Key performance indicators

Plan vs. Actual Budget Productive Time Schedule Attainment Unit Cost Variance Work Backlog
Variance (“Time on Tools”)
Foundation
Governance • Defined governance model and decision Data • Accurate, reliable data from an agreed-upon source
making processes of truth
• Strategy for using key levers (e.g., OT, contractors) • Consistent analytics used centrally and in the field
Accountability • Clear roles & responsibilities, exec/field Processes • Standardized tools/processes/reports
buy-in, comms and tools • Portfolio-wide management capabilities
• Clear understanding of priorities, performance metrics
January 2014
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Typical distribution workflow pain points

Design/Plan Schedule/Assign Execute

• Non-constructible designs • Backlog of compliance and other priority work • Scheduled jobs not worked as planned
• Inconsistent designs across locations and • Pre-construction tasks poorly coordinated • Unscheduled work frequently performed
companies • Job sites not ready for construction • Inadequate contractor coordination
• Work packages submitted late • Material and equipment not ready when needed • Jobs not completed on time
• Incomplete packages • Crews under-utilized • Missed customer commitments
• Unnecessary planned outages • Lack of view into progress
• Ineffective work breakdown
• Poor date management
• Design, Scheduling and Field do not communicate effectively within locations
• Work & Resource Management does not coordinate across locations to balance work and resources
• Lack of a single source of truth for operational data; inconsistent analytics

Consequences: Excessive unit costs and budget overrun; throughput impediments and work backlog; inability to meet capital
plan; dissatisfied customers

January 2014
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Potential distribution improvement solutions

Design/
Initiate Schedule/Assign Execute Close
Plan

Schedule/Assign

• Cadenced work and resource management sessions – plan, • Crews scheduled to capacity
review, adjust
• Crew size optimization
• Integrated local construction work teams
People & Process • Planned outage minimization
(design, scheduling, field)
• Effective work bundling
• Compliance work management
• Automated crew call-out
• Contractor management

• % of crew available time scheduled (95%+) • % schedule preventable delays (<10%)

• % of scheduled crew time actually on the job (“time on tools”) • % false starts (e. g., jobsite not ready, missing material)
Key Performance (70 - 80%) (<10%)
Indicators* • % of unscheduled, non-emergent orders worked (<10%) • % of compliance work completed within target window (100%)
• % of orders worked and completed within scheduled • % of commitment dates met (95%)
time (90%)

Technology • Metrics dashboard, reports, and queries • Ability to handle resource changes and emergent work

* () indicates leading performance

January 2014
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Potential distribution improvement solutions

Design/
Initiate Schedule/Assign Execute Close
Plan

Design/Plan Execute

• Design constructability • Crews out of yard on time

• Reduction in designs requiring planned outages and switching • Jobs constructed as designed
People & Process • Adherence to scheduling lead times • Construction methods standardized and optimized
• Third party coordination • Specialty crews utilization
• Construction pre-release coordination • Project progress tracking

• % increase in throughput (5 – 10%)

• % orders returned to Design (<5%)
• % decrease in “cost pers” for standard units (5 – 10%)
Key Performance • % orders meeting Scheduling window (90%)
• Avg. time for crew to depart yard (15-20 min)
Indicators* • % deviation work estimates vs. actuals (<10%)
• % orders complete as assigned (90%)
• % orders re-scheduled (<5%)
• % variation of overtime from target (< 10%)

Technology • Template-based designs for repetitive work • Real-time work order status reported from field

* () indicates leading performance

January 2014
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Implementation challenges in a distribution environment

Complexities
• Process optimization across multiple companies/states
• Balancing centralization with local operations autonomy
Corporate
• Planning/balancing work demand and resource supply
Balancing • Managing multiple regulatory bodies and unions
Regions/Jurisdictions
management
push with
employee pull In-State Groupings of Districts • Linkage between corporate and state-level objectives with
localized planning and execution

Districts/Operations Centers • Maintaining/tracking process and execution consistency across

local Districts
Employees Responsible for Execution • Employee adoption and execution of process standards

Lessons learned – avoid the following:

“Big Bang”, inflexible/complex design, “One Size Fits All”, “retrofit” people and process for tools, inadequate change management,
lack of business ownership and accountability, unclear operational metrics

January 2014
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Consider two parallel threads – Local workflow improvement and
regional/system work and resource management

1 Local workflow
Metrics Organization Capability
improvement ~80-90% Common core solution
• Consistent • Roles and • Training/skill
Consistent across OpCos/Districts
methods responsibilities development
District • Targets reflect • Accountability • Continuous
local variation • Process improvement
~10-20% Local variation
• Relevant peer ownership
Variable across OpCos/Districts benchmarks

2 System Work
OpCo/Region • Work planning and initiation • Resource planning • Performance
and Resource
• Work priorities • Contract labor management
Management

Corporate Continuous Improvement System

January 2014
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Thread 1 – Local workflow improvement

“Live in the District” Philosophy: engage employees at a grass-roots level to build and deploy an enhanced scheduling model; the
same core team engages and rolls-out the model in the other OpCo districts; finally take the model to the remaining OpCos and follow
the same engage-build-deploy approach until deployed in all districts

Assessment and Solution Design Initial Implementation and Pilot Rollout

Key deliverables/ • A core, integrated “high efficiency” • High efficiency process model deployed in • High efficiency process model rolled out
outcomes end-to-end work and resource a small set of districts; system-wide rollout system-wide, customized to OpCo/district
management process model plan developed requirements
• Sustainability objectives achieved
High level approach • Core design teams “live in the • Core teams work with districts to • Core team deployed for rollout to other
district”, engage employees, apply a implement comprehensive pilots districts
structured solution development • Roll out in waves
methodology
Duration • 2-5 months • 2-3 months • In waves

Locally Based Scheduling: “Living in the District”

Employee engagement Sustainability
Team Project Lead
• Multiple employee engagement • Robust training developed and
Structure District Ops SME
workshops to develop/vet delivered by the core team
scheduling improvements • Process ownership, governance,
• Hands-on, “in the district” design maintenance and performance
District 1 Core Team District 2 Core Team District 3 Core Team
and deployment approach accountability clearly defined
Supervisor Foreman Supervisor Foreman Supervisor Foreman

Line Line Line

Lineman Lineman Lineman
Servicer Lead Servicer Lead Servicer Lead

Dispatcher Co-Lead Work Dispatcher Co-Lead Work Dispatcher Co-Lead Work

Scheduler Scheduler Scheduler

Meter Technician Meter Technician Meter Technician

Specialist Specialist Specialist

Extended Team Extended Team Extended Team

SMEs SMEs SMEs

January 2014
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Thread 2 – System work and resource management

“Best of breed” system-wide process defined by the territories: establish centralized policies and processes to optimize
system-wide work and resource management based on best practices; model enables centralized decision-making that drives
execution strategy within the states and districts

Assessment and Solution Design Initial Implementation and Pilot Rollout

Key deliverables/ • Decision-making model for • Pilot at a quarterly work and resource • Model rolled out system-wide, customized
outcomes workforce planning, control, mgmt. meeting; decisions cascade to one to OpCo/district requirements
execution, metrics state’s districts for execution; feedback • Sustainability objectives achieved
• Defined meeting sequence loop identifies improvements
(cascades from system down to • System-wide rollout plan developed
district and back),
roles/responsibilities, data model
High level approach • Cross-territory core team defines • Design team facilitates quarterly and • Core team deployed for rollout to
process based on system and monthly meetings, supports execution of remaining states/districts
industry best practices, defines plan by the pilot state/districts • Roll out in waves
long-term model
Duration • 2-3 months • 3-6 months • In waves

System Work and Resource Management

Employee engagement Sustainability
Project Lead
• Cross-territory team engaged to • Robust training developed and
Work and Resource Management SME
define/vet process improvements delivered by the core team
Team
Structure that optimize central planning • Process ownership, governance,
with decentralized execution maintenance and performance
Core Team
• Hands-on rollout by design team accountability clearly defined
Carolinas FL
Supervisor Supervisor that supports end-to-end process
Carolinas
Scheduler Lead
FL
Scheduler
from central decision-making to
Midwest Co-Lead
district execution and back
Supervisor Finance

Midwest WRM
Scheduler

Extended Team
SMEs
January 2014
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PwC contacts

To learn more, please contact:

Jian Wei Chester Lee Andy McKenna
Partner, Power and Utilities Partner, Power and Utilities Managing Director, Power and Utilities
Phone: (415) 498 5270 Phone: (703) 731 3551 Phone (978) 846 1810
Email: jian.wei@us.pwc.com Email: chester.c.lee@us.pwc.com Email: andy.mckenna@us.pwc.com

January 2014
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