Successfully Managing Performance-Based Regulation

Background
Utilities have always used “key performance indicators” to measure how successful they have been in managing certain aspects of their business. Some of this information has been gathered to support rate cases or to report performance on a periodic basis as requested by Public Utility Commissions (PUC’s). Over the years, the source of this information has evolved from a paper-driven series of organization hierarchical consolidations, to information system silos, to data warehouses. The methods for developing and analyzing reports have also evolved from preparing manual reports at each level in the organization, to printing off and consolidating reports from each information system, to setting up data repositories for ad-hoc queries. Much, if not all, of the data is now available in electronic form directly from automated systems. However, there are relatively few integrated reporting systems. Even the ones that have been developed don’t provide a mechanism to focus your attention to where it is most needed. The importance of monitoring and managing key business processes is even more important today as utility commissions are beginning to incent utilities to either maintain or improve levels of service quality by linking profitability to service quality performance metrics. This shift in regulation has led to a new term – Performance-Based Regulation (PBR). Not surprisingly, utilities are looking for ways to focus their attention on the key business issues that can improve overall company performance, maximize their rate-of-return, and avoid costly penalties.

The Situation
Executives and managers have more responsibilities, more pressures, and less time to peruse a multitude of reports and make decisions in today’s more competitive and ever-evolving electric utility industry. Silos of information exist that can supply all kinds of data concerning the company’s performance. Work Management Systems report on crew performance. Scheduling systems report on commitment date performance. Outage Management Systems report on service reliability performance. Consequently, management has to access each system separately, analyze the information, and then compare the analyses from the different systems or sources to determine where they need to focus their attention. Even recently deployed ERP systems present difficulties in accessing the data and presenting it in a format that is intuitively useful to a utility manager. There are numerous reports available either directly from the systems where the data is housed or from efforts to compile and consolidate the data from different systems and organizational levels. The big questions now are: “Where should I be focussing my attention?” and “Which aspect of how the company is performing should I be spending time on?”