The ScottMadden Energy Practice


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Since 1983, we have been energy consultants. We have served more than 300 clients, including 20 of the top 20 energy utilities. We have performed more than 2,400 projects across every energy utility business unit and every function. We have helped our clients develop strategies, improve operations, reorganize companies, and implement initiatives. Our broad and deep energy utility expertise is not theoretical—it is experience based.

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The ScottMadden Energy Practice

  1. 1. Copyright © 2014 by ScottMadden, Inc. All rights reserved. The ScottMadden Energy Practice
  2. 2. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 1 Who We Are ScottMadden is a management consulting firm with more than 30 years of deep, hands-on experience. We deliver a broad array of consulting services—from strategic planning through implementation—across many industries, business units, and functions. WHAT IT TAKES W E D O TO GET IT DONE R I G H T  More than 2,400 projects  More than 300 clients including 20 of the top 20 energy utilities  Every business unit, every function ENERGY  More than 1,100 projects  Clients range from entertainment to energy to high tech  Unmatched experience with more clients and more solutions CORPORATE& SHAREDSERVICES  Unique perspective built on 30 years of energy experience  Solutions for clean and renewable sources of energy, smart energy management, and sustainability CLEANTECH& SUSTAINABILITY
  3. 3. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 2 We believe that client success is the best measure of our own success. We listen carefully to our clients’ challenges, concerns, and goals so we can personalize our work and focus on the things most important to their success. We don’t solve problems with canned methodologies—we help our clients solve the right problem in the right way. We do what we say we are going to do with genuine passion, tenacity, and integrity throughout the entire process. S c o t t Ma d d e n : SMART. FOCUSED. DONE RIGHT. “They were able to offer more customization vs. a cookie- cutter consulting project plan or proposal. Exactly what we’re looking for.”
  4. 4. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Our energy utility expertise has been built over more than 30 years. It is experience based, not theoretical. Our capabilities are broad and deep. Chances are we have seen and solved a similar problem. E X P E R I E N C E We have helped our clients develop strategies, improve operations, reorganize companies, and implement initiatives. S E R V I C E S We perform projects across every energy utility industry business unit and in every function. Since 1983, we have served more than 300 clients and completed more than 2,400 projects. S C O P E 20 OF THE TOP 20 ENERGY UTILITIES HAVE ENGAGED SCOTTMADDEN. 3 ScottMadden Knows Energy
  5. 5. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 4 Representative Capabilities  Strategic planning  Business planning  Operational excellence and best practices  Playbook and management model  Process improvement  Organization design and staffing  Smart Grid  Renewables  Environmental  Regulatory  Mergers and acquisitions  Benchmarking  Corporate and shared services  Clean tech and sustainability “I’ve used many consulting services during my career, and no other firm ever delivered on the promises they made better than ScottMadden.” G E N E R A T I O N C O M P A N Y P R E S I D E N T
  6. 6. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 5 Areas of Focus GENERATION Our practical expertise in nuclear, fossil, and renewables helps clients implement leading practices for fleets and individual plants to improve and sustain results. DISTRIBUTION/SMART GRID We help our clients manage their distribution businesses in this changing environment with a continued focus on managing cost and ensuring reliability. TRANSMISSION We provide broad, deep energy expertise coupled with practical business acumen to help companies navigate transmission challenges with solid business advice. VERTICALLY INTEGRATED UTILITIES/PUBLIC POWER, MUNICIPALS, AND COOPERATIVES We have performed numerous projects for leading players in every area of the business. REGULATION AND RATES We offer extensive experience in addressing the strategic and operational challenges posed by energy regulation to help our clients succeed in today’s turbulent times. GAS We help companies adapt to rapid change in the natural gas industry by providing strategic and operational improvements that deliver value to clients.
  7. 7. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Consulting Approach C O N T E N T D E E P We know energy and have worked across every energy utility business unit and every function for more than 30 years. P E R S O N AL I Z E D We begin by listening to our clients’ situation, challenges, and goals; then we personalize our work to help them succeed. C O N T E X T U AL We don’t solve problems with canned methodologies—we help our clients solve the right problem in the right way. C O L L AB O R AT I V E We engage with our clients like no other firm does, working side by side to produce results. R E AL R E S U LT S Our work is practical and can be put into play immediately. We excel at helping internal stakeholders take ownership to continue producing results after our work is done. 6
  8. 8. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 7 Representative Clients Transmission Delivery Utilities Regulation GasGeneration Note: Representative sample; not all-inclusive of clients served. Excludes numerous well-known clients due to confidentiality agreements
  9. 9. Copyright © 2014 by ScottMadden, Inc. All rights reserved. 8  More than 30 years in the energy industry gives us unmatched experience  More than 2,400 projects means “most likely” we’ve seen a similar issue or solved a similar problem D E E P E X P E R T I S E  Before we begin any project, we sit down and listen to our clients’ needs and challenges  We engage with our clients like no other firm does, working side by side to create practical, real results  We don’t employ canned methodologies or cookie-cutter solutions. We work to solve the right problem in the right way P E R S O N A L I Z E D A P P R O A C H P H I L O S O P H Y  We are personally invested in every project and measure our success by our clients’ success  We listen to our clients’ needs and put their best interests ahead of our own  We work with integrity, tenacity, and a genuine passion for what we do  We do what it takes to get it done right More than 30 years later, our very first client is still with us today. Why ScottMadden? “Outstanding job of selecting really good people that have the experience, knowledge, and insights.”
  10. 10. Copyright © 2014 by ScottMadden, Inc. All rights reserved. S. Bradley Kitchens President and Chief Executive Officer ScottMadden, Inc. 3495 Piedmont Road Building 10, Suite 805 Atlanta, GA 30305 404-814-0020 ScottMadden, Inc. 2626 Glenwood Avenue Suite 480 Raleigh, NC 27608 919-781-4191 Stuart M. Pearman Partner and Energy Practice Leader Contact Us 9
  11. 11. Copyright © 2014 by ScottMadden, Inc. All rights reserved. National Nuclear Fleet Operator Fleet Operating Model Development and Implementation ScottMadden worked with this operator to determine how to put an approach in place to operate a fleet of plants that had grown through acquisition and continued to operate independently. We began with a formal assessment of their current approach against criteria of a stronger fleet model. Gaps were identified, and a long-term transition plan was implemented. Standards were set for organization, staffing, tiered indicators, regular management meetings, business plans, functional area ownership, and improvement plans. Large Unregulated Fleet Operator Site Performance Improvement Applying Fleet Standard ScottMadden worked with an underperforming nuclear generating station to improve operational performance by identifying and closing gaps to the proven standard fleet operating model. This included facilitating initial assessments to identify quick wins, followed by a thorough gap assessment for each functional area in order to create gap-based improvement plans. This process has been recognized and recommended in the industry as a best practice. Single-Site Nuclear Operator Reorganization and Staffing ScottMadden led a corporate downsizing effort for a single-site, dual-unit, non- fleet nuclear operator. The initial phase of the project included working with executives to determine the right staffing targets, working with functional areas to perform a detailed workload analysis of their plant in comparison to top- performing peer operators, and assisting the functional area teams to develop staffing recommendations based on leading practices to the executive review team. The final phase of the project included working with human resources to develop a selection process that was legal, fair, and equitable for all parties and assisting plant leadership with the selection process. N U C LEA R Generation Representative Qualifications 10
  12. 12. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Large Fossil Utility Fossil Power Playbook Development ScottMadden assisted our client in developing a playbook structure for consistent management practices across their fossil business. To execute this project, ScottMadden adapted our model for this approach to the unique needs of our client. The approach focused on both management controls—how we run the business and hold people accountable—and operational processes—how we run and maintain the units. We leveraged best practice policies, processes, and procedures in dozens of functional areas to ensure our client had a successful operating model and assisted with the implementation. Our client saw dramatic results in operational and management performance metrics. Multiple Large Fossil Utilities and Unregulated Generators Fossil Operations Restructuring ScottMadden assisted our clients in designing and implementing an organization structure and reporting relationship changes in their fossil organizations. This was a multi-phased project which included current state analysis, functional mapping, organization design, staffing selection methodology, and implementation and communications. Generation Representative Qualifications FOSSIL 11
  13. 13. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Large Utility Renewable and Clean Tech Project Evaluation Pipeline Process ScottMadden assisted a large utility in the development of a renewable and clean tech project pipeline screening and evaluation process. Scope included the major renewable and clean tech projects such as biomass, wind, solar, and energy storage. The evaluation pipeline was geared for acquisition of assets or companies, and the pipeline process evaluated projects that were operational, had commenced construction, had just applied for permits, or were just “on the drawing board.” R EN EWA B LES Generation Representative Qualifications 12
  14. 14. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Independent System Operator Wind Penetration Impact Study ScottMadden conducted a comprehensive study of the impacts of wind generation penetration on the transmission grid. This study assessed the issues associated with increased wind generation such as intermittency, the need for increased voltage regulation, and the need for firming capacity. We also estimated the cost of remediating these issues. Large Wind Developer Wind Development Organization Business Plan ScottMadden assisted a large wind developer in developing a formal business strategy and business plan. This included the market, regulatory, economic, and legislative framework to shape development of the company wind business. The business plan also analyzed key drivers shaping wind generation demand, such as coal plant retirements, natural gas supply and price projections, transmission availability, expansion of state renewable portfolio standards, the turbine technologies, and others. Large Wind Developer Wind Development Organization Project Management Process Assessment and Improvements ScottMadden assisted a large wind developer in assessing, improving, formalizing, and documenting the processes used to manage wind generation projects from cradle to grave (origination to commercial operations date). The project resulted in the formation of a project management organization structure to coordinate all the activities needed to successfully manage a wind generation project to completion. ScottMadden conducted similar assessments for the same developer in construction management and safety. Generation Representative Qualifications R EN EWA B LES W IN D 13
  15. 15. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Large Municipal Utility Rooftop Solar Rate Strategy ScottMadden worked with a large municipal utility to refine the strategy and rate structure for customer-owned rooftop solar generation. The new approach was targeted at providing a better alignment with the cost of solar integration and involved the development of a value of solar rate to replace their then-current net-metering rate. ScottMadden also led the development of an implementation plan and detailed communication plan to support the change. Generation Representative Qualifications R EN EWA B LES SOLA R 14
  16. 16. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Large Resource Management Company Biomass Strategic Option Development ScottMadden assisted a non-utility large resource management company in developing a comprehensive biomass strategy, including feedstock assessments, generation plant-size determinations, PPA structures, and internal skill assessments. Since the client had no experience in electric utility operations, the development of PPA pricing, terms and conditions, and transmission interconnection were particularly useful. R EN EWA B LES B IOMA SS Generation Representative Qualifications 15
  17. 17. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Independent Transmission Company Operations Center Design and Implementation ScottMadden led the development of a comprehensive plan to build a new transmission operations center to take over operations of a transmission system being divested by the incumbent integrated utility. Once the plan was finalized, ScottMadden managed the project to build the operations center. This project included building a facility to house system operations, implementing a new energy management system, upgrading remote terminal units in the substations, provisioning a new telecom network, and developing all policies and procedures that would be used to manage the new organization. Transmission Company in the Midwest Transmission Strategy Project ScottMadden was retained by a large multi-state utility to assess existing transmission project requests, near- and long-term state commission expansion plans, and multi-state regional transmission and generation planning group goals. We helped the client prepare the five- to ten-year landscape for likely transmission construction projects. Potential projects were evaluated on the likelihood of project approval in the regulatory arena, costs to construct, and perceived benefits (including regulatory return), improved system reliability, and increased system stability. The study produced a rank-ordered listing of projects that would result in stabilizing capital investments over a multi-year horizon. Independent Transmission Company Operational Strategy ScottMadden assisted a transmission owner in selecting the strategy and technology by which it would manage its newly built transmission assets. ScottMadden helped the organization select the appropriate energy management system and telecommunications solution to facilitate remote operations. The solution enabled the client to minimize local energy management system equipment and software and leverage the organization’s significant IT resources in another state. This work also allowed the organization to maintain a local control center with proximity to the transmission assets. TR A N SMISSION / SMA R T GR ID Transmission Representative Qualifications 16
  18. 18. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Regional Transmission Operator Control Area Consolidation ScottMadden assisted a large North American RTO with a strategic assessment of implementation options for consolidation of balancing authority functions and the rollout of an ancillary services market. The project scope included development of operational requirements and potential configuration options for consolidation. In addition, a comprehensive cost/benefit study was performed to model the economic benefits of consolidation and estimate the financial impact of various implementation choices and trajectories. The project mapped out development of a virtual balancing authority and subsequent transformation into a physical balancing authority. This was implemented successfully. The client used this analysis to support the development of a FERC filing on the potential benefits of this consolidation. Regional Transmission Organization Generation-Transmission Interconnection Process Development and FERC Tariff Submission ScottMadden assisted an RTO in revamping their interconnection process to accommodate the large influx of renewable interconnection requests into the queue. The project included management of the RTO stakeholder process. Stakeholders included those involved in RTO planning and asset management, regulatory groups, the transmission owners in the RTO footprint, generating entities in the footprint, FERC, state regulators, and a wide array of lobbying groups. ScottMadden helped develop the interconnection process and provided subsequent assistance in revising internal business processes and drafting sections of the FERC tariff, which was approved by FERC. Regional Transmission Organization Implementation of an Energy Dispatch Market ScottMadden assisted an RTO with the implementation of an energy dispatch market, including day-ahead and real-time markets, asset management, and back-office functions. ScottMadden designed the post-market launch organization structure and assisted the RTO with certification to FERC of readiness to open the energy market. MA R K ETS / R TOs/ISOs Markets/RTOs/ISOs Representative Qualifications 17
  19. 19. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Investor-Owned Utility Smart Grid Demonstration Grant ScottMadden assisted a large northeastern utility in managing a Smart Grid Demonstration Grant within the American Recovery and Reinvestment Act (the Stimulus package). This program was designed to further Smart Grid capabilities in electric distribution systems. It included advanced meter infrastructure and associated distribution system automation and data utilization, piloting of energy storage applications, electric vehicle charging, facility functionality, and electric grid stability applications to facilitate expanded penetration of renewable energy resources. This suite of applications and functions was designed to use alternative resources to help improve the functionality of the T&D system. Visualization of the various resources was another important part of the demonstration. ScottMadden developed the program infrastructure, project execution plan, and earned value management models to manage the project. We provided day-to-day program management support to the client across multiple sub-awardees and internal utility departments. Electric Utility in the Northeast Capital Project Planning Process Development ScottMadden was engaged by this client to develop a new capital project planning process to support more robust business plans and budgets. Working with stakeholders across T&D operations, ScottMadden developed a stage-gate process, defining the thresholds of approval required for various types of projects. Key stakeholders of the process were engaged to ensure that all project team members were fully committed to the revised procedures. This work also included development of a project close-out process. The new stage- gate process was implemented successfully in the following year’s planning cycle.D ISTR IB U TION / SMA R T GR ID Distribution/Smart Grid Representative Qualifications 18
  20. 20. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Southeastern Vertically Integrated Utility Merger Integration ScottMadden assisted an energy company with the integration of an acquisition of a $3+ billion energy company. The acquisition received close scrutiny from Wall Street and industry observers. The identification and realization of cost reduction synergies were key elements for this post-acquisition integration effort. We set up the integration approach in the first 30 days and identified synergy and integration opportunities in the next 90 days. We also supported organization redesign, staffing, and detailed process integration. The deal closed in record time for the energy industry. Synergies identified, and ultimately realized, met the highly ambitious targets initially announced to Wall Street. Attendant earnings and growth targets were in line with estimates. VER TIC A LLY INTEGRATED UTILITIES Vertically Integrated Utilities Representative Qualifications 19
  21. 21. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Public Power Agency Strategic Planning ScottMadden assisted one of the largest public power agencies in the United States with the development of its strategic plan. The plan was designed to optimize the business across multiple stakeholders with differing interests, reduce risk, and ensure a continued supply of low-cost power over the long term. We helped identify, and mitigate, significant risks to the business. ScottMadden performed the analysis, helped develop the strategy, and presented it to the Board. The plan is being implemented successfully and is routinely in the news. Generation and Transmission Cooperative Strategic Planning ScottMadden provided strategic planning leadership for a G&T cooperative. We provided an assessment of the current state; worked with the Board and executive leadership team to craft a new vision, set strategic objectives, and develop an implementation plan; and established an integrated strategic planning calendar. Municipal Utility Business Plan Development ScottMadden supported the first evolution of a municipal utility’s enterprise business plan development. We designed the business planning process to link operational performance to strategic plans and created the methods, templates, metrics, and other infrastructure required for execution. We project managed 11 teams from all operational and support services business units through the development process. ScottMadden provided project management and analysis support for the teams throughout the project and helped author the enterprise consolidated business plan. The project resulted in a comprehensive, two-year company business plan focused on achieving very specific results by addressing the root causes of existing gaps between current and first-quartile performance. PU B LIC POW ER , MU N IC IPA LS, A N D C OOPER ATIVES Public Power, Municipals, and Cooperatives Representative Qualifications 20
  22. 22. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Investor-Owned Electric Utility Future Test-Year Support ScottMadden assisted an electric utility in maximizing its probability of success with a future test-year rate case filing. Concerns existed around current budgeting and financial management processes. Internal resources were constrained in the midst of mounting integration, documentation, and business process improvements. The budgeting process and assumptions were documented, and the O&M budgeting process was redesigned to improve accuracy. Variance reports were designed and installed across business units. We also performed an evaluation of the capital project process, with associated recommendations designed to improve accuracy and efficiencies. Investor-Owned Utility in the Southeast Rate-Making Process Assessment The company established a goal to: (a) reduce regulatory lag; (b) harden its regulatory filing development process; and (c) capture institutional knowledge of its regulatory filing development process. ScottMadden was retained to help improve the speed and accuracy of the rate-making process by examining the potential benefits of improvements on the revenue side of rate filings, enhancing information reporting and analytics, and automating the process through potential technology solutions. We completed a detailed analysis of the sub-processes, people, and systems underlying the utility’s ratemaking efforts. Recommendations addressing each of the key findings were developed and prioritized considering a number of factors, including (a) cycle-time days saved; (b) workforce/work management benefits; (c) costs; and (d) risks. A revenue deficiency of $60 million translates into an additional $5 million in revenue for every month the cycle time can be reduced. We were able to help the company trim five weeks from their timeline—a potential earnings impact of almost $6 million.R EGU LATION A N D R ATES Regulation and Rates Representative Qualifications 21
  23. 23. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Investor-Owned Utility in the Midwest Rate Case Support ScottMadden assisted a utility in the Midwest in its response to commission inquiries about affiliate interest issues, cost separation methodologies, and the rationale for proposed increases in the company’s cost-of-service filing. ScottMadden developed detailed documentation and supporting work-paper templates for capital and O&M budgets, facilitated template completion by the business units, sample-tested capital budget items to ensure adequate separation of regulated and non-regulated projects, and assisted the client in submitting new filing. Regulation and Rates Representative Qualifications R EGU LATION A N D R ATES 22
  24. 24. Copyright © 2014 by ScottMadden, Inc. All rights reserved. Gas Utility Strategic Sourcing Assessment and Implementation ScottMadden assessed the potential savings achievable through strategic sourcing at a large gas utility. We developed and executed a plan to achieve these savings through the establishment of client-led teams. This effort involved team selection and training and the implementation of leading practices in spend and market analysis, sourcing strategy, RFP development, proposal evaluation, negotiations, and contracting. Our approach not only yielded cost savings for the client but also established a new capability in the organization. Multiple Gas LDCs Business Process Improvement ScottMadden managed large multi-team projects to assess LDCs’ current state processes, functions, and organizations and led teams through developing future state designs and business cases to support implementation. ScottMadden provided the methodology, supported project management, facilitated and performed analysis, offered best practices, supported communications and change management, and helped to develop deliverables. Projects improved business results, service levels, and operating efficiencies, increased employee engagement, and helped develop a new culture of continuous improvement. The project was cited in the client’s subsequent Wall Street analyst presentations and annual reports. Gas LDC Organization Analysis ScottMadden conducted an organizational structure analysis for a large gas LDC by comparing current state practices to best practice benchmarks, including spans of control, layers, and cost to manage. The analysis resulted in identification of potential areas of improvement. These opportunities would result in a structure aligned with corporate strategy, efficient decision making, clear accountabilities, increased morale, and the potential for significant savings. GA S Gas Representative Qualifications 23