A public power utility that can effectively adopt and implement tools in areas such as safety and reliability will reap a number of benefits, the American Public Power Association’s Mike Hyland and Alex Hofmann said at the Association’s recent National Conference where they detailed strategies for utilities to up their operations games.
Hyland, Senior Vice President, Engineering Services at the Association, and Hofmann, the Association’s Senior Director, Energy & Environmental Services, spoke at a session at Association’s 2019 National Conference in Austin, Texas, earlier this month.
Throughout their presentation, Hyland and Hofmann highlighted the variety of ways that the Association can assist member utilities when it comes to leveraging data and encouraged member utilities to take advantage of the programs that the Association has to offer.
In a blog he wrote in 2015, Hyland noted that he drew inspiration for the idea of a “five-tool” utility from baseball and the concept of the five-tool player. “This elusive breed of ball player possesses not just excellent talent hitting for power but also hitting for average, base running skills and speed, fielding like a vacuum cleaner, and strength in throwing,” Hyland wrote.
For electric utilities, the tools include things like reliability, safety and compensation.
Advantages of upping your operations game
Before diving into the specifics of the tools, Hyland and Hofmann detailed the advantages of a utility upping its operations game.
One advantage is improved third party review. Hyland noted that bond rating agencies asked Association staff to brief them on the Association’s Reliable Public Power Provider (RP3) program.
The rating agencies noticed that as the program continued to grow, “RP3’s doing something right, so they asked us to brief them on it,” Hyland said.
Hofmann came up with the idea of mining their data and bringing it back to them in a different form. The Association examined public power utilities rated by the three agencies – Moody’s, S&P and Fitch – and compared utilities in the RP3 program and their rating with those not in the RP3 program.
Using Fitch as an example, Hyland noted that “we have a whole bunch more in RP3 that moved to the triple A level, compared to those that are not.”
While Hyland noted that it remains an open question as to whether such a trend is causation or correlation, “all we know is some of our best systems are going to RP3. This is pure money, so when that accountant says to you on the operations side, why would I do RP3, you show them this slide,” Hyland said in reference to a slide that broke down Fitch ratings for RP3 versus non-RP3 public power utility ratings.
“The utility is going to save money if you’re doing the right things in the right program,” Hyland said.
RP3 can also help in terms of insurance coverage, he noted. One insurance company asked Association staff to provide a briefing on RP3.
“By having data it can actually help you financially too, rather than just statistical benchmarks,” he noted.
Improved public interaction is another benefit that can flow from a utility upping its game.
An example cited by Hyland is the Association’s monthly squirrel index developed by Hofmann that looks at the number of squirrel outages in the U.S. based on the 400-plus public power utilities that provide data to the Association “and we can tell you how many you’re having per month per thousand customers.”
“In 2016 alone, utilities reported 3,456 outages caused by the ubiquitous rodents that cut off power to more than 193,873 customers,” wrote Hofmann in a 2017 blog.
The Association’s tracking of squirrel-related outages has spurred national media coverage. “It’s something that’s really moved us in public interaction,” Hyland said.
John Kelly, a columnist for the Washington Post, devoted an entire column to the effort during squirrel week in April 2019.
“We just want to come up with fun ways that you can relate to your customers that we can relate to you,” such that public power utilities can take data, categorize and analyze it, and make better decisions, Hofmann noted.
Meanwhile, Hyland noted that the Association offers programs to help member utilities measure and improve reliability.
Examples include the Association’s RP3 designation for providing reliable and safe electric service and the eReliability Tracker, a web-based subscription service that allows utilities to collect, categorize and summarize their outage information.
Hyland said that data from the Energy Information Administration shows that public power utilities are more reliable than investor-owned utilities and cooperatives. When it comes to reliability, public power “can brag about this till the cows come home,” Hyland said.
“If you don’t know how to get the EIA data, we can send you the spreadsheet and show you how you can grab all the coops, munis and IOUs in your state and do your comparison,” Hyland noted.
Moreover, the Association can provide data to member utilities on national outage cause rates. The data is derived from information provided through the eReliability Tracker. Outage causes vary by region, he noted. For example, in the Northeast, trees and squirrels are major contributors to outages.
Meanwhile, Hyland encouraged member utilities to provide the Association with their safety-related data.
“It just amazes me that with 2,000 utilities I can only get 300 applications,” he said in reference to the Association’s Safety Awards of Excellence. “It’s free. It’s online. You put in your data and you may win a really nice plaque,” Hyland said. “It also helps us in benchmarking.” In 2018, 113 public power utilities were awarded for their excellent safety records.
At a later point, Hyland noted that the Association’s eReliabilty Tracker, which is already patented, allowed “us to look at this idea of an eSafety tracker – starting to look at common collection, common reporting, improved analysis.”
Hofmann discussed the new eSafety tracker at the Association’s 2018 Engineering and Operations Technical Conference in Colorado Springs, Colo.
Noting that Association is still focused on building the eSafety Tracker, Hyland said that what is envisioned is making available safety videos, Association Safety Manuals, and pole climbing videos, among other things, on iPads and mobile phones.
“Everything’s going to be right there for you and then you’ll be able to enter data right there,” he said. In turn, the Association will be able to start capturing information that will ultimately help it to drill down on incidence rate trends.
In the area of compensation, Hofmann said “You really need to have good people and in order to have good people, you need to pay them because there’s a market for talent,” he said. “Good people just cost money. It’s just the world we live in. It’s hard to find people who can do the job you need and do it really, really well.”
Hofmann said that “respecting that, using some kind of market analysis to understand just for your region and your local economy what that’s worth is really important and you should spend the time to consider it.”
He noted that a question was recently added to the RP3 application related to compensation studies.
“I think as we move forward it’s going to become more and more apparent through retirements or other means that we are maybe not paying enough as organizations.”
Hofmann and Hyland highlighted the fact that the public power general manager pay gap is significant when compared with electric cooperatives.
“If your general manager retires and he is working off some kind of inflation based-salary, and maybe he was hired in the 1950s, or she was brought on in the 1960s or ‘70s…you may find that there is a bit of a shock when you go to hire another person,” Hofmann said.
Lineworker wages and high turnover rates were also singled out as a cause for concern for public power.
“I have heard more stories than you can imagine about absolutely chaotic lineworker attrition,” Hofmann said.
Hofmann said public power utilities should take a hard look at boosting lineworker salaries and improving training and equipment as ways in which to retain lineworkers. “These are things to really think about when you’re trying to keep people for the long term.”
Hofmann noted the Association has developed a Public Power Lineworker Hourly Wage Estimator, which allows utilities to input various utility factors, such as region and revenue, to calculate a close estimate to average utility-wide journeyman lineworker pay.
Additional details on the estimator, including a link to download it, are available here.
Hofmann and Paul Zummo, the Association’s Director of Policy Research and Analysis, wrote about lineworker pay in a 2018 blog.
“We just want you to focus on your strengths,” Hofmann said, referencing community. “We think that your strength is community. We think as part of the five tools, you should just know what you’re giving back,” Hofmann said.
“We need to be able to communicate to people what it is we’re giving to the community,” he said. “It can be payments in lieu of taxes. It can be fees. It can be free labor…Somewhere, every year, add that all up and keep it because most people don’t understand it.”
In the area of cybersecurity, Hyland highlighted a cybersecurity scorecard that the Association developed under a cooperative agreement with the Department of Energy and is a free tool to help public power utilities assess cybersecurity risks and shore up their defenses.
“What we’re really getting at the heart of is are you set up to be cybersecure,” Hyland said.
Additional information about the scorecard is available here.
Association’s Smart Energy Provider program
Another tool in the works is the Association’s new Smart Energy Provider (SEP) program, Hyland said.
The SEP program is a new leading practices designation for public power utilities in the areas of energy efficiency, distributed generation, renewable energy, and environmental initiatives.
Officials from Association member utilities recently gathered in the Association’s offices in Virginia to evaluate the first-ever applications submitted for the SEP program.
“We had seventy one utilities apply to that, and we’ll probably introduce that next year, and show you what that’s all about because we’re really starting to get some cool data” in areas such as demand response, solar, battery storage and rate design.
“We’ve got seventy one utilities that gave us that data and that’s only going to grow,” Hyland said.