Utility Achieves Rapid and Sustainable Cost and Performance Improvement

Dec 01, 2010, 09:30 ET from UMS Group Inc.

PARSIPPANY, N.J., Dec. 1 /PRNewswire/ -- UMS Group recently undertook a comprehensive Operational Effectiveness and Productivity Improvement Program for a large, east coast investor-owned utility's electric and gas delivery businesses with the following commitments:

  • Reduce O&M costs by 10 percent or more without compromising current customer service levels, system performance or existing union contractual agreements.
  • Identify specific initiatives to achieve these reductions with measures and metrics to monitor attainment of targeted savings.
  • Highlight collateral opportunities to reduce capital expenditures.
  • Seamlessly integrate these initiatives and opportunities with the company's current strategic and operating plans.

The impetus for this intervention was the challenge confronting every electric and gas utility today from continued earnings pressure amidst increased costs related to: environmental improvement mandates, increased energy efficiency targets, and high customer expectations with respect to safe and reliable service. Further compounding the challenge were three factors – 1) any plan had to be sustainable from both a financial and reliability perspective, 2) the probability of rate relief was extremely low, and 3) a credible, actionable plan with specific actions and ownership by each functional Vice President had to be in place within four weeks.

These challenges drove the client to seek UMS Group to tackle this challenge. They defined tight standards for our consulting team.  It had to:

  • Consist of seasoned professionals with depth of industry experience beyond those of utility operators, with the ability to rapidly apply their knowledge within the unique operating framework of a combination utility.
  • Bring a previously established library of industry "best practices" with accompanying measures and metrics to readily match the opportunities identified during the assessment phase of the project.
  • Provide specific subject matter expertise to add value to and augment programs already under study within the utility.
  • Utilize a codified and time-tested approach easily modified to meet the unique characteristics of this specific utility to ensure rapid integration of recommendations into their existing operating model.
  • Deliver strong facilitating skills to build upon the momentum for change already established in the utility and meld with established approaches already demonstrated as successful in the U.S. and international markets.

UMS Group's strong operational focus in all aspects of the electric and gas utility business, our specific expertise in cost and service level benchmarking and asset investment optimization, as well as our leadership in a number of global learning consortia provided the winning combination. Not only did we meet all the above stated requirements, we beat the target savings by 50% and provided a road map and operating model to drive reliable capture of the savings and monitor implementation success over a 5-year period. In meeting the aggressive time frame of four weeks, our professional team not only provided the "answer," but also provided tools and processes to address the uncertainties and inevitable changes to regulation, environment and strategy that will occur over the 5-year implementation period. In so doing, the client's longer range goal of establishing a strategy for continual reduction in O&M expenditures well beyond this effort was assured.

About UMS Group

UMS is a leading global consultancy and thought leader in the areas of utility asset management, performance assessment, performance management and the management of sustainable change.  UMS proprietary databases, analytical tools and methodologies have been utilized by over 300 gas, water and electric utilities on four continents to build world-class operations.

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