2001 Strategic Plan

College Station Electric Utility

Draft October 11, 2001

College Station Electric Utility

2001 Strategic Plan

Table of Contents

Page No.

  1. Background1
  2. Strategic Planning Process5
  3. Strategic Plan8
  • Mission Statement10
  • Goals and Action Plans11

Financial / City / Community12

Operations and Engineering13

Customers14

Energy Supply15

Employees and Organization16

  • Action Plan Implementation17
  • Action Plan Implementation Schedule18

Table of Contents Page 1 Draft October 11, 2001

I. Background

The City of College Station (City) has owned and operated an electric utility to serve customers within its City limits since 1939. During that period, the electric utility has grown in complexity and size to meet the continued growth of the City. Currently, the electric utility operations are the responsibility of the Electric Division within the City’s Public Utilities Department. For purposes of this plan document, this electric utility will be referred to as the “Utility”.

The Utility owns and operates an electric distribution system and portions of the regional electric transmission network. The Utility does not own generation capacity and relies on wholesale purchases for its power supply. The Utility operates approximately 320 miles of electric distribution lines serving a defined service area of approximately 40 square miles. This distribution system has a high percentage of its lines underground with approximately 40% of total system underground. The Utility’s operational reliability is recognized as one of the highest for electric utilities within the country.

The Utility currently serves slightly over 27,000 meters and continues to experience annual customer growth of approximately 5% per year. A number of City Departments provide the Utility significant levels of support in the areas of financial, human resources, purchasing, and customer service support. The Utility staff is responsible for the planning, construction, operation, and outage restoration of the electric system.

The Utility’s revenues for FY 2000 were approximately $37 million. The Utility transferred approximately $4.7 million to the City’s General Fund for the contributed services from other City Departments and in support of other City services. The Utility’s rates are competitive with other electric utilities within Texas. The Utility has maintained a strong financial condition with low debt, significant cash reserves, and a strong bond rating.

Results from a recent customer survey revealed a high level of customer satisfaction with Utility services from both residential and commercial customers. The “3Rs” (reliability, rates, and responsiveness) dominated customers’ opinions of what was important to them with their electric service. The customers valued local presence of customer service and utility operational control. The adjacency of the Bryan Texas electric utility (BTU) contributes a “competitive environment” in the minds of Utility customers even though there is no direct competition for individual customers. Natural gas service is offered in most areas of the Utility’s service area by TXU.

The Texas Legislature passed legislation in 1999 introducing competition at the retail level in Texas. Customers served by investor-owned utilities will have retail competition beginning January 1, 2002. Municipal electric utilities and electric cooperatives have the opportunity to open their systems to retail competition or to continue to provide a “bundled” package of services and not open their systems to retail competition. One of the activities completed in the preparation of this Strategic Plan was the consideration by the Utility and the City of whether or not to pursue a plan to open up the Utility for retail competition. As the result of a careful review of many issues related to this issue, the City Council decided to not “opt-in” to retail competition at this time. Their position on these issues is summarized as follows:

City of College Station Position Statement on Electric Deregulation

Under the provisions of the 1999 Texas State Legislation, investor-owned electric utilities are scheduled to enter a competitive electric market in Texas on January 1, 2002. Cities with publicly owned, municipal electric utilities are allowed to evaluate their position and make a decision to opt in, or delay entering the competitive market.

The College Station City Council has reviewed the City’s options regarding the decision. After a careful examination of all relevant factors, the Council has concluded that it would be premature to immediately opt-in to competition.

Factors considered in this decision are:

  • Deregulation experiences in other states that suggest a level of caution be taken.
  • The competitive retail market in Texas, despite all assurances of success, is still a new market for electric competition. It is prudent to wait for further development of this market.
  • The opt-in decision is irrevocable. Once a decision to opt-in to competition is made, municipal electric utilities must stay in the competitive market.
  • The City currently offers reliable, competitively priced power and services to customers of the electric utility. Future competitiveness is assured by an existing power supply contract for wholesale electricity.

Even though the Council has decided to not opt-in to retail competition at this time, it has instructed the City Manager to take the necessary steps for the electric utility to be ready for competition. The City will continue to monitor the deregulation environment in Texas and consider, when appropriate, the timely introduction of electric competition to College Station residents.

As the Utility and the City look to the future, there are new challenges and new opportunities. The Texas Legislature’s decision to introduce retail competition in Texas will lead to new customer expectations in the area of services offered and quality of those services. A successful electric utility must be prepared to respond to these changing conditions and provide the new services. This will require continued improvement in the quality of electric service, introduction of new services, and a management resolve to provide services in a cost-competitive manner.

The Utility is well positioned to build on its many strengths to meet these new challenges. The Utility has evidenced its commitment by completing a comprehensive review of current operations and an assessment of future opportunities to provide valuable services to its customers and community. The results of these planning efforts are summarized in this 2001 Strategic Plan. There are opportunities to continue to refine the Utility’s proficiencies and to take advantage of its strengths. This Strategic Plan identifies the Utility’s long-term goals and strategies for managing these changes, opportunities, and challenges.

II. Strategic Planning Process

The City, in preparation for electric utility deregulation, determined that it wished to develop a Strategic Plan. Navigant Consulting, Inc. (NCI) was retained to guide and assist the City with the evaluation of changes to the electric utility industry and the identification of successful strategies to effectively serve its customers and citizens in the future. This Strategic Plan focuses on the Utility operations and all related support activities within the City and their combined ability to meet new challenges evolving from the deregulation of the electric industry within Texas.

The preparation of this Strategic Plan involved extensive participation of key City and Utility staff. A Core Team was formed to provide overall direction for the planning process, contribute a broad range of input, assist with analyses, and participate in work sessions and a planning retreat that developed a Utility Mission Statement and a comprehensive set of Goals and Action Plans. This Core Team included:

David MasseyLinda Piwonka

John WoodyBruce Albright

Carol BakerCharles Cryan

Glenn Brown

Additionally, Tom Brymer and Harvey Cargill participated in key planning sessions and contributed important guidance to both the consideration of current conditions as well as the development of new direction for the Utility.

A comprehensive set of objectives was established for the planning process. These included:

  • Assess the Utility’s current posture in the market
  • Educate Utility and City staff on a comprehensive set of issues associated with the evolving new electric marketplace
  • Address the “opt-in” to retail competition issue
  • Facilitate a greater understanding by the City Council on key issues impacting both the current and future electric industry
  • Develop comprehensive new strategic direction for the Utility

To accomplish these objectives, a deliberative planning process was identified and implemented. Key steps in this planning process were:

  • Comprehensive review of Utility and customer service operations and Utility financial conditions
  • Preparation of customer surveys of both residential and commercial customers
  • Preparation of an employee survey of Utility and customer service staff
  • Preparation of a Competitive Assessment using a SWOTs (strengths, weaknesses, opportunities, and threats) review of current Utility operation and projected future market conditions
  • Evaluation of the “opt-in” to retail competition option
  • Participation of the City Council in the planning process through a series of three work sessions addressing:
  • Current and developing electric market conditions
  • Findings from the Competitive Assessment
  • The option for the City to “opt-in” to retail competition
  • Development of a Utility Mission Statement and a comprehensive set of Goals and Action Plans to establish new strategic direction for the Utility
  • Preparation of a Strategic Plan document summarizing all the results from the planning activity

A key planning decision in developing this Strategic Plan was the action of the City Council to establish its position relating to electric deregulation and a decision to delay any determination to “opt-in” to retail competition. Even though there was no definitive decision to “opt-in” to retail competition, the City Manager was instructed “to take the necessary steps for electric utility to be ready for competition. The City will continue to monitor the deregulation environment in Texas and consider, when appropriate, the timely introduction of electric competition to College Station.” This action by the City Council combined with the results of the Competitive Assessment provided a strong foundation for the planning retreat held to establish the Utility’s Mission Statement and Goals and Action Plans. The planning retreat was attended by all Core Team members and Messrs. Brymer and Cargill. The new strategic directions identified at this retreat establishes a strong commitment to position the Utility to be responsive to future customer needs, offer a competitive set of services, and maintain the high level of services that the Utility’s customers have come to expect.

III.Strategic Plan

The College Station Electric Utility 2001 Strategic Plan includes a Mission Statement, a set of Goals and associated Action Plans, and an Implementation Plan. This Strategic Plan was developed to respond to long-term opportunities and challenges facing the Utility. The accomplishment of the Goals will involve a combination of both near-term tasks and long-term ongoing activity.

The Goals and Action Plans contained in this Strategic Plan resulted from a comprehensive assessment of contemporary knowledge and considerations of available projections of the changing electric utility market. A plan for restructuring the Texas electric retail marketplace has been established. Retail competition will be introduced in areas served by investor-owned utilities beginning on January 1, 2002. Municipal electric utilities and cooperatives have the choice of whether or not to open their retail system for competition.

The City recently completed a “City of College Station Strategic Plan 2000” (City Strategic Plan 2000). This City Strategic Plan 2000 established the City Council’s Mission and Vision Statements and outlined specific Strategies to fulfill these visions. A new theme for the City, “College Station, Embracing the Past, Exploring the Future”, was established. The development of this Strategic Plan for the Utility was prepared considering the relevant elements within the City Strategic Plan 2000. The Utility vision, described in its Mission Statement, was developed to be in concert with the City’s Mission Statement, Vision Statements, and new theme. The development of the Utility’s Goals and Action Plans was influenced by the City’s Vision Statements and associated Strategies to pursue these visions. Reference to City Vision Statements and related Strategies are provided with each of the Utility’s Action Plans.

The identified Goals and Action Plans involve all areas of Utility responsibility. These Goals were identified to implement the commitment made in the Mission Statement. The accomplishment of the Goals and Action Plans will require teamwork and the full support from the Utility and City staff. Work to complete all Goals must be accomplished to assure the continued growth and development of the Utility to respond to its many opportunities to effectively serve its customers and the community.

Scheduling of activity to address the individual action Plans has been established and is presented on the Action Plan Implementation Schedule. It is anticipated the majority of the work activity described in the Action Plans will be addressed within the next couple of years. A number of the Action Plans describe a planning activity that, when completed, will likely lead to further activity that run well past this initial two-year period. A future decision by the City to “opt-in” to retail competition could also impact the potential timing of certain activity anticipated to be addressed within the Action Plans.

Mission Statement

The Mission Statement, while only a couple of simple statements, is a very powerful commitment to the Utility’s customers and the College Station community. It confirms a commitment to provide quality services responsive to customer desires, in a cost-effective manner. This statement publicly confirms the Utility’s established business perspective.

We are a leading Utility providing high quality, customer-owned services to College Station.

We are committed to:

•Exceptional reliability

•Outstanding customer satisfaction

•Best value for the price

•Anticipating the future

•Improving the quality of life

Goals and Action Plans

The 2000 Strategic Plan includes a set of Goals to position the Utility to respond to the new challenges and opportunities to serve its customers. The Goals, when implemented through the identified Action Plans, will allow the Utility to refine its abilities and use its strengths to improve and expand the delivery of valued services.

The following Goals present a comprehensive approach to effectively address the changing electric utility industry. Additionally, a number of new and expanded opportunities to serve the Utility’s customers and the community will be explored and evaluated. The Goals and associated Action Plans have been grouped into a series of areas (ex., Financial, Operations and Engineering, etc.) of focus within the Utility. A number of the Goals and Action Plans overlap among the areas of focus. The accomplishment of individual Goals within certain areas will depend upon the successful implementation of Action Plans described within the respective area of focus, and in some cases Action Plans in other areas of focus.

Financial / City / Community

Goals:

•Maintain transfer fund support to City

•Use Utility reserves to optimize support of Utility and City needs

•Operate Utility within a financial policy addressing debt, capital, and rate contingency requirements

•Maintain Utility financial performance (ratios) to continue strong support of City’s fiscal position

•Continue support of local economic development

•Positively impact citizen’s view of municipal government

Action Plans:

•Develop financial plan to address future capital requirements and establish fiscal and budgetary policy

•Prepare rate review to incorporate expanded services and to unbundle energy from wires charges

Operations and Engineering

Goals:

•Maintain current reliability levels

•Implement actions to improve economic/technical performance

•Formalize a Safety Program to assure performance within top quartile of electric utilities

•Apply technology using a proactive/pragmatic approach

•Create proper balance for use of in-house vs. out-sourced engineering

Action Plans:

•Evaluate target customers for AMR load profiling

•Establish street light standards that will deliver an adequate lighting level on the various types of streets and thoroughfares

•Review options for staffing engineering needs by performing cost-benefit analysis

•Create well-documented Safety Program and establish safety performance goals

Customers

Goals:

•Effectively communicate to customers the “value” contributed by Utility

•Deliver highest customer service

•Offer a competitive mix of services that can be delivered at high quality

•Maintain good awareness of customer desires for services

•Provide customer desired mix and range of utility services

Action Plans:

•Prepare short-term communications plan

•Prepare brand and image development, including name for Utility

•Develop Key Accounts Management program

•Review Customer Sales job responsibilities at comparable utilities in deregulated markets to develop appropriate responsibility/compensation balance for City customer sales representatives

•Establish customer billing/payment program using credit card and Internet media

•Develop process to identify, evaluate, and implement new product/service offerings

•Benchmark Utility rates vs. other regional utilities

•Evaluate IT/Billing infrastructure and identify needed upgrades

•Develop surveys to measure customer satisfaction

•Prepare comprehensive customer survey (similar to 2000 survey) to monitor customer desires and satisfaction

Energy Supply

Goals:

•Create energy supply program that provides best available price and opportunity to manage price volatility

•Establish desired level of transmission delivery to Utility substations

Action Plans:

•Identify and evaluate methods of load management that could produce a positive outcome in wholesale/retail power costs to the City and customer

•Prepare market assessment of comparative power supply costs

•Incorporate energy supply policy into City financial policies