By Wallace Edward BrandWallace Edward Brand practices law in his own firm in Washington, DC, where he represents small electric systems.
Operations & Maintenance: Who Has the Best Margin?
for missing data points in certain years, or changes due to M&A activities).
We checked the resulting final methods for good year-to-year smoothness in the resulting benchmark standings for each utility. This required statistical analysis of all the utilities to uncover any outliers that had abnormal differences in the relative sizes of their yearly results. Large jumps, which should not occur, were investigated.
In some cases physical or business reasons were found for significant differences. As one example, when performing the same analysis for transmission and distribution together, as opposed to distribution alone, we found the inventory levels as a percent of assets were much higher for Georgia Power than its sister subsidiary, Alabama Power. It turns out that Georgia Power has long-term agreements in place with Oglethorpe for O&M activities, and it holds T&D equipment inventory for Oglethorpe to support that contract, thereby creating higher than expected inventory levels as a percent of Georgia Power's T&D assets.
The detail level of the data we employed is well indicated by the following lists of elements within the selected O&M FERC schedules.
Distribution Plant Data
Structures & Improvements- Additions Structures & Improvements- Retirements Structures & Improvements- Total at end of year Station Equipment-Additions Station Equipment-Retirements Station Equipment-Total at end of year Overhead Conductors & Devices-Additions Overhead Conductors & Devices-Retirements Overhead Conductors & Devices-Total at end of year Underground Conduit-Additions Underground Conduit-Retirements Underground Conduit-Total at end of year Underground Conductors & Devices-Additions Underground Conductors & Devices-Retirements Underground Conductors & Devices-Total at end of year Line Transformers-Additions / Retirements /Yr. End Tot. Services-Additions / Retirements / Yr. End Tot. Meters-Additions / Retirements / Yr. End Tot. Installations on Cust. Premises-Adds/ Rets / Yr. End Tot. Street Lighting & Signal Systems-Additions Street Lighting & Signal Systems-Retirements Street Lighting & Signal Systems- Total at end of year
Distribution Operations Expenses:
Operation Supervision & Engineering Load Dispatching Station Expenses Overhead Line Expenses Underground Line Expenses Street Lighting & Signal System Expenses Meter Expenses Customer Installations Expenses Miscellaneous Expenses Rents
Distribution Maintenance Expenses:
Maintenance Supervision & Engineering Maintenance of Structures Maintenance of Station Equipment Maintenance of Overhead Lines Maintenance of Underground Lines Maintenance of Line Transformers Maintenance of Street Lighting Maintenance of Signal Systems Maintenance of Meters Maintenance of Misc. Distribution Plant
For comparison of one or more utilities against the same benchmark, we statistically normalized the results for all seven benchmarks so that the median value was at the 50 percent mark, and created radar charts such as the one below. This provides a snapshot of how individual utilities performed against all seven benchmarks as numbered below. This example shows the 2003 results of a strong performer (Tucson Electric Power) and a weak performer (Idaho Power Co.) across all seven benchmarks listed above ().
Comparing this to the same results for these two companies in 2002 produces interesting results. The changes in the seven benchmarks from one year to the next are relatively small, typically less than 10 percent-a good indicator that the numbers are telling a realistic story.
Another way of viewing our results is to create