The time-honored discounted cash flow method for determining appropriate utility returns falls short when interest rates are low. Inadequate ROEs ultimately increase cost of capital and wipe away...
Transforming the SysOp
Strategic pain points require an artful approach.
personnel so they are ready to handle the challenges of this demanding job.
Finally, the regulatory environment has undergone a number of significant changes, starting with the Energy Policy Act of 2005. Important changes include NERC certification, cyber security guidelines, and penalties for non-compliance. There is now a mandate for NERC certification of all transmission operators, requiring between 60 and 80 hours of additional training per year. There also is stricter enforcement of compliance requirements, accompanied by fines of up to a $1 million per day relating to associated compliance audits conducted in three-year cycles.
Ensuring compliance with established standards requires a defined program that demonstrates an entire organization’s compliance, as well as that of individual operators. To accomplish this, utilities will determine whether the skill set of its system-operator profile meets new and tougher standards established by regulators. Moreover, a methodical training program, including a proper performance-management process, will be an integral part of an organization’s ongoing operations.
These four drivers are nothing new for the utility industry as a whole. This is the first time, however, that these drivers have been identified as central issues for system operators. As a result, utilities are becoming more aggressive in transforming themselves through the proper alignment of their business capabilities—people, processes, and technology.
Preparing for the Future
As utilities seek to minimize their risks and build a strategy that proactively addresses its present and future requirements, a comprehensive talent-management approach will help them effectively transform the system operator workforce.
“Training and leadership development have been at the top of our agenda in preparing our workforce for the future,” Huang says. “These activities are all built into our transition plans over the next several years.”
A talent-management capability allows an organization to acquire, develop and retain high-performing individuals in critical jobs. While talent management contains many capability areas, there are a few key elements associated with competency alignments, learning and knowledge management, and strategic recruiting and retention that are particularly important in fostering this change and in preparing companies for the unique transformation of their system-operator function. Successful execution of these areas will allow utilities to more fully address the external pressures affecting their workforce and proactively respond to a rapidly changing environment with a methodical approach to managing that change.
The first step is to begin aligning system operators’ competencies with the requirements of their positions. In general, the skill sets required of system operators has changed little for most utilities. As new technology is introduced, there typically is some level of change, but, on the whole, system operators’ profiles have evolved slowly over the last 20 years. In today’s environment, however, utilities are facing new competency challenges and asking whether their system operator profile will meet tomorrow’s needs. They are assessing how adaptable their workforce is in building new skill sets prior to any process or technology implementation. Finally, they are evaluating whether they have the right performance measures in place to measure accountability for each job and organization.
Based on a projected outlook of their system operations, utilities will assess these