An examination of FERC Form 1 data from the 100 largest U.S. electric utilities reveals that the “miscellaneous” is the largest expense category for 59 of the 100 investor-owned utilities (IOUs) studied, and a close second for the remaining 41 utilities (see Figure 1).
For these 100 IOUs, miscellaneous distribution operations expenses totaled $878 million in 2004 and $835 million in 2003, representing the largest single element (between 31 and 32 percent) of their combined annual $2.7 billion distribution-operations expenditure.
If we shine some light on these expenditures, it appears that reduction in clerical workloads and paperwork through better integration of real-time data across the enterprise holds great promise for tangible benefits. And when it comes to reducing clerical workloads and paperwork, the integration of real-time data from mobile-data systems should be at the top of any good list of initiatives to improve efficiency while increasing system reliability and customer satisfaction.
One utility relatively far down the path of mobile-data system usage is Potomac Electric Power Co. (Pepco). They’ve reported that their implementation of a mobile-data system for Pepco field workers led to the elimination of 100,000 pieces of paper per year for this group alone.
Each of the 100,000 pieces of paper that Pepco eliminated represented a trouble ticket, work order, or service request, and due to legal requirements, each had to be stored for a period of seven years.
“In my experience, mobile-data systems typically result in major savings,” comments Leo Hagood, mobile-systems product manager at SPL WorldGroup. “When you don’t have to distribute and collect pieces of paper, you free up a lot of commuting time. That’s particularly significant for utilities serving congested urban areas or large, sparsely populated rural counties. One of our Western clients, for instance, added an hour and a half to each field worker’s productive day by eliminating the need to start and finish at a central location. That’s a 20 percent productivity improvement.”
Obviously, the miscellaneous category of expense, by definition, is a grab-bag for items not captured in the other categories shown on the chart. But when we look at the formal definition provided for FERC reporting purposes under the U.S. Uniform System of Accounts, it turns out that a total of seven specific labor items are involved, most of which are controllable in precisely the way that the Pepco example above illustrates:
U.S. Uniform System of Accounts Definition of Miscellaneous Distribution Operations Expenses
(Labor portion)
1. General records of physical characteristics of lines and substations, such as capacities, etc;
2. Ground resistance records;
3. Joint-pole maps and records;
4. Distribution-system voltage and load records;
5. Preparing maps and prints;
6. Service interruption and trouble records; and
7. General clerical and stenographic work except that chargeable to account 586, meter expenses.
Costs in a similar category, general and administrative (G&A), also are surprisingly large. Specifically, consider which of these three broad (and non-redundant) categories of electric utility O&M expense is the largest:
1. Transmission O&M;
2. Distribution O&M; or
3. General & Administrative (G&A).
Once again, counter-intuitive though it may seem, the “grab bag” expense category of G&A is the largest for the 100 IOUs reporting to FERC:
For the IOUs under consideration, in each of the last two FERC Form 1 reporting years (2004 and 2003), G&A expenses totaled more than $10 billion per year.
This sum could represent an industry unto itself. More tellingly, this $10 billion in annual G&A spend also exceeds the expenditures of these 100 utilities for their T&D operations and maintenance (O&M) by a significant margin (See Table 1).
When we run year-to-year correlation studies for each of the 100 IOUs across these spending categories over the last 10 years, the correlations for each of the 100 utilities’ pairs of numbers in adjacent years (i.e., not just the smoothness of the totals) are high—in the range of 90 percent—and are similar to the high year-to-year correlation levels found for more tangible items such as distribution plant in service. This suggests that the miscellaneous and G&A categories are not comprised of a large proportion of unique “one-time event” expenses but, like the other O&M and capital items, are run-of-the-mill elements of a utility’s ongoing cost structure.
Granted, G&A includes certain fixed costs that are not simply going to go away, but other elements certainly can be improved upon. For example, the $11.7 billion in G&A in 2004 for the 100 IOUs includes $2.1 billion in G&A-related salaries and wages, a number of similar order of magnitude to the $2.9 billion in distribution and $1.7 billion in customer-service and informational related salaries and wages spent by these 100 IOUs for the same year.
A concrete example of the type of clerical workload that can ensue from lack of integration of field operations with back-office functions comes from a mid-sized electric utility in the New England region, which commenced the first few years of this decade with an 18-month backlog in updating its asset model based on electric distribution system construction work. By creating an integration between a new GIS model and field operations/design engineering functions, this backlog (and full-time workload for 28 clerks) eventually was eliminated.
Pepco’s implementation of its mobile workforce management (MWM) solution actually began in the early 1990s with metering-related work, and was rolled out across the entire distribution system in 2001. It included integration of more than 1,400 feeder maps from its GIS so that crews no longer rely on paper maps, which were much more difficult to update, according to Sean Kelly, senior project manager at Pepco. More important, according to Kelly, is the EAI (Enterprise Application Integration) architecture Pepco employed to link its MWM system to its customer informtion system. Pepco’s MWM, as well as its outage management system, are both from SPL, and the workflows between these two systems and their customer information system have provided a significant improvement in operational efficiency.
Before implementing its MWM, during severe storm events, the radio communications system employed by Pepco’s field workers tended to get overloaded, with waits of an hour or more for workers to get through the queue to job dispatchers. These backlogs were eliminated, and now the radio system can be used during emergencies for its intended purpose—safety-related calls—while the field workers’ mobile data terminals handle their work orders and scheduling.
Ranking the 100 IOUs in the FERC Form 1 database by means of numerous criteria, Pepco is in the top-performing decile for numerous benchmarks (such as miscellaneous distribution operations expense as a percent of distribution plant in service or distribution-operations expense, and total distribution operations expenses as a percent of distribution plant in service, as well as total distribution and customer-service -related salaries and wages benchmarked to total distribution plant in service) and Pepco is in the top-performing quartile for all other major related benchmarks (e.g., benchmarking salary and wages to distribution plant separately for distribution operations, customer accounts and customer service expenses, and G&A). On the other side of the coin, survey work that revealed which other utilities were rather “behind the curve” in terms of implementation of mobile-data systems typically indicated bottom-decile, if not bottom quartile, performance for these self-same benchmarks.
But even for utilities that are relatively well along the path to mobile and real-time enablement, survey work indicates that the depth of implementation is typically at or below the 50 percent mark. In other words, there is a lot more mobile-enablement to be done even for the most “heavily” mobile enabled utilities to date. And the prospective increase in usage of mobile-data systems involves both an increase in range of functions (e.g., deeper cost tracking and the addition of tablet PCs to enable engineering designers to mark up images in the field to improve design work) and depth (an increase in the number of field service vehicles equipped with mobile data terminals).
The “second-tier” benefits from greater integration of real-time mobile data may be even greater than the first-tier ones which many utilities are currently enjoying. Consider outage management systems. When a utility employs an outage management system, even the best and most well designed ones in use today, costs are not tracked. These systems simply were not designed to track costs because they are concerned with rapid identification of the source of outages and rapid dispatch of field workers to restore power. But if deeper integration between asset or work management functions and outage management can be accomplished via mobile data systems, it is reasonable to expect significant operational improvements.
Fundamentally, what we track gets improved upon. We can get a glimpse of the size of some of these costs in the miscellaneous and G&A categories. For each of the 100 IOUs studied, a mere 5 percent reduction is sufficient to fund a depth of integration previously beyond anyone’s wildest dreams. For example, what would rigorous analysis of the efficiency of crews in different operating districts of a utility reveal in terms of optimal work practices vis-à-vis the relative utilization of regular and overtime labor (both in-house and third-party contract labor) during power restoration efforts after a major storm event?