Introduction to ScottMadden’s Fossil Generation Benchmarking

• We believe performance benchmarking is a must have management tool.
  • Assess performance
  • Establish targets
  • Obtain competitive intelligence
• ScottMadden’s fossil generation benchmarking allows generation operations to compare their generation units against peer units.
  • We work to build apples-to-apples comparisons.
  • We use relevant and up-to-date industry data.
• ScottMadden has been benchmarking fossil generation for more than 10 years. We know how to perform the analysis quickly and efficiently to allow you to focus on running your plants.

Why Is Fossil Generation Benchmarking Important?

• Benchmarking:
  • Specifically identifies areas for improvement and provides a basis for performance goals
  • Provides clear link between specific actions and performance objectives
  • Provides defensible analysis to support sound decision-making around budgets and staffing
  • Clearly defines common vision

Why ScottMadden Benchmarking?

• Our clients obtain specific benefits from ScottMadden’s generation fleet benchmarking study:
  • Identify areas of positive performance to be encouraged and reinforced.
  • Pinpoint areas of comparatively sub-par performance to set the stage for root cause analysis.
  • Discover top-performing plants at other utilities which could be studied for leading practices.
  • Prioritize improvement initiatives to focus efforts on achieving results.
• ScottMadden brings unique skillsets to fossil generation benchmarking.
  • Proprietary Methodology
    • We examine unit cost and reliability results at the unit level and staffing at the plant level. Our studies are designed to provide unique insights.
  • Expertise and Staffing
    • Our benchmarking staff have performed hundreds of studies. Our expertise is experience based in energy, not theoretical.
  • Report
    • You are not signing up to provide your data every month. We prepare a report that shows how your units compare to peers and information on the gaps.
  • Unbiased
    • We ask our clients to agree on the peer plants before performing the analysis. We report the facts without manipulation.
  • Energy Focused
    • We have deep energy experience from our 30 plus years of consulting with energy companies.

ScottMadden Provides Three Benchmarking Products

• Cost
• Reliability and Performance
• Staffing

Overall Methology

• We conduct benchmarking studies using an efficient four-step methodology:

Methodology: Prepare

• Finalize the metrics that will be benchmarked
• Obtain your data
  • Cost data at the unit level (as available)
  • Staffing data for in-scope plants sorted by ScottMadden’s provided functional buckets
• Identify your team participants and stakeholders who will review the peer group selection process
• Finalize project plan and set milestone reviews

Methodology: Form Peer Groups

• Develop peers based on like unit characteristics (e.g., vintage, equipment type, capacity, etc.)
• Multiple peer groups to match the fossil fleet makeup
• Key step in the benchmarking methodology because reliability and cost benchmarking can be correlated
• Peer groups must be signed off by the client prior to moving forward

Methodology: Benchmark and Validate

• Perform analysis
• Validate data
• Prepare report
• Deliver report

Methodology: Review and Discuss Results

• Identify cost and reliability improvement areas for discussion with owner-operators.
• Conduct progress reviews with you as the project sponsors.
• Conduct presentations with key leadership to present findings and gather input.
• Work collaboratively with your team to discuss implications and potential causes for certain topics of interest based on the results of the benchmarking.
• May even perform some hypothetical modeling; for example, if event X had not happened last year, your results would have improved, and you would be in the top quartile.
• These are important discussions to have as they help us to frame the results of the benchmarking. Please note that benchmarking tells you where you stand versus your competitors; it does not answer the question of “why.”
  • Our studies and interactive discussions with your team attempt to narrow down the possible answers to the “why.”

Deliverables Overview

• The primary deliverable is a comprehensive report comparing your unit’s results to peer group results.
• An executive summary is prepared to summarize results for senior leadership and/or boards.

Typical Timing Is 8 to 9 Weeks for 4 to 6 Peer Groups

Recent Examples of ScottMadden’s Work ScottMadden performs comprehensive analyses of cost and reliability for fossil fleets in North America. Utility in the Midwest/Cost and Efficiency

• ScottMadden helped a large investor-owned utility (IOU) in the Midwest identify plants which were higher cost and lower reliability compared to similar peer plants.
  • Significant new and incremental variable renewable generation in the region was forcing base load coal plants to be cycled in new and unprecedented ways, which was causing unplanned and unexpected outages.
  • Subsequent collaboration between the plant operators and the trading and marketing group resulted in a more holistic and constructive process for dispatching units as “a portfolio.”
  • Plants more suited to cycling were identified and targeted for accommodating curtailment required by the market, and those which were more prone to failures were allowed to run unabated.

Investor-Owned Utility in the Southwest/Reliability

• ScottMadden conducted a study to help a large fossil fleet operator in the Southwest identify specific components that were failing at disproportionally higher rates than peers, resulting in disproportionately higher lost MWhs.
  • Because transparent peer groups were developed collaboratively, plant managers had faith in the results.
  • This set the stage for the plant managers to conduct root cause analyses, develop improvement initiatives, and set reasonable goals for future improvement.
  • A task force comprised of cross-functional subject matter experts was chartered to address a handful of high-priority issues, which were identified as themes across multiple plants.
  • Benchmarking was embraced and institutionalized, and a procedure was developed to update ScottMadden’s analysis once a year in the process of business planning and budgeting.

Public Power Generator in the Southeast – Cost and Staffing

• ScottMadden benchmarked the cost and staffing levels of a fossil generation fleet at the request of the company’s board of directors.

Large Fossil Generator in the Southeast – Fossil Operations Restructuring

• ScottMadden assisted a client in developing a business case for implementation of performance improvement opportunities in fossil operations through use of a playbook structure.
  • Preliminary work to support the business case was a cost benchmarking study for the fossil operations coal fleet and a dialogue on workforce management. 

Large Utility Environmental Department – Organization and Process Performance Assessment

• ScottMadden conducted an assessment of the Air Quality Group of an IOU environmental department.
  • The objective was to assess organizational structure, staffing levels, process quality, and quality of work in the areas of air policy development, compliance planning, and compliance reporting.
  • The project was implemented through a detailed benchmarking and best practices assessment and resulted in an organizational design and succession planning process development.
  • An ISO 14001 based methodology was employed.

Large Fossil Utilities and Unregulated Generators – Fossil Organization Development

• ScottMadden assisted clients in developing organizational structures and reporting relationship changes for multiple fossil organizations, applying benchmarking to inform the analysis.
  • These included multi-phased projects requiring organizational assessment, functional mapping, organizational design, staffing and selection method, and implementation.