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Staffing And Outsourcing

Community Insights Conference

August 18-21, 2015

Minneapolis, MN

2015 Electric T&D Benchmarking

2014YE 2013YE

  Min Mean Max # of Bars Min Mean Max # of

Bars

Distribution

Wage Rate: Distribution Journey Level Line Worker $34.64 $40.37 $50.72 13 $35.30 $39.13 $42.14 12

Distribution Staffing: FTEs per 100,000 Customers 19.69 74.02 157.33 11 36.15 79.45 143.02 13

Percent of staffing group represented by a union/bargaining unit: Distribution Field 48% 84% 100% 8 0% 78% 100% 11

Substation

Wage Rate: Substation Journey Level Electrician $31.93 $39.40 $46.38 13 $33.24 $38.21 $41.97 12

Substation Staffing: FTEs per $100M Substation Assets 8.41 13.17 18.95 10 8.46 15.83 32.94 13

Transmission

Wage Rate: Transmission Journey Level Line Worker $34.64 $41.02 $50.72 12 $35.30 $39.30 $42.15 9

Trans Staffing: FTEs per $100M Trans Assets 3.67 11.46 27.07 10 3.49 13.18 24.69 11

Staffing demographics

2

Average staffing levels went down.Average wage rates went up.

3

2012YE 2013YE 2014YE$30

$32

$34

$36

$38

$40

$42

Transmission

Substation

Distribution

Wages rates & Headcounts

FTE counts are steadily decreasing.

Average wage rates have been steadily climbing.

Staffing SO10, Pg 3, 4, 5

2012YE 2013YE 2014YE0

5

10

15

20

25

30

35

40Transmission

Substation

Distribution

Staffing SO15, SO20, SO25, Pg 16, 25, 31

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Changes to staffing Levels

Reducing18 Reducing through attrition to manage O&M expense.32 We are reducing - to reduce costs33 Reducing - restructure organization for efficiencies37 We have been reducing overall headcount. Each position vacated is reviewed prior to backfillingStay the Same21, 2517 Neutral. Prefer to increase efficiency instead of add bodies.31 We are maintaining a relatively flat workforce due to flat load growth and sales, but we have increased staffing in

areas such as Substations and Heavy Equipment and Transport to meet current needs, while reducing staffing in other areas as retirements occur. In some cases, we have replaced contract employees with core employees, because the position is critical to the core business, including Project Managers and Construction Managers.

38 Our primary goal is to maintain staffing levels taking into account workload levelsIncreasing23 Adding staffing as needed; primarily project employees27 Adding - Hiring for knowledge transfer from anticipated retirements24 Company is adding staffing for a number of reasons. We are installing AMI smart meters for all 4 million of our

customers, and this requires a significant amount of manpower to install and maintain the new AMI meters, as well as gathering and analyzing the data that we are receiving from these smart meters. We are also making significant investments into our existing infrastructure to make the grid more resilient, so we are hiring many engineers and project managers to execute this work. We also have an aging workforce, so we are over hiring in certain pockets of the organization in order to get ahead of expected retirements.

While the overall trend is decreasing staffing levels, that’s not true of each individual company.

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Attrition Rates

Linemen Engineers Sub Electricians0%2%4%6%8%

10%12%14%16%18%20%

Mean

At 6% or more, attrition does seem to be a valid method for reducing staffing levels. However, some utilities are losing qualified employees more rapidly than they’d like.

Staffing & Outsourcing Pg 46, 47. 48; Source: SO57

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Staffing per $100M Assets

T&D Staffing per Asset

Staffing pg 8, SO12

Distribution Line Staffing per Asset

Staffing pg 16, SO15

7

Staffing per $100M Assets

Substation Staffing per Asset

Staffing pg 25, SO20

Transmission Line Staffing per Asset

Staffing pg 31, SO25

8

Span of Control

Dist Field C&M

Service Restoration

Sub Field C&M

Sub Trouble

Trans Field C&M

02468

1012141618

Mean

Spans of control vary, with the broadest ranges in the Substation and Transmission Line Field Construction & Maintenance areas.

Staffing & Outsourcing Pg 21, 23, 28, 32; Source: SO15, 20, 25

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T&D Field C&M Staffing per 100,000 customers

For those companies reporting outsourcing percentages, it doesn’t have a big impact on where they compare against the group.

Staffing & Outsourcing Pg 15;Source: SO12, ST5 Staffing & Outsourcing Pg 15;Source: SO12, ST5

Mean 52

Quartile 1 42

Quartile 2: 49

Quartile 3: 58

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Distribution Outsourcing

2012YE 2013YE 2014YETotal Respondents 13 14 10Do Not contract 0% 0%Street lighting installation 76.92% 64.29% 70%Street light maintenance 69.23% 71.43% 60%Pole replacements 69.23% 71.43% 80%Pole inspection 84.62% 92.86% 90%Pole treatment or reinforcement 84.62% 78.57% 80%Tree trimming 100% 92.86% 100%New service installations 46.15% 42.86% 50%Overhead line construction and relocations

76.92% 64.29% 90%

URD underground line construction and relocations

76.92% 50% 90%

Concrete manhole conduit system construction and relocations

61.54% 78.57% 90%

Facility locating 46.15% 64.29% 70%Soft surface or yard restoration 46.15% 50% 90%Hard surface or paving restoration 53.85% 71.43% 100%Design work 38.46% 64.29% 80%Other 38.46% 21.43% 30%

Construction related activities are seeing increasing use of outsourcing.

Source: SO115

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Substation Outsourcing

2012YE 2013YE 2014YETotal Respondents 13 14 12Do Not contract 0% 0%Civil construction 84.62% 92.86% 100%Electrical Construction 76.92% 71.43% 100%Transformer maintenance 15.38% 14.29% 33.33%Breaker maintenance 7.69% 14.29% 41.67%Relays or control maintenance 7.69% 14.29% 33.33%Ground maintenance or vegetation management

92.31% 78.57% 100%

Other 15.38% 14.29% 16.67%

The biggest change is in the maintenance area.

Source: SO120

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Transmission Outsourcing

2012YE 2013YE 2014YETotal Respondents 12 13 12Do not contract 0% 0%Pole or tower inspections 66.67% 38.46% 50%Pole treatment or reinforcement 91.67% 69.23% 66.67%Pole replacements 83.33% 69.23% 75%Tower construction 75% 69.23% 91.67%Tower maintenance 66.67% 61.54% 58.33%Tree trimming or Vegetation management 100% 92.31% 100%Other 33.33% 38.46% 16.67%

An obvious trend is hard to find in transmission outsourcing.

Source: SO125

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Employee Engagement

Mean 65 %

Quartile 1 73 %

Quartile 2: 71 %

Quartile 3: 54 %

Staffing & Outsourcing Pg 86; Source: SO150

Engagement Survey Questions:

#23: Increased focus on performance and development, communications and our Comfort Speaking Up program, People Strong initiatives, safety, ethics and integrity, and diversity and inclusion.

#33: 1. Overall, how would you rate your satisfaction with your company at the present time? 2. I would recommend my company as a great place to work. 3. I feel proud to work for my company. 4. I am motivated to go beyond what is normally expected to help my company be successful. 5. What is one idea you have that can be implemented at your company to improve engagement?

#27: I know what is expected of me at work. My fellow employees are committed to doing quality work. At work my opinion seems to count. In the last seven days I received recognition or praise for the work I've done. I have a best friend at work.

Do more probing questions equal poorer scores?

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About 1QC

Satellite Offices

Debi CookDebi.Cook@1QConsulting.com760-272-7277

David WeilerDavid.Weiler@1qconsulting.com607-761-6778

Dave CanonDave.Canon@1qconsulting.com817-980-7909

Dave CarterDave.Carter@1qconsulting.com414-881-8641

Your Presenters

Ken Buckstaff Ken.Buckstaff@1QConsulting.com310-922-0783

Thank You for Your Input and Participation!