the scottmadden energy practice

Copyright © 2014 by ScottMadden, Inc. All rights reserved.

The ScottMadden Energy Practice


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Who We Are

ScottMadden is a management

consulting firm with more than 30 years

of deep, hands-on experience.

We deliver a broad array of consulting

services—from strategic planning

through implementation—across many

industries, business units, and

functions.

WHAT IT TAKES W E D O

TO GET IT DONE

R I G H T

More than 2,400 projects

More than 300 clients including 20 of the top 20 energy utilities

Every business unit, every function

EN

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More than 1,100 projects

Clients range from entertainment to energy to high tech

Unmatched experience with more clients and more solutions C

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Unique perspective built on 30 years of energy experience

Solutions for clean and renewable sources of energy, smart energy management, and sustainability C

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We believe that client success is the

best measure of our own success.

We listen carefully to our clients’

challenges, concerns, and goals so

we can personalize our work and

focus on the things most important

to their success.

We don’t solve problems with canned

methodologies—we help our clients

solve the right problem in the right way.

We do what we say we are going to do

with genuine passion, tenacity, and

integrity throughout the entire process.

S c o t t M a d d e n :

SMART.

FOCUSED.

DONE RIGHT.

“They were able to offer more

customization vs. a cookie-

cutter consulting project plan

or proposal. Exactly what

we’re looking for.”


Our energy utility expertise has been built over more than 30

years. It is experience based, not theoretical. Our capabilities are

broad and deep. Chances are we have seen and solved a similar

problem.

E X P E R I E N C E

We have helped our clients develop strategies, improve

operations, reorganize companies, and implement initiatives.

S E R V I C E S

We perform projects across every energy utility industry business

unit and in every function. Since 1983, we have served more than

300 clients and completed more than 2,400 projects.

S C O P E

20 OF THE TOP 20

ENERGY UTILITIES HAVE ENGAGED

SCOTTMADDEN.

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ScottMadden Knows Energy


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Representative Capabilities

Strategic planning

Business planning

Operational excellence and best practices

Playbook and management model

Process improvement

Organization design and staffing

Smart Grid

Renewables

Environmental

Regulatory

Mergers and acquisitions

Benchmarking

Corporate and shared services

Clean tech and sustainability

“I’ve used many consulting services during my

career, and no other firm ever delivered on the

promises they made better than ScottMadden.”

G E N E R A T I O N C O M P A N Y

P R E S I D E N T


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Areas of Focus

GENERATION

Our practical expertise in nuclear,

fossil, and renewables helps clients

implement leading practices for

fleets and individual plants to improve

and sustain results.

DISTRIBUTION/SMART GRID

We help our clients manage their

distribution businesses in this

changing environment with a

continued focus on managing cost

and ensuring reliability.

TRANSMISSION

We provide broad, deep energy

expertise coupled with practical

business acumen to help companies

navigate transmission challenges

with solid business advice.

VERTICALLY INTEGRATED

UTILITIES/PUBLIC POWER,

MUNICIPALS, AND COOPERATIVES

We have performed numerous

projects for leading players in every

area of the business.

REGULATION AND RATES

We offer extensive experience in

addressing the strategic and operational

challenges posed by energy regulation

to help our clients succeed in today’s

turbulent times.

GAS

We help companies adapt to rapid

change in the natural gas industry by

providing strategic and operational

improvements that deliver value

to clients.


Consulting Approach

C O N T E N T D E E P

We know energy and have worked across every

energy utility business unit and every function for

more than 30 years.

P E R S O N AL I Z E D

We begin by listening to our clients’ situation,

challenges, and goals; then we personalize our

work to help them succeed.

C O N T E X T U AL

We don’t solve problems with canned

methodologies—we help our clients solve the

right problem in the right way.

C O L L AB O R AT I V E We engage with our clients like no other firm

does, working side by side to produce results.

R E AL R E S U LT S

Our work is practical and can be put into play

immediately. We excel at helping internal

stakeholders take ownership to continue

producing results after our work is done.

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Representative Clients

Transmission Delivery Utilities Regulation Gas Generation

Note: Representative sample; not all-inclusive of clients served. Excludes numerous well-known clients due to confidentiality agreements


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More than 30 years in the energy industry gives us unmatched

experience

More than 2,400 projects means “most likely” we’ve seen a

similar issue or solved a similar problem

D E E P E X P E R T I S E

Before we begin any project, we sit down and listen to our

clients’ needs and challenges

We engage with our clients like no other firm does, working side

by side to create practical, real results

We don’t employ canned methodologies or cookie-cutter

solutions. We work to solve the right problem in the right way

P E R S O N A L I Z E D A P P R O A C H

P H I L O S O P H Y

We are personally invested in every project and measure our

success by our clients’ success

We listen to our clients’ needs and put their best interests ahead

of our own

We work with integrity, tenacity, and a genuine passion for what

we do

We do what it takes to get it done right

More than 30 years later, our very first client is still

with us today.

Why ScottMadden?

“Outstanding job of selecting

really good people that have

the experience, knowledge,

and insights.”


S. Bradley Kitchens

President and Chief Executive Officer

ScottMadden, Inc.

3495 Piedmont Road

Building 10, Suite 805

Atlanta, GA 30305

[email protected]

404-814-0020

ScottMadden, Inc.

2626 Glenwood Avenue

Suite 480

Raleigh, NC 27608

[email protected]

919-781-4191

Stuart M. Pearman

Partner and Energy Practice Leader

Contact Us

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National Nuclear Fleet Operator

Fleet Operating Model Development and Implementation

ScottMadden worked with this operator to determine how to put an approach in

place to operate a fleet of plants that had grown through acquisition and

continued to operate independently. We began with a formal assessment of their

current approach against criteria of a stronger fleet model. Gaps were identified,

and a long-term transition plan was implemented. Standards were set for

organization, staffing, tiered indicators, regular management meetings, business

plans, functional area ownership, and improvement plans.

Large Unregulated Fleet Operator

Site Performance Improvement Applying Fleet Standard

ScottMadden worked with an underperforming nuclear generating station to

improve operational performance by identifying and closing gaps to the proven

standard fleet operating model. This included facilitating initial assessments to

identify quick wins, followed by a thorough gap assessment for each functional

area in order to create gap-based improvement plans. This process has been

recognized and recommended in the industry as a best practice.

Single-Site Nuclear Operator

Reorganization and Staffing

ScottMadden led a corporate downsizing effort for a single-site, dual-unit, non-

fleet nuclear operator. The initial phase of the project included working with

executives to determine the right staffing targets, working with functional areas to

perform a detailed workload analysis of their plant in comparison to top-

performing peer operators, and assisting the functional area teams to develop

staffing recommendations based on leading practices to the executive review

team. The final phase of the project included working with human resources to

develop a selection process that was legal, fair, and equitable for all parties and

assisting plant leadership with the selection process.

N U C L E A R

Generation

Representative Qualifications

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Large Fossil Utility

Fossil Power Playbook Development

ScottMadden assisted our client in developing a playbook structure for

consistent management practices across their fossil business. To execute this

project, ScottMadden adapted our model for this approach to the unique needs

of our client. The approach focused on both management controls—how we run

the business and hold people accountable—and operational processes—how

we run and maintain the units. We leveraged best practice policies, processes,

and procedures in dozens of functional areas to ensure our client had a

successful operating model and assisted with the implementation. Our client

saw dramatic results in operational and management performance metrics.

Multiple Large Fossil Utilities and Unregulated Generators

Fossil Operations Restructuring

ScottMadden assisted our clients in designing and implementing an organization

structure and reporting relationship changes in their fossil organizations. This

was a multi-phased project which included current state analysis, functional

mapping, organization design, staffing selection methodology, and

implementation and communications.

Generation


F O S S I L

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Large Utility

Renewable and Clean Tech Project Evaluation Pipeline Process

ScottMadden assisted a large utility in the development of a renewable and

clean tech project pipeline screening and evaluation process. Scope included

the major renewable and clean tech projects such as biomass, wind, solar, and

energy storage. The evaluation pipeline was geared for acquisition of assets or

companies, and the pipeline process evaluated projects that were operational,

had commenced construction, had just applied for permits, or were just “on the

drawing board.”

R E N E WA B L E S

Generation


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Independent System Operator

Wind Penetration Impact Study

ScottMadden conducted a comprehensive study of the impacts of wind

generation penetration on the transmission grid. This study assessed the issues

associated with increased wind generation such as intermittency, the need for

increased voltage regulation, and the need for firming capacity. We also

estimated the cost of remediating these issues.

Large Wind Developer

Wind Development Organization Business Plan

ScottMadden assisted a large wind developer in developing a formal business

strategy and business plan. This included the market, regulatory, economic, and

legislative framework to shape development of the company wind business. The

business plan also analyzed key drivers shaping wind generation demand, such

as coal plant retirements, natural gas supply and price projections, transmission

availability, expansion of state renewable portfolio standards, the turbine

technologies, and others.

Large Wind Developer

Wind Development Organization Project Management Process Assessment

and Improvements

ScottMadden assisted a large wind developer in assessing, improving,

formalizing, and documenting the processes used to manage wind generation

projects from cradle to grave (origination to commercial operations date). The

project resulted in the formation of a project management organization structure

to coordinate all the activities needed to successfully manage a wind generation

project to completion. ScottMadden conducted similar assessments for the same

developer in construction management and safety.

Generation


R E N E WA B L E S

W I N D

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Large Municipal Utility

Rooftop Solar Rate Strategy

ScottMadden worked with a large municipal utility to refine the strategy and rate

structure for customer-owned rooftop solar generation. The new approach was

targeted at providing a better alignment with the cost of solar integration and

involved the development of a value of solar rate to replace their then-current

net-metering rate. ScottMadden also led the development of an implementation

plan and detailed communication plan to support the change.

Generation


R E N E WA B L E S

S O L A R

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Large Resource Management Company

Biomass Strategic Option Development

ScottMadden assisted a non-utility large resource management company in

developing a comprehensive biomass strategy, including feedstock assessments,

generation plant-size determinations, PPA structures, and internal skill

assessments. Since the client had no experience in electric utility operations, the

development of PPA pricing, terms and conditions, and transmission

interconnection were particularly useful.

R E N E WA B L E S

B I O M A S S

Generation


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Independent Transmission Company Operations Center Design and Implementation ScottMadden led the development of a comprehensive plan to build a new transmission operations center to take over operations of a transmission system being divested by the incumbent integrated utility. Once the plan was finalized, ScottMadden managed the project to build the operations center. This project included building a facility to house system operations, implementing a new energy management system, upgrading remote terminal units in the substations, provisioning a new telecom network, and developing all policies and procedures that would be used to manage the new organization. Transmission Company in the Midwest Transmission Strategy Project ScottMadden was retained by a large multi-state utility to assess existing transmission project requests, near- and long-term state commission expansion plans, and multi-state regional transmission and generation planning group goals. We helped the client prepare the five- to ten-year landscape for likely transmission construction projects. Potential projects were evaluated on the likelihood of project approval in the regulatory arena, costs to construct, and perceived benefits (including regulatory return), improved system reliability, and increased system stability. The study produced a rank-ordered listing of projects that would result in stabilizing capital investments over a multi-year horizon. Independent Transmission Company Operational Strategy ScottMadden assisted a transmission owner in selecting the strategy and technology by which it would manage its newly built transmission assets. ScottMadden helped the organization select the appropriate energy management system and telecommunications solution to facilitate remote operations. The solution enabled the client to minimize local energy management system equipment and software and leverage the organization’s significant IT resources in another state. This work also allowed the organization to maintain a local control center with proximity to the transmission assets.

T R A N S M I S S I O N /

S M A R T G R I D

Transmission


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Regional Transmission Operator Control Area Consolidation ScottMadden assisted a large North American RTO with a strategic assessment of implementation options for consolidation of balancing authority functions and the rollout of an ancillary services market. The project scope included development of operational requirements and potential configuration options for consolidation. In addition, a comprehensive cost/benefit study was performed to model the economic benefits of consolidation and estimate the financial impact of various implementation choices and trajectories. The project mapped out development of a virtual balancing authority and subsequent transformation into a physical balancing authority. This was implemented successfully. The client used this analysis to support the development of a FERC filing on the potential benefits of this consolidation. Regional Transmission Organization Generation-Transmission Interconnection Process Development and FERC Tariff Submission ScottMadden assisted an RTO in revamping their interconnection process to accommodate the large influx of renewable interconnection requests into the queue. The project included management of the RTO stakeholder process. Stakeholders included those involved in RTO planning and asset management, regulatory groups, the transmission owners in the RTO footprint, generating entities in the footprint, FERC, state regulators, and a wide array of lobbying groups. ScottMadden helped develop the interconnection process and provided subsequent assistance in revising internal business processes and drafting sections of the FERC tariff, which was approved by FERC. Regional Transmission Organization Implementation of an Energy Dispatch Market ScottMadden assisted an RTO with the implementation of an energy dispatch market, including day-ahead and real-time markets, asset management, and back-office functions. ScottMadden designed the post-market launch organization structure and assisted the RTO with certification to FERC of readiness to open the energy market.

M A R K E T S /

R TO s / I S O s

Markets/RTOs/ISOs


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Investor-Owned Utility

Smart Grid Demonstration Grant

ScottMadden assisted a large northeastern utility in managing a Smart Grid

Demonstration Grant within the American Recovery and Reinvestment Act (the

Stimulus package). This program was designed to further Smart Grid

capabilities in electric distribution systems. It included advanced meter

infrastructure and associated distribution system automation and data utilization,

piloting of energy storage applications, electric vehicle charging, facility

functionality, and electric grid stability applications to facilitate expanded

penetration of renewable energy resources. This suite of applications and

functions was designed to use alternative resources to help improve the

functionality of the T&D system. Visualization of the various resources was

another important part of the demonstration. ScottMadden developed the

program infrastructure, project execution plan, and earned value management

models to manage the project. We provided day-to-day program management

support to the client across multiple sub-awardees and internal utility

departments.

Electric Utility in the Northeast

Capital Project Planning Process Development

ScottMadden was engaged by this client to develop a new capital project

planning process to support more robust business plans and budgets. Working

with stakeholders across T&D operations, ScottMadden developed a stage-gate

process, defining the thresholds of approval required for various types of

projects. Key stakeholders of the process were engaged to ensure that all

project team members were fully committed to the revised procedures. This

work also included development of a project close-out process. The new stage-

gate process was implemented successfully in the following year’s planning

cycle. D I S T R I B U T I O N /

S M A R T G R I D

Distribution/Smart Grid


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Southeastern Vertically Integrated Utility

Merger Integration

ScottMadden assisted an energy company with the integration of an acquisition

of a $3+ billion energy company. The acquisition received close scrutiny from

Wall Street and industry observers. The identification and realization of cost

reduction synergies were key elements for this post-acquisition integration effort.

We set up the integration approach in the first 30 days and identified synergy and

integration opportunities in the next 90 days. We also supported organization

redesign, staffing, and detailed process integration. The deal closed in record

time for the energy industry. Synergies identified, and ultimately realized, met the

highly ambitious targets initially announced to Wall Street. Attendant earnings

and growth targets were in line with estimates.

V E R T I C A L LY

INTEGRATED UTILITIES

Vertically Integrated Utilities


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Public Power Agency

Strategic Planning

ScottMadden assisted one of the largest public power agencies in the United

States with the development of its strategic plan. The plan was designed to

optimize the business across multiple stakeholders with differing interests,

reduce risk, and ensure a continued supply of low-cost power over the long term.

We helped identify, and mitigate, significant risks to the business. ScottMadden

performed the analysis, helped develop the strategy, and presented it to the

Board. The plan is being implemented successfully and is routinely in the news.

Generation and Transmission Cooperative

Strategic Planning

ScottMadden provided strategic planning leadership for a G&T cooperative. We

provided an assessment of the current state; worked with the Board and

executive leadership team to craft a new vision, set strategic objectives, and

develop an implementation plan; and established an integrated strategic planning

calendar.

Municipal Utility

Business Plan Development

ScottMadden supported the first evolution of a municipal utility’s enterprise

business plan development. We designed the business planning process to link

operational performance to strategic plans and created the methods, templates,

metrics, and other infrastructure required for execution. We project managed 11

teams from all operational and support services business units through the

development process. ScottMadden provided project management and analysis

support for the teams throughout the project and helped author the enterprise

consolidated business plan. The project resulted in a comprehensive, two-year

company business plan focused on achieving very specific results by addressing

the root causes of existing gaps between current and first-quartile performance.

P U B L I C P O W E R , M U N I C I PA L S , A N D

C O O P E R AT I V E S

Public Power, Municipals, and Cooperatives


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Investor-Owned Electric Utility

Future Test-Year Support

ScottMadden assisted an electric utility in maximizing its probability of success

with a future test-year rate case filing. Concerns existed around current budgeting

and financial management processes. Internal resources were constrained in the

midst of mounting integration, documentation, and business process

improvements. The budgeting process and assumptions were documented, and

the O&M budgeting process was redesigned to improve accuracy. Variance

reports were designed and installed across business units. We also performed an

evaluation of the capital project process, with associated recommendations

designed to improve accuracy and efficiencies.

Investor-Owned Utility in the Southeast

Rate-Making Process Assessment

The company established a goal to: (a) reduce regulatory lag; (b) harden its

regulatory filing development process; and (c) capture institutional knowledge of

its regulatory filing development process. ScottMadden was retained to help

improve the speed and accuracy of the rate-making process by examining the

potential benefits of improvements on the revenue side of rate filings, enhancing

information reporting and analytics, and automating the process through potential

technology solutions. We completed a detailed analysis of the sub-processes,

people, and systems underlying the utility’s ratemaking efforts.

Recommendations addressing each of the key findings were developed and

prioritized considering a number of factors, including (a) cycle-time days saved;

(b) workforce/work management benefits; (c) costs; and (d) risks. A revenue

deficiency of $60 million translates into an additional $5 million in revenue for

every month the cycle time can be reduced. We were able to help the company

trim five weeks from their timeline—a potential earnings impact of almost $6

million. R E G U L AT I O N A N D

R AT E S

Regulation and Rates


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Investor-Owned Utility in the Midwest

Rate Case Support

ScottMadden assisted a utility in the Midwest in its response to commission

inquiries about affiliate interest issues, cost separation methodologies, and the

rationale for proposed increases in the company’s cost-of-service filing.

ScottMadden developed detailed documentation and supporting work-paper

templates for capital and O&M budgets, facilitated template completion by the

business units, sample-tested capital budget items to ensure adequate

separation of regulated and non-regulated projects, and assisted the client in

submitting new filing.

Regulation and Rates


R E G U L AT I O N A N D

R AT E S

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Gas Utility

Strategic Sourcing Assessment and Implementation

ScottMadden assessed the potential savings achievable through strategic

sourcing at a large gas utility. We developed and executed a plan to achieve

these savings through the establishment of client-led teams. This effort involved

team selection and training and the implementation of leading practices in spend

and market analysis, sourcing strategy, RFP development, proposal evaluation,

negotiations, and contracting. Our approach not only yielded cost savings for the

client but also established a new capability in the organization.

Multiple Gas LDCs

Business Process Improvement

ScottMadden managed large multi-team projects to assess LDCs’ current state

processes, functions, and organizations and led teams through developing future

state designs and business cases to support implementation. ScottMadden

provided the methodology, supported project management, facilitated and

performed analysis, offered best practices, supported communications and

change management, and helped to develop deliverables. Projects improved

business results, service levels, and operating efficiencies, increased employee

engagement, and helped develop a new culture of continuous improvement. The

project was cited in the client’s subsequent Wall Street analyst presentations and

annual reports.

Gas LDC

Organization Analysis

ScottMadden conducted an organizational structure analysis for a large gas LDC

by comparing current state practices to best practice benchmarks, including

spans of control, layers, and cost to manage. The analysis resulted in

identification of potential areas of improvement. These opportunities would result

in a structure aligned with corporate strategy, efficient decision making, clear

accountabilities, increased morale, and the potential for significant savings.

G A S

Gas


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the scottmadden energy practice

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