By Terence Donnelly, Commonwealth Edison
For many industries, it’s a painful reckoning for bad or deferred decision-making. For others, it’s being in the wrong place at the wrong time.
Things are not as dire for utilities, thanks to more consistent revenue streams and conservative management. Still, challenges abound. Properly met, they will strengthen utilities once the economy emerges from the recession.
When times are good, there’s little urgency to change what works. When conditions reverse, companies see ways to improve existing processes and drive greater efficiency.
Risk Modeling and Investment
ComEd met the recession already having reviewed many processes in response to business pressures requiring us to get leaner. All the while, we still had to meet customers’ high-reliability expectations.
Atop our list was getting smarter with our material condition improvement program (MCIP) by strategically determining what assets to aggressively target.
Finite investment dollars required creation of a dependable, metrics-based assessment of equipment failure probability and consequence. Development of our risk-scoring model took about a year and integrates best practices from across the globe. The result is a standard, repeatable model that is not overly complex, requires fact-based rigor and avoids funding discussions among engineers that bog into a cycle of “defend, defend, defend.”
When budget pressures came, the model allowed us to come to an aligned decision in hours–compared with the days or weeks in the past.
Trust but Verify
Changing economics should cause re-examination of internal and external business conditions. This means trusting the numbers by verifying them in the field and by knocking on doors.
ComEd saw new business work drop 50 percent last year and anticipates similar numbers this year and next. Decision-makers must know how and where to cut budget, how to redeploy personnel and what can and cannot be deferred.
New commercial projects might have construction permits, but is earth moving? Do estimated occupancy rates reflect the latest conditions? A developer might say one thing, but what do superintendents report?
Contracts and Suppliers
Economic pressures also have created opportunities to re-evaluate all budget categories, and none may be more opportune than reviewing contractor-vendor relationships.
The decrease in new business and capacity has allowed ComEd to bring most contractor work in-house. We’re working closely with our union to remain flexible while demonstrating our commitment to keep our people fully employed. Work shifts have required employees to learn new skills and work in different trades and locations. Lower demand for contractors allows us to gain price concessions and re-evaluate storm protocols that called for a certain amount of contractors on property to respond to storm-related outages.
The same applies to suppliers. With fewer orders and lean customer budgets, utilities should use our economies of scale to obtain discounts. Suppliers will need to give more in this environment, but when things pick up we will remember our true partners.
Urgency creates challenges no one can argue. Consequently, an organization can unify under intense conditions. With time, what doesn’t kill us will only make us stronger.
Terence Donnelly is Commonwealth Edison senior vice president of transmission and distribution. ComEd is a unit of Chicago-based Exelon Corp. (NYSE: EXC) and provides service to approximately 3.8 million customers in Chicago and northern Illinois.