how energy & utilities must adopt intelligence best practices to compete against disruptive...

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How Energy & Utilities Must Adopt Intelligence Best Practices to Compete Against Disruptive

Developments

A Complimentary Webinar from Aurora WDC

12:00 Noon Eastern /// Wednesday 25 May 2016

~ featuring ~

Kathryn Valdez Dr. Craig Fleisher


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Kathryn Valdez

Kathryn Valdez serves as an advisor to clients in the Energy & Utilities sector. She is also the Principal and Founder of Mapleton & Sloan, LLC an energy consulting company focused on energy issues for the electric and gas sectors. She has a wide range of experience in environmental policy, strategy development and implementation, energy technology strategy, fuel supply management and logistics, and strategic intelligence gathering and assessment. Previously Kathryn spent 11 years with Xcel Energy in various leadership positions including managing corporate strategy development, expert witness for numerous regulatory filings, developer of innovative clean energy programs, and lead strategic planner for compliance with new environmental regulations.

Email: [email protected]

The Intelligence Collaborative is the online learning and networking community powered by Aurora WDC, our clients, partners and other friends and dedicated to exploring how to apply intelligence methods to solve real-world business problems.

Apply for a free 30-day trial membership at http://IntelCollab.com or learn more about Aurora at http://AuroraWDC.com – see you next time!

http://intelcollab.com/

http://aurorawdc.com/


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Today’s Discussion

Part 1 Not your Dad’s utility business. The need for

strategic intelligence Accelerated energy sector evolutionPart 2 Formation of a strategic intelligence function Intelligence methods and tools including assumption

development and business model analysis Requirements for future success for energy utilities


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Electric Utility Sector Performance

A happy alternative in a low interest rate environment Steady stock price appreciation over the last decade Disruption may not be evident in this trend

Source: Fidelity Investments

S&P 500

Index of Electric Utility Stocks


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Not your Dad’s Utility

2010 2011 2012 2013 2014 20150

5000

10000

15000

20000

25000

Electric Consumption by Type (Trillion Btus) – EIA data

19651966

19671968

19691970

19711972

19731974

19751976

19771978

19791980

19811982

19831984

19850

2000

4000

6000

8000

10000

12000

14000

16000

18000

Fossil Fuels Nuclear Renewable Less Hydro

55% increase

6% decrease


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Business Evolution Acceleration

Technology, customer preferences, and price are threatening certainty of the electric utility business model

Electric utilities facing new competition and its not just solar

Several years of discussion of the “utility death spiral”


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Wanted: Strategic Intelligence

Sales Price

Price

2006 2007 2008 2009 2010 2011 2012 2013 2014 20157.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

180.00

190.00

200.00

210.00

220.00

230.00

240.00

Cents per KWh CPI-U

Elec

tric

ity P

rice

(all

cust

omer

cla

sses

)

CPI-U


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Strategic Intelligence Function Necessity

How do you keep executives informed of the important business developments and why they matter when so much is changing?

How do you answer questions from your executives? Who do they always ask for those answers?

How do you provide better answers and make answering these questions more efficient, collaborative, creative and complete?

Answer: Implement a thoughtful strategic intelligence process


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Finalized Strategic Assumptions

Began with 46+ “beliefs”

Narrowed down to ~20 tied to four

5-year corporate Initiatives

Executive team selected 4

assumptions linked to corporate

initiatives and 2 underlying

assumptions


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Strategic Assumption Qualifications

Are: Tied to 5-10 year corporate

strategy and goals Include beliefs about

customer preferences Include beliefs about

regulatory landscape Include technology

performance and cost expectations

Primarily externally focused Measureable

Are Not: Interest rate assumptions Sales forecasts Weather trends Based upon company

initiatives around culture Open ended or without a

time horizon Too obvious


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Collaborative Subject Matter Experts

SME networks established for each assumption SME networks included the known company “go-to”

people and additional nominated members that are up and comers/high potentials

Each of the six assumptions was given a project plan for validation and a desired frequency of revalidation


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Challenges of Assumption Proving

Specific definitions within the assumptions: What measurements to use to assess impacts of

changes? Timeline for which assumption is expected to hold true Key Intelligence Topic and Question development:

balancing the importance of thoroughness with analysis that is “good enough”

No burdens. Only engaging and valuable work allowed.


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Business Model Analysis and Regulatory Intelligence

Utility business models generally very transparent, just read their regulatory filings!

New entrants in regulated footprints causing discomfort Tweaks to regulatory compacts are small, but

compounding Professional services firms can help understanding

competitor developments through business model analysis and primary research


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German Perspective 2011 to Today: Regulatory Intelligence

American disbelief as Germany transformed its energy mix, reducing imported fossil fuels/ nuclear and increasing renewable generation

German utilities misread the regulatory landscape; lost tremendous market cap

Today, general public acceptance and feeling that “at least the money is going to the farmers” New Wind Turbines near Frankfurt, Germany


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Electric Utilities Critical Role to Continue

Disruption is not providing something that will replace electricity it is replacing how the power is made and who the customer pays for it

Key intelligence areas for utilities to focus on today are in the Business Model and Regulatory Intelligence areas

Technology evaluation is important, but competitive success will require more

A thoughtful process around intelligence will position a company to act more quickly than their peers

Don’t forget to look internationally


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Thank you! Now how about a little Q&A?

Email: [email protected]

The Intelligence Collaborative is the online learning and networking community powered by Aurora WDC, our clients, partners and other friends and dedicated to exploring how to apply intelligence methods to solve real-world business problems.

Apply for a free 30-day trial membership at http://IntelCollab.com or learn more about Aurora at http://AuroraWDC.com – see you next time!

mailto:[email protected]


http://aurorawdc.com/