local utility welcome - alliant energy · 2016-09-26 · page 4 4 proprietary and confidential...

Proprietary and Confidential

Local Utility Welcome - Alliant Energy EEI Strategic Issues Roundtable Robert Durian, Vice President, CAO & Treasurer September 29, 2016


1

About Alliant Energy

Service Territory Advantages Favorable commission rankings

Economic diversity

High quality renewable resources

Access to ANR, Northern Border, and Northern Natural Gas pipelines

2015 data IPL WPL Total

Electric Customers 489,632 463,346 952,978

Electric Sales (GWh) 15,914 14,437 30,351

Summer Peak Demand (MW)

3,005 2,564

Gas Customers 225,290 184,742 410,032

Gas Sales (000’s Dths) 61,006 61,791 122,797

Operating Revenues (millions)

$1,775 $1,435 $3,210 WISCONSIN

“WPL”

Iowa

Wisconsin

“WPL”

“IPL”


2 About Alliant Energy

Transitioning our Energy Resources



Iowa Wind Expansion Proposal

Up to 500 MW

Revised proposed cost cap to $1,690

from $1,961 per kW including AFUDC,

excludes transmission

11.5% return on equity (ROE)

40 year depreciable life

10.3% ROE rate used in the AFUDC

calculation

In-service 250 MW in 2019 and 250 MW

in 2020

Location includes Whispering Willow

Wind Farm and possibly other areas of

the state

Decision requested by December 2, 2016

to take advantage of 100% PTC

Proposed Stipulated Schedule

OCA & Intervener Direct Testimony

September 16, 2016

Rebuttal Testimony September 23, 2016

Joint Statement of Issues

September 30, 2016

Hearing October 26-27, 2016

Simultaneous Briefs November 10, 2016

Final Decision Requested

December 2, 2016



Gas Generation Investments

• Need due to retirements and modest load growth

• ~650 MW combined cycle natural-gas facility

• Cost cap $920 million, including the facility, pipeline,

transmission costs, owners’ costs & AFUDC

• Approved by the Iowa Utilities Board (IUB) in

November 2013

• KBR selected as engineering, procurement and

construction contractor

• Siemens SGT6-5000F5ee combustion turbines

• Contractual guarantee heat rate ~6,650 BTU/kWhr

• In-service by second quarter 2017

• Need resulting from long term energy and capacity due

to planned coal and gas retirements

• ~700 MW combined-cycle natural gas facility

• Estimated cost $700 million for facility, excluding

transmission costs and AFUDC

• Approved by Public Service Commission of Wisconsin

(PSCW) in May 2016

• AECOM selected as engineering, procurement and

construction contractor

• GE Frame 7FA.05 combustion turbines

• In-service by early 2020

IPL’s Marshalltown Generating Station WPL’s Riverside Expansion



Electric Distribution Strategy

Grid Enhancements and Customer Need

Reliability

- Distributed Generation/Renewable

integration

- Integrate planning with generation

and transmission

- Increase remote monitoring and

control

- Eliminate lower voltage systems

- Increase life extension and rebuild

rate

Customer Focused

- Customer data availability

- Utility as “trusted advisor” for

technical solutions



Natural Gas Strategy

Reliability and Customer Growth

Reliability

- Preparing for increased pipeline inspections

under expected PHMSA rules

- Modifying existing pipes for enhanced

inspection and verification requirements

- Replacing aging gas transmission lines

- Increasing remote monitoring

- Replacing bare steel

Customer Growth

- Add capacity to areas of growth potential

- Modify tariffs to promote growth

- Utility as “trusted advisor” for natural gas

solutions


7

(The guiding principles below are built on what we know about our customers and their

expectations, and on what we anticipate about our future)

About Alliant Energy

Our Vision for the Future

PROVIDING INNOVATIVE CUSTOMER SOLUTIONS Listening to our customers and understanding their changing needs is at the center of our vision today and in the future.

We are developing customized energy solutions that provide flexibility, affordability, and additional customer options. And

we are continuing to promote energy efficiency and technologies that help reduce energy costs, increase productivity, and

make it easier to do business.

MODERNIZING THE POWER GRID Our customers and communities count on a power grid that is increasingly interactive and dynamic. Every day, we work to

improve the security, reliability, and resiliency of the grid, which is evolving into a two-way flow of electricity and

information. This includes making investments that accelerate the integration of new technologies, such as renewables.

ADVANCING CLEAN ENERGY Our energy mix combines clean and renewable sources with traditional ones while ensuring that electricity remains safe,

reliable, and affordable for all customers. Since 2010, we‘ve retired, repurposed, or converted one-third of our coal-fired

generation. We are investing in high-efficiency, cost-effective, natural gas-fired generation to complement our growing

investments in renewable energy.

STRENGTHENING OUR COMMUNITIES We are investing in our communities, creating jobs, and helping drive economic growth through the energy solutions we

provide. We partner with communities across our service territory to improve the quality of life locally, including giving back

through charitable contributions.


Case Study: Developing the Alliant Energy

2020–2025 Strategic Plan EEI Strategic Issues Roundtable Robert Durian, Vice President, CAO & Treasurer September 29, 2016


9

How do you know when you need to develop a new

strategy?

How do you deal with strategic decisions under

uncertainty?

What are the steps to build an enterprise strategic plan?

How do you engage employees along the way?

What are the challenges?

What are the lessons learned?

Everybody Talks About Strategy…

But How Do You Develop One?


10

Why We Were Ready for Strategy Development

Strategy efforts to focus our direction

Strategy Definition

Strategy Implementation

The “Math Dilemma”

Customer

Rates =

Costs

Sales

Generation Fleet Transformation

(Most recent large scale strategy

initiated in 2010)


11

A Word about Strategy…

“A strategy is a coherent set of analyses, concepts, policies, arguments, and

actions that respond to a high-stakes challenge or opportunity.”

Adapted from “Good Strategy, Bad Strategy,” Richard P. Rumelt

Diagnosis Guiding

Policy

Coherent

Action

Strategy


12

Some noteworthy predictions…

“I think there’s a world market for maybe

five computers.”

–Thomas Watson, Chairman of IBM, 1943

“Who the hell wants to hear actors talk?”

–HM Warner, Warner Brothers, 1927

“We don’t like their sound. Groups of

guitars are on the way out.”

–Decca Records Company Executive,

Turning Down the Beatles, 1962

…and Uncertainty

“It’s tough to make predictions, especially about the future.”

Yogi Berra

…and a few more from the U.S.

electric industry

Retail competition will take off

nationwide in the United States

We will be short/long of generation

capacity

Gas prices will stay:

In the $2s

$8–$10

$5–$7

$4–$6

$3–$4


13

Scenario planning is a method to factor uncertainty, optionality, and flexibility into

strategic planning that has been used successfully by others

Alliant Energy 2020–2025 Strategy Project Method

Scenario Planning “Light” Approach

Core

Strategies

Alliant Energy is

committed to this

course of action

Contingent

Strategies

Alliant Energy will do

Y if/when X occurs

Opportunistic

Strategies

Alliant Energy will

take Z type of deal if it

is especially attractive

Three types of strategy, each determines the level of commitment to a

proposed initiative; “all in” versus “test the waters”


14

Alliant Energy 2020–2025 Strategy

Project Method


15

1. Develop a strategy to mitigate the risks and capitalize on

the opportunities presented by the confluence of evolving

technology, evolving customer tastes and preferences,

and evolving public policy

2. Develop an implementation plan/strategy road map with

embedded change management to effect and adapt the

strategy


Objectives


16


Project Organization

2. Generation Stack 1. Distribution Grid

Transformation

3. Distributed Energy

Resources

Govern and oversee strategy development

Provide resources/remove roadblocks

Synthesize and authorize strategy

Ensure coordination among teams

Structure and manage project

Ensure project success

Provide thought leadership

Ensure coordination among teams

4. Natural Gas

Business

5. Customer Centric

Regulatory

Construct & Pricing

Structure of Each Team

Team Leader

4 Additional Team Members

Steering Team

Project Core Team

CEO

CFO

SVP & General

Counsel

Iowa Utility President

Wisconsin Utility

President

SVP

VP, CAO &Treasurer,

Executive Sponsor &

Project Lead

Director of Finance

SVP

Mgr. Investor Relations

ScottMadden

Opportunity Teams

Participants on Each Team

High potential employees

Mix of Directors, Managers and

Individual contributors

Succession planning considerations

Backgrounds of Participants

Broad range of backgrounds for each

team (Engineers, Lawyers, Financial

Analysts, Project Managers, etc.)

Purposeful diversity on each team


17


Six-Step, High-Engagement Process

Step

Month

March April May June July August

1. Organize the Project

2. Perform External and

Internal Scans

3. Develop Scenarios and

Perform Opportunity

Assessment

4. Synthesize and Develop

Strategy

5. Develop Road

Map/Implementation Plan

and Board Package

6. Finalize (Based on Board

Input) and Implement

Two Day Offsite

Meeting with

Executive Team

Board

Meeting

Second Meeting

with Executive

Team


18

Establish project organization with a

core team and a steering committee

and ensure enterprise governance with

clear roles and responsibilities

Create strategy development guidelines

How would we know a good

strategy if we saw one?

What are the constraints that we

cannot violate or risks we cannot

tolerate?

Finalize approach and charter

Develop work plan


1. Organize Project

Establish a project structure with well

specified accountabilities and decisions

rights

Dedicate a small core team of high

potential employees

Organize, plan and run strategy

development as a project

It takes “four to five” months to develop

strategy; too long and too short are both

mistakes

Schedule the executive meetings right

away; this can be a single point of

vulnerability

Utilize CEO and rest of the executive

team to message this is a top priority for

the organization

Key Activities Lessons Learned


19










tolerate?


Develop work plan


1. Organize Project



rights


potential employees





mistakes



vulnerability



the organization



20










tolerate?


Develop work plan


1. Organize Project



rights


potential employees





mistakes



vulnerability



the organization



21

Look outwardly at the business

environment

Look inwardly at the company’s

capabilities (both strengths and

weaknesses)

Identify key business drivers and

develop “scenario planning light

endpoints”


2. Perform Internal and External Scans and

Develop “Scenarios”

Leverage what you have on the shelf for

external scan, but be self-objective as

to how in tune you are with the outside

world and build on it if needed

For internal scan, be self-objective and

self-critical – seek cross-functional,

confidential feedback

Engage the senior leaders and focus

them on the strategy level (the offsite

workshop)

Make scenario planning development

as efficient as possible; don’t get

bogged down in predicting every

possible future scenario and debating

too fine of details



22


environment



weaknesses)



endpoints”













workshop)





too fine of details



23


environment



weaknesses)



endpoints”













workshop)





too fine of details



24

Identify and prioritize a handful of the

most promising opportunities

Select opportunity teams and assign

opportunities

Perform assessments of the

opportunities

Provide stretch goals that remove

limitations on ideas


3. Perform Opportunity Assessment

Narrow your field of play to “five” broad

opportunity areas; this is hard but critical

Leverage your best and brightest on the

opportunity teams - use succession planning

to identify them and make it a premiere role

Create climate where executives are

generous in supporting, and backfilling, the

assignments

Dedicate them 60–80% to ensure they are

not pulled back into their day-to-day work

Make sure the strategy is client-owned, not

consultant owned – these people are your

future ambassadors and implementers

Prescribe structure, templates, plans, process

and methods to the teams – then free them to

focus on content

Removal of regulatory lens/barriers was a key

to evaluating opportunities from an “outside

in” perspective



25




opportunities


opportunities












assignments








focus on content



in” perspective



26




opportunities


opportunities












assignments








focus on content



in” perspective



27

Synthesize an integrated strategy that

is the best fit for the company’s internal

capabilities and external opportunities

Delineate core, contingent, and

opportunistic elements


4. Synthesize and Develop Strategies

Understand that this is more art than

science – it is like taking pieces from

different puzzles and making one

picture out of them

Assign someone to take a first crack at

it – you cannot do this by committee

Pay attention to the top level, the

overarching strategy, the middle level,

the focus areas, and the detail level, the

initiatives

At top level without the other levels

is poetry and speechifying

The lower levels without the top

level is not sufficiently guiding – not

actionable



28











picture out of them






initiatives





actionable



29











picture out of them






initiatives





actionable



30

Bucket strategy into actionable

initiatives

Assign executive owners

Identify key players

Draft initiative plans (with core,

contingent, and opportunistic elements)

Integrate plans

Establish governance and oversight

Develop and review Board package


5. Develop Road Map/Implementation Plan

and Prepare Board Package

Make sure you have tangible actions

that can be executed

Give each senior executive some “skin

in the game” for execution success

Establish a PMO, put a project manager

on it full time initially, and run this like a

major project

Iterate on the Board package and

engage multiple executives for delivery

to the Board



31


initiatives





Integrate plans












major project



to the Board



32


initiatives





Integrate plans












major project



to the Board



33 Alliant Energy 2020–2025 Strategy Project Method

6. Finalize (Based on Board Input) and

Implement

Establish a recurring cadence of

oversight and accountability meetings to

monitor progress with implementation

Adjust and adapt

Provide staff support from the project

manager and others so executives

know what is really going on, not just

what the progress reports say

Monitor and prevent the organization’s

tendencies to revert back to the old way

of doing things

Adapt the strategy as needed…

...But make sure any changes are

explicitly decided, at the enterprise

level, and communicated at that level –

no silos





Implement




Adjust and adapt







of doing things





no silos



36

Questions


37

Participant Discussion

Scenario Planning –

How have others used scenario planning in their

strategy development and what was the

benefit/effort ratio, i.e., was the climb worth the

view?


38


Organization Engagement –

What processes and techniques have you used

successfully to involve your organizations in

strategy development?

What has been successful that you would

recommend to others?


39


Role of Board of Directors –

How involved do your Board of Directors

expect to be in strategy development (they all

certainly approve the strategy) and how do you

meet their expectations?


40


Implementing Cross-functional

Strategies –

How have you addressed the challenges associated

with implementing cross-functional strategies (i.e.

changes in your strategy team structures, processes

and communications)?

local utility welcome - alliant energy · 2016-09-26 · page 4 4 proprietary and confidential...

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