7/31/2013

1

Public Power Member and Broker Session

Dennis SaccoDirector of Risk Management

New York Power Authority

Member of the AEGIS Risk Management Advisory Committee (RMAC)

Public Power Member and Broker Session

James J. (Jim) JuraCEO & General Manager

Associated Electric Cooperative, Inc.

Member of the AEGIS Board of Directors

7/31/2013

2

Distribution of Membership

Public Power(Municipal)

16.38%

As of December 31, 2012 Membership of 315Distribution of Ownership Type

Public Power(State Project)

4.52%

Cooperative6.60%

Investor Owned72.50%

Public Power Member and Broker Session

Michael J. Hyland, P.E. Senior Vice President – Engineering Services

American Public Power Association

7/31/2013

3

Public Power Operational Risk Management

• Disaster management

• Reliable utility management

Reliability benchmarking

Safety compliance

Workforce development

System improvement

• Distribution power supply management

APPA’s View From DC

Disaster Management: Superstorm Sandy

• History of effective storm restoration

• Increased reliability expectations from consumers

• APPA membership initiatives

Mutual Aid Task Force

CAPP

NIAC JEEC – NERC ESCC

The New Norm?

7/31/2013

4

Reliable Utility Management

• Program started by APPA in 2005

• Provides public power with a platform to benchmark their utility operations through a self-check format

• Four focus areas

• Applications good for a three-year time period

• Applications are graded by a panel of APPA member experts

Reliable Public Power Provider Program – RP3

RP3

• Based on 100 point system

25 for each focus area

• Reliability – indices, disaster planning, mutual aid

• Safety – incident rate, ‘safety culture’ measures

• Workforce – succession planning, training, IDP’s

• System improvement – R&D, O&M projects

184 Systems and Growing

7/31/2013

5

Safety – All or Nothing…

6.09

9.20

11.51

0

2

4

6

8

10

12

14

0 1 2

RP3 Cycles 5 and 6 Average OSHA Incidence Rate by Number of "No" and "No Answer" Responses to Safety Questions on RP3 Application

Ave

rage

Inc

iden

ce R

ate

(Cal

cula

ted

per

OS

HA

Met

hodo

logy

)

What Gets Measured…..Gets Done!

Mean and Median for 67 RP3 Applicant Utilities

RP3 Cycle 5 IR RP3 Cycle 7 IR

Mean 6.61 4.79

Median 5.75 3.76

7/31/2013

6

Power Supply Management

• Generation at a crossroads

• Integration of renewable energy

• Pressure to lower carbon production

• Pressure to supply low-cost energy and services

• Pressure to adapt to new technologies

Solar, Wind, DR....Oh My!

Public Power Member and Broker Session

Sandy Meyers, CPA, CPCU, ARM, AINS, CISMDirector – Risk Management

City Utilities of Springfield, Missouri

7/31/2013

7

Challenges of Public Risk Management

• Time-consuming and detailed

• Every entity does it a little differently

• Limits competition

• Focuses on best price and not best fit

• Does not allow you to leverage your relationships

Competitive Bidding

Challenges of Public Risk Management

• It is a relationship-driven business

• Market-driven commodity

• Standard bidding practices don’t always work in your favor

• Utility expertise is a must for your brokers and insurers

Insurance Is Not Another “Widget”

7/31/2013

8

Challenges of Public Risk Management

• Limited staffing and experience

• Long learning curve

• Travel and training funds are restricted

• Consulting services are a luxury

• Diverse risks must be addressed with limited funds

Limited Resources

Challenges of Public Risk Management

• Diverse operating risks are complex and have a long learning curve

• Operating areas manage their own risks

• Risks are not openly shared or communicated

• Risk managers sometimes lack authority to intervene in decisions

Managing Risk Silos

7/31/2013

9

New Risk Manager Lessons Learned

• Which part(s) of the process can be adjusted to better serve the unique market?

• Is it within legal, policy, and ethical constraints?

• Ask for support from executive staff to make adjustments where acceptable

Flexibility In Your Bidding Process

New Risk Manager Lessons Learned

• Build strong internal and external relationships

• Foster trust and sharing of information

• Relationships can be leveraged when they are needed most

Relationships Are The Key

7/31/2013

10

New Risk Manager Lessons Learned

• Leverage brokers

• Leverage peers

• Leverage insurance and risk management associations

• Take training or obtain certification(s)

• Ask for support and help when needed

Seek All Available Resources

New Risk Manager Lessons Learned

• Learn the details of the business

• Ask lots of questions

• Challenge yourself and others to consider alternatives

• Don’t accept the way things have always been done

Details, Details, Details

7/31/2013

11

New Risk Manager Lessons Learned

• Opens up communication about risks

• Identifies and shares risk tolerances

• Helps prioritize limited resources

• Builds consensus across a multidiscipline utility

• Shared ownership of risks

Enterprise Risk Management Is Valuable

Public Power Member and Broker Session

Cindy A. Stevens MBA, CRM, CICInsurance Program Manager, Enterprise Risk Management

Colorado Springs Utilities

7/31/2013

12

Colorado Springs Utilities

The “Power” of Public Power

2012 Colorado Association of Municipal Utilities

Electricity Providers by Ownership

Ownership Number % of Total

Publicly Owned 2,006 61.7%

Cooperatives 874 26.9%

Investor-Owned 194 6.0%

Power Marketers 168 5.2%

Federal Power Agencies 9 0.3%

Total 3,251 100%

Publicly Owned62%

Investor-Owned6%

Power Marketers5%Federal Power Agencies

0%

Cooperatives27%

Electricity Providers in America

7/31/2013

13

Background – Colorado Springs Utilities (CSU)

• Est. in 1878, an enterprise of the City of Colorado Springs

• Colorado Springs population ~429,000

• Electric: 213,000 customers, 99.99% reliable, generation = 1,100 MW

• 58 substations, 235 miles transmission

• ~3,400 miles distribution (~75% UG)

• $1.05 billion annual budget

4 Services – Water, Waste Water, Electric and Gas

2012 Official Statement

Coal39%

Hydro & Renewable12%

Other4%

Gas45%

CSU Electric GenerationResources by Fuel Type

Challenges – Striking a Balance

• 2010 strong Mayor – “small government” advocate

• City Council = utilities board

• City budget constraints, outsourcing initiatives

• Failed initiative to sell utilities’ electric generation

• Study to decommission Drake coal plant in 15-20 years

• Colorado government immunity act – waivers

Trying to restore “caps” on monetary damages ($350,000 per individual, $990,000 per occurrence as of 7/1/2013)

Politics “Unusual” – Utilities Versus City

7/31/2013

14

Challenges – Striking a Balance

• CSU’s water system – 26 dams, 13 counties

• 80% water supply from western slope – risk

• $1 billion 62-mile pipeline/WTP project from Pueblo Dam to City of Colorado Springs 2016

New Projects Versus Aging Infrastructure

Pueblo Reservoir and Dam

Challenges – Striking a Balance

• Waldo Canyon June – July, 2012

• 2 deaths, 347 homes destroyed

• Human-caused, still under criminal investigation

• Assets threatened: finished water treatment plants and hydro

Ute Pass – 2 MGD

Pine Valley – 88 MGD

McCullough – 75 MGD

Mesa – 42 MGD

Tesla Hydro Electric Facility

Wildland-Urban Interface – Wildfires

7/31/2013

15

Waldo Canyon Fire – June 26, 2012

Challenges – Striking a Balance

• Assets threatened

Several water storage tanks, Twin Rocks pump station

34.5 kV electric transmission line – Green Mtn. to Rampart

Northfield watershed

Wildland-Urban Interface – Wildfires

ReservoirDate

CompletedCapacity in

Gallons

Capacity in Acre

Feet

Nichols 1913 191,000,000 586

Northfield 1890 90,000,000 276

Rampart 1970 13,318,000,000 40,871

7/31/2013

16

Fire Progression:

June 23 2,500 acres

June 24 3,600 acres

June 25 4,500 acres

June 26 15,622 acres

June 27-28 16,750 acres

June 29 17,073 acres

June 30 17,650 acres

July 1-6 18,247 acres

Challenges – Striking a Balance

• CSU’s Wildland Fire Team (WFT) – instrumental to saving CSU infrastructure

• Minimal physical damage incurred

• Versatility – fire and FEMA trained emergency responders

• Unique – WFT includes experts from all four services

Electric, gas, water, waste water

Wildland-Urban Interface – Wildfires

7/31/2013

17

Waldo Canyon Fire – Rampart Reservoir

Challenges – Striking a Balance

• July 30, 2012

• Over $15 million “uninsurable” damages

Two damaged pipelines, two lost reservoirs

CSU’s watershed = USFS land 59% of area moderate to high soil burn severity

Use grants as a funding source!

Wildland-Urban Interface – Post Waldo Fire – Northfield Flood

Resources: www.inciweb.org, www.springsgov.com

7/31/2013

18

Challenges – Striking a Balance

• July 11, 2013

• Two deaths, 503 destroyed homes

• North end of CSU service territory

• CSU’s Wildland Fire Team deployed immediately

• No CSU infrastructure damage

Wildland-Urban Interface – Black Forest Fire

Colorado Springs Utilities Wildland Fire Team

Thank you!

www.csu.org cstevens@csu.org 719.668.8705

7/31/2013

19

Electric Risk Assessments

Scot Macomber, CGEManager Loss Control Utility Operations

AEGIS Insurance Services, Inc.

Purpose of a Risk Assessment

• Help members identify potential problems and concerns

• Provide the AEGIS Underwriting division with additional information regarding the company

7/31/2013

20

Scheduling an Assessment

Opening PresentationRisk Assessment Overview

AircraftStrike

2%

ElectricContact

66%

Other3%Failure

to Supply4%

Explosionor Fire20%

VehicleAccident

5%

7/31/2013

21

Topics Covered

• Substation design, construction, and inspections

• Transmission design, construction, and inspections

• Distribution design, construction and inspections

• Vegetation management / tree trimming

• Pole inspections

Topics Covered

• Joint use / joint ownership pole practices

• Downed wire dispatch procedures

• Public safety and awareness

• Environmental programs

• Occupational safety

7/31/2013

22

New Topics

• Dams

• Contractor safety review and evaluation

Wrap-Up / Closing Meeting

7/31/2013

23

Wrap-Up / Closing MeetingFrequent Suggestions – Substations

Wrap-Up / Closing MeetingFrequent Suggestions – Distribution

7/31/2013

24

Wrap-Up / Closing MeetingFrequent Suggestions – Public Safety and Awareness

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