Transcript Slide 1

Rate Case Management Made Easy with
solutions by SAP and Open Text
Maureen Coveney - Industry Director, Utilities
Hugh Ritchie - Industry Manager, Utilities
© 2008 Eventure Events. All rights reserved.
Macro Business Challenges facing Utility
Companies Today
Business Challenges
–
Many utility companies face significant investments: Smart Grid, additional plant,
environmental requirements, transmission, customer service
–
Tough economic times are making consumers resist any rate increases
–
Higher costs leading to more delinquency and higher levels of bad debt write-off
–
Significant increases in operating and maintenance costs due to aging assets
–
Complexity of connecting strategy, implementation plans, financial systems, budgets and
rate-case imperatives
Business Imperatives
–
Most utility companies are earning below their allowed rates of return
–
Many are facing the prospect of rate cases having lost much of their expertise
–
Rate freezes following mergers and acquisitions are coming to an end
–
Many are facing required and costly “green” investments
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Many are investing in technology to streamline operating processes and reduce cost
–
Most have aging infrastructure and are facing high levels of capital expenditure
–
There can be significant lags in regulatory cost recovery mechanisms
Evidence: Times Are Getting Tough
CenterPoint Energy Reaches Rate Case Settlement for Customers in
Arkansas: HOUSTON, Sept. 25, 2007 (PRIME NEWSWIRE) -- CenterPoint
Energy and the Staff of the Arkansas Public Service Commission (APSC) today
filed with the APSC a Stipulation and Agreement (the settlement) in the company's
pending rate case. If approved by the APSC, the settlement will resolve all issues
in that proceeding.
Council Approves CPS Energy Rate Hike: 05/15/2008 -- After a day filled with
deliberation and citizen comments, the City Council approved a 3.5 percent rate
increase for CPS Energy customers. The utility originally sought a 5 percent
increase, but rejected the proposal with a 6-5 vote. The reduced rate was later
agreed upon by a unanimous vote.
TXU Defers Rate Case Filing to 2008: TXU Electric Delivery Co., a subsidiary of TXU Corp on
Thursday said it will defer the filing its system-wide rate case with the Public Utility Commission of
Texas until June 30, 2008.
PG&E Seeks Reliably Higher Rates From California Public Utilities: In an unusually audacious
move, PG&E is trying to stick customers with unprecedented rate hikes that will only add to the
economic difficulties facing many Californians. PG&E has asked the California Public Utilities
Commission to impose up to $374 million in new charges on customers, above and beyond almost
$1 billion in rate hikes already approved for the next three years.
SEMPRA'S GREEDY GRAB: Two companies owned by Sempra—Southern
California Gas and San Diego Gas & Electric—want to charge ratepayers $372
million more in 2008, a 13.5% increase from just one year ago! They are demanding
over $3.1 billion from their customers in 2008. And on top of that Sempra wants
automatic increases for the next five years.
Citizens Gas Rate Case: Citizens Gas & Coke Utility is seeking an increase in its
base distribution rates in Indiana Utility Regulatory Commission (IURC) Cause
No. 43463. Links to electronic copies of the utility's testimony in this case are
available below.
Successful Rate Lifecycle Management is….
 A systematic, end-to-end approach for managing investments and
expenses in order to optimize rates and ensure compliance with regulatory
agencies and interveners.
 A centralized and integrated framework that is able to receive, process,
organize, store, and publish data from a variety of different departments
including, finance, engineering, customer service, administration, and
corporate planning.
 Not simply just a financial exercise!
RLM questions
“I’m not a lawyer, not a records manger but I need to treat the rate case information like I
am one”.
• How do I ensure that I am managing my rate case information in accordance with the
our policies and to help avoid any personal legal or rate case failure risks?”
• “I would love to be able to file email related to the Rate Case in in the same easy and
fast way I do in Outlook.
• I cannot waste time looking for the information I need to answer the interrogatory. There
must be a better way to research the information.
• I just want to be able to find what I’m after without having to know what system stores
the information.”
• How do I get a view of the overall rate case or of just what just what I need?”
Rate Lifecycle Management – Pain Points
 Competing business imperatives
and external pressures
 Timely access to all elements in
decision process in integrated
manner
 Previous RLM submissions
 Investor and Public Sentiments
 Need to do cost-to-serve
modeling and what-if analysis
 Need to do gap analysis between
Determine whether to
proceed with the rate
case
strategic plan and recovery
metrics on new investments
 Operational Efficiencies
Perform What-If and Gap
Analysis
Evaluate and Prioritize
Investment Areas
 Significant CapEx investments required: Smart
Grid, Green, generation, T&D, etc., balanced
with O&M
 Difficult economic times: high cost of capital
 Complexity of integrating strategy, plans,
financials and other imperatives
 Public Expectations
© SAP 2007 / Page 7
© SAP 2008 / Page 7
 Lack of end-to-end approach
does not lead to optimized rates
 Lack of centralized and integrated
framework prevents optimal
decision-making
 Visibility
 Records
 Process
Decide to proceed with rate
case, using unified set of
information or execute process
without pursuing rate case
Convergence of Rate Lifecycle Management Elements to Optimize
Pricing for Customers
© SAP 2008 / Page 8
Rate Case Preparation
Process
© SAP 2007, 071203_PnT_Team_Update, CSG/9
What Problems Are We Trying to Solve
When it Comes to Rate Management?
6 to 12 Month Process
Upstream
Disparate Application
“Suites/Modules”
Downstream
User
Interface
FERC ACCOUNTING/REPORTING
Key Challenges
Data Sources
Data - Accuracy & Predictability
Structured data
Process - Efficiency & Standards
ERP
LOB
EAM
HR
HB
CRM
PLANT
CRM
ERP
LOB
HB
Execution - Usability &
Adaptability
FORECAST & PLANNING
 Timeliness - 6 - 12 Months on
CIS
Average
ERM
 Compliance - Lack of Confidence
CRM
ERP
HB
LOB
 Collaboration - Siloed and
duplicate efforts
PLANT/ LEGACY SYSTEMS
Unstructured data
CRM
ERP
HB
LOB
CORPORATE MISSION, STRATEGY, INITIATIVES, PROJECTS,
GOALS, and KPIs
Rate Case Creation
“Turning Art into Science”
Rate Case Observations:
 Average rate case takes 12-18 months
 Rate cases being filed are on the rise
 Consists of thousand pages of financial analysis, testimony, projections,
and assumptions
 Very costly, outside consultants get involved
 Today’s rate departments operate on a shoestring budget and the human
capital required to support rate case filings has severely depreciated or
disappeared completely
RLM Process & Departments Involved
Business Problem
Accurate and timely responsiveness to assembling all the documents needed for building the
Rate Case submission documents
Whether dealing with routine rate case questions or responding to the crisis of the day, the flow of
information requires careful management of deadlines, content and process.
Executives and responsible officials need to have a clear overall picture of the Rate Case.
Example of Gap Analysis
Key Functions to Manage the Process
 Project Management Elements to Guide the Process
 Document Access/Archiving to Manage Structured and Unstructured
Data
 Document Publishing
 Enterprise Search and Query Capabilities
 Self Service Capabilities Allowing Interveners to Gather Data They Need
Rate Case Process
Rate Case
Strategy
Initiate Rate
Case
&
Process
Interrogatories
Validate all
documents &
records
Deliver Rate
Case to PUC
Review / Audit /
Approve all
documents
Submit to PUC
Assign Project
Team
Initiate Workflows
– Folders,
Deliverables…
Decision to
Proceed
Project Plan –
Schedule,
Measure, Monitor
Testimonials
Scan and Archive Data and Documents
 Capture documents from any
source: paper, email, web &
desktop
 Trim database size & manage
documents and archived data with
robust replication, caching,
encryption, and digital
signature/time stamping
capabilities with flexible storage in
optical, magnetic WORM, SAN,
NAS hardware from vendors of
choice
 Migrate legacy data to archival
storage while providing easy
access in SAP business context
Manage and Route Your Documents
 Control content and automate manual
controls with content-centric document
management, collaboration, and workflow
 Powerful Search and Discovery
Capabilities
 Advanced access control and audit trail
 Rapid deployment and adoption
 Desktop and productivity application
integration
 Integrated Workflow
 Wide area access and hosting capabilities
enabling extranet communication and
enhancing transparency with the public
Automate Processes and Integrate
Systems
 Multi thread workflow with dynamic
routing
 Notify users of assignments
 Monitor document changes
 Update document changes to other
systems
 Create graphical workflows
 Work in popular desktop applications
 Trigger and schedule automatic
processes within workflows via XML
 Export (import) data to (from) external
systems via XML
 Secure access, monitor login and
enforce timeout policies
Improve Compliance with Enterprise
Records Management
 Establish a trusted
repository for electronic &
physical records (DoD
5015.2, Chapter 2 certified);
legal discovery, holds &
disposition; warehouse
space & circulation
 Control records retention
and destruction policies
across all enterprise
content, moving infrequently
accessed files to tier 3
storage
Project Management
Capabilities
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Clear Project deliverables and
responsibilities
Standardization by using “Best Practices” templates
Flexible phase-based structuring
Interactive Gantt-Chart
Project Resource Planning role based, acc. to availability and skills
Knowledge Management Search Engine
Sophisticated search engine providing capabilities to search across all
SAP Document Repositories
Document Repository: Document tracking and control including
versioning, document rating, feedback and reviews
Collaboration Rooms
Maintain virtual workspaces for teams, workgroups and communities,
including Team News, Discussions, and Chat capabilities
100% Browser Based, Zero Footprint Solution
No client footprint required, accessible anywhere via a web browser.
Business Problem
Accurate and timely responsiveness to respond to interrogatories from interveners and assembling
all the documents needed
Whether dealing with routine intervener questions or responding to the crisis of the day
Executives and responsible officials need to have a clear overall picture of the Rate Case.
Assembling the Rate Case Process
Reuse similar processes
Interrogatories Process
Intervener
Public
Mail Room
Email
Web Posting
From PUC
Utility Rate
Case
Department
Author
Review
Approve
(Legal)
Burst question
Interrogatory
Capture
Physical /
Electronic
Delegate /
Assign
Check for
Similar
Question
Validate
Response
Respond to
Questions
Post Response
Final Process
Defend
Monitor &
Manage
Financial
Reporting
Translate into
Business Terms
Dashboard
Monitoring
Reporting
Administration
and Policy
changes
Monitor /
Customer Service
Implement
Capture Physical
/ Electronic
settlement
Pleading and
Settlement
Negotiations
Public Notification
Bill Presentment
Records
Management
Process Benefits
Executives and responsible officials need to have a clear overall picture
of the Rate Case.
Accurate and timely responsiveness to Rate Case submissions
Clear project tracking and reporting
Allow for easy research of previous cases and interrogatories
Manage incoming interrogatories correspondence in any form — paper or
electronic
Use framework case methodology
Ensure accuracy, integrity and expected deadlines
Ensure a records management
Work with subject matter experts across distributed or decentralized
environments
Rate Lifecycle Management– Solution
Enablers
 Have a centralized platform to
enable informed decisions to be
made
 Common view
 One voice
 What-if scenario analyses for
Determine whether to
proceed with the rate
case
collaborative decisions
 Share insights, not just data
 Increased visibility
 Rapid response
 Decisions not made in isolation
Perform What-If and Gap
Analysis
Evaluate and Prioritize
Investment Areas
 Have unified information that supports all
data sources and has complete data
quality
 Have business network optimization with
sharing of content; sharing of metadata on
information; sharing of third -party data
 Resources and budget focused solely on
activities that can deliver on utility’s goals
 Supported records enable fast decisions
and comparisons
© SAP 2007 / Page 29
© SAP 2008 / Page 29
 Make decision
 If proceeding with rate case,
respond to interveners and
submit
 Tie back outcome of decision to
company strategy
 End to end business view
Decide to proceed with rate case or
execute process without pursuing rate
case, using unified set of information
Questions
Rate Case Management Made Easy with
solutions by SAP and Open Text
Hugh Ritchie - Industry Manager, Utilities
Maureen Coveney - Industry Director, Utilities
© 2008 Eventure Events. All rights reserved.