T&D Support

1. 2014 Electric T&D Benchmarking T&D Support Community Insights Conference August 20-22, 2014 Vail, CO

2. Agenda: T&D Support • Our T&D study benchmarks these important support functions at a high level • The topics reviewed for each function include some demographic measures, key performance measures and current improvement initiatives • Material Inventory • Inventory Levels • Turns and Fill Rates • Stores Facilities • Job Site Deliveries & Truck Loading • Mitigating Copper Theft • Fleet Operations • Vehicle Numbers and Costs • Vehicles per Field Employee • Own vs. Lease • Alternative Fuels • Fleet Operations Outsourcing • Shops • Shop Work Outsourcing • Shop Operations Improvement Initiatives • Repair vs. Replace Criteria

3. Material Inventory

4. T&D Material Inventory Levels There are a couple of ways to measure inventory levels Percentage of Assets Percentage of Capital Additions Companies that have a lot of consignment stocking (where a vendor owns the material before it leaves the storeroom) will appear on top of these charts. These companies may be paying more for those inventory items since the vendors price includes compensation for financing and maintaining the inventory Support Pages 3 and 7 Source: SU10, DF5, DF 70,TF65

5. Inventory Turns and Order Fill Rates (Higher is Better) We often speak of tradeoffs, but some companies are high or low on both of these common inventory performance benchmarking measures Fill Rate Turns per Year Support Pages 11 and 15 Source SU25, SU30

6. How Good Performance is Achieved on Inventory Turns • Close planning and coordination with suppliers and material users was mentioned by 6 of the 13 responding companies • Other specific responses focused on metrics (2 companies), dedicated staffing • (1 company), use of an integrator supplier for fast moving material (1 company), • and adjusting min/max levels in the company’s inventory management system • (1 company) Top 3 Performers on Inventory Turns Support Page 35 Source SU63

7. T&D Storeroom Facilities The best way to evaluate this is on a per square mile basis. # Storeroom Facilities # Facilities per 1,000 Square Miles • Roughly 1.5 to 4 storeroom facilities per 1,000 square miles is the norm • This data suggests that companies 22 and 40 might gain some economies by consolidating storeroom locations Support Pages 28 and 30 Source SU45, SU30

8. Job Site Deliveries and Truck Loading There are wide variations on whether stores staff are engaged in delivering material to jobs sites and/or loading material onto crew trucks Materials Delivered Directly to Job Site Materials Loaded on Crew Trucks Other: 38 – Loaded and delivered throughout the day to job sites 30 – Contractor pick up, counter pick up and job site delivery 27 – Deliveries to crews 359 – Loaded by logistics in the morning Support Pages32, 33 and 34 Source: SU60, SU61, SU62

9. Mitigating Copper Theft Copper theft has been occurring in the storeroom yards as well as in the field. Companies are addressing this costly problem through a variety of security measures. Support Pages 39 and 40 Source: SU65 and SU66

10. Fleet Operations

11. Vehicle Numbers and Operating Costs • Bars show panel average number of vehiclesnormalized by circuit mile. Lines show max, min and average annual operating costs. The average annual operating costs for most vehicles classes have been decreasing in our community (includes leases, depreciation, maintenance and licensing). Annual (Probably not all for T&D employees) (Note the wide ranges of costs for some classes) 11

12. Bucket Trucks Per Distribution Field Employee (Direct) • Bucket trucks are typically assigned to and used by line crews, troubleshooters and vegetation management crews on a daily basis • We normalize bucket truck counts by the number of direct field employees to get a feel for how many “spares” each company has. This ratio should be close to the inverse of your average crew size across the line, trouble and vegetation management areas. The median of 0.55 implies an average crew size of 1.8 • Note: If you have specialized underground field employees, your ratio will be lower since they are in the denominator but don’t use bucket trucks Support Page 54 Source: SO15, SU120

13. Heavy Equipment Per Circuit Mile Typically much of this equipment is not assigned to nor used by all crews on an a daily basis (shared or pooled equipment) Normalizing by circuit mile provides a rough indication of how much shared equipment is readily available to crews in each geographic area of each utility’s service territory. The wide variations shown on this chart may be attributable to differences in practices regarding work contracting (companies that contract most of their underground construction and major overhead construction work would likely have less of this equipment). Support Page 55 Source: ST35, SU120

14. Owned vs. Leased Vehicles and Percent Alternative Fuel Use 10 of 13 reporting companies own most of their vehicles. Only 3 show large percentages of alternative fuel use for the larger trucks that T&D uses % of Vehicles that are Owned (not leased) % of Vehicles that Use Alternative Fuels (any type) Support Pages 57, 61,62.63 Source: SU125, SU135

15. Fleet Operations Outsourcing Most companies outsource portions of their fleet operations. The functions that are most commonly outsourced are highlighted in red * % of responding companies (15) that outsource each function (partially or completely) Support Pages 65 Source: SU140

16. Shops

17. Distribution Shops Work Outsourcing Only five companies responded to this question. All of those companies outsource portions of their Distribution Shops work. The functions that are most commonly outsourced are highlighted in red. None of those companies outsource AMR/AMI meter testing and repairs. * % of responding companies (5) that outsource each function (partially or completely) Source: Report page 41, SU67

18. Meter Shop Operations Improvement Initiatives It is interesting how much is going on in this area; a very diverse list of initiatives and process improvements Source: Report page 42, SU70

19. Distribution Transformer Shop Operations Improvement Initiatives It is also interesting how much is going on in this area Source: Report page 43, SU75

20. Substation Shop Work Outsourcing Ten companies responded to this question. All of those companies outsource portions of their Substation Shop work. The functions that are most commonly outsourced are highlighted in red. * % of responding companies (10) that outsource each function (partially or completely) Source: Report page 47, SU90

21. Substation Shop Operations Improvement Initiatives A variety of improvement initiatives were identified for Substation Shops Source: Report page 48, SU95

22. Repair vs. Replace Criteria - Substation Transformers Repair vs. replace criteria for transformers vary widely across our community Source: Report page 45, SU85.1

23. Repair vs. Replace Criteria - Breakers Repair vs. replace criteria for breakers also vary widely across our community Source: Report page 45, SU85.2

24. Repair vs. Replace Criteria - Relays Repair vs. replace analysis criteria for relays are influenced by the desire to upgrade to new technology Source: Report page 46, SU85.3

25. Thank you for your Input and Participation! Your Presenters Ken BuckstaffKen.Buckstaff@1QConsulting.com310-922-0783 David Carter Dave.Carter@1QConsulting.com 414-881-8641 Dave Canon Dave.Canon@1QConsulting.com 817-980-7909 Debi McLain Debi.McLain@1QConsulting.com760-272-7277 Tim Szybalski Tim.Szybalski@1QConsulting.com 925-878-5066 About 1QC First Quartile Consulting is a utility-focused consultancy providing a full range of consulting services including continuous process improvement, change management, benchmarking and more. You can count on a proven process that assesses and optimizes your resources, processes, leadership management and technology to align your business needs with your customer’s needs. Visit us at www.1stquartileconsulting.com | Follow our updates on LinkedIn Satellite Offices Corporate Offices California 400 Continental Blvd. Suite 600El Segundo, CA 90245(310) 426-2790 Maryland 3 Bethesda Metro Center Suite 700Bethesda, MD 20814(301) 961-1505 New York | Texas | Washington | Wisconsin