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© 2008 Eventure Events. All rights reserved.
Rate Case Management Made Easy with solutions by SAP and Open Text
Maureen Coveney - Industry Director, UtilitiesHugh Ritchie - Industry Manager, Utilities
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
– 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
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.
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.
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!
“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?”
RLM questions
© SAP 2007 / Page 7
Perform What-If and Gap
Analysis
Rate Lifecycle Management – Pain Points
© SAP 2008 / Page 7
Analysis
Rollout
Determine whether to
proceed with the rate case
Evaluate and Prioritize
Investment Areas
Decide to proceed with rate case,
using unified set of information or
execute process without pursuing
rate case
Need to do cost-to-serve modeling and
what-if analysis
Need to do gap analysis between
strategic plan and recovery metrics on
new investments
Operational Efficiencies
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
Competing business imperatives and
external pressures
Timely access to all elements in decision
process in integrated manner
Previous RLM submissions
Investor and Public Sentiments
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
Alignment
© SAP 2008 / Page 8
Convergence of Rate Lifecycle Management Elements to Optimize Pricing for
Customers
Rate Case Preparation Process
© SAP 2007, 071203_PnT_Team_Update, CSG/9
ERPCRM LOBHB
ERPCRM LOBHB
What Problems Are We Trying to Solve When it Comes to Rate Management?
Data Sources
Disparate Application “Suites/Modules”User
Interface
FORECAST & PLANNING
PLANT/ LEGACY SYSTEMS
FERC ACCOUNTING/REPORTING
Unstructured data
Structured data
ERP
CRMLOB
HB
ERPCRM LOBHBERP
CRMLOB
HB
ERP
CRMLOB
HR
ERP
PLANT
CIS
EAM
CORPORATE MISSION, STRATEGY, INITIATIVES, PROJECTS, GOALS, and
KPIs
Upstream Downstream
6 to 12 Month Process
Data - Accuracy & Predictability
Process - Efficiency & Standards
Execution - Usability & Adaptability
Timeliness - 6 - 12 Months on Average
Compliance - Lack of Confidence
Collaboration - Siloed and duplicate
efforts
Key Challenges
ERM
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
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
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
Automate Processes and Integrate Systems
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
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
Final Process
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
© SAP 2007 / Page 29
Perform What-If and Gap
Analysis
Rate Lifecycle Management– Solution Enablers
© SAP 2008 / Page 29
Analysis
Rollout
Determine whether to
proceed with the rate case
Evaluate and Prioritize
Investment Areas
Decide to proceed with rate case or execute
process without pursuing rate case, using
unified set of information
What-if scenario analyses for
collaborative decisions
Share insights, not just data
Increased visibility
Rapid response
Decisions not made in isolation
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
Have a centralized platform to enable
informed decisions to be made
Common view
One voice
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
Alignment
Questions
© 2008 Eventure Events. All rights reserved.
Rate Case Management Made Easy with solutions by SAP and Open Text
Hugh Ritchie - Industry Manager, Utilities
Maureen Coveney - Industry Director, Utilities
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