© 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