Riverside Public Utilities

Succession Planning Recommendations

Spring 2011

RPU Fact Sheet

Obligation to Serve & Local Control

Annual budget - appx. half a billion dollars/yr

$400 to $500 million 5 year CIP

Total assets - $8 to $10 billion (FMV)

640 employees (9% vacant)

Vertically integrated Utilities

Provides and supports City services

National and state regulatory impacts growing

Facilities in multiple regions and states

Riverside is an area of growth

Regional economic driver

Succession Planning Goal

Our Mission Statement

Prepare for significant retirements in an era

where replacement candidates are scarce

Ensure that management transition over the

next decade is smooth for the customers, City

and employees

Build a workforce that represents our

community through proactive planning rather

than marketplace supply

Recommendation: Add 8 strategically placed

managers and reclassify several positions for

better leadership development

RPU - A Great Place to Work!

Result of years of effort!

Well Governed

Council, Board and Community Recognition

National Recognition

Leader In Clean Energy & Conservation

Water Independent

Highly Qualified, Professional Staff

Advancement Opportunities

State of the Art Facilities and Equipment

Healthy Budget, CIP and Growth Area

Succession Planning Concerns

Recession & hiring freeze in late 80s/early 90s

Appx. 1 out of 5 RPU employees is over 55

Appx. 1 out of 3 is over 50

Small candidate pool in mid-career range

Power Resources - 3 Power Resource Managers

positions filled by 9 people in less than 6 yrs.

Upper management recruitments yield few, if any,

qualified applicants

SCPPA members poaching from each other

California not attractive for relocation

Successful Efforts

Succession planning in many areas has been a

successful decade-long effort

Most “clerical” type jobs are adequately structured

and attract qualified candidates

Field positions are recruited at entry level, trained

through an RPU apprentice program, and

appropriately structured for succession planning

Most entry to mid-level professional positions

aren’t a recruiting challenge

Retention Challenges

Retention less challenging than recruitment

Limited areas with significant impacts

Utility specific salaries and benefits need to be comparable to other Utilities

Most salaries are set at competitive levels

Resignations of several excellent staff due to salary differentials have occurred

May need occasional promotional opportunities at times when positions are not available

Some resignations are normal and expected

A resignation should not create a major problem

Recruitment Challenges

Mid-level professional positions and above

Growing candidate shortage – RPU college majors not a high student priority, nor is locating to Riverside

Even a recessionary economy is not providing enough qualified candidates

All Utilities hiring from a shrinking candidate pool

Professional staff sought for RPU must often relocate

Specifically Principal Engineers in Water and Energy Delivery

Senior Engineer openings can experience candidate shortages

Experienced Resources positions and Scheduler/Traders

Water and Electric Superintendents

Finance/Accounting staff with specific training in Utilities

Marketing/Communications staff with training in Utilities

Overall Plan

Short term: Identify and recruit critical staff for

succession planning needs

Many positions don’t have a qualified internal candidate pool

Effort requires several positions and reclassifications

Double fill some positions where retirements are imminent

Expanded economic development efforts benefit RPU

Long Term: Encourage individuals with upward

potential for a long-term career at RPU

Competitively identify “high potential” candidates for promotion

Add programs and training to facilitate their advancement

Create a candidate pool of mid-level staff for promotion

Counsel individuals without development potential

Five Current RPU Divisions

Utilities

General

Manager

DGM

Electric

Delivery

AGM

Water

AGM

Resources

AGM

CFO -

Administration

AGM

Marketing

Cust. Rel.

Secretary

Reclassification New Position Existing Position

Water Division

Develop candidates for AGM – Water

Need increased subordinate development

• Esp. managerial and administrative area

Development of broad Utility perspective

Provide time for development of strategic initiatives

Principal Engineers

Very flat organizational structure - 5 to 15 direct reports

Significant time spent on detailed project level issues

Superintendents (Field Management)

Only management level in field organization

Manage 30 – 70 people, selected from crew supervisors

Limited theory and supervisory experience

Need management development time and support

Water Org Chart

AGM

Water

Principal

Engineer

Principal

Engineer

Principal

Engineer

Principal

Engineer

Principal

Engineer

Principal

Engineer

Water

Operations

Manager

Water

Super-

intendent

Water

Super-

intendent

Water Division

Reclassify 2 Engineering Managers from

existing Principal Engineer positions

Engineering Manager positions part of historic

structure

Remaining Principal Engineers report to new

Engineering Manager positions

Add 2 Water Operations Managers

Add 1 Superintendent

Water Recommended Org Chart

AGM

Water

Engineering

Manager

(Delivery)

2

Principal

Engineers

Engineering

Manager

(Resources)

2

Principal

Engineers

Water

Operations

Manager

Water

Superintendent

Water

Operations

Manager

Water

Superintendent

Water

Operations

Manager

Water

Superintendent

Principal

Resource

Analyst-

Regulation

Energy Delivery

Eminent Retirement of AGM

Existing structure does not develop a candidate pool

Two external recruitments to develop candidates in 3 years

One hired away by a SCPPA member, RPU hired from a

SCPPA member

Recruitments Taking 6 -12 Months - Longer

Engineering Managers, Principal Engineers and Senior

Engineers all suffering the same challenge

Recruitments not delivering candidates

Need to reinstate Principal Electrical Engineer designation

Recommendation

Add one Engineering Manager

Add two Electric Superintendents

Energy Delivery Org Chart

AGM

Energy

Delivery

Engineering

Manager

4

Principal

Engineers

Electric

Operations

Manager

Superintendent

IBEW

Supervisors

Electric

Field

Manager

2

Superintendents

Outside

Constr. Mgr.

IBEW

Supervisors

Safety

Manager

Project

Assistant

Energy Delivery

Recommended Org Chart

AGM

Energy

Delivery

Engineering

Manager

2

Principal E.

Engineers

Engineering

Manager

2

Principal E.

Engineers

Electric

Field/Operations

Manager

3

Superintendents

Electric

Field/Operations

Manager

2

Superintendents

Outside

Constr. Mgr

Safety

Manager

Project

Assistant

Resources

Annual power budget: ~ $170 million

RPU is only muni:

Participating Transmission Owner

Located within CAISO

Scheduling Coordinator

Performs all wholesale power supply functions with own staff

In CA, only Anaheim and Pasadena similar

Some utilities outsource at a higher cost

RPU provides its own services and for several other utilities

Larger munis (IID, SMUD, LADWP) aren’t in the ISO

Can’t recruit from them as no ISO training

They look to RPU for candidates

Resources (cont)

No direct degree programs - OJT and experience

Source degrees of Business, Math, Engineering

Aptitude for industry, theory and application

Not all hired develop

Experienced individuals sought after by others

Upper level Manager - national recruiter, salary increased by 25%, still only 2 qualified candidates over 12 mos

Must develop own Resources employees as we can’t find experienced outside candidates

Succession planning mostly resolved in this division

Resources Org Chart - First Tier

AGM

Resources

Real

Property Agent

Generation

Manager

Power

Resources

Manager

(Scheduling)

Power

Resources

Manager

(Contracts/Proj.)

Power

Resources

Manager

(Marketing)

Resources - Recommendations

No new positions, possible reclassifications

Consideration of reclassifying Settlements series into Resource Analyst series

Requires HR job description and duties review

Create a lower entry level compensation range to develop candidates

Minimum standards for recruitment still requires a good long term “fit”

Add entry level staff if RPU’s are recruited away

Finance

FASB/GASB provided in college courses

No FERC/MW/MMbtu accounting

• No energy risk or regulatory compliance management

• No utility ratemaking

Multiple years and areas of focus to develop analytical ability

Accountant doesn’t equal a capable Analyst

CPA type experience highly desirable

Current structure not developing candidate pool

Principal Analyst and Manager Level Recruitment Challenges

Small pool

Promotional opportunities at other utilities

Often just technical proficiency OR managerial development

Need cross training

Finance Org Chart

AGM

Finance

(CFO)

Assistant

CFO

Utilities Principal

Analyst (0.5)

Utilities Senior

Analyst

2 Senior

Accountants

Finance/

Rates

Manager

Utilities Pricing

Analyst

Senior

Accountant

Business

Systems

Support

Manager

IT

Liason

Utility

Billing

Supervisor

Regulatory/

Energy

Risk Manager

Utilities Principal

Analyst (0.5)

Finance Recommendations

Create Utilities Fiscal Manager position

Add one position

Consider reclassifying 5 existing positions

Need HR assistance

One Utilities Fiscal Manager

Reclassify Pricing Analyst to Utilities Analyst

Series

Promote after training, if appropriate

• 3 Sr. Accountants to Utilities Sr. Analysts

Finance Org Chart - Recommended

AGM

Finance

(CFO)

Assistant

Utilities CFO/

Util. Fisc. Mgr.

(Finance/Budget)

Utilities Principal Analyst

Utilities Senior

Analyst

Utilities

Fiscal

Manager

(Rates/Revenues)

Utilities Principal Analyst

Utilities Senior

Analyst

Utilities

Fiscal

Manager

(Cap./Spec. Projects)

Utilities Principal Analyst (0.5)

Utilities Senior

Analyst

Regulatory/

Risk Manager

Utilities Principal

Analyst (0.5)

IT

Liason

Business

Systems

Support

Manager

Marketing Customer Relations

Fast growing discipline for municipal utilities

Growing regulation at state and national levels

Conservation & rebates a significant effort 22,000 rebates in 2009/10

Increased customer expectations and contacts

Outsourced communications poor and high cost

Few candidates with regulated industry experience

Need management training in all functional areas

Increase understanding of experience

requirements

“Green” responsibilities an additional skill set

Marketing Org Chart – First Tier

AGM

Marketing &

Customer

Relations

Public Benefit /

Bus. Relations

Manager

Marketing

Manager

Sustainability

Officer

Customer

Service

Manager

Field

Service

Manager

Recommendations Mktg.

Consider reclassification of 3 existing positions to

Public Benefits/Customer Relations Manager

HR assistance required

One Principal Account Manager position in each

section

Reclassify two from existing a/c manager positions

• HR assistance required

Recommended Org Chart – Long Term

AGM

Marketing &

Customer

Relations

Pub. Ben./

Customer Rel.

Manager

(Rebates and

Account Reps.)

Principal

Account Rep.

Pub. Ben./

Customer Rel.

Manager

(Marketing /

Communications)

Principal

Account Rep.

Pub. Ben./

Customer Rel.

Manager

(Customer

Service)

Principal

Account Rep.

Field Services

Manager

Sustainability

Officer

Study Area - Compensation

Entry to mid-level management compensation

levels remain at average

Mid-level and above should allow for above

average for excellent performance

Use private sector model

Utilize merit pay

Merit pay only to be utilized for individuals with

significant performance effort or promotional potential

Employees with average performance or without

promotional potential compensated at average levels

New evaluation criteria may be required

At most:

Water – Add 3 positions, 2 reclassifications

Electric Delivery – Add 3 positions

Resources – 3 reclassifications

Finance – Add 1 position, 5 reclassifications

Marketing/Customer Service – Add 1

position, 5 reclassifications

8 new positions

15 reclassifications

Position Summary

Impacts

New and Reclassifications from existing

positions

Incorporate into annual budget

Possibly implement over several years

No impact on rates

Riverside Public Utilities –

Prepared for the Future