Utility companies need to develop more agile operating models to deliver and exceed historical performance.

Since the peak in 2008 there has been now a paradigm shift where demand does not follow economic patterns in a predictable way, as illustrated by recent economic expansion but anemic sales during the same period.
Recent changes in government regulations and technology have driven this shift from a stable, predictable, and regulated market that the industry had operated in since the late 1800s – where demand followed the overall economic activity and output.  UMT has a long history of working with large Utility organizations across North America to develop processes and enable technology solutions that provide tangible and lasting business performance. As a recognized thought-leader in integrated portfolio management, we’re uniquely positioned to leverage our industry knowledge and established best practices to be strategic partners in addressing the challenges of this rapidly changing industry.

UMT Utilities Enterprise Governance Model

Asset and Resource Portfolio Management

Given that the Utilities industry is a capital-intensive one, it is crucial for Utility companies to have an asset management solution to manage and optimize their asset portfolio in order to improve efficiency and organizational growth. Since current estimates show that Utility companies spend 70-80% of their budgets on maintaining and supporting their existing infrastructure and capital assets, leaving little room for strategic and transformational initiatives, a small reduction in their operational cost can have a significant positive impact on results and shareholder value.

UMT helps Utility companies design and implement process and technology solutions to manage their capital assets. These solutions include:

  • Data models that connects disjointed processes
  • Risk assessment
  • Long term capital planning
  • Analysis of capex spend to sales ratio

Rate Case Optimization

Given their status as a natural monopoly (as is often the case), the rate case process is extremely important for Utility companies since it has a large impact on the organization’s revenue. Public Utility Commissions (PUCs) have a fiduciary responsibility to ensure Utility companies provide a reliable and safe service while, at the same time, allowing them to charge the rate payer an amount that ensures an adequate return to cover cost of supplies and infrastructure investments, as well as external unforeseen events (e.g., Hurricane Sandy). In the last few years, the Rate Case process has become more challenging and labor intensive for Utility companies. Financial transparency and environmental awareness increase the pressure on PUCs to demand higher service standards as well as lower rates.

UMT helps Utility companies design and implement process and technology solutions to manage their annual rate case process:

  • Variance analysis
  • Benchmarking
  • Economics analysis
  • Expense normalization
  • Trend analysis
  • Program prioritization
  • Rate Case optimization
  • Reporting and business insight
Financial Governance and Dynamic Re-Allocation

Even though not unique to the Utilities industry, the need for financial governance and control —leveraging UMT’s dynamic reallocation framework —is especially paramount for Utility companies given the capital intensive nature of their project portfolios.

UMT helps companies manage the portfolio budget at the ‘top level’ by dynamically evaluating the performance of all projects. For instance, if two programs are underspending by 30%, tying up valuable resources, UMT’s dynamic reallocation solution identifies the issue and provides guidance on how to reallocate the resources to either a high priority need or to a program that might be running over budget (with change controls in place).

UMT helps Utility companies design and implement this process for different types of portfolios.

Investment Portfolio Analysis, Selection and Governance

The Utilities industry is highly capitalized, characterized by multiple portfolios and hundreds of projects—of various lengths resulting from multiple business and regulatory drivers. These fundamental differences make it difficult to select the optimal project portfolio, especially when having to work within the rate case construct. As a result, Utility companies are increasingly starting to use business intelligence and analytical tools to help facilitate fact-based decision making. UMT pioneered many portfolio optimization techniques and has successfully implemented processes and technology solutions for many North American Utility companies.

Portfolio optimization has become an essential management discipline that enables organizations to govern their end-to-end investment management processes. UMT’s framework consists of idea generation (Create), project and portfolio selection and implementation analysis (Select), resource alignment and capacity planning (Plan), and ongoing project execution and performance management (Manage). Adoption of Project and Portfolio Management best practices enables organizations to better control and manage demand, improve resource utilization and effectively deliver the right initiatives on time. UMT understands it is not uncommon for change initiatives to fail, so UMT is extremely focused on developing project and portfolio management solutions that are realistic, appropriate, and implementable to ensure project and portfolio management efforts are successful.

UMT works with organizations within the industry to identify the optimal portfolio, to enhance chances of successful launches, and to maximize efficiency of operations:

Identifying business drivers

Project evaluation, selection

  • Strategic imperatives
  • Prioritization of drivers and constraints
  • Alignment of programs to strategic drivers

Portfolio Selection

Scenario planning and comparative analyses of various portfolios

  • Optimization using the efficient frontier
  • End-to-end life cycle view of each asset