I WENT TO VISIT CRAIG BROUSSARD IN HEBER CITY, UTAH. I JUST HAD TO SEE WHAT HIS LOCAL UTILITY, HEBER LIGHT & POWER CO., WAS DOING.
I first ran into Broussard when I was on a plant tour of Caterpillar's diesel engine manufacturing plant in Indiana. It turns out that Heber City is a demonstration site for Caterpillar's latest diesel and natural gas-fired generation sets. This is a sweet deal for both companies, as Caterpillar is able to test its new reciprocating engines under high-altitude operating conditions during hot summers and cold winters. Heber mechanics operate the diesels while dispatchers market the power on an hourly basis to maximize value for the company.
When Broussard first arrived at this small utility 15 minutes outside Park City, Utah, keeping the lights on had become difficult. There wasn't sufficient revenue coming in to properly maintain the distribution system of Heber Light & Power Co., an interlocal utility that also includes the communities of Midway and Charleston within the Heber Valley. But Broussard, hired as the general manager, realized that if Heber Power could own the entire supply chain, it could tap into the resources to invest in the distribution system and maintain the five Heber Power substations while building for new load in this burgeoning resort city.
SMALL IS BEAUTIFUL
Now, if you buy into the myth of economy of scale, then there would be no way this small utility could deliver electricity anywhere near the rates of neighboring PacifiCorp, but I found out that the residential rates are comparable. Why? Because smaller utilities have the ability to out-innovate the large investor-owned utilities of today.
Here are a few examples of innovation in action:
Heber Power generates its own low-cost hydro power from two small lakes in the surrounding hills and intends to install generators in another lake nearby.
It has its own hourly power-dispatch center where it buys and sells electricity for itself and others.
So, how can a utility with only 25 employees serving 10,000 customers run a power dispatch center? Because the custom-designed software is easy to use, and because the Heber Power staff is really into what they are doing.
Tim Van Wagoner, a former lineman, simultaneously runs the dispatch center, where he trades for energy on a daily basis, and the operations center. But even with this capability, Heber City faces several wholesale electric market challenges that keeps it in a constant battle to maintain low rates for its retail customers.
To address additional energy requirements and market demands, Heber Power has installed a local fleet of diesel and gas-fired generation. This town has become a Mecca for visiting utilities from within the United States and around the world that are considering similar options for their utilities. Some come to see the engines while others come to explore applications or review operations strategy.
IT'S ALL ABOUT TEAM
Even though really slick things are going on at Heber Power, that's not what caught my eye. Instead, it was the enthusiasm of those who work with Broussard on the Heber Power team. I say “work with” because Broussard is not one who gives edicts; instead, he asks questions. He is not the first to make his opinions known but rather seeks the opinions of others.
For example, I had lunch with Troy and Reggie, the two men responsible for building and maintaining the Heber lines and substations. These two love the freedom of making key decisions in building and maintaining “their” distribution system. With no engineers in this small utility, these two decide on equipment, materials and work processes.
We had quite an interesting discussion of the various merits of EPR and cross-linked insulation materials for the medium-voltage cables they were about to purchase. Discussions ran from cable life to ease of installation to stripping ability to sidewall-bearing pressure. I expected Broussard, with a Fortune 100 operations background and decades of hands-on experience, to jump into the conversation, but he was too cagey for that. Broussard didn't want to contaminate the discussion with his input, but rather wanted the guys to formulate their own opinions and come up with their own solutions.
INVESTING IN DISTRIBUTION
With money coming in from its generation portfolio, Heber Power has the resources to invest in the distribution system. When I was in town, Heber linemen were upgrading the conductor on a 12.47-kV feeder line from #2 to 500 kcmil. Broussard's thought: “You might as well put in the biggest wire you can afford.”
Yes, there is energy here in Heber City. But what fuels the people who work here? One key to a committed workforce is appropriate financial incentives. Passionate people must be properly compensated. Broussard worked with the power board to make sure the utility could provide salaries and raises that trump what neighboring utilities pay. This flies in the face of conventional wisdom that says that small utilities cannot afford to pay decent salaries. By aligning the right individuals with the right incentives to tackle the right tasks, this team is definitely fired up.
What about the things they can't or don't want to tackle? This is where partnering comes in. At the service center, I met a contract engineer drawing up jobs using industrial-strength software. As a small utility with no engineers on staff, Heber Power has access to this part-time engineering contractor. Heber Power also outsources large segments of the supply chain with contract personnel stocking the warehouse and maintaining the pole fleet. These partnering companies have become so attached to the hip that they are virtual Heber Power employees.
ADD A MAD MAN TO THE MIX
Broussard recruited Rob Webster to join his virtual team. Webster, quite an interesting character in his own right, will never again be constrained within a large corporation. He is an innovator and a wild man, with big ideas and even bigger hair. Webster, it turns out, teams with Broussard and the Heber Power generation manager to handle the city's wholesale planning function and oversee the portfolio of electric resource contracts. He also writes the code that the Heber Power dispatcher uses for operating the generating facilities, and for buying and selling power. While working on contract for Heber Power, Webster also maintains a private consulting practice that gives him a broad view of the wholesale market and small utility best practices.
Back home, I was sharing my experiences with this interesting utility with Dan, a buddy from church. Dan commented, “Rick, you have to read Good to Great.” An avid reader, I picked up a copy. A few chapters into the book, I could see how Broussard and his team were able to build such a great utility: They focus only on the work they are deeply passionate about, and for which they can be properly compensated.
WHAT MAKES GREAT COMPANIES?
The author, Jim Collins, believes great companies have the ability to create a climate where truth is spoken. Does this sound like your utility? Maybe not. But truth is spoken at Heber Power. Broussard creates a climate of trust by:
Leading with questions, not answers
Engaging in dialogue and debate, not coercion
Conducting autopsies without blame.
Collins has found that successful companies that last are inevitably run by leaders who seldom talk about themselves, instead deflecting credit to the team. A common statement, “We are blessed with a marvelous team.” When pressed for a reason for their success, they typically make comments like “We were lucky,” or “We happened to be at the right place at the right time” or “I am surrounded by people who are a lot smarter than I am.”
Heber Power has provided us with a model of what a small utility — or any company — can do. Within any organization, a team of individuals can accomplish amazing things if they are properly enabled, encouraged and supported within an environment of trust.
Editor's Note: Check out “Affordable Power Comes to Utah” on page 32 for details on Heber Light & Power Co.'s generation program.