Kansas City Power & Light (KCP&L) has a history of innovation and operational excellence. The utility also likes to live near the edge, being the first utility to put in automatic meter reading and the first to perform live rebuild of a major transmission line. Still, in today's competitive era, KCP&L (Kansas City, Missouri, U.S.) decided it needed to better leverage the processes and technologies to reshape its distribution organization using a process-driven system.
Distribution at KCP&L changed quickly when Bill Herdegen joined the utility as vice president of Distribution Operations in September 2001, after 20 years with Commonwealth Edison (Chicago, Illinois, U.S.). Herdegen created a team to assess the performance of Distribution Operations, looking at safety, reliability, cost control, customer satisfaction and organizational capability. Previous management at KCP&L had laid a solid foundation with dedicated, hard-working employees and good work practices.
Because the organization was functioning well, KCP&L had time to objectively assess the current state of the utility, rather than succumbing to the temptation to rush in and make wholesale changes.
The initial review showed KCP&L had a relatively high cost to serve with high reliability, in which KCP&L traditionally benchmarks in the first quartile. Armed with this knowledge, KCP&L moved forward in July 2002 to implement a series of process-based organizational changes to move Distribution Operations toward step-change performance improvements.
The KCP&L review team realized the need to shift away from the company's traditional way of doing business, placing greater emphasis on asset management and work prioritization. Such a shift would require detailed knowledge of the overall condition of the distribution system.
KCP&L first implemented a series of organizational changes to maximize use and productivity of available resources. This required a strong project management focus and a more strategic contract management approach. In addition, KCP&L developed a comprehensive service restoration strategy to enhance performance while reducing costs. Of course, new initiatives require people with the right skills to get the job done. KCP&L went back and reviewed the technical, craft and management needs, adding talent as needed to strengthen the team.
To create a process-focused organization, KCP&L narrowed the scope of responsibilities of its managers, so they could concentrate on development and execution of business processes. Previously, managers were spread thin, with too many assignments competing for their attention. KCP&L now has narrowed the span of control to better enable execution of core processes. The basic organization was restructured as follows:
Distribution Safety was established to enhance the safety focus, making the safety team accountable directly to Herdegen. This has provided the autonomy to drive safety-related accountability throughout the organization.
Engineering & Asset Management was created from the former Distribution Engineering work group. Traditionally, system maintenance priorities had been left to individual work groups, resulting in an inconsistent approach to maintenance. The earlier Distribution Engineering group had focused most of its attention on meeting system expansion requirements, thus devoting inadequate attention to maintaining existing assets. The new Engineering & Asset Management group is responsible for both performance of existing assets and system expansion, and has direct accountability for all system maintenance and investment decisions. Except for customer-driven work, the entire program of work is originated and prioritized within this group with the entire system in mind.
Field Operations emerged from the consolidation of the management of all the utility service centers. By placing all the centers under one individual, inconsistencies have been eliminated and work practices have been made more uniform.
Operations & Restoration is charged with restoring service in the event of an outage. Previously, the group responsible for service restoration did not have financial accountability for the resources it managed. Given today's pressures to control costs, this was considered a serious misalignment, so the utility now has a workforce dedicated to operations. Additional supervision was folded into this group to facilitate enhanced focus on safety and efficiency, while maintaining the historically high levels of reliability and holding the line on cost.
Resource Management was created to schedule all maintenance and construction work for the service centers. This group is charged to maximize use of internal KCP&L resources, prior to the addition of contractors, to shave peaks. Project managers were added to oversee large construction efforts and ensure that they are completed on time and within budget. Results to date indicate this has been a successful move.
Contract Management also was rolled into Resource Management, resulting in more uniform and efficient handling of the company's outsourcing strategy and consolidation of the oversight of ongoing outsourced programs. Contracted work includes tree trimming, streetlight maintenance and joint use. Moving the existing supply-chain organization into Resource Management helped accelerate procurement of materials — particularly on large projects.
Any time a utility undertakes a change of this magnitude, it must address significant challenges. The first order of business was to build a consensus that the business drivers going forward included safety, customer satisfaction, reliability, cost control and operational excellence. The company spent a great deal of time and effort communicating this vision. Processes to support this vision had to be developed, communicated and implemented. While much has been done in this area, additional proactive communications will be required to help people better understand the overall vision and direction. Change management will be an ongoing priority.
The utility also has to overcome some significant cultural barriers. Some employees at KCP&L thought the reallocation of responsibilities reflected negatively on their past job performance. In reality, much good work had been done. Still, work could be performed more safely and efficiently if the organization was truly built to enable personnel to deliver desired outcomes. Once people understood that they were valued for their previous work as well as for their talents, the new processes and systems were quickly adopted, proving that nothing is more important than ongoing communications and making people feel included.
Accomplishments to Date
The results of the utility's efforts are starting to be realized. Safety performance has improved enormously. KCP&L's OSHA incidence rate is half of what it was just a year ago. From a financial perspective, costs have been reduced significantly, improving KCP&L's relative cost position while continuing to maintain top quartile reliability levels. While the company has additional progress to make, it is clearly on the right track.
Engineering & Asset Management recently completed an evaluation of the “state of the system,” which will move the utility away from the previous erratic practice of making maintenance decisions on a decentralized basis. For the first time in its history, KCP&L is moving to implement a comprehensive asset replacement program (such as cable replacement) that is proactive rather than based on failure rates. If KCP&L is to remain a top-tier reliability performer, these programs will be increasingly necessary as the system ages.
Uniform work practices are emerging as a result of consolidating management in Field Operations. This proactive approach has brought about substantially reduced overtime hours and resulting lower costs. This same cost consciousness is now showing up in Operations & Restoration as well, given that it is required to balance reliability with financial performance.
Overall, there has been a more consistent approach to work scheduling; consequently, resources are now more effectively used across the system. Contracting decisions are centralized, which means individual work groups no longer secure contract resources independently. In the past, this resulted in minimal sharing of KCP&L resources across the service centers while contractor utilization was expanded. In addition, the tree-trimming efforts are more targeted, placing a greater emphasis on reliability rather than crew productivity. The net effect has been improved efficiency and a two-thirds reduction in the cost per mile as well as the number of tree-related outages. KCP&L's electrical contracting and supply-chain management efforts are based on formalized alliance structures with a smaller number of providers, which has reduced both construction and inventory costs.
There has been considerable success in improving the relationship between KCP&L management and the bargaining unit workforce. New creative incentives were placed in a contract that was recently approved by one of the union locals, and progress continues toward achieving a long-term partnership with them.
Several areas continue to require attention, although considerable progress has been made. First, Distribution Operations has placed great emphasis on developing a succession process for both technical and craft perspective. The workforce is aging, and if this challenge is not met effectively, the company will be unable to sustain the gains already made.
KCP&L recognizes that it must enhance the speed and quality of decision making and execution. This requires the company to become a true learning organization, formalizing processes so that they are fully understood by the existing team and transferable to future employees.
A systematic and understandable set of metrics must be developed and regularly reported to measure progress and keep things on track. To that end, Distribution Operations is in the process of finalizing a series of balanced scorecards across the organization — something that had never been done.
Technology is Key
KCP&L has made technology a major part of its overall strategy to improve service while reducing cost, as evidenced by its recent selection to receive the T&D Automation Project of the Year Award for 2003. Great effort continues to be dedicated to fully leveraging the top-tier technologies that the company has implemented over the last several years to maximize their potential benefits. Finally, the company realizes that the distribution system of the future will be very different from today's, and considerable work is being devoted to trying to define the future rather than being overtaken by it.
Consistent with the technology theme, KCP&L evaluated existing asset management systems already in place throughout the industry to aid in setting direction. The company acquired a work optimization tool to enable Engineering & Asset Management to make informed decisions when deciding on which work was required to enhance system performance in a cost-effective manner. Distribution Operations' existing outage management system (OMS) helps it better manage restoration efforts, while moving the company closer to its goal of providing viable restoration time estimates that are vital to customers. KCP&L also has implemented an “auto-dialer tool” to accelerate the process of calling in additional resources when required.
Distribution automation continues to be a major area of interest. As part of the business-planning process, KCP&L has outlined its automation strategy for going forward, the purpose of which is to ensure that technologies with possible future application are always on the radar screen.
Mobile data and geographical positioning systems are slated for implementation in 2004. This will greatly enhance the ability to dispatch people during an outage. Ultimately, the mobile data platform will be tied into the work management processes to facilitate crew scheduling.
Additional effort will be dedicated to enhancing CellNet AMR benefits, a major component of which is to link it with the OMS and build the capability to gather intelligence that will negate the need for customers to contact the company in the event of an outage; such notification will come from the system on a real-time basis and accelerate the dispatch of restoration forces.
As part of the reorganization, the position of manager, Technology Management was established. This individual is responsible for evaluating emerging technologies that may offer potential for implementation over the entire KCP&L system.
KCPL is tackling major initiatives on many fronts. Having worked at a large utility, KCP&L's Herdegen believes scale is an important factor. He also realizes a smaller utility is able to more rapidly implement process, technology and cultural change.
Teamwork is easier to foster in a utility like KCP&L because its smaller size is conducive to the relationship building that facilitates people working together. An inherent downside in such a culture is the resistance to bringing talent from outside the organization. KCP&L now realizes the need to mix invaluable internal capabilities with imported talent to add perspective, experience and skills. The company has started down that path and is discovering the new faces that have joined the team over the last few years are adapting quickly and their input is making a significant difference.
Mark Schuler joined Kansas City Power & Light in 1984 and is currently director of Resource Management. In this position, which he has held since July 2002, he is responsible for all activities associated with work management, project management and contract management. Previously, Schuler held management positions in customer services and line clearance. He has more than 20 years of experience in utility vegetation management and holds several academic degrees, the most recent being an MBA from Baker University in 1996.
Asset Management Objectives
Evaluate proposed engineering projects (34.5 kV and below).
Evaluate existing and future distribution system maintenance initiatives (preventive, corrective and predictive).
Employ available tools to prioritize maintenance and project work for each budgeting period, as well as long-term and ongoing O&M and capital expenditures.
Stay abreast of current industry trends and evaluate current and emerging technologies and initiatives.
Collaboratively work to implement new technologies.