HomeMy WebLinkAboutStaff Report 192-05an overall "balanced scorecard" approach to measuring and reporting the Utilities
Department's progress in achieving the Strategic Plan Objectives, and application of this
measurement methodology to identify and implement action plans to improve
shortcomings.
BOARD/COMMISSION REVIEW AND RECOMMENDATIONS
The Utilities Strategic Plan performance report was discussed at the October 13, 2004
UAC meeting. Comments were generally positive and indicated that the Commission felt
that staff is moving" in the right direction. Key commission questions and comments are
summarized below with staff responses.
1. Does measure of reliability "Duration of Outages" include or exclude storm
outages?
Storm-related outages are excluded from this measure. There are many variables
that impact the duration of outages during a storm such as how hard the area was hit,
how many outages were present at one time, available equipment and available
staffing at the time. In order for the measure to be comparable, storm-related
outages are excluded.
2. Does measure "Accelerated CIP Spending" measure spending the money or
getting the work done?
The measure "Accelerated CIP Spending" measures the ability to accelerate or
decelerate spending, and in that sense it is a measure of the ability to locally
control utility capital projects. Here in Palo Alto, the City has the ability to
accelerate, slow down, change priorities based on what the community says. This
measure is designed to reflect and monitor our ability to do that.
3. Under financial measures, instead of total utility bill comparison with neighboring
utilities, CPA U should be comparing individual utility bills for electric, gas and
water to be more aware of issues specific to individual service.
This will be taken into account with the updated Utility Strategic Plan.
4. Under the safety measure, it appears that most of the injuries are back-related. Is
due consideration being given to employees' age and physical condition?
CMR:192:05 Page 2 of3
Attachment A
MEMORANDUM rn;· .. ··:·····:·······: : ::: ... ':":. ".:.
·······.·:2'·.· ... ·.··· .. ·· .... '. .
:·.·· ••• ·::··: .• ·:· •• ·i<;;
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: OCTOBER 13, 2004
SUBJECT: UTILITIES STRATEGIC PLAN PERFORMANCE UPDATE
REPORT COVERING JANUARY 2004 THROUGH JUNE 2004
REQUEST
This report includes the City of Palo Alto Utilities (CP AU) semi-annual update and
overall "Balanced Scorecard" for the period beginning in January 2004 and ending in
June 2004, and is for the Commission's information only. No action is· necessary.
SUMMARY
The CPAU overall "Balanced Scorecard" for the period beginning in January 2004 and
. ending in June 2004 is shown in Figure 1. This perf011l1ance update reports on the pre-
existing performance measures only. Revised performance measures for the next
reporting period are provided in the accompanying updated strategic plan report.
For this reporting period, CPAU has:
1. Met or exceeded goals in most categories
2. Achieved significant progress on its act jon plans
3. Addressed current unfavorable scores in this update
UAC ITEM: 2 -10/13/04 -Utilities Strategic Plan Performance Update Report Cove'riilg January 2004 Through June 2004
Page 1 of9
For this reporting period 37 out of 50 performance measures have been updated, and one
performance measure was dropped as the responsibility for the task was transfened to the
Public Works Depmiment. Measures that do not cunently meet their goal are also
addressed in this rep mi.
BACKGROUND
On November 13th, 2000 the Palo Alto City Council (Council) approved the Utilities
Strategic Plan [CMR 418:00] and directed the City Manager to return to Council with an
implementation plan at a future date.
"-On May 21, 2001, Council approved the Utilities Strategic Implementation Plan
[CMR:223:01] and directed staff to make periodic progress repmis on the performance of
CPAU in meeting the objectives of the strategic plan. Staff committed to update the UAC
and City Council twice per year about the performance of Utilities.
The first strategic plan performance report was presented to the UAC in November 2001
and to City Council in January 2002 [CMR:129:02]. The initial report focused on
performance measures. Council indicated a desire to be presented with a discussion of
activities. The next iteration of the report provided key accomplishments and activities as
well as key performance measures for each of the strategic objectives. The report also
included discussion of recommended modifications to the Utilities Strategic Plan in order
to adapt to the changing utility industry environment.
The next update was provided to the UAC in April 2002. In October 2002, the UAC was
presented with another Strategic Plan Performance Report. Proposed changes to the
Strategic Plan were unanimously recommended by the UAC. City Council approved the
revisions in the Strategic Plan Performance RepOli in November 2002 (CMR 432:02).
The Utility Strategic Plan is included in this report as Attachment A.
On March 5, 2003, the UAC approved the "balanced scorecard" approach presented by
staff as an effective method to set targets and to present the semi.:.annual strategic
planning perfonnance measurement
On October 1,2003, the UAC received the first semi-annual Strategic Plan Perfomlance
update repmi, which included the 51 performance measures chosen for the Balanced
Score Card covering the 6-month period from January 2003 through June 2003. The
report also included Action Plans for two of the perfonnance measures, which had
received a minus score for not achieving their objective goals.
On December 1, 2003, the City Council received its first semi-annual Strategic Plan
Perfonnance update report (CMR:526:03), which included the 51 perfommnce measures
chosen for the Balanced Score Card for the period January 2003 through June 2003.
UAC ITEM: 2 -10/13104 -Utilities Strategic Plan Perfonnance Updale Report Covering January 2004 Through June 2004
Page 30[9
On March 3, 2004, the UAC received the second semi-annual Strategic Phm Performance
update report, which included the 51 perfopnance measures chosen for the Balanced
Score Card covering the 6-month period from July 2003 through December 2003. The
report also included Action Plans for five of the performance measures, wInch had
received a minus score for not achieving their objective goals, and an update status on the
two action plans presented in the October 2003 update report.
On May 10, 2004, the City Council received its second semi-annual Strategic Plan
PerfOlTIlanCe update repoli (CMR:246:04), which included the 51 performance measures
chosen for the Balanced Score Card for the period July 2003 through December 2003.
This repOli provides CPAU's semi-annual update and overall "Balanced Scorecard" for
the period beginning in January 2004 and ending in June 2004.
I. Utilities Semi-Annual Balanced Scorecard
The Balanced Scorecard tracking methodology continues to assist in perfonnance
measurement and to promote a better understanding of CPAU's strategic business
processes on a semi~annual basis. Even though each perspective and category in the
above Balanced Scorecard was examined for alignment with the Strategic Plan, not all
measures can be updated on a semi-annual basis, either because updated data is not
available atthe time the report is prepared or the data is updated on a calendar year basis
only (or longer).
A. Customer and Community Perspective
Tlu'ee categories are measured in this perspective, namely customer satisfaction,
reliability and unique municipal value. CPAU has attained the majority of goals
set for all the performance measures updated for this repOliing period.
To measure customer satisfaction in the Customer and Community perspective,
three indices serve as useful indicators of achieving strong customer satisfaction.
These are the Residential Customer Satisfaction Index, the Business Customer
Satisfaction Index, and the Customer Service Gap Analysis, which is the
difference between customer-reported utility perfonnance and customer
expectations. The first two will be updated as planned in spring 2005 and spring
2006, respectively. Service reliability is measured in terms of service intenuption
minutes per customer per year. CPAU's reliability measures were on target for
this reporting period. The value of local municipal ownership includes unique
Public Benefit and Demand Side Management program offerings, as well as
accelerated infrastructure replacement programs to minimize maintenance costs in
the future.
1. The accelerated infrastructure replacement prqgrams are back on track
following delays in the Water and Electric ClP funds discussed in the March
2004 update report. For the current repOliing period, 88% of the budget was
spent. Delays in spending were the result of delays in the Underground
UAC ITEM: 2 -10/13/04 -Utilities Strategic Plan Performance Update Report Covering January 2004 111rough June 2004
Page 4 of9
Conversion Project -UG38, the Park Blvd. Substation Breaker Replacement
Project, and the re-bidding for the electr'ic estimating software.
2. Several projects have been implemented, which include a Public Ali
Component of the Electric Public Benefits Program, the Shade Tree Program,
the Energy Visualization Project (using infrared thermography as an efficiency
evaluation tool), the Efficiency Cuniculum SuppOli for the Palo Alto Unified
School District, and the support of the "Sustainable Schools Program" of the
Palo Alto Unified School District.
B. Environment Perspective
In the Environmental perspective energy efficiency, renewable implementation
and water quality are main categOlies measures. CP AU has attained the goals set
for all the performance measures updated for this reporting period.
1. The Public Benefits and Demand Side Management Programs are being
offered and are specific to customer sectors· such as the new "Palo Alto
Green" program that has 2,595 (2,498 residential and 97 business)
paliicipants and has exceeded its objective target of 1,250 participants.
2. The Long-term Electric Acquisition Plan (LEAP) is being implenlented,
beginning in FY 2003-04, in order to manage the City's electric supply
pOlifolio by securing energy supplies for electlic customers, including an
aggressive 20% renewable pOlifolio by 2015. Staff is in negotiations with
three suppliers to achieve the goals. If the wind contract is complete,it will
meet ...... 6% of the rvnewables targets starting in Jan 2005. Staff anticipates
having contracts to Council for approval in Sep-Nov time frame,
3. CPAU adopted the new US EPA's Capacity, Man:agement, Operations, and
Maintenance regulations (CMOM) on July 1, 2004 as the new perfoll11ance
measure for wastewater efficiency.
C. Financial Perspective
In the Financial perspective, competitive rates, financial strength, cost-
effectiveness and efficiency, supply cost advantage and returns to the community
are the main categories measured. CPAU has attained the majority of the goals set
for the performance measures updated for this repOliing period.
Rate comparisons may also be found in the Utilities Quarterly RepOlis. Rate
comparisons to other electric generating suppliers besides PG&E (i.e. Santa Clara)
have 110t yet been integrated into the Balanced Scorecard process. However,
NCPA completed an electric retail rate comparison study including NCP A Pool
member utilities and PG&E using information collected from EIA Form 861 for
2002, which shows that Palo Alto's rates continue to be the lowest among this
group. There has not been any update to the EIA data since the last repOli.
UAC ITEM: 2 -10113/04 -Utilities Strategic Plan PerfOrl1lal1Ce Update Reporl Covering January 2004 Through June 2004
Page 5 of9
D. People Perspective
To measure progress in the People perspective, CPAU measures safety, attraction
and retention of employees, training and development and implementation of
Gallup plans. The number of OSHA recordable accidents remained unchanged
during this reporting period from the previous report. Because the goal of "0"
reportable injuries was not achieved, it was necessary to assign a score of (-)
minus to this perfol111ance measure. Therefore, CP AU received an unfavorable
score and has not attained the goals set for all the performance measures updated
for this reporting period.
CPAU compares the rate of OSHA (the Federal Occupational Safety and Health
Act) incidents against other utilities, examines the employee turnover rate, tracks
training and development and focuses on building a stronger workplace program
based on the results of the Gallup Q 12 survey.
1. The number of OSHA recordable accidents remained consistent with the
previous report of 7 incidents, making it necessary to maintain a score of (-)
minus for this perfonnance measure. The reportable accidents consisted of: 2
employees in the Water-Gas-Wastewater Operations receiving back strains, 1
person receiving medical attention for a Clushed finger, 1 person receiving
medical attention due to being shuck by flying rock, and one person suffering a
sprained ankle. In Electric Operations, the injuries consisted of two strained
back injuries.
2. To mitigate these types of injuries, CPAU hired a medical professional to
review the work practices and to develop a back safety program for each of the
above groups in order to reduce exposure and heighten awareness to prevent
injuries in the future.
II. Previously Reported Action Plans
Staff developed the accompanying action plans, which reflect recommendations and
actions to mitigate the unfavorable scores received for the current performance-reporting
period.
Action Plan 1: Improve electric reliability perception of business customers (Measure:
A2. Customer & Community, Reliability)
In spring 2003, RKS conducted its bi-annual survey of California Businesses on behalf of
all of the California Municipal Utility (CMUA) members. Although overall CPAU scores
ranked higher than other Califomia Munis and NCP A pool members in general, Palo Alto
Business customers awarded CPAU a lower than average score in reliability in the
survey, based primalily on their recollection of how many service dismptions and/or
power quality interruptions they had experienced during the year.
Updates:
1. CP AU now repOlis its SAIDI excluding stonn-related outages for benchmarking
UAC ITEM: 2 -10/13/04 -Utilities Stralegic Plan Performance Update Report Covering January 2004 Through June 2004
Page G of9
purposes with APP A member municipal utilities and California Investor Owned
Utilities. CPAU's SAIDI (excluding stoml-related outages) meets the intemal
perfonnance goal proposed for the reporting period of less than 60 minutes per
customer, and is lower on an annual basis (43 minutes) compared to PG&E (193
minutes), SDGE (76 minutes) and the average for APPA (67 minutes) Municipal
. utilities based on the latest SAIDI averages listed in the APP A Selected Financial
and Operating Ratios of Public Power Systems repOli published in April 2004.
This measure is reported excluding stoml-related outages to match the CPUC and
APPA guidelines for computing IOU and APPA member utility reliability indices.
CPAU's SAIDI including stOlm':related outages is 211 minutes. .
2. Staff wi1l continue to focus efforts on replacing and maintaining. the aging
infrastmcture through it CIPs and improve reliability by devoting significant
funding to maintaining the reliability of service to its business and residential
customers
3. A follow-up survey will be conducted in fall 2005 and the results will be reported
in the March 2006 update report to assess any change in business customer
perception about the reliability of their electric service.
Action Plan 2: Promote a safe workplace for all employees, reduce OSHA Incident Rate
to "0" (Measure: Dl. People, Safety)
Safety activities play an important role in achieving the mission and objectives of the
Utilities Strategic Plan. Proper safety equipment, training activities, and statistics are
monitored and reported on an ongoing basis. Since the OSHA recordable injuries did not
drop to "zero" since the last report, jt was necessary to assign a score of (-) minus to this
perfonnance measure.
Update:
1. Staff will continue to conduct mandatory monthly safety meetings, across all
Utility Divisions, on subjects related to office and fieldwork safety.
2. The E&O Division adopted a work planning process, which is intended to assist in
identifying and evaluating job site hazards.
3. Staff in Operations has instituted a hazard evaluation and control guideline to
provide a systematic approach for evaluating hazards, prioritizing hazards, and
controlling hazards identified in the work environment.
4. Staff has begun identifying patterns or trends related to hazardous condition
reports, near miss incidents, automotive incidents, incidents involving specific
injury or illness, infractions found during inspections, incidents involving third
parties, material problem repOlis, equipment failure and contractor incidents.
UAC ITEM: 2 -10/13/04 -Utilities Strategic Plan Performance Update Report Covering January 2004 Through June 2004
Page 7 of9
Action Plan 3: Maintain gas commodity costs per gas therm at least 10% less than
. PG&E on a rolling average 36-month basis (Measure: C4. Financial, Supply Cost
Advantage ( Gas))
Update: The revised gas laddering strategy resulted in CPAU's average gas cost being
approximately 9.7% below that of PG&E for this reporting period.
Action Plan 4: Complete 90% of budgeted ClP for infrastructure replacement program to
reduce maintenance costs in future years (Measure: A3. Customer & Community,
Accelerated ClP (water) infrastructure replacement program to reduce maintenance costs
in future years)
Update:
1. Water Study Projects Phase 1 -Project was delayed due to CEQA / ElR
requirements. ElR will be completed by June 2005. Phase I Design is 100%
complete. Construction is expected to be complete within 12 months from Phase I
bid opening in September 2004.
2. Council ordered that no projects in the1999 Water Study Projects can continue
until the EIR is completed for the 3 Phases of the Water Study Projects. Only the
projects cUlTently included in Phase 1, on existing facilities, can proceed. No
work can continue on the budgeted Water ClP projects until the ElR is approved
in June 2005.
Action Plan 5: Complete 90% of budgeted ClP for infrastructure replacement program to
reduce maintenance costs in nrture years (Measure: A3. Customer & Community,
Accelerated ClP (electric))
Update: Construction on Underground District #38 began on March 17, 2004 and is on
target for completion in December 2004.
NEW Action Plan for unfavorable scores received for the report period starting in
January 2004 and ending in June 2004:
New Action Plan: Complete 90% of budgeted ClP for infrastructure replacement
program to reduce maintenance costs in future years (Measure: A3. Customer &
Community, Accelerated ClP (electric))
There was $8,020,000 budgeted in the current year for infrastructure replacement. There
was $7,091,000 committed or spent in the CUlTent year. Approximately 88% of the
cun-ent year's budget was spent. The expenditures were below 90% because of delays in
contracting for UG District 38, and Park Blvd. Substation that delayed subsequent
projects.
UAC ITEM: 2 -10113/04 -Utilities Strategic Plan l'erfonnancc Update Report Covering January 2004 Through June 2004
Page 80f9
ATTACHMENT A
Utilities Strategic Plan *
MISSION
"To build value for our citizen owners to provide dependable retul'ns to the City and citizens of
Palo Alto and to be the re erred ttl! service utility rovider while sustainin the en.vironment. "
SUPPORTING OBJECTIVES
1. Enhance customer satisfaction by delivering valued products and services.
2. hwest in utility infrastructure to deliver reliable service.
3. Provide superior financial performance to the City and competitive rates to customers.
4. To identify and maintain the unique advantages of municipal ownership.
lillY STRATEGIES, Years 2001-06
STRATEGY 1: Operate distribution systems in a cost-effective manner.
STRATEGY 2: Preserve a supply cost advantage compared to the market price.
STRATEGY 3: StTeamline and manage business processes to allow CP AU to work efficiently
and cost-effectively.
STRATEGY 4: Deliver products and services valued by our customers, and continue to build
CP AU brand presence.
STRATEGY 5: Attract and retain empl~ees with critical skills and knowledge.
STRATEGY 6: Maintain stable General Fund transfers, and maintain financial strength.
STRATEGY 7: ~Implement programs that improve the quality of the environment.
lillY STRATEGIES with TACTICS
STRATEGY.l: Operate distribution systems in a cost-effective matmer.
A. Accelerate the capital improvement program to reduce maintenance costs in later years when
competition may become more intense.
B. Develop multi-year supplement contracts with local contractors to reinforce staff's installation of new
water, gas, and wastewater services.
C. Provide customized reliability solutions to meet customer needs.
D. Identify and implement measures to reduce the frequency of contractors accidentally rupturing mains.
STRATEGY 2: Preserve a supply cost advantage'compared to the market price.
A. Explore alternative supply methods and projects to control the cost of electric, gas, and water
conunodities to meet existing and future cllstomer needs.
B. Investigate partnerships, alternative sotll"ces, and projects to secure low cost, reliable transmission for
conmlOdity supplies.
C. Manage exposure to energy conunodity price risk.
D. Enhance wholesale revenues through optimization of contractual rights for transmission and
generation.
E. Work thi·ough partner agencies such as BA WUA, TANC and NCPA to become a more effective voice
for our mutual benefit.
STRATEGY 3: Sh·eamline and manage business processes to allow CPAU to work efficiently & cost
effectively.
A. Develop, execute, and monitor service level agreements with other City Departments.
B. Review the Municipal Code for governance andorgimization changes, which could improve Utilities
communication and success.
C. Examine outsourcing for cost-effective opportlmities.
D. Support City effort to streamline budget, administrative, and regulatory processes.
E. Protect customer confidentiality to the greatest extent possible, as allowed by governing law.
F. Track and evaluate other departments' charges to Utilities accounts.
ATTACHMENT A
STRATEGY 4: Deliver products & services valued by om customers and continue to build CPAU brand
presence.
A. Reliability services
B. Convenient customer bill payment and self-service options consistent with "e-govemment" tactics
C. Energy and water efficiency, information and control services
D. Installation and maintenance seivices
E. COlllill0dity products
F. Telecommunications products
G. Special Facilities and metering options
H. Explore technical and financial assistance, and standards for customers \vho wish to install distributed
generation equipment
1. Provide 24 x 7 field customer service
STRATEGY 5: Attract and retain employees with clitical skills and knowledge. .
A. Offer compensation and benefit p'ackages that are competitive with private industry and consistent with
the local markets.
B. Evaluate hiring practices to allow the Utility to respond to a competitive environment.
C. Promote a safe and drug free work place.
D. Evaluate establishing apprenticeship and recruiting programs.
STRATEGY 6: Maintain stable transfers to the General Fund.
A. Maintain reserves within established guidelines.
B. Balance transfers between enterprise funds to provide flexibility.
C: Maintain bond';financing ratings and consider it to fund major projects.
D. Optimize the economics ofbuyillg rather thal1leasing prope11y.
E. Complete the work order cost system.
F. Create performance measures and establish budgetary and cost monitoring tools.
STRATEGY 7: Implement progrmils that improve the quality of the environment.
A. Support implementation of the enviromnel1tal components of the City's Comprehensive Plan.
E. Improve existing green pricing program.
C. Support implementation of the City's Sustainability Program.
D. Support investment in fhture green resource projects.
E. Implement Public Benefits and demand side management programs.
F. Provide sustainability life cycle cost analysis to Palo Alto customers.
G. Enhance conservation.
* As approved by City Council in November 2002, CMR 432:02
2
A. Customer & Community: Balanced Score Card Measures for FY 2003/2004
Customer Satisfaction
Residential Customer Satisfaction hldex (RCS)
(see Note 1)
Business Customer Satisfaction Index (BCS)
(see Note 1)
Gap Analysis
Reliability
Residential Customer Perception -reliability
(see Note 1)
Business Customer perception -reliability
(see Note 1)
System Average Interruptible Duration Index,
(SAIDI)
Service Intemlptions per customer -Gas
Sen'ice IntelTuptions per customer-Water
Unique Municipal Value
Maintain local contml
Accelerated ClP -Electric
Accelerated CIP -Gas
Accelerated CIP -Water
Public benefit and DSM program offerings
Notes:
Cunent
N/A
N/A
+
N/A
N/A
+
+
+
+
+
+
+
Previous
N/A
N/A
+
N/A
N/A
+
+
+
+
+
+
The residential Customer Satisfaction Index (RCS) and the Residential Customer perception measure of
reliability are obtained fTom the CMUAResidential Benchmark Survey of Califomia Customers. The
survey will be conducted in the Fall of 2004.. Similarly, the business customer survey will be conducted in
Fall 2005.
S:\UTL\OldH\04RESOURCE l'vIANAGEMENT\Analytical SlIpportl.Stratcgic Plan Tracking\SlImmcr 2004\Oct~ber 2004 Strategic Plan Update Report\Drafi_AttB Tables FY03-04.doc
"
Atta.chment B
D. People: Balanced Score Card Measures for FY 2003/2004
Safety
Safe workplace
Safety education
Attract & Retain
Compensation
(see Note 1)
Employee tenure
Retirements
(see Note 2)
Employee tumover ratio
(see Note 3)
Train & Develop
Employee training and development
(see Note 4)
Gallup
Job Satisfacti0l1 Index
(see Note 5)
Notes: .. .. ..
Current
+
TBD
TBD
·TBD
TBD
TBD
N/A
Previous
+
TBD
TBD
TBD
TBD
TBD
+
1. Staff is working with the Human Resources DivisiOll to benchniark compensation plans with other
local Muni's.
2. Staff continues to work on this area and will develop a plan to mitigate the expected increase in
employee retirees in the coming few years. An update will be presented in a future update report
3. Staff is working \\lith the Human Resources Division to examine the employee tumover ratio and an
update wiII be presented in the next report.
4. Staff will be tracking the number of employee hours dedicated to training and developnient. This will
be done as a SAP report. Staffwill work with the Human Resources Division to benchmark against
industry standards for the next repOli.
5. The second Gallup sutvey wi1lbe conducted in Fall 2004. The revised Index for utilities wjlJ be
repOlied in the Spring 2005 update repOli.
S:\UTL\OldH\04RESOURCE MANAGEMENTV\nal)1ical Support\Stratcgic Plan Tracking\Summer 2004\09.~er 2004 Strdtegic Plan Update Rcport\[)rall_AnB Tables FY03-04.doc
Attaclm1ent B
Measure ID
workplace
Education
, ···.~.:.:~.;:r::.':;}~:.:; ".:_::::",.'
1'~!~1!lc'mp~Mt;'"
~~i~t~~~??·{;t2lTenure
~~t~l6trlf.C~i~:.\?IRetirements
~~" ~~\. ~ft~~tt~~~5~~:;;,il~:~~1:re Ratio
-,,~:;:.:.:::: ~ .. :.:~::~.~ .. : ::i.'·::::
I~t,~~~~;~~:~~:~~g
Measure
Definition/Objective
OSHA incidence rate.
Promote a safe workplace
for all employees
Monthly safety meetings
attendance.
All unexcused employees
attend all monthly safety
meetings
Offer compensation
packages that are
competitive with private
industry and consistent with
the local markets
Employee Tenure
Average Age of Utility
Employees
Employ~e turnover ratio - %
of employees reSigning,
terminating. retiringf/eaving
in last 12 months:
Training person-hours per
year.
Training and development
tracking at the Cubberley
Training Center and by
supervisor/division
Proposed Commodity I Benchmark(s}
Benchmark
Goal
Statement
Measure Goal
Statement
All
APP A average I Less than
OSHA Incidence APPA average INone
All
All
All
All
Rate rate
NOT Currently Benchmarked
Compare current
salary and
benefits with
other local
Muni's using HR
salary survey
TBD
NOT Currently Benchmarked
NOT Currently Benchmarked
NOT Currently Benchmarked
NOT Currently Benchmarked
100%
Attendance
Compensation
Package within
+/-10% of local
Muni's
TBD
TBD
TBD
min 20, max 60
Measure
Goal Value
NTEO
90%
attendance
. for each
work group
TBD
TBD
TBD
TBD
20-60
hours!
employee/
year
Current
Value
January -
2004 -June
2004
EE=O
EO=2
WGE=O
WGO=5
Cust=O
CC-97%
EngrW-99%
EngrE-100%
Ops-98%
Total 98.5%
TBD
10.6
TBD
TBD
N/A
Previous
Value
July 2003-
December
2003
EE=O
EO=4
WGE=O
WGO=3
Cust=O
CC-70.5%
EngrW-
98%
EngrE-
100%
Ops-98%
Total
91.9%
NfA
9.3
N/A
NfA
N!A
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Current
Score
+ / 0 /-
+
TBD
TBD
TBD
TBD
TBD
Attac1unent B
Previous
Score
+ / 0 /-
+
TBD
TBD
TBD
TBD
TBD
Measure
Update
Frequency
Semi-
Annual
Semi-
Annual
Annual, or
as part of
Contract
Negotiation
Annual
Annual
Annual
Semi-
Annual
Attachment B
[j,jJ4l'_~~iki~~II{~I~~I£~i,*ilW~~ii~1i~~Y:f£;t~~;;\!;'!;f~i~i~i~j,~;f;ii~V.~~~];C:;-;;';~;lg};~~.~i;~:!;:i£;~;;;;~i;j~~-
Current Previous
Measure I . I Proposed Benchmark Measure Goal Measure Value Value I Current I Previous I Measure Measure ID Defi niti on/Objective Commodity Benchmark(s) Goal Statement Goal Value January July 2003 -Score Score Update
Statement 2004 -June December + I 0 I - + f 0 I -Frequency
2004 2003
Gallup 012 poll. National average 012> National Improvement Next 012
Job Satisfaction Maintain a Gallup measures Average Grand poll will be All Gallup 012 over previous >3.65 conducted in I 3.65 NfA + I Annual Index equal to or better than Mean Average
national average measures Score year Fall 2004
S:\UTL\OldH\04RESOURCE MANAGEMENT\Analytical Support\Strategic Plan Tracking\Summer 2004\09~er 2004 Strategic Plan Update Report\DrafU\tt13 Tables FY03-04.doc
Attachment B
S:\UTL\OldH\04RESOlJRCE MANAGEMENT\Analytical Support\Strategic Plan Tracking\Summer 2004\09~er 2004 Slrategic Plan Update RepoTt\Draft_AttB Tables FY03-04.cloc
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NO.3: REVISED STRATEGIC PLAN
Ulrich reviewed that the UAC has given direction and we've reviewed with our
employees asking them what's a better way of dealing with these measures. The
main reason for having this is so every employee in Utilities should understand
what they do is related to customer satisfaction and what we do in this business.
Connolly said managers had a series of meetings to discuss every component of
the strategic plan and looking at what we have. Our revised mission statement has
same spirit as previous but more succinct. Bechtel said mission statements get
people wrapped around an axel. Commissioners like the new statement.
Connolly went to the next level: Key Objectives. In the revised objectives, we've
made them more succinct.
Dawes feels the utility infrastructure is such an important part of the Utilities
organization he is opposed to whittling it down. He wants to see it shown in the
updated plan. Dahlen agreed, and said she would like to see it in the updated
report.
Bechtel remarked that Dexter is recommending a reference to the Utility
infrastructure.
Dawes likes the focus on infrastructure; it leads to reliable service more than
satisfaction does. Connolly said investing in infrastructure sounds like a strategy.
We have it under strategies in S-1.
Melton and Bechtel both stated S-l doesn't mention infrastructure.
Ulrich said right now we're spending a lot of money on capital improvement; it's
embedded in there. We're looking at doing system reliability work in the most
cost effective way. Connolly directed the Commissioners to Attachment C, page
3. Tactic 2.
Dahlen thinks it's buried in the details and the goal is to bring it more in the front.
Maybe change infrastructure to maintenance. Dexter agreed with Elizabeth.
Ulrich said we feel very comfortable with this but the Commissioners have to feel
very comfortable. We want to make sure we report what they need. Dahlen wants
it upfront because to the community, infrastructure matters and it's okay to have it
in there. MaybeCPAU could modify S-1. Dexter would like to see it in the
objectives. Looking at the big slides with plusses and minus's it would not be
measured since we have dropped all reference to CIPs.
Connolly stated CIP expenditures are moved under financials. We are captured by
fund but captured as a financial measure. Melton said on page 7 it is 1-B.
Connolly said moving on to the other objectives: No.3 Managing Financial
Resources Effectively. Competitive rates are part of the measures. Bechtel
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measured shift from existing 3 to managing effectively. Dahlen likes having
competitive rates in there, but feels something is missing. Dawes and Bechtel
both agreed with Elizabeth.
Bechtel said we are measuring the benefit to us as users of the system and we're
loosing that in these updated objectives.
Connolly spoke of the two new objectives; employee balanced environmental
solutions, and the other under People -ensuring a safe and engaged workforce.
Dahlen said the environmental section is a weak statement. Balanced
environmental solution, what does it mean?
Ulrich thinks pragmatically, it will be difficult to define environmental without
balancing the cost but we're trying to look at it from that stand-point. We didn't
want to become so environmentally focused that we forget about the other side of
the business. You can define balanced any way you decide to do so.
Dahlen likes John's example. Maybe we can be clearer on this statement. Ulrich
asked for a suggestion, but Dahlen was not prepared to give a suggestion at this
point. Bechtel thinks trying to craft the words tonight would be difficult. He
stated the Commission will give feedback at a top level and staff will come back
to us.
Ulrich thinks at the top level, you're comfortable with these mission objectives
and strategies. Don't want to work on something you're not comfortable with.
Bechtel summarized updated objectives,
• we're missing a reference to utility infrastructure.
• Balanced environmental solution is a weak statement.
• Financial resources is missing something about competitive rates and
benefit to the city.
Dawes agreed and stated he appreciates staff's efforts, but these updated
objectives lose some importance.
Ulrich said we're doing this as a self-centered objective. We'd like to know
clearly what the City expects of us. We're trying real hard to write it down and
use it on a daily basis. We listened a lot to employees who read through the old
one, and we worked on it for a year. John said the Commission's feedback is
valuable to us.
Dahlen commented that balanced score-cards and people -it's a missing point that
some of these issues are not up there. Ulrich thinks we've captured what the
UAC summarized. Bechtel agreed we have the old strategic plan to operate u~der
until further input from staff and the Commission regarding a revised plan.
Connolly went on the Measures: how to do? Key objectives that few, but most
relevant. Customer and Community: We are developing a customer survey which
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will give us feedback, develop database to track customer complaints which will
be designed to allow.us to pull information into reports. Environment: we will
set goals for demand side efficiency.
Bechtel asked to take comments on these two measures.
Dahlen commented on "Customer" saying we're loosing unique customer value.
Connolly said we are monitoring under the financial. Dahlen repeated we are
loosing our unique customer value in this updated version .
. Ulrich said accelerated doesn't mean as much as it did a couple of years ago when
staff said "we've done this analysis and it's going to take us 30 years to do this."
We don't look at accelerated now, we look at where should money be spent, how
should it be spent, and how do we get the most for the money spent. We track
under financial how much we are actually spending.
Melton thinks tracking CIPs under financials makes a lot of sense to him.
Customer Measures measure customer reaction to what we're doing. Customer
satisfaction. Ulrich said we will be doing a more focused view on customer
satisfaction. Melton said a measurement tool that is not timely doesn't have much
value. Bechtel mentioned cost competitiveness is a customer value. We can
measure how well-off we are here in Palo Alto compared to other utilities.
Melton wants cost competitiveness to be retained in financials.
Bechtel remarked about feedback for Muni Value and Acceleration. The
suggestion is to look at this as a customer issue, and measure in some way.
Connolly said under Financial Measures, .the revised objective is managing
resources effectively. Go to attachment B, under financial measures -net sales
will be measured in terms of budget to actual to make sure when forecasting or
setting budget we have good sense of what to expect. She described tactics for
financial measures. We will measure utility bills by customer types, with goal to
be by area. We'll add Santa Clara as was mentioned earlier. Goal is making sure
our goals are competitive.
Dawes asked about Net Sales, it implies if we beat our sales by 5% we're not
meeting goal. He didn't understand that.
Ulrich gave a perspective of what we're trying to do. His expectation is our
forecasting folks will figure out what our customers will need because we will
have to go out an purchase. We are prohibited in the Muni Code from speculating
and we are audited all the time. We're having a more difficult time forecasting
what our customers are buying because of the economic times. Price of fuel is
changing quite dramatically. This is an extremely important areato do.
Dexter said we're grading the accuracy of the forecast and not the amount of
money. Ulrich yes, we need to meet what our customers want to purchase and see
that we don't buy too much or too little.
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Retaining measures of balance sheet issues are now lacking. Reserves are very
essential to our stewardship of utilities. This is probably the most important thing
to outsiders looking at us. Likes the debt service measures; to be able to watch
coverage rating change over time is very important.
Looking at combined utility bills, this can cover a lot of sins, very competitive in
electric at the moment but not in water. Dexter feels it is important to know how
we compare in each category.
Ulrich said doing these things may make you feel good but there may not be much
he can do about. These are some things he can do things about. We can measure
anything the Commission wants but he'd like to measure something CPAU can do
something about.
Recommend keeping Financial 2 and see the individual information.
Rosenbaum feels strongly about cost competitiveness. Rosenbaum moved that
staff continue to compare cost for the individual utilities, in particular, electric to
Santa Clara and Roseville, gas to PG&E, and water to neighboring communities.
Dahlen seconded.
Bechtel addressed the process, stating that we could make motions on each one or
we can give staff the feedback on what we want done and have them corpe back to
us with another draft.
Rosenbaum felt this one was most straight-forward and definitive. Thought we
could give them a clear message. Three reasons for picking Santa Clara and
Roseville; they are the same size as us, they have a similar composition, and use a
significant amount of Western. All things being equal, our rates should be a little
less than theirs' .
. Bechtel asked for any comments on the motion on the floor? Melton suggested
giving staff feedback and saving our motions till we get a revised version. He
thinks we ought to go another round before we go to making motions. Dexter
agreed. Send back to staff to incorporate suggestions made by Commissioners.
Concluding motion putting it back to staff for revisions. Bechtel also preferred
that method.
Motion: Motion the floor to be specific tocost competitive factors.
Motion overturned on a vote 3 to 2 (Aye: Rosenbaum and Dahlen; No: Bechtel,
Melton, and Dawes).
Melton remarked that he believes we are omitting the most important financial
measure, which is list net sales, next thing should be operating net. Dexter
agreed.
Ulrich said those numbers are easy to get. He asked Melton to sit down with him
to discuss the process, the financial methodology that the City uses so he can see
how we really do it.
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Bechtel says that is an appropriate subject for our quarterly review .
. Ulrich said this goes back to the importance of having measures we can do
something about and it has some impact to our mission and indicators. If this fits
into that category, it's easy to do, but he wants to make measurements that help
improve the business.
Melton questioned C and D under Effective Financial Management. l-C is O&M,
I-D is allocated and direct charge. Melton not quite sure what value obtained
from measuring these?
Ulrich couldn't answer that question until he started working here at the City.
Some of the explanation is "City-speak", I-D we do not provide all the services
within the utility organization. We devise our salary in the Enterprise Fund, but
we also hire other people in the City to do work for us. We allocated money into
other departments; this is a very important area we track. Also has rents included.
Melton asked if O&M 100% of the time would be a subset of allocated direct
charges? Ulrich thought so. Bechtel asked for any other recommendations on
Financial measures. None offered.
Connolly moved on to the "People" section, stating that staff changed the
objective to secure workplace and having safe work force. Other measures will
continue to be monitored, but will not be part of the revised goal.
Bechtel clarified if compensation does not have to be measured specifically since
it would be part of this, will employee turnover be easy to measure? Ulrich said it
is easy to measure, but don't know what to do about that. Our turnover is low.
Melton says if it starts going up, something is wrong. Gallup job satisfaction, is it
an annual thing, monthly turnover is this real time feedback?
Ulrich we have 230, none leave without him looking into it. He said we do a
pretty good job of trying to figure that out. Gallup looks at how someone is
satisfied with their job, couldn't tell if they are getting paid less than or more than
the market. We thought of a simplified way to determine what employees think
about and are concerned about and have found that you can tell a lot from the
Gallup survey.
Bechtel agreed that staff is right to pick what they think is useful, but the other
part of the reason for measurements is to tell the rest of the world how you are
doing. Dahlen mentioned training and development are important, maintaining a
safe workplace, other aspects of job training. She questioned if these issues are
being rolled up into the job satisfaction category.
Ulrich spoke of the employee training plan. Connolly said we track training time
and dollars.
Melton noted in S-7, "foster a productive workplace," there is no mention of
productivity in the measures. Ulrich said we provided those reports in the annual
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problem since we are now talking about strategy not measurement tools. Strategy
is how do you develop the portfolio risk boundaries. Ulrich remarked that nobody
is going to listen more intently than he will.
Bechtel. said, "develop a supply that meets our risk management guidelines."
Dexter said to send this back to staff for more clarification.
Bechtel asked for any other comments or recommendations on the updated
strategies?
Bechtel had one suggestion to staff on Number 4: Provide low and stable rates,
adequate reserves, and transfers. He feels this statement needs a modifier to
transfers.
Ulrich asked if it should be budgeted or targeted?
Auzenne remarked that transfers are growing at 3% per annum.
Bechtel asked whether we need to state that we will provide mandated transfers?
Ulrich thinks the word, budgeted, is better.
Bechtel asked for any other recommendations/changes? None noted. Bechtel
stated we've gone through exhaustively -motion for action.
MOTION: Rosenbaum moved refer the Strategic Plan Update back to staff to
respond to feedback provided by the UAC. .
SECOND: Melton seconded.
Motion passed unanimously.
Bechtel directed staff to report back to the Commission whenever staff is able to
get it back on the agenda.
NO.4: PERFORMANCE REPORT ON CUSTOMER SALES CONTRACTS
Ulrich shared that we have provided this report to the Commission in the past. It is
important to give the Commission background.
Bechtel asked if there were any questions or need for clarifications? Does it mean
margins? ~
Auzenne replied risk premium. Bechtel asked what is the outlook for the future?
Auzenne stated he is not really sure with the increased volatility and very high gas
prices. Two large customers have their fixed-rate gas contracts ending and cost
can flip in a week. Auzenne was not sure if our customers will want to lock in at
the current fixed-price gas rate or take a risk on the market rates. Cost will
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