Fossil Benchmarking Analysis

With ever increasing performance pressures on fossil units, operators will be required to do more with less. In the face of these challenges and myriad others, benchmarking is a critically important tool. This document outlines ScottMadden’s approach to fossil fleet benchmarking, which provides operators with the analytics needed to succeed.


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Fossil Fleet Performance Benchmarking

    • ScottMaddens Methodology for Achieving Results

Introduction to ScottMadden Fossil Generation Benchmarking

    • We believe performance benchmarking is a must-have management tool
      Assess performance
      Establish targets
      Obtain competitive intelligence
      ScottMaddens fossil generation benchmarking allows generation operations to compare their generation units against peer units
      We work to build apples-to-apples comparisons
      We use relevant and up-to-date industry data
      ScottMadden has been benchmarking fossil generation for more than 10 years. We know how to perform the analysis quickly and efficiently to allow you to focus on running your plants

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The Fossil Fleet

    • Why Is Fossil Generation Benchmarking Important?

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  • Renewable Portfolio Standards
  • Regulatory Requirements
  • Aging Workforce
  • Increasing Oversight
  • Benchmarking
    Specifically identifies areas for improvement and provides basis for performance goals
    Provides clear link between specific actions and performance objectives
    Helps clarify and realize common vision

Our clients obtain specific benefits from a ScottMadden generation fleet benchmarking study
Identify areas of positive performance to be encouraged and reinforced
Pinpoint areas of comparatively sub-par performance to set the stage for root cause analysis
Discover top-performing plants at other utilities which could be studied for leading practices
Prioritize improvement initiatives to focus efforts on achieving results

    • ScottMadden brings unique skillsets to fossil generation benchmarking:
    • Why ScottMadden Benchmarking?

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ScottMadden Can Provide Three Benchmarking Products

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Overall Methodology

    • We conduct benchmarking studies using an efficient, four-step methodology:

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Methodology: Prepare

    • Finalize the metrics which will be benchmarked
      Obtain your data
      Cost data at the unit level (as available)
      Staffing data for in-scope plants, sorted by ScottMadden, by the functional buckets
      Identify your team participants and stakeholders who will review the peer group selection process
      Finalize project plan and set milestone reviews

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Methodology: Form Peer Groups

    • Develop peers based on like-unit characteristics (e.g., vintage, equipment type, capacity, unit mission/duty cycle, etc.)
      Multiple peer groups to match the fossil fleet makeup
      Key step in the benchmarking methodology because reliability and cost benchmarking can be correlated
      Peer groups must be signed-off by the client prior to moving forward

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Methodology: Benchmark and Validate

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    • Ensuring Data Credibility
    • Source
    • Analysis
    • Results
    • Investigate anomalies
      Database audits and control totals
    • Sanity check of results versus expectations
      Deep dive analysis into issue areas before finalizing
      Identify drivers for variations
    • Respected data partners
      Validated and scrubbed data
      Large samples
      Targeted peer group members

Methodology: Review and Discuss Results

    • Identify cost and reliability improvement areas for discussion with owner-operators
      Conduct progress reviews with you as the project sponsors
      Conduct presentations with key leadership to present findings and gather input
      Work collaboratively with your team to discuss implications and potential causes for certain topics of interest based on the results of the benchmarking
      May perform some hypothetical modeling; for example, if event X had not happened last year, your results would have improved and you would be in the top quartile
      These are important discussions to have as they help us to frame the results of the benchmarking. Please note that benchmarking tells you where you stand versus your competitors; it does not answer the question of why
      Our studies and interactive discussions with your team attempt to narrow down the possible answers to why

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Deliverables Overview

    • The primary deliverable is a comprehensive report comparing your units results to peer group results.

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  • An executive summary is prepared to summarize results for senior leadership and/or boards
  • Cost Example
  • Staffing Example
  • Reliability Example

Road Map to Improved Performance

    • Since Unit 1 EFOR appears to be a key performance gap, we would provide some insights into likely ways to improve performance for that unit.

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  • Potential Improvement Opportunities
    Reinvigorate the preventive maintenance program
    Identify opportunities for operations to conduct more routine maintenance activities
    Examine maintenance packages in the work maintenance system to ensure that tasks are closed out in a timely and effective manner

Timing

    • Typical timing is eight to nine weeks for four to six peer groups.

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Recent Examples of ScottMaddens Work

    • ScottMadden performs comprehensive analyses of cost and reliability for fossil fleets in North America
      Utility in the Midwest: Cost and Efficiency
      ScottMadden helped a large, investor-owned utility in the Midwest identify plants which were higher cost and lower reliability compared to similar peer plants
      Significant new and incremental variable renewable generation in the region was forcing base-load coal plants to be cycled in new and unprecedented ways, which was causing unplanned and unexpected outages
      Subsequent collaboration between the plant operators and the trading and marketing group resulted in a more holistic and constructive process for dispatching units as a portfolio
      Plants more suited to cycling were identified and targeted for accommodating curtailment required by the market, and those which were more prone to failures were allowed to run unabated
      Investor-Owned Utility in the Southwest: Reliability
      ScottMadden conducted a study to help a large fossil fleet operator in the Southwest identify specific components which were failing at disproportionally higher rates than peers, resulting in disproportionately higher lost MWhs
      Because transparent peer groups were developed collaboratively, plant managers had faith in the results
      This set the stage for the plant managers to conduct root cause analyses, develop improvement initiatives, and set reasonable goals for future improvement
      A task force comprised of cross-functional subject matter experts has also been chartered to address a handful of high-priority issues which were identified as themes across multiple plants
      Benchmarking has been embraced and institutionalized, and a procedure was developed to update ScottMaddens analysis once a year in the process of business planning and budgeting

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Recent Examples of ScottMaddens Work (Contd)

    • Public Power Generator in the Southeast: Cost and Staffing
      ScottMadden benchmarked the cost and staffing levels of a fossil generation fleet at the request of the companys board of directors
      Large Fossil Generator in the Southeast: Fossil Operations Restructuring
      ScottMadden assisted a client in developing a business case for implementation of performance improvement opportunities in fossil operations through use of a playbook structure
      Preliminary work to support the business case was a cost benchmarking study for the fossil operations coal fleet and a dialogue on workforce management
      Large Utility Environmental Department: Organization and Process Performance Assessment
      ScottMadden conducted an assessment of the air quality group of an IOU environmental department
      The objective was to assess organization structure, staffing levels, process quality, and quality of work in the areas of air policy development, compliance planning, and compliance reporting
      The project was implemented through a detailed benchmarking and best practices assessment and resulted in an organization design and succession-planning process development
      An ISO14001-based methodology was employed
      Large Fossil Utilities and Unregulated Generators: Fossil Organization Development
      ScottMadden assisted clients in developing organization structures and reporting relationship changes for multiple fossil organizations, applying benchmarking to inform the analysis
      These included multi-phased projects requiring organizational assessment, functional mapping, organization design, staffing and selection method, and implementation

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Contributing Authors

Preston Fowler Director

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