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The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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How Energy & Utilities Must Adopt Intelligence Best Practices to Compete Against Disruptive
Developments
A Complimentary Webinar from Aurora WDC
12:00 Noon Eastern /// Wednesday 25 May 2016
~ featuring ~
Kathryn Valdez Dr. Craig Fleisher
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Kathryn Valdez
Kathryn Valdez serves as an advisor to clients in the Energy & Utilities sector. She is also the Principal and Founder of Mapleton & Sloan, LLC an energy consulting company focused on energy issues for the electric and gas sectors. She has a wide range of experience in environmental policy, strategy development and implementation, energy technology strategy, fuel supply management and logistics, and strategic intelligence gathering and assessment. Previously Kathryn spent 11 years with Xcel Energy in various leadership positions including managing corporate strategy development, expert witness for numerous regulatory filings, developer of innovative clean energy programs, and lead strategic planner for compliance with new environmental regulations.
Email: [email protected]
The Intelligence Collaborative is the online learning and networking community powered by Aurora WDC, our clients, partners and other friends and dedicated to exploring how to apply intelligence methods to solve real-world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn more about Aurora at http://AuroraWDC.com – see you next time!
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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α Use the Questions pane on your GoToWebinar control panel and all questions will be answered in the second half of the hour.
α You are welcome to tweet any comments on Twitter where we are monitoring the hashtag #IntelCollab or eavesdrop via http://tweetchat.com/room/IntelCollab
α Slides will be available after the webinar for embedding and sharing viahttp://slideshare.net/IntelCollab
α To view the recording and download the PPT file, please register for a trial membership at http://IntelCollab.com.
Questions, Commentary & Content
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Today’s Discussion
Part 1 Not your Dad’s utility business. The need for
strategic intelligence Accelerated energy sector evolutionPart 2 Formation of a strategic intelligence function Intelligence methods and tools including assumption
development and business model analysis Requirements for future success for energy utilities
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Electric Utility Sector Performance
A happy alternative in a low interest rate environment Steady stock price appreciation over the last decade Disruption may not be evident in this trend
Source: Fidelity Investments
S&P 500
Index of Electric Utility Stocks
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Not your Dad’s Utility
2010 2011 2012 2013 2014 20150
5000
10000
15000
20000
25000
Electric Consumption by Type (Trillion Btus) – EIA data
19651966
19671968
19691970
19711972
19731974
19751976
19771978
19791980
19811982
19831984
19850
2000
4000
6000
8000
10000
12000
14000
16000
18000
Fossil Fuels Nuclear Renewable Less Hydro
55% increase
6% decrease
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Business Evolution Acceleration
Technology, customer preferences, and price are threatening certainty of the electric utility business model
Electric utilities facing new competition and its not just solar
Several years of discussion of the “utility death spiral”
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Wanted: Strategic Intelligence
Sales Price
Price
2006 2007 2008 2009 2010 2011 2012 2013 2014 20157.00
8.00
9.00
10.00
11.00
12.00
13.00
14.00
180.00
190.00
200.00
210.00
220.00
230.00
240.00
Cents per KWh CPI-U
Elec
tric
ity P
rice
(all
cust
omer
cla
sses
)
CPI-U
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Strategic Intelligence Function Necessity
How do you keep executives informed of the important business developments and why they matter when so much is changing?
How do you answer questions from your executives? Who do they always ask for those answers?
How do you provide better answers and make answering these questions more efficient, collaborative, creative and complete?
Answer: Implement a thoughtful strategic intelligence process
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Finalized Strategic Assumptions
Began with 46+ “beliefs”
Narrowed down to ~20 tied to four
5-year corporate Initiatives
Executive team selected 4
assumptions linked to corporate
initiatives and 2 underlying
assumptions
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Strategic Assumption Qualifications
Are: Tied to 5-10 year corporate
strategy and goals Include beliefs about
customer preferences Include beliefs about
regulatory landscape Include technology
performance and cost expectations
Primarily externally focused Measureable
Are Not: Interest rate assumptions Sales forecasts Weather trends Based upon company
initiatives around culture Open ended or without a
time horizon Too obvious
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Collaborative Subject Matter Experts
SME networks established for each assumption SME networks included the known company “go-to”
people and additional nominated members that are up and comers/high potentials
Each of the six assumptions was given a project plan for validation and a desired frequency of revalidation
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Challenges of Assumption Proving
Specific definitions within the assumptions: What measurements to use to assess impacts of
changes? Timeline for which assumption is expected to hold true Key Intelligence Topic and Question development:
balancing the importance of thoroughness with analysis that is “good enough”
No burdens. Only engaging and valuable work allowed.
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Business Model Analysis and Regulatory Intelligence
Utility business models generally very transparent, just read their regulatory filings!
New entrants in regulated footprints causing discomfort Tweaks to regulatory compacts are small, but
compounding Professional services firms can help understanding
competitor developments through business model analysis and primary research
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German Perspective 2011 to Today: Regulatory Intelligence
American disbelief as Germany transformed its energy mix, reducing imported fossil fuels/ nuclear and increasing renewable generation
German utilities misread the regulatory landscape; lost tremendous market cap
Today, general public acceptance and feeling that “at least the money is going to the farmers” New Wind Turbines near Frankfurt, Germany
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Electric Utilities Critical Role to Continue
Disruption is not providing something that will replace electricity it is replacing how the power is made and who the customer pays for it
Key intelligence areas for utilities to focus on today are in the Business Model and Regulatory Intelligence areas
Technology evaluation is important, but competitive success will require more
A thoughtful process around intelligence will position a company to act more quickly than their peers
Don’t forget to look internationally
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Thank you! Now how about a little Q&A?
Email: [email protected]
The Intelligence Collaborative is the online learning and networking community powered by Aurora WDC, our clients, partners and other friends and dedicated to exploring how to apply intelligence methods to solve real-world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn more about Aurora at http://AuroraWDC.com – see you next time!