Management Audit of Fitchburg Gas and Light Company d/b/a Unitil Prepared For Massachusetts

i

Management Audit of Fitchburg Gas and Light Company d/b/a Unitil

Prepared For

Massachusetts Department of

Public Utilities

April 13, 2011

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Fitchburg Gas and Light Company

d/b/a Unitil

Management Audit Report

Prepared For

Massachusetts Department

Of Public Utilities

For Jacobs Consultancy

Frank DiPalma

April 13, 2011

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This report was prepared based in part on information not within the control of the consultant;

Jacobs Consultancy Inc. Jacobs Consultancy has not made an analysis, verified, or rendered

an independent judgment of the validity of the information provided by others. While it is

believed that the information contained herein will be reliable under the conditions and subject

to the limitations set forth herein, Jacobs Consultancy does not guarantee the accuracy thereof.

Use of this report or any information contained therein shall constitute a release and contract to

defend and indemnify Jacobs Consultancy from and against any liability (including but not

limited to liability for special, indirect or consequential damages) in connection with such use.

Such release from and indemnification against liability shall apply in contract, tort (including

negligence of such party, whether active, passive, joint or concurrent), strict liability or other

theory of legal liability, provided, however, such release limitation and indemnity provisions shall

be effective to, and only to, the maximum extent, scope, or amount allowed by law.

This document, and the opinions, analysis, evaluations, or recommendations contained herein

are for the sole use and benefit of the contracting parties. There are no intended third party

beneficiaries, and Jacobs Consultancy shall have no liability whatsoever to third parties for any

defect, deficiency, error, omission in any statement contained in or in any way related to this

document or the services provided.

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Table of Contents Section Page

1 Executive summary............................................................................................................. 1

1.1 Background.................................................................................................................. 1

1.2 Scope .......................................................................................................................... 1

1.3 Approach ..................................................................................................................... 1

1.4 Conclusions ................................................................................................................. 2

1.4.1 Strategic and Operational Planning....................................................................... 2

1.4.2 Staffing and Workforce Management.................................................................... 2

1.4.3 Workforce Planning............................................................................................... 2

1.4.4 Maintenance Programs......................................................................................... 2

1.4.5 Training................................................................................................................. 3

1.4.6 Reliability .............................................................................................................. 3

1.4.7 Capital Budget ...................................................................................................... 3

1.4.8 Operating Budget.................................................................................................. 3

1.4.9 Resource Allocation.............................................................................................. 4

1.4.10 Customer and Public Relations............................................................................. 4

1.4.11 Communications with Customers.......................................................................... 4

1.4.12 Communications with Local Officials..................................................................... 5

1.4.13 Storm Preparedness and Response Planning....................................................... 5

1.4.14 Business Continuity Planning................................................................................ 5

1.4.15 Emergency Preparedness Plan ............................................................................ 5

1.5 Recommendations....................................................................................................... 6

2 Introduction ......................................................................................................................... 8

2.1 Background.................................................................................................................. 8

2.2 Scope .......................................................................................................................... 8

2.3 Approach ..................................................................................................................... 9

2.4 Objective...................................................................................................................... 9

2.5 Report Organization....................................................................................................10

3 Strategic and Operational Planning....................................................................................12

3.1 Strategic Planning Process ........................................................................................13

3.1.1 Findings ...............................................................................................................14

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3.1.2 Conclusions .........................................................................................................15

3.1.3 Recommendations...............................................................................................16

4 Staffing & Workforce Development ....................................................................................17

4.1 Staffing Levels ............................................................................................................20

4.1.1 Findings ...............................................................................................................20

4.1.2 Conclusions .........................................................................................................26


4.2 Workforce Planning.....................................................................................................27

4.2.1 Findings ...............................................................................................................28

4.2.2 Conclusions .........................................................................................................28


4.3 Maintenance Programs...............................................................................................28

4.3.1 Findings ...............................................................................................................32

4.3.2 Conclusions .........................................................................................................32


4.4 Training.......................................................................................................................32

4.4.1 Findings ...............................................................................................................35

4.4.2 Conclusions .........................................................................................................35


4.5 Reliability ....................................................................................................................35

4.5.1 Findings ...............................................................................................................44

4.5.2 Conclusion...........................................................................................................45


5 Management & Control ......................................................................................................47

5.1 Capital Budget Process ..............................................................................................47

5.1.1 Findings ...............................................................................................................51

5.1.2 Conclusions .........................................................................................................51


5.2 Capital Project Prioritization ........................................................................................51

5.2.1 Findings ...............................................................................................................53

5.2.2 Conclusions .........................................................................................................53


5.3 Operating Budgets......................................................................................................53

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5.3.1 Findings ...............................................................................................................55

5.3.2 Conclusions .........................................................................................................56


5.4 Resource Allocation within Unitil .................................................................................56

5.4.1 Findings ...............................................................................................................57

5.4.2 Conclusions .........................................................................................................57


6 Customer & Public Relations..............................................................................................58

6.1 Call Center Performance.............................................................................................62

6.1.1 Findings ...............................................................................................................68

6.1.2 Conclusions .........................................................................................................68


6.2 Communications with Customers................................................................................69

6.2.1 Findings ...............................................................................................................81

6.2.2 Conclusions .........................................................................................................81


6.3 Communications with Local Officials...........................................................................82

6.3.1 Findings ...............................................................................................................85

6.3.2 Conclusions .........................................................................................................85


7 Storm Preparedness & Response Planning .......................................................................86

7.1 Status on 28 Recommendations from 2008 Storm......................................................87

7.1.1 Findings ...............................................................................................................87

7.1.2 Conclusions .........................................................................................................90


7.2 Business Continuity Planning, Crisis Response Planning, and Enterprise Risk

Management .........................................................................................................................91

7.2.1 Findings ...............................................................................................................93

7.2.2 Conclusions .........................................................................................................93


7.3 Emergency Preparedness Plan...................................................................................93

7.3.1 Findings ...............................................................................................................95

7.3.2 Conclusions .........................................................................................................96

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8 Appendix............................................................................................................................97

8.1 Glossary .....................................................................................................................97

8.1.1 Acronyms.............................................................................................................97

8.1.2 Common Electric Distribution Industry Terms ......................................................98

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Table of Figures

Figure Page

Figure 1 - Recommendations ..................................................................................................... 6

Figure 2 – FG&E Functional Areas Reviewed ............................................................................ 8

Figure 3 - Recommendation Priority Scores..............................................................................11

Figure 4 - 2009 Incentive Plan .................................................................................................14

Figure 5 - Historic Staffing Levels..............................................................................................21

Figure 6 - Electric Maintenance Staffing Levels.........................................................................22

Figure 7 - Overtime ...................................................................................................................23

Figure 8 - Electric Staff Level vs. SAIFI .....................................................................................24

Figure 9 - Electric Staff Level vs. CAIDI ....................................................................................25

Figure 10 - FG&E Electric Maintenance Department Age Demographics..................................26

Figure 11 - Interrupting Device Inspection and Maintenance Intervals ......................................30

Figure 12 - Protective Relay Maintenance.................................................................................31

Figure 13 - Voltage Regulator Maintenance ..............................................................................32

Figure 14 - 2009 Outage Cause Percentages ...........................................................................37

Figure 15 - Outages by Cause ..................................................................................................38

Figure 16 - FG&E Reliability Performance 2005-2009...............................................................40

Figure 17 - Unitil New England Survey......................................................................................41

Figure 18 – I.E.E.E. – ALL CAIDI 2009 Data.............................................................................41

Figure 19 - I.E.E.E. - ALL SAIDI 2009 Data...............................................................................42

Figure 20 - I.E.E.E. - ALL SAIFI 2009 Data ...............................................................................42

Figure 21 – FG&E Excludable Storms.......................................................................................43

Figure 22 - MDPU Excludable Storms.......................................................................................44

Figure 23 – Capital Budget vs. Actual, 2005-2009 ....................................................................50

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Figure 24 – Operating Budget vs. Actual, 2005-2009................................................................55

Figure 25 - Customer Satisfaction Survey - Supplying Electric Service at Fair ..........................60

Figure 26 - Customer Satisfaction for Service Excluding Price..................................................61

Figure 27 - Customer Satisfaction Survey - Restoring Power....................................................62

Figure 28 - Call Center Staffing vs. Call Volume .......................................................................65

Figure 29 - Abandonment Rate .................................................................................................66

Figure 30 - Call Center Service Level........................................................................................67

Figure 31 – Annual Customer Service Survey Results - Service ...............................................78

Figure 32 - Annual Customer Service Survey Results – Transactions.......................................79

Figure 33 – Annual MDPU Received Customer Complaints......................................................79

Figure 34 – Average MDPU Ordered Billing Adjustments .........................................................80

Figure 35 – Percent Service Appointments Met ........................................................................80

Figure 36 – Percent Actual Meter Reads...................................................................................80

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1 EXECUTIVE SUMMARY

1.1 Background

Fitchburg Gas and Electric Light Company (FG&E or Company) D/B/A Unitil retained Jacobs

Consultancy, Inc. to perform an independent management audit of the Company's management

practices, including the management practices of Unitil Corporation, pertaining to its electric

distribution operations in Massachusetts. Specifically, the Massachusetts Department of Public

Utilities (MDPU or Department) had directed the Company to initiate, subject to Department

oversight, a comprehensive independent management audit that will address the effect on the

Company of Unitil Corporation’s management practices, including: (1) Strategic Planning

Processes; (2) Staffing Decisions; (3) Management and Control of the Company; and, (4)

Relations with Customers and Public Safety Officials.

The purpose of the audit is to conduct a review and evaluation of FG&E’s management

practices in these areas pertaining to its electric distribution operations in Massachusetts in

order to be sure that the Company is prepared to meet its public service obligations to its

customers under all circumstances, including a significant power outage.

1.2 Scope

The scope of our audit involved the complete diagnostic review of the major functions of the

Company. In undertaking this audit, we conducted focused interviews with FG&E and Unitil

personnel and reviewed numerous documents. Our assessment of the Company focused on

operations, system of internal controls, reliability, emergency response and communications.

1.3 Approach

Jacobs completed a comprehensive and fact-based review and investigation of the key

functional areas of the FG&E and Unitil to confirm or refute the reasonableness of their

management operations, covering:

• Strategic Planning

• Staffing & Workforce Management

• Management & Control

• Customer & Public Relations

• Emergency Preparedness & Response Planning

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In addition, the audit focused on a major ice storm that occurred on December 11 and 12, 2008

and affected vast areas of New England and had a significant impact on electric utilities and

their customers.

1.4 Conclusions

Our review of FG&E’s management practices pertaining to its electric distribution operations in

Massachusetts was designed to evaluate how well the Company is prepared to meet its public

service obligations to its customers under all circumstances, including a significant power

outage. We balanced our analysis against industry best practices in each of the focus areas

and present our conclusions below:

1.4.1 Strategic and Operational Planning

Unitil maintains an adequate Strategic and Corporate Planning Process. This process enables

Unitil to plan the steps necessary for the near- and mid-term needs of the corporation. Unitil

has made extensive effort to include their employees in the planning process and inform them of

their roles in achieving the corporation’s goals.

1.4.2 Staffing and Workforce Management

Staffing levels at FG&E has declined over the last five years due to the completion of the

advanced metering integration project and consolidation of certain gas operations and dispatch

functions. The Electric Line department has three employees on long-term disability and in 2010

added staff to approach the previous levels. Overtime ranges between 11% and 17%, which is

below recent findings of other utilities, and is in line with best management practices.

Based on the age demographics of the linemen and the lead time in training new individuals,

FG&E appears to be short of apprentice linemen to fill the upcoming retirement gap.

1.4.3 Workforce Planning

The existing manual-based work management system appears to function adequately for

FG&E, given the small number of field staff. Adoption of an automated system may be cost

effective if implemented on an enterprise basis.

1.4.4 Maintenance Programs

Unitil’s maintenance cycles and components are in line with industry practice.

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1.4.5 Training

Unitil appears to have the right mix and frequency of management, safety, and technical training

programs to provide its employees a solid foundation to operate effectively in a safe

environment.

1.4.6 Reliability

Unitil’s strong focus on reliability extends to the operation of the FG&E system and provides a

clear guideline fostering operating and maintaining the system to continuously improve

reliability.

Unitil’s focus on reliability and implementation of policies to ensure continuous improvements is

reflected in FG&E’s excellent reliability performance.

While broken trees are the leading outage cause, as Unitil implements the 3-Year Hazard

Removal Program, as recommended in the Environmental Consultants, Inc. confidential 2009

report, entitled “Distribution and Sub-Transmission Vegetation Management Program,” this

outage category should see improvement within the coming three years. Further, the enhanced

vegetation management program, with shortened trim cycles for both three-phase and single-

phase distribution lines, should contribute to a continued decline in tree contact outages.

A consistent methodology for classifying excluded events would remove uncertainty in reporting

and acting on results of major storms or outage events.

1.4.7 Capital Budget

As can be interpreted from a combination of the budgeting process procedural review and the

review of reliability statistics in FG&E, the capital and operating budgeting processes appear to

be functioning adequately to provide sufficient infrastructure resources.

1.4.8 Operating Budget

The budget planning process is logically structured, incorporates input from all key constituents,

and appears to flow relatively well.

The instruction material for the operating budget process is complex. The current process

would appear to require a high degree of spreadsheet and accounting proficiency from

operating and other functional managers.

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1.4.9 Resource Allocation

As can be interpreted from a combination of the resource allocation procedural review and the

review of reliability statistics in FG&E, the allocation of capital and operating budgets appear to

be functioning well enough to provide adequate resources in FG&E.

1.4.10 Customer and Public Relations

Unitil staffs the call center in accordance with the flow of call volume and uses technology to

enhance the call center’s ability to service customers in an effective and efficient manner. The

technologies employed include: Milsoft Utility Solutions Interactive Voice Response Unit,

Siemens HiPath 4000 PBX Voice-Over-IP, and Global Connect.

Unitil’s call center performance has met criteria the majority of the time and in some areas

continually exceeds targets.

1.4.11 Communications with Customers

Unitil has made significant strides in its communications since the ice storm of 2008. By

redefining its external communications to include a customer-centric focus rather than simply

corporate communications, Unitil has addressed many of the gaps that can create issues during

outage events. Providing education to customers prior to events, increasing the communication

channels to reach customers during events, and formalizing the crisis communication processes

and protocols during an event all indicate a commitment to inform customers and other critical

audiences effectively and responsibly. With the development and implementation of the

Strategic Communication Plan, Unitil’s leadership moved its public relations and communication

efforts to be proactive rather than reactive.

Organizationally, the Communications Group is positioned where it can be most effective -

directly aligned with senior management. By adding staff resources to match the elements of

the Strategic Communication Plan, Unitil ensured implementation of that strategy could move

forward in a timely manner with experienced professionals.

Unitil’s redesigned website is a valuable asset to customers and others seeking information both

before and during emergency events. Before an outage or crisis occurs, visitors to the site can

easily find information about what to do during an outage, how to prepare in advance, how to

report outages, where to go for assistance, and more. During an emergency event, website

visitors to the site can learn where outages are occurring and obtain updates on restoration

efforts. Customers and others who have signed up in advance can also receive this information

through Twitter or RSS feeds.

One of the strongest elements of Unitil’s newly defined communications approach is its effort to

engage directly with the communities that it serves. By participating in community events,

attending local functions, developing relationships with community leaders, and creating a

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presence before outage events occur, Unitil is demonstrating that communities such as those

served by FG&E are more than just another service area. This outreach creates linkages with

the Company that local officials, customers, the media, and others can leverage during an

emergency to be sure the community’s needs are met in a timely and effective manner.

Unitil’s investment in the Global Connect system to quickly reach a large number of customers

is another strong advancement in making sure communication during outage events is

managed effectively. This web-based system allows Unitil to contact customers directly

impacted by outages, and provide critical information of interest such as restoration timeframes.

1.4.12 Communications with Local Officials

As indicated in Section 1.4.11 Communications with Customers, Unitil has made significant

strides in its communications since the ice storm of 2008. By redefining its external

communications to include a customer-centric focus rather than simply corporate

communications, Unitil has addressed many of the gaps that can create issues during outage

events. Providing education to elected and local officials prior to events, increasing the

communication channels to reach them during events, and formalizing the crisis communication

processes and protocols during an event all indicate a commitment to inform these critical

audiences effectively and responsibly.

1.4.13 Storm Preparedness and Response Planning

At present, Unitil has completed 26 of the 28 self-assessment recommendations and has

substantially completed most of the tasks associated with the additional work, which was either

reported by Unitil or requested by the MDPU. OMS is installed and has been used to respond

to outages since early December 2010. It is fully integrated with the IVR, CIS, and GIS

systems. Full SCADA integration is planned to be completed by the end of 2011. The remaining

recommendations related to the 69 kV sub-transmission systems, vegetation management, and

estimated billing practices are either completed or on schedule for completion, as detailed in the

most recent status update submitted in October and November 2010.

1.4.14 Business Continuity Planning

Unitil has comprehensively addressed Business Continuity Planning, Crisis Response Planning,

and Enterprise Risk Management through development of specified planning documents that

complement each other and provide linkages to the emergency response plan; discussed in the

next section.

1.4.15 Emergency Preparedness Plan

Based on our review, Unitil’s MDPU approved Emergency Preparedness Plan is comprehensive

and is aligned with proven Incident Command Structure methodologies. The Plan was

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developed from proven plans including Florida Power and Light and National Grid and tuned to

Unitil’s service area and system.

1.5 Recommendations

Based on our analysis, we conclude that following the 2008 ice storm FG&E has been

responsive and has undertaken significant initiatives and steps to improve overall performance

and in particular, communications and storm response. Most, if not all, of these initiatives were

fast-tracked by the Company and are currently in place and functioning. The Company has also

addressed MDPU requirements for improvement in a number of areas. Our recommendations

support these initiatives and provide opportunities to further improve the results of the strategy

set forth by management.

We have presented 16 recommendations in the body of the report and summarized them below.

Figure 1 contains 13 recommendations as the recommendations emanating from sections 6.2.3

and 6.3.3 are identical but deal with different aspects of communications. A rating methodology

has been developed to help prioritize these recommendations based on our current knowledge

of the Company, the issues being faced by the organization, and our knowledge of issues facing

similar companies and our experience.

Figure 1 - Recommendations

Section Topic Recommendation(s) Priority

4.1.3 Staffing and

Workforce

Development

1. Unitil should undertake a staffing study to determine the number of apprentice linemen needed and the optimal timing for these hires.

High

4.2.3 Workforce Planning

2. Unitil should continue to evaluate extending the Mobile Data System and its components to the entire system including FG&E, should the economics and net benefits be favorable.

Medium

4.5.3 Reliability

1. Continue with and monitor the results of adopting Environmental Consultants, Inc.’s 2010 vegetation management recommendations.

2. Consider enhancing or developing an animal protection program.

3. Consider including other reliability measures, such as SAIFI, to gain better intelligence on outage frequencies in order to place expanded focus on preventative programs.

4. Unitil should work with the MDPU to conform exclusionary

criteria. 5. Unitil should make certain that FG&E’s reported figures are

Medium

Medium

High

High

High

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Section Topic Recommendation(s) Priority

conformed to the criteria adopted by the MDPU.

6. Unitil and the MDPU should consider adopting the Institute of Electrical and Electronic Engineers Beta Method for Major Event Days to conform reporting to emerging industry standards.

Medium

5.3.3 Operating Budgets

1. Conduct a study and flow chart budget interface and

requirements for managers, whereas a simplified approach

could have the potential to improve accuracy and free up

non-accounting managers from accounting chores.

Low

6.1.3 Customer and Public

Relations

1. Conduct a call center staffing study to better align resources to improve agent-only service levels.

High

6.2.3

and

6.3.3

Communicating with Customers

and Local Officials

1. Continue with implementation of the Strategic Communication Plan.

2. Resources and funding should continue to be allocated for enhanced communications with customers and public officials.

3. Appropriate communications staff should continue to receive support from senior leadership for communication efforts.

High

High

High

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2 INTRODUCTION

2.1 Background

Fitchburg Gas and Electric Light Company (FG&E or Company) D/B/A Unitil retained Jacobs

Consultancy, Inc. to perform an independent management audit of the Company's management

practices, including the management practices of Unitil Corporation, pertaining to its electric

distribution operations in Massachusetts. Specifically, the Massachusetts Department of Public

Utilities (MDPU or Department) had directed the Company to initiate, subject to Department

oversight, a comprehensive independent management audit that will address the effect on the

Company of Unitil Corporation’s management practices, including: (1) Strategic Planning

Processes; (2) Staffing Decisions; (3) Management and Control of the Company; and, (4)

Relations with Customers and Public Safety Officials.

The purpose of the audit is to conduct a review and evaluation of FG&E’s management

practices in these areas pertaining to its electric distribution operations in Massachusetts in

order to be sure that the Company is prepared to meet its public service obligations to its

customers under all circumstances, including a significant power outage.

2.2 Scope

The scope of our audit involved the complete diagnostic review of the major functions of the

Company, as shown in Figure 2. In undertaking this audit, we conducted 12 interviews with 20

FG&E (and Unitil) personnel and reviewed over 200 documents. Our assessment of the

Company focused on:

Figure 2 – FG&E Functional Areas Reviewed

Functional Areas Reviewed

• Operations

• Finance

• Accounting

• Asset Management

• Customer Relations

• Customer Service

• Engineering

• Storm Response

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2.3 Approach

We completed a comprehensive and fact-based review and investigation of the key functional

areas of FG&E and Unitil to confirm or refute the reasonableness of their management

operations, covering:

• Strategic Planning

• Staffing & Workforce Management

• Management & Control

• Customer & Public Relations

• Emergency Preparedness & Response Planning

In addition, the audit focused on a major ice storm that occurred on December 11 and 12, 2008

which affected vast areas of New England and had a significant impact on electric utilities and

their customers. At its peak, the storm and its effect on utility infrastructure caused outages to

more than one million customers in the region. The region’s utilities experienced significant

damage to their electric systems, and as a result, some customers in the region were without

power for up to two weeks.

The Company is a wholly owned subsidiary of Unitil Corporation, an investor-owned public utility

holding company with gas and electric utility operations in Massachusetts, New Hampshire, and

Maine. FG&E provides electric and natural gas service in north central Massachusetts in a 170-

square mile area with an estimated population of about 100,000. The Company provides electric

service to approximately 27,800 customers in the communities of Fitchburg, Townsend,

Lunenburg, and Ashby. The Company also provides natural gas service to approximately

15,100 customers in these communities and the towns of Gardner and Westminster.

Electric companies are facing the retirement of system-critical assets, increased capital

spending on infrastructure, and greater financial uncertainties. As a result, state utility

commissions have come under ever-greater scrutiny to demonstrate strong stewardship of the

regulated utilities to ensure continued safe, reliable, and fairly priced utility services are

available.

2.4 Objective

The Company’s primary mission is to deliver power safely, dependably, and at a reasonable

price. The audit will confirm or refute whether the Company is presently providing adequate,

efficient, reliable, safe, and cost-effective service to its customers.

The objectives of this audit are to determine the broad-based business policies, practices, and

procedures in place at FG&E and Unitil and to evaluate the appropriate, reasonable, timely, and

consistent implementation of these policies throughout the organization with respect to the

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business management operations of the Company, and to assess the adequacy of the

Company’s response to the winter storm of 2008. Specifically, we confirmed and comment on

the 28 recommendations emanating from the Unitil’s self-assessment.

2.5 Report Organization

The Executive Summary provides an overview of our report’s key conclusions and

recommendations. Recommendations are based on an assessment of the findings and

conclusions presented in the body of our report.

The body of our report is divided into five sections, generally along functional lines. Each

section contains an overall assessment, background, and analysis of specific topics. Overall

assessments are narrative statements of conclusion that provides a summary of our general

perception of the function or topic. The background comments follow the overall assessment

and describe the present situation, mode of operation, expenditures, management controls,

performance trends, or other appropriate information pertinent to the understanding of the

environment or situation.

In the various sections, we address 17 specific topics. For each specific topic, we present our

analysis in the form of conclusions, findings, and recommendations, as appropriate. For the

purposes of this report, we define findings, conclusions, and recommendations as:

• Findings represent strengths, weaknesses, opportunities and threats that tie directly to

the facts obtained from our interviews and review of documents.

• Conclusions summarize and represent our assessment of the related findings and our

opinion regarding proposed opportunities for improvements associated with a specific

topic. Our conclusions may lead to recommendations.

• Recommendations can take the form of a general recommendation suggesting the need

for more in-depth review or specific recommendations which suggests a direct course of

action.

Each recommendation has been assigned a relative score. The score is the weighted average

value of three factors: 1) system integrity improvement (safety, capacity), 2) customer

satisfaction improvement (service, reliability, power quality), and 3) Company effectiveness

improvements (asset utility, resource allocation, expense containment).

Depending on the recommendation’s score, it is assigned a priority: high, medium, or low. The

figure below describes each of these priorities.

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Figure 3 - Recommendation Priority Scores

Priority Score Range Description

High 4.0 – 6.0

Implementation would result in significant cost savings and/or

major improvements in system integrity, service, management

practice, or performance. These recommendations should be

implemented as soon as possible.

Medium 2.1 – 3.9

Implementation would result in meaningful cost savings and/or

improvements in system integrity, service, management

practice, or performance. Implementation should begin within

12 months of audit report acceptance.

Low 0 – 2.0

Implementation would enhance system integrity, service,

management practices, or performance. Benefits are modest

or difficult to measure. Since many of these

recommendations require little effort to implement,

implementation should begin as soon as possible, but not

more than 24 months after audit report acceptance.

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3 STRATEGIC AND OPERATIONAL PLANNING

Effective strategic planning is a necessity for all companies, including utilities and their affiliates.

Management’s ability to anticipate and respond to opportunities and problems can have a

significant effect on a company's operations and the overall success of an organization. During

its review, the Consultant will examine Unitil Corporation’s strategic and operational plans, the

ability of the organization to define goals and objectives over different time horizons, the quality

of the planning process, and the overall effectiveness of its planning efforts, all as they relate to

its electric utility operations in Massachusetts.

Overall Assessment

Background

Unitil has a strong strategic planning process developed from a change management program

called Breakthrough Change. This process is based on the premise that all employees must

understand their role in helping achieve the Unitil’s vision. The initial plan was developed

through a corporate-wide focus process, which engaged every employee in the Breakthrough

Change methodology, and included the framework for the Corporation’s mission statement and

core values.

Unitil has incorporated the business plan into the strategic plan and identified key strategies to

support the overall strategic plan. The key strategies are divided into four areas which are:

• Customer

• Regulations

• Operations

• Growth

For each of these areas Unitil has developed:

• Objectives

• Action Plans

• Milestones

The objectives are items to be accomplished over the next three years and action plans are

developed to determine what needs to be carried out in order to meet the objectives. Unitil has

developed milestones to measure the progress of the action plans. These are monitored by

senior management closely throughout the year.

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3.1 Strategic Planning Process 1

The process begins with a case for change, which is the overriding rationale for Unitil’s strategic

direction. The change is based on the current industry environment, Unitil’s position and

performance, and the prioritization of opportunities available to drive future success. Unitil’s

senior management team reviews and potentially adjusts the mission statement and the core

principles designed to guide employees in making the required changes in addition to preparing

specific strategies to achieve the mission.

Updates are conducted by management with varying levels of employee engagement, as

required. The core of the strategic plan requires relatively modest adjustments and changes in

strategies and performance measures. After the plan has been updated, it is approved by the

Board of Directors and communicated to all employees, and during the year the progress of the

strategic plan is also communicated.

During the strategy development, the management team reviews the present state relative to

the desired future state and establishes objectives and action steps designed to close the gaps.

A set of overall performance measures for each strategy area is developed to gauge how the

Company is performing in meeting the strategy objectives and overall mission. The strategic

plan is carefully integrated with the financial outlook which provides the basis for the annual

Capital and Operating Budgets. The plan covers a three-year period which is updated annually.

Unitil employs a set of performance metrics internally which ties to compensation to be sure the

goals of the plan are achieved. The figure below illustrates the 2009 incentive plan.

1 DR J-3, Strategic Planning Process

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Figure 4 - 2009 Incentive Plan 2

3.1.1 Findings

• Until has instituted a sound Strategic and Corporate Planning Process based on a

change management program.

• Unitil’s Strategic and Corporate Planning Process currently in place:

o Adequately enables the Company to plan for the near- and mid-term needs.

o Is driven by a corporate-wide focus process.

o Maintains a regular annual planning schedule with deliverables.

• Unitil has developed a mission that defines the fundamental purpose of the operating

entity. Unitil’s mission is as follows, “We provide for the necessities of living:

2 DR J-12, Attachment 4, 2009 Incentive Plan

15

o Safely

o Reliably

o Cost-effectively

o Responsibly

� To a growing number of customers

� With a “high-performing workforce”

• As Unitil works to achieve the mission, they have established and communicated

values for conducting business. Unitil’s values are:

o commitment/achievement,

o empowerment,

o teamwork,

o respect,

o open communications and

o ethical practice.

• A vision has been established that sets a future course for the Company. Unitil’s vision

is “Unitil provides for the necessities of life, safely, and reliably delivering natural gas and

electricity throughout New England. Our talented, dedicated people power technology

and innovation that leads to more dependable, efficient energy.”

• Unitil employs an internal performance monitoring process tied to its annual incentive

plan.

• Unitil’s strategic goals and the success in achieving these goals have been translated

into key strategies which have been identified in four major areas: 1) Customer, 2)

Regulation, 3) Operations, and 4) Growth, which are Unitil’s business plan.

• The business plan identifies objectives, action plans, and milestones for each key

strategy and monitors their progress throughout the year.

3.1.2 Conclusions

Unitil maintains an adequate Strategic and Corporate Planning Process. This process enables

Unitil to plan the steps necessary for the near- and mid-term needs of the corporation. Unitil

has made extensive effort to include their employees in the planning process and inform them of

their roles in achieving the corporation’s goals.

16

3.1.3 Recommendations

None

17

4 STAFFING & WORKFORCE DEVELOPMENT

Staffing & Workforce Management is the process of assigning the right employees with the right

skills to the right job at the right time. The Consultant will review how Unitil Corporation and the

Company assure that its operating departments employ effective means for maintaining

appropriate levels of staffing, productivity and utilization. The review will encompass

determination of appropriate standards, monitoring of performance against them, and corrective

action to address areas where the Company may benefit to adjustments in staffing levels as

well as obtain more effective and efficient utilization.

Overall Assessment

Background

Unitil is organized with Unitil Service Corp. providing centralized management and

administrative services to the rest of the Unitil companies, including its electric and gas

distribution operating affiliates, which are referred to as distribution operating centers (DOC).

Unitil has undergone numerous reorganizations over the past decade in an attempt to improve

the quality and cost effectiveness of providing service to its customers. Areas reorganized

include:

• Functional centralization of customer service

• Engineering

• Emergency management

• Centralized dispatch services3

FG&E uses functional approach for work management processes including: Engineering,

Operations, Business Services, Finance, Procurement, Construction and Operation Services,

and Crews (internal and external) who are performing the work. The process allows for multi-

functional interaction and review. This review is very specific to each operating department and

ensures proper checks and balances. Work requests can be initiated in three different ways: 1)

Engineering Work Request (EWR), 2) Operations, and 3) Customers. EWR’s and operations

requests are handled in a similar fashion4.

Examples of the work management process are:

• Engineering Work Request (EWR)

3 DR-14, Organizational Development

4 DR-21, Work Management Processes

18

1. In the case of projects initiated from Engineering, the project is designed and

documented on the EWR. The EWR goes through an electronic routing process for

approval by Engineering and Operation’s management. The EWR is sent to

Operations for feasibility and cost estimation.

2. Operations use a cost estimating tool and construction planner having specific tasks

associated with labor and material costs. The project is designed in the field by a

field technician who performs a field visit in order to determine the scope of work,

required material, an estimate of labor hours to complete, and an identification of

obstacles that may affect the project. The design is captured on the construction

planner, which will be used by the assigned crews to complete the project.

3. Once the estimation for the project is completed, an authorization is written to

request approval to complete the project. The authorization is routed through an

approval process that includes electronic approvals by various levels of

management. The level of approval is determined by the total estimated cost of the

project. Once approved, the work is prioritized and placed into a schedule. Any

specialty material is ordered.

4. Operations evaluates the resource requirements to complete the project and

determine if it will be performed with in-house personnel or if it becomes bid work.

Contract labor is used when the project involves specialized equipment (e.g. off-road

vehicles), specialized knowledge, or when other workload requirements call for

outside services.

5. Once the project is assigned to either in-house or contractor personnel, Operations

Management monitors the flow of the job, sets daily expectations for crews, and

follows the job to completion. Any significant scope changes require approval by

Operations Management before they can be implemented. Daily interaction occurs

between Operations supervision with each crew to determine progress, job status,

and any identified issues.

6. At job completion, a review, and sign-off of work orders is required by Operations

Management. This provides an auditable process to ensure accuracy. In addition,

spot field audits are conducted, and larger construction projects are routinely audited

to ensure adherence to Unitil Construction Standards and quality assurance.

7. At the end of each day, crews hand in their construction planners with their

completed daily work. The supervisor is required to review and approve the work

completed. Therefore, each day, the supervisor has detailed knowledge of the work

completed.

8. Operations Support performs closeout of all work orders associated with the

respective projects regardless of the size of the project. This also provides an

opportunity to check for accuracy of the project estimate and reconcile actual labor

19

and material used to complete the project. Any discrepancies in paperwork are

brought to Operations’ attention for clarification, analysis, and sign-off. Plant records

are then updated to reflect as-built conditions in the field.

• For projects initiated by Operation:

1. Operation uses a cost estimating tool and construction planner that has specific

tasks associated with labor and material costs. The project is designed in the field

by a field technician who performs a field visit in order to identify required labor and

material, as well as identify obstacles that may affect the project. The design is

captured on the construction planner, which will be used by the crews assigned to

complete the project.

2. Once the estimation for the project is completed, an authorization is written to

request approval to complete the project. The authorization is routed through an

approval process that includes electronic approvals by various levels of

management. The level of approval is determined by the total estimated cost of the

project. Once approved, the work is prioritized, placed into the schedule, and any

specialty material is ordered.

3. Operations evaluates the resource requirements to complete the project and

determine if it will be performed with in-house personnel or if it becomes bid work.

Contract labor is used when the project involves specialized equipment (e.g. off-road

vehicles), specialized knowledge, or when other workload requirements require

outside services.

4. Once the project is assigned to either in-house or contractor personnel, Operations

Management monitors the flow of the job, sets daily expectations for crews, and

follows the job to completion. Any significant scope changes require approval by

Operations Management before they can be implemented. Daily interaction occurs

between Operations supervision with each crew to determine progress, job status,

and any identified issues.

5. At job completion, a review and sign-off of work orders is required by Operations

Management. This provides an auditable process to ensure accuracy. In addition,

spot field audits are conducted and larger construction projects are routinely audited

to ensure adherence to Unitil Construction Standards and quality assurance.

6. At the end of each day, crews hand in their construction planners with their

completed daily work. The supervisor is required to review and approve the work

completed. Therefore, each day, the supervisor has detailed knowledge of the work

completed.

20

7. Operations Support performs closeout of all work orders associated with their

respective projects regardless of the size of the project. This also provides an

opportunity to check for accuracy of the project estimate, and reconcile actual labor

and material used to complete the project. Any discrepancies in paperwork are

brought to Operations’ attention for clarification, analysis and sign-off. Plant records

are then updated to reflect as-built conditions in the field.

• For work originated by a customer request:

1. Customer contacts the call center with a request. These types of requests include,

but are not limited to, credit and collections, meter change-outs, voltage complaints,

low-wire notification, trimming requests, system related issues, etc.

2. The call center representative will enter a work order into the customer information

system. In addition, the Operations and Energy Measurement and Control

Departments have the ability to enter work orders.

3. The backlog of work requests are prioritized by the Operations and Energy

Measurement and Control Departments. Work is assigned daily to field crews.

4. Once the work order is addressed, Operations Support enters the resolution to the

work order then closes the work order.

4.1 Staffing Levels

4.1.1 Findings

• FG&E’s overall staffing levels have declined over the last five years as shown below:5

5 DR-09, Staffing Counts by Organizational Assignment

21

Figure 5 - Historic Staffing Levels

• The staff reductions for 2006-2008 reflect the full deployment of an advanced metering

integration (AMI) project and centralization of certain gas operations and dispatch

personal.

22

Figure 6 - Electric Maintenance Staffing Levels

• The electric line staff has decreased slightly over the last four years. However, the chart

as shown above does not include individuals who are on long-term disability6:

6 DR-85, Overtime Hours

23

Figure 7 - Overtime

• Unitil’s policy is to attempt to use overtime for emergencies only. Overtime percentages

have varied over the last four years ranging between 11% and 17%.

24

Figure 8 - Electric Staff Level vs. SAIFI

25

Figure 9 - Electric Staff Level vs. CAIDI

As depicted in the preceding figures, the number of linemen (journeymen, apprentices, and

contract workers) has been relatively level as staffing levels increased to 14 in 2010. In terms of

commonly used electric industry measures, except for 2008,7 SAIFI has improved, averaging

1.37 interruptions per customer, and CAIDI has stayed relatively flat hovering around 78

minutes. SAIFI is in the first quartile (excellent performance) and CAIDI in is the first quartile

(excellent performance). This indicates that FG&E has mitigated some outage causes and

restoration times.

7 In 2008 both CAIDI and SAIFI results were severely influenced by major storms

26

Figure 10 - FG&E Electric Maintenance Department Age Demographics

FG&E has an aging workforce, 47% of the electric maintenance staff is above 50 years old and

87% above 40. The average age for the workforce is 48 years old. Today, an older aging

workforce is common in the utility industry.

4.1.2 Conclusions

Staffing levels at FG&E has declined over the last five years due to the completion of the AMI

project and consolidation of certain gas operations and dispatch functions. The Electric Line

department has three employees on long-term disability and in 2010 added staff to approach

the previous levels. Overtime ranges between 11% and 17%, which is below recent findings of

other utilities, and is in line with best management practices.

Based on the age demographics of the linemen and the lead time in training new individuals,

FG&E appears to be short of apprentice linemen to fill the retirement gap.

27


1. Unitil should undertake a staffing study to determine the number of apprentice linemen

needed by year and the optimal timing for these hires.

4.2 Workforce Planning

FG&E’s workforce planning is done on a manual basis and does not use an automated work

planning/management tool. With only four crews, the manual system is reported to work well for

that size staff. Several software applications are used to manage and record the work order

related to FG&E’s electric operations.

• Inspections are recorded using e-intake, a Microsoft Access database, to print out the

assignments to crew. The crews fill out the hours and material used, then on

completion, the supervisor signs off and the data is sent to Plant Records.

• Engineering-sponsored work is input via an electronic work request, which is a separate

database from that used for inspections. Engineering Management validates the design.

Final system configuration changes are put into the geographic information system

(GIS).

• Customer driven work requests are input via e-intake and when completed the system

configuration is updated in the GIS.

• Mass DOT (Department of Transportation) originated work requests are input via e-

intake.

In 2009, Unitil implemented a mobile data system (MDS) to support Unitil / Northern Utilities’

gas operations. Unitil plans to expand the use of this system to FG&E’s gas and electric

operating center in 2011 and to Unitil Energy System’s operating centers in 2012 or 2013. The

MDS is also designed to integrate directly with Unitil’s Customer Information System (CIS). The

mobile connectivity capabilities, along with the CIS integration, provide for near real-time

operation and communications between customer service representatives, operations

dispatchers, and service technicians. The MDS is a web-based system comprised of the

following components: Dispatch Application, Service Technician Application, MDS WebOps

Application, MDS Database, and CIS Integration Components. In MDS, there are three types of

Work Orders: 1) Service Call Work Orders, 2) Meter Work Orders, and 3) Credit Work Orders.

Unitil initiated a project in early 2010 to assess expanding the use of MDS for gas work in FG&E

and electric work across all three operating centers. The centralization of electric and gas

dispatch in Portsmouth, NH in 2010 provided opportunities for implementing a common

approach for work order management that could provide synergies, savings, and increased

28

flexibility in dispatching. In August of 2010, the Project Review Team recommended moving

forward with further MDS development to accommodate these goals.

4.2.1 Findings

• Work request are initiated by engineering, operation, or customers.

• The current manual process does use several separate software applications that link

the final configuration back into the GIS system.

• During the interview process, we heard FG&E believes an integrated WM system would

improve overall process; not so much actual crew planning, since there aren’t many

crews. We believe the WM process is done well manually as currently performed; we

concur.

• An enterprise-wide integrated work management system is being evaluated.

4.2.2 Conclusions

The existing manual-based work management system appears to function adequately for

FG&E, given the small number of field staff. Adoption of an automated system may be cost

effective if implemented on an enterprise basis.


1. Unitil should continue to evaluate extending the MDS system and its components to the

entire system, including FG&E, should the economics and net benefits prove favorable.

4.3 Maintenance Programs

Unitil shares a common vision among all operating departments regarding the importance of

thorough inspection programs. The philosophy of their maintenance policies is to:

• Ensure the safe operation of the distribution and transmission system.

• Provide a uniform method for maintaining and inspecting overhead and underground

distribution systems, substations, and transmission assets.

• Ensure compliance with applicable regulatory requirements.

• Ensure the integrity of the poles and equipment.

• Establish requirements for record keeping and performance measures.

29

Unitil has defined inspection and maintenance programs8 which cover:

• Transmission Inspections

o Semi-Annual Inspection – A visual patrol from the ground and/or air.

o Annual Inspection –Visual inspection of steel towers.

o Three-Year Inspection – Infrared inspection for hot connections.

o Five-Year Inspection– Clearances to be measured every five years at designated

locations as required by state regulation.

• Substation Annual and Monthly Inspections

Visual and Operational Inspections of each substation and switchyard are performed as

a key element in the Unitil Preventive Maintenance Program. These inspections cover

all major substation components and are performed with the apparatus in service and

are designed to detect abnormal conditions before the apparatus is damaged or a

customer outage occurs. Data collected during the inspections are one of the items used

to prioritize individual apparatus for further investigation.

• Distribution Inspections

o Annual visual inspection of metallic and concrete streetlight poles.

o Two-year visual inspection of underground network or primary distribution

system.

o Five-year public safety visual inspection of underground distribution facilities.

o Ten-year public safety visual inspection of overhead distribution.

o Ten-year pole test of distribution poles test.

• Insulation Oil Analysis

Dissolved gas-in-oil analysis tests and fluid quality tests are scheduled and performed

on equipment containing insulation oil, and fluid quality tests are performed on all

substations and line equipment containing insulation oil at any time overhaul

maintenance is scheduled to be performed on such equipment.

8 DR J-36, Maintenance Programs Description and Philosophy

30

• Infrared Survey

Infrared Surveys are performed by experienced personnel during periods of heavy

loading and include:

o Major Substations - Survey every two years. Examples of major substations are

system supply point stations, transmission switching stations, and large

distribution stations.

o Minor Substations - Survey every four years. Examples of minor substations are

small distribution substations.

o New Substations - Survey after energization and with load.

o Repaired or Modified Substations - Survey within one year after significant

repairs or modifications were made.

• Interrupting Devices Inspection, Test, and Maintenance

Figure 11 - Interrupting Device Inspection and Maintenance Intervals

31

• Isolating Devices Inspection, Test, and Maintenance

o Monthly maintenance includes visual inspections which may be performed from

the ground.

o Annual maintenance includes performing a thorough, in-service examination of

all isolation device components accessible. In addition, all checks done under

monthly maintenance are performed.

• Protective Relay Testing and Maintenance

Figure 12 - Protective Relay Maintenance

• SCADA

All functions are tested on a routine and as needed basis when a situation arises and

testing can be accomplished. Cycles for testing will depend on other factors such as the

maintenance schedule of other station equipment.

• Substation Transformer Inspection, Test, and Maintenance

o Monthly Maintenance - Routine inspections and readings.

o Annual Maintenance - Extensive inspections and testing.

o De-energized Maintenance - Inspection and testing that is not critical for

continued operation and can wait until a convenient time when the transformer

can be de-energized.

o Optional Tests - Additional tests and inspections useful in identifying problem

conditions.

o New Transformer Tests - Testing and inspection of a new transformer when it

arrives, after installation, and during the warranty period.

32

• Voltage Regulation

Figure 13 - Voltage Regulator Maintenance

4.3.1 Findings

• Unitil has developed a comprehensive set of maintenance guidelines that apply to the

electric transmission, sub-transmission, and distribution systems. They provide the

framework for a structured inspection and reporting process.

• Unitil sets a proactive approach allowing for a scheduled inspection program which has

the ability to monitor the amount of plant being inspected, equipment in need of repair, or

the outcome of maintenance on the equipment itself.

4.3.2 Conclusions

Unitil’s maintenance cycles and components are in line with industry practice.


None

4.4 Training

Unitil has a robust employee training program at all levels of staff. All employees are provided

with numerous training programs9 beginning with new employee orientation. Other training

related to sexual harassment, workplace violence, safety, sabotage reporting, data privacy and

emergency response and drills are provided for all employees. In addition, some training is

9 DR J-24:Employee Development Process and Training Programs, J-18: Existing Staff Training Plans

and Programs

33

tailored to the position (i.e. training for line workers includes: CPR and first aid, pole-top rescue,

and confined space training).

Supervisors and managers are also provided with additional training in the following areas:

• Interviewing

• Performance Management and Annual Performance Appraisal

• Reasonable Suspicion

• Affirmative Action and Equal Employment Opportunities

• FMLA and Disability Management

• ECNE Leadership Training for Managers

Employees may attend seminars and conferences to stay abreast of industry developments and

trends. In addition, Unitil provides educational assistance for employees pursuing individual

college courses, advanced degrees, and specialized certifications related to their job.

During the performance appraisal process, any opportunities for development and advancement

are discussed with the employee. The process is driven both by employees and their

supervisors as follows:

• Employees are encouraged to express their career goals and develop their skills.

• Supervisors initiate the conversation about skill development to be sure Unitil is taking a

proactive role in developing and retaining talented employees.

Specific training programs include:

• Managing at Unitil

• Affirmative Action

• NERC Sabotage Reporting

• Substance Abuse

• Workplace Harassment

• Employee Development

• New Employee Orientation

Unitil also conducts monthly safety meetings for field personnel. A typical meeting agenda

includes: an update on current safety performance, information regarding recent injuries or

34

motor vehicle accidents, and one or more key safety topics. Most programs are developed and

presented by Unitil’s Department Management or Safety Department staff. Several programs

are developed by outside agencies such as the National Safety Council or industry consultants.

The following courses were earmarked for delivery in 2010/201110:

First Aid/ CPR/ Blood Borne Pathogens - National Safety Council Program, two-year cycle-

consultant trainer utilized - multiple sessions in each DOC already scheduled for January and

February of 2011.

Manager Safety Meeting - December 14, 2010 - Meeting will deal with manager safety

responsibilities, safety leadership role, safety management system improvements, and

performance expectations. Senior management and a consultant trainer are involved with the

development and presentation of the program materials.

Supervisor Safety Leadership Responsibilities - 1st Quarter 2011 - This program continues

with the subject matter from the Manager Meeting and will use key managers in the

presentations along with Safety Department staff.

Accident/Incident Investigation Workshop - Managers and Supervisors - 2nd Quarter of

2011 - Training will be conducted at each DOC which will include detail steps and expectations

for determining the root cause of accidents/incidents, identifying safety system improvements to

reduce the potential for a similar event, and the process to implement those safety system

improvements. Unitil developed and Unitil to present.

Accident/Incident Investigation Workshop - Safety Team Members - 2nd Quarter of 2011 -

Training will be conducted with each DOC Safety Team which will be similar in content to the

program described above. Safety Team members will be utilized in Near-Miss Incident Reviews.

Utilizing trained field employees, who perform the same type of work, lead to improved

communications, transparency in the process, and trust in the system. Unitil developed and

Unitil to present.

Grounding Update - Review and continued discussion of grounding requirements - Unitil

developed and Unitil to present which will include a written test.

Confined Space Training - This will be a new program that includes the latest ANSI

requirements. Unitil will develop the content based on the non-entry rescue process and will

conduct the training on site.

Switching and Tagging Training - 1st Quarter of 2011 - Unitil Switching and Tagging rules and

procedures are in the process of being reviewed and updated to include the new Electric

Central Dispatch process. Training will be conducted by Unitil for all affected employees.

10

DR J-18 Attachment 9: Unitil Safety Training Programs

35

Basic Rigging - This will be a review of a program originally presented in late 2007 into 2008.

The program is designed for Electric Operations and includes: load calculation, sling tension,

and sling care and maintenance.

Defensive Driving - 1st Quarter of 2011 - This program will utilize a Consultant Trainer and will

be designed for the types of vehicles driven by Unitil employees.

Qualified Worker - This will also be a repeat of a program presented earlier. This program

deals with the expectations and requirements to be a “qualified worker” under OSHA 1910.269.

The program is Unitil developed and Unitil to present which will include a written test.

OSHA Crane Rule - OSHA’s new crane rule will impact the use of the FG&E’s digger truck for

any work other than digging the hole, setting the pole, or loading and installing equipment to be

placed on the pole. Training and certification will need to be completed within the time period

outlined in the Standard; 3rd Party Operator Certification will be required.

4.4.1 Findings

• Unitil has a strong focus on safety training along with appropriate technical training.

• As an outcome of Unitil’s strategic planning activities, management and supervisory

training, counseling and coaching courses are offered.

4.4.2 Conclusions

Unitil appears to have the right mix and frequency of management, safety and technical training

programs to provide its employees a solid foundation to operate effectively in a safe

environment.


None

4.5 Reliability

Policies

Unitil has a strong focus on reliability and follows a detailed electric reliability policy. The

purpose of this policy is to establish electric system reliability measures for goal setting and

performance tracking; to establish the guidelines for planning, justifying, and prioritizing

initiatives to maintain or advance reliability; and to identify the information collection and

reporting requirements to support these activities to ensure a high level of electric service

reliability can be effectively sustained or advanced by exercising the following principles:

36

• Avoid preventable outages.

• Minimize the number of customers interrupted as a result of an outage.

• Minimize the duration of customer interruptions.

The following activities are defined in the policy in order to promote these concepts and

establish appropriate funding levels to support them. In general, the engineering function has

oversight responsibility to evaluate the cost effectiveness of the non-routine maintenance

activities in the context of their impact on reliability.

Practices, Procedures, and Resources - Operating practices, procedures, and resources are

planned and applied in accordance with sustaining or improving overall system reliability. The

DOCs will have primary responsibility to plan and administer these needs, which may include:

considerations such as organizational strategy, staffing functions, work practices, operating

procedures, troubleshooting techniques, tools, training, etc.

Ongoing Operations and Maintenance Programs - Certain routine, recurring O&M programs

are considered in order to sustain or advance overall system reliability. The DOCs have primary

responsibility for planning, justifying, and implementing these programs, subject to normal

budget approval procedures.

Targeted Improvement Projects - Specific projects are developed, as needed, to address

reliability concerns. Engineering has primary responsibility for planning and justifying these

projects subject to normal budget approval procedures. The Distribution Operating Centers

(DOCs) have primary responsibility for their implementation subject to normal construction

authorization procedures.

37

Outage Causes

We reviewed FG&E’s outage cause data11 for the 2005 to 2009 period and examined both

cause frequency and percentage contribution. The following figures highlight FG&E’s

performance.

Figure 14 - 2009 Outage Cause Percentages

11

DR J-68: Outage Cause Breakdown

38

Figure 15 - Outages by Cause

Aside from 2008, overall outages exhibit a declining trend. Of the top three outage causes;

Broken Trees and Tree limbs, Tree/Limb contact and Animal-Squirrel caused outages, annual

figures are fairly consistent with improvement noted in all three categories. With the enhanced

vegetation management program, it is reasonable to anticipate that Tree/Limb contact outages

should continue to decline and should also impact the number of outages repored as “Parolled,

Nothing Found,” as these can be caused by limb contact or animal contact for which no

evidence is found.

Reliability Benchmarking

Unitil cooperates in an annual benchmark survey with neighboring peer utilities who participate

in the Energy Council of the Northeast (ECNE)’s Reliability and Asset Management Committee

of which Unitil is an active participating member. This external benchmarking focuses on

electric reliability indices, SAIDI12, SAIFI13, and CAIDI14. The results of the ECNE reliability

benchmarking, along with responses to requests for reliability data from other peer utilities, are

12 SAIDI: System Average Interruption Duration Index – The average length of outages across the system. This index is calculated as: Sum of outage customer minutes of interruption/Total number of customers served. 13 SAIFI: System Average Interruption Frequency Index – The average frequency of outages across the system. This index is calculated as: Sum of outage customer interruptions/Total number of customers served. 14 CAIDI: Customer Average Interruption Duration Index – The average length of an outage for the affected customers. This index is calculated as: Sum of outage customer interruption duration / Sum of outage customer interruptions.

39

used to perform internal studies to generate Unitil’s corporate electric annual distribution

reliability goal for total system SAIDI representing the combined overall performance of its three

Distribution Operating Centers (DOCs) - FG&E, Seacoast, and Capital. SAIDI is chosen as the

single index for reliability performance since it represents the combined effect of both outage

duration and rate of occurrence. In the most recent survey data15 completed in late 2009 for

2008 data, Unitil’s customer density normalized performance is in line with its 10-year averages

and has not shown the decline (worsening) of the other peer companies as a group.

We utilized reliability survey information provided by Unitil for FG&E’s reliability performance

along with the New England survey information provided by Unitil. We also compared FG&E

against the 2010 I.E.E.E. Benchmark Survey (2009 data) for the subgroup of small companies.

We utilized the I.E.E.E - all data, which includes all events, rather than the I.E.E.E. tMed16

exclusion data since FG&E excluded major events as per definitions stipulated by the MDPU.

15 DR J-35: Benchmarking (Confidential) 16 I.E.E.E, 1366 reliability reporting standards, tMED is a statistical methodology to define a “Major Event Day: in which SAIDI exceeds the calculated tMED threshold value.

40

Figure 16 - FG&E Reliability Performance 2005-2009

FG&E’s reliability performance, excluding major events as defined by the MDPU, has been fairly

level over the 2005-2009 time period, with the exception of 2008, where the impact of other non-

excludable severe weather caused SAIDI and SAIFI to spike higher than normal.

41

Figure 17 - Unitil New England Survey

In comparison to peer companies operating in New England, FG&E has historically been

clustered within results of the better performers, as shown in the figure above.

Figure 18 – I.E.E.E. – ALL CAIDI 2009 Data

FG&E’s CAIDI performance for 2009 is within the first quartile of survey respondents for the

I.E.E.E. 2010 Survey (2009 data), as shown in the preceding figure. Furthermore, FG&E’s

SAIDI and SAIFI performance also remains within the first quartile of the small company sample

of the I.E.E.E survey as shown in the following two figures.

42

Figure 19 - I.E.E.E. - ALL SAIDI 2009 Data

Figure 20 - I.E.E.E. - ALL SAIFI 2009 Data

43

Major Events

Unitil excludes major events based on criteria that parallel, but differ somewhat from the MDPU

exclusionary criteria. Both criteria are principally based on the loss of more than 15% of

FG&E’s customers during an event, but have slight variations on other criteria. The criteria

used by Unitil to define a major or exceptional storm17 include:

Based on this definition, FG&E has experienced five exceptional storms since 2005 as listed in

the following figure.

Figure 21 – FG&E Excludable Storms

Major Storms with Until exclusions

Description of Storm Date(s):

# Concurrent

Troubles Customer Minutes

# Customer

Interrupted SAIDI

Wind Storm Feb. 17 -18, 2006 18 557,299 2,567 20

Wind and Rain Storm October 20 - 21, 2006 22 508,912 1,623 18

Ice Storm January 15-17, 2007 56 5,769,994 20,298 204Thunder and Lightning Storm June 10 -11, 2008 19 1,025,481 3,610 36

Ice Storm December 11-25, 2008 > 60 188,236,260 28,495 6,606

The MDPU has defined an Excludable Major Event in MDTE Docket #99-84 as the following:

17

DR J-44: Major System Storms in Past 5 Years

Exceptional Storms - Exceptional Storms and other natural disasters that

cause significant, widespread damage, and whose impacts are uniquely

unrepresentative of typical Distribution Reliability, will be considered

exclusionary.

At FG&E, a storm or other natural disaster will be considered exclusionary if,

at any given time during the event, either: (a) sustained interruptions of electric

service concurrently affect 15% or more of FG&E’s customers coincident with

13 or more concurrent uncorrected outage troubles; or (b) 18 or more

concurrent uncorrected outage troubles occur.”

44

Based on this definition, FG&E has experienced three exceptional storms since late 2005 as

listed in the following figure.

Figure 22 - MDPU Excludable Storms

Major Storms with MA DPU exclusions

Description of Storm Date(s):

# Concurrent

Troubles Customer Minutes

# Customer

Interrupted SAIDI

State of Emergency * October 15-16, 2005 5 133,245 1,505 5

Ice Storm January 15-17, 2007 56 5,769,994 20,298 204Ice Storm December 11-25, 2008 >60 188,236,260 28,495 6,606

* This State of Emergency (SOE) was declared exclusionary due to flooding. SOE declared in Massachusetts.

4.5.1 Findings

• Unitil has implemented an Electric Reliability Policy that comprehensively addresses

reliability goals and mechanisms and practices to meet the goals.

• FG&E’s 2010 Incentive Goals include a 10% factor assigned to SAIDI18.

• Broken trees or limbs are the leading outages for FG&E, at 30% for 2009, but over the

2005 to 2009 period, this category has somewhat declined.

• Of outages in 2009, 17% were caused by vegetation encroachment, but are still higher

than in 2006 and 2007.

• Of outages in 2009, 13% were caused by squirrels. After a rise in 2007, this category

appears to be declining.

• FG&E’s reliability performance, with major events excluded, has been fairly consistent,

with an improving trend, except for a sizeable spike in 2008, when the Fitchburg area

18

DR J-18, Attachment 7: Employee Orientation, slide 16

“Excludable Major Event shall be defined as a major outage event that

meets one of the following criteria: (i) the event is caused by earthquake, fire,

or storm of sufficient intensity to give rise to a state of emergency being

proclaimed by the Governor (as provided under the Massachusetts Civil

Defense Act); (ii) any other event that causes an unplanned interruption of

service to 15% or more of FG&E's electric customers in an operating area; (iii)

an event that results from the failure or disturbance of a transmission, power

supply, or other system that is not owned or operated by FG&E.

Notwithstanding the foregoing criteria, an extreme temperature condition

would not constitute as an Excludable Major Event.”

45

experienced a significant increase in the number of customers interrupted due to lighting

storms. Specifically, in June, one lightning storm accounted for 36 SAIDI minutes. This

event did not meet the MDPU exclusionary criteria; however, it was considered a Major

Event Day using the IEEE 1366 criteria. The second largest event was a squirrel

contact in a substation that resulted in approximately 18 SAIDI minutes.

• FG&E has remained among the best performers based on the Unitil New England

reliability survey.

• FG&E’s 2009 reliability performance, as compared to the I.E.E.E. 2010 Survey (2009

data), further confirms first quartile performance in both interruption frequency and

outage duration.

• There is a discrepancy between MDPU approved exclusion criteria and those applied by

Unitil.

4.5.2 Conclusion

Unitil’s strong focus on reliability extends to the operation of the FG&E system and provides a

clear guideline fostering operating and maintaining the system to continuously improve

reliability.

Unitil’s focus on reliability and implementation of policies to ensure continuous improvements is

reflected in FG&E’s excellent reliability performance.

While broken trees are the leading outage cause, as Unitil implements the Three-Year Hazard

Removal Program, as recommended in ECI’s 2009 report, this outage category should see

improvement within the coming three years. Further, the enhanced vegetation management

program, with shortened trim cycles for both three-phase and single-phase distribution lines,

should contribute to a continued decline in tree contact outages.

A consistent methodology for classifying excluded events would remove uncertainty in reporting

and acting on results of major storms or outage events.


1. Continue with and monitor the results of adopting the ECI vegetation management

recommendations.

2. Consider enhancing or developing an animal protection program.

3. Consider including other reliability measures, such as SAIFI, to gain better intelligence

on outage frequencies in order to place expanded focus on preventative programs.

4. Unitil should work with the MDPU to conform exclusionary criteria.

46

5. Unitil should make certain that FG&E’s reported figures are conformed to the criteria

adopted by the MDPU.

6. Unitil and the MDPU should consider adopting the I.E.E.E. Beta Method for Major Event

Days to better conform reporting to emerging industry standards.

47

5 MANAGEMENT & CONTROL

The Consultant will evaluate Unitil Corporation’s management and control of the Company.

Specifically, the Consultant will review the operating and capital budgeting process including

budget preparation and approval, project appropriation and authorization, changes to approved

authorization/appropriation, project spending control, capital and operation and maintenance

budget status reporting, and overall budget control. The Consultant will also analyze the

planning and budgeting process from the perspective of how resource allocation decisions are

made among Unitil’s three subsidiary companies and the resulting allocation of resources to

Unitil’s electric operations in Massachusetts.

Overall Assessment

Background

5.1 Capital Budget Process

Unitil’s budgeting procedures for both the capital and operating budgets are similar. Each is

considered to be a “bottom-up process,” with each departmental and functional category being

created by consolidating specific budget amounts for detailed line items. Managers with budget

responsibility develop budgets, including justification, and the budget proposal is routed through

the management review and approval process.

Capital Budget Process

The development process for the capital budget is broad based and inclusive of representatives

from operations, engineering, and senior management. Capital projects are categorized

according to specific priority, 1 - load or customer driven, 2 - support of load or regulatory

requirement, 3 – discretionary, and the prioritized plan is ranked with input from multiple

departments and sent to management for review. The budget is then reviewed by senior

management and presented to the Board of Directors for final approval.

The capital budget development process is established by Unitil’s Operating Procedure No. PR-

EG-OP-01. This document identifies the responsibilities of ten different positions ranging from

operations managers, to distribution engineering staff, to the director of engineering, and the

senior management team. In short, capital budget requests are submitted by personnel in

operating or engineering departments, and these requests are reviewed and refined or

approved by each successive layer of management. A summary of some of the key activities

described in PR-EG-OP-01 follows:

48

General Process – The Manger of Distribution Engineering initiates the capital planning

process by publishing a schedule of dates and meetings for the submittal and initial approval of

the capital budget. Proposed projects are entered into the capital budget system by various

departments and department managers review the proposals. Distribution engineering staff

then reviews proposed projects to be sure all information is complete and categorization is

accurate. After all items have passed this review, the total budget is reviewed for costs. The

Manger of Distribution Engineering coordinates an effort with other functional mangers to rank

projects and adjust the timing of projects based on the total cost of the budget. The budget is

targeted to match the amount proposed in the previous five-year budget for that given year and

modified, as necessary, to meet project needs. The draft capital budget and comparison reports

are sent to the operational directors for approval to present to the Senior VP, Chief Operating

Officer, and senior management. Upon approval, the Senior Management Team presents the

budget to the Board of Directors for final approval. The budget is not considered approved until

the Board of Directors approves the budget.

Functional Review of Present Year Capital Budget - Includes a review of projects which will

not be completed by year end (cancelled or carried over), the schedule to complete unfinished

projects, and accuracy of projections.

Annual Capital Budget Items - Input is conducted from departments as indicated above. A

large amount of descriptive information is included for each project including: year, status,

project priority, justification, categorization, and cost. The following cost components are

included to provide sufficient detail for review and analysis: labor time, transportation expense,

material, contract labor, other specific charges, customer contribution, and retirement and

salvage.

Project justification can be made on the basis of need in one or more of the following categories:

safety, reliability, load, voltage, protection, customer driven, government mandated relocation,

regulatory/legal requirement, intercompany operating agreement, power quality, power factor,

economics, repairs/replacements, and other.

Required Project Documentation - Varies depending on the specific justification for each

project. As an example, projects justified on the basis of safety must “demonstrate danger to

utility workers or members of the public, risk of damage to utility plant or public property, or

noncompliance with appropriate codes in effect at time of construction.” Example projects fitting

this requirement are provided along with guidance as to the specific documentation required.

Another example would be a project justified on the basis of reliability. These projects must

“demonstrate anticipated reductions in the number of outages, duration of outages, or number

of customers impacted by outages. Estimated reductions are based on past performance over a

predefined time interval.” Required documentation would include, among other things,

“calculation of anticipated customer interruptions and customer minutes with and without the

proposed solution based on past history, impact on SAIFI, CAIDI and SAIDI.”

49

Annual Capital Budget Review

Managers are responsible for reviewing all entries within their area of responsibility for

appropriate justification and estimate. Distribution Engineering reviews each entry for proper

justification and estimates information prior to accepting it into the budget.

All projects must be entered into the Capital Budget model by the date specified by the Manager

of Distribution Engineering for that given year. In addition, since FG&E is also a gas distribution

company, the Gas Engineering and Distribution Engineering departments coordinates meetings

with Operations at each DOC, per the published schedule, to review Engineering and

Operations related projects. At these meetings, each proposed project in the Capital Budget is

reviewed for the following:

• Complete and detailed justification

• Complete estimate

• Review of priority level based upon criteria

• Correct item number

Director Review of Annual Capital Budget

After the proposed budget is reviewed by the Engineering and Operations Managers, a draft of

the Annual Capital Budget is submitted for director review as per the published schedule.

Directors meet with appropriate personnel then work with the Engineering and Operations

Mangers to adjust the budget, as needed and present Annual Capital Budget to Senior

Management, per the published schedule.

Five-Year Capital Budget

After the Annual Capital Budget is accepted by the directors, items are entered for the

remaining four years to complete a five-year capital budget. Energy Systems Engineering

solicits input on substation, transmission, protection and control (P&C), and system control and

data acquisition (SCADA) projects. Distribution Engineering staff solicits input on distribution

system improvement requirements. Engineering and Operations’ meetings are held to review

and finalize the Five-Year Capital Budget.

Director and Senior Management Review of the Five-Year Capital Budget

Functional directors review the proposed budgets for the completed Five-Year Capital Budget.

Directors schedule any meetings during this time required to discuss the scope, justification,

and estimate of the proposed capital budget items. Directors provide recommended changes,

and the Five-Year Capital Budget is submitted to senior management for review prior to the

December Board Meeting.

50

Capital budgeting is anticipated and scheduled annually well in advance of the budget cycle.

The process is publicized internally through the use of a Capital Budget Schedule distributed to

all managers and capital budget stakeholders19. Each year, the same general schedule is used

for consistency with revisions to address new initiatives or schedule requirements20.

Capital projects are reviewed on a monthly basis and are re-estimated if the costs change by

15%, or $5,000. These changes must be approved by the project manager, director, and senior

vice president. If the capital project has unforeseen costs, the project is stopped and re-

estimated then re-approved.

One way to determine the validity budgeting process is to measure budgeted versus actual

expenditures. From 2005-2009, the capital budgeted and actual spent tracked on-line with

minimal variations. An anomaly occurred in 2009 because of the capitalization of the December

2008 storm expenses.

Figure 23 – Capital Budget vs. Actual, 2005-2009

19

DR J-43, Attachment 4: Capital Budget Schedule 20

Unitil response memorandum to DR J-43

51

5.1.1 Findings

• Unitil has a well defined budget process with milestone dates that are established early

in the process.

• Unitil tracks the budget on a monthly basis and variances are explained and documented.

• The capital expenditures were within an average of 2% of the budget for 2005 through 2008.

5.1.2 Conclusions

As can be interpreted from a combination of the budgeting process procedural review and the

review of reliability statistics at FG&E, the capital and operating budgeting processes appear to

be functioning adequately to provide sufficient infrastructure resources.


None

5.2 Capital Project Prioritization

An integral component of the capital budgeting process is a prioritization process to identify

projects that are critical to the operation of FG&E. Engineering has the responsibility to assign

priorities based on their perception of criticality to the system.

Projects that are budgeted, but not started during the budget year, are rolled over into the next

budget year and are reprioritized against all other projects based on continuing need.

The finance group does not have an impact on the prioritization of projects; the competition for

funds comes naturally from the prioritization process; there is no bottom-line budget.

The following is a list of priorities that are developed during the capital budgeting process:

Priority 1 – Projects that are absolutely essential for FG&E to distribute energy in a reliable

manner and receive payment for gas and electricity.

• Construction required for serving new customer load.

• Construction to address critical constraints such as load, voltage, and pressure where

they jeopardize the Company's ability to distribute gas or electricity.

• Construction to restore service during storms and emergencies.

52

Budget categories typically assigned a Priority 1 include:

• Transmission, distribution, and substation specific projects to address load, pressure,

voltage, or protection constraints.

• Line extensions and mains extensions, customer driven specific projects.

• Blankets for New Customer Additions, Outdoor Lighting, Emergency & Storm

Restoration, Billable Work, Transformers, Meters, New Gas Services, Water Heater &

Burner Replacements, and Meter Purchase & Installation.

Priority 2 – Projects essential for direct support of Priority 1 are those necessary to perform

assigned business functions in required manner including: regulatory or legal requirements,

intercompany operating agreements, and related facilities, fleet and equipment infrastructure.

• Construction which is not load driven or customer driven, but which is requested by state

or local government, other utilities in accordance with internal operating procedures, etc.

• Construction required addressing legal and regulatory requirements.

• Facilities, tools, and infrastructure required to perform essential functions.

Budget categories typically assigned a Priority 2 include:

• Telephone company requests, highway relocations, joint encapsulation, cast-iron

replacement.

• Blankets for T&D System Improvements, Gas Distribution System Improvements,

Corrosion Control, and Abandoned Services.

• Fleet replacement in accordance with established Unitil guidelines.

• Tools and equipment required to support essential Unitil requirements.

• Construction and improvements of structures and facilities required to meet essential

Unitil requirements.

Priority 3 – Is comprised of any project not falling into either Priority 1 or Priority 2 is assigned a

Priority 3. In general, any such project is considered an improvement or enhancement to

existing systems or capabilities and is deemed discretionary. The "test" of whether a project is

essential or discretionary relies on a determination that the project is (or is not) absolutely

essential to distribute energy in a reliable manner and receive payment for gas and electricity, or

is (is not) essential to meet business and regulatory obligations.

53

• System reliability improvement projects.

• Projects with a defined economic payback.

• Projects which improve or enhance gas or electric system capabilities.

• Replacement of old or obsolete equipment where such replacement is not the result of

failure and does not prevent the Company from adequately distributing gas or electricity.

• Maintaining or initiating desirable projects and programs.

5.2.1 Findings

• Unitil uses a three-level capital project prioritization employed during the budget process.

• Project priority is based on system need and cost/benefit and not on funds availability.

• Projects that are not initiated are put back in contention in the following budget, if still

required.

5.2.2 Conclusions

Unitil’s project prioritization process follows industry best practices and, given economic

constraints, should provide adequate guidance on critical need projects.


None

5.3 Operating Budgets

Operating Budget Process

The development of an operating budget is a bottom-up process and is developed using a line-

by-line approach which is a consolidation of detailed line items. The operations and

maintenance (O&M) budget is focused on reliability, quality of service, and trouble circuit(s) to

determine budget amounts.

Microsoft Excel budget models are provided for use by directors and managers in the annual

preparation of budgets under their control. Guidance for use of the spreadsheets, standardized

procedures for data input, the assignment of account numbers, and for updating previously

submitted budgets are also provided21.

21

DR J-43 Attachment 1: Unitil 2010 Budget Kickoff Memo

54

Unitil’s “Operating Budget Procedure” document22 provides a lengthy and detailed instruction to

managers on the preparation of budget spreadsheets. Departmental and senior management

reviews precede submittal of a consolidated budget to the Board of Directors. Accounting and

finance reviews seek to ensure that the allocations and roll-ups are functioning and correctly

yielding accurate totals and functional subtotals.

The O&M budget process is started in August of each year with a defined set of deliverables:

• Salary Models

• Budget Models

• Electric & Gas Unit Sales Forecast

• Flow-Through Testing

• Unitil Service Corporation Reporting

• DOC Reporting

• Intra-Company Eliminations

The departmental model includes a time charge allocation tab, a narrative tab, and the journal

entry tab(s). The departmental manager completes the time charge allocation tab by providing

percentages to be charged by affiliate in addition to the percentage charged to expense the

respective affiliate. The timetable for the process completions is:

• Draft Budget Book for Controller’s Review – last few days of October.

• Draft Budget Book for Chairman Review – end of first week in November.

• Board of Director’s Budget Book – within first few days of December.

• Budget Summaries for DOCs and USC Managers.

• Operating and Capital Budget Book with Work Papers and Supporting Documents –

within second week of December.

O&M expenditures have historically increased 2% to 4% yearly with variations occurring for

unique maintenance requirements. Budgets are reviewed on a monthly basis line-by-line to

compare the amount of work completed versus the amount of money spent. A report is

produced allowing for a review of the O&M expenditures versus budget facilitating mid-year

corrections. Any month-to-date variance of $25,000 (favorable or unfavorable), and year-to-

date variance of 2% or more (favorable or unfavorable) must be explained, and variance reports

are filed with explanation of monthly and/or annual over/under expenditures.

22

DR J-43 Attachment 2: Operating Budget Procedure

55

Fitchburg O&M expenses have increase yearly from 2005-2009.

Figure 24 – Operating Budget vs. Actual, 2005-2009

5.3.1 Findings

• Unitil has a well defined budget process with milestone dates that are established early

in the process.

• Unitil tracks the budget on a monthly basis and variances are explained and

documented.

• Unitil’s budget tracking process allows for mid-year budget corrections.

• Unitil’s operating departments are involved in the budgeting process and based on

service quality requirements, reliability, and worst performing feeders.

• The O&M expenditures were within an average of 2% of the budget for 2005 through

2009.

56

5.3.2 Conclusions

The budget planning process is logically structured, incorporates all of the key constituents, and

appears to flow relatively well.

The instruction material for the operating budget process is complex. The current process

would appear to require a high degree of spreadsheet and accounting proficiency from

operating and other functional managers.


1. Conduct a study and flow chart budget interface and requirements for managers,

whereas a simplified approach could have the potential to improve accuracy and free up

non-accounting managers from accounting chores.

5.4 Resource Allocation within Unitil

Unitil Service Corp. manages central and shared management services for FG&E and Unitil’s

other operating companies. Shared services include: accounting, finance, internal audit,

engineering, emergency management and compliance, communications, customer service,

business services, information technology, administration, regulatory services, energy

contracting, legal, purchasing and inventory control, and energy measurement and control.

FG&E manages: electric and gas system construction, electric and gas system maintenance

and repair, electric and gas meter installation, service, and repair, response to customer

complaints regarding electric reliability, inventory and supply maintenance, accounting for local

plant and equipment, and fleet maintenance [1].

Unitil believes the provision of central and shared management services can increase

efficiencies and contribute to a lower cost per customer than would otherwise be possible.

Shared costs are generally allocated between companies as a function of some logical

determinant, often customer count[2]. Especially unusual costs borne by the shared functions,

such as the incremental collection costs in FG&E, are allocated to that entity so the other

entities are not forced to bear the additional burden.

Unitil reports the process of providing resources for each operating entity and is driven by the

need in each area, not by externally determined allocations to each operating entity.

[1]

DR J-6: Memorandum from Chad Dixon. [2]

Meeting notes from interview with Brock and Northrup, November 30, 2010.

57

Budgeting for spending in each of the operating entity service areas is driven by the need to

maintain reliability. There is an awareness of the business realities in each service area, but

capital investment has been made sufficient to increase reliability in FG&E[3].

Competition for funds happens as a part of the prioritization process described elsewhere; not

between operating companies. There is no bottom line capital budget established as an overall

constraint. The capital budgeting process is focused on obtaining the needed resources for

every operating entity[4].

5.4.1 Findings

• Unitil’s budget process is driven by need at the project level based on service criteria,

and there appears to be no competition within Unitil for allocated capital budget funds.

• Competition for funds is based on need prioritization among all Unitil companies. We

are not aware of any projects classified in Category 1 or Category 2 that was unfunded.

• The use of a shared services function provides economy of scale and resultant savings

for common functions. Unitil does, however, allocate costs to each operating unit for

unusual costs specific to an operating unit; for example, the higher cost of dealing with

uncollectible accounts in FG&E.

5.4.2 Conclusions

As can be interpreted from a combination of the resource allocation procedural review and the

review of reliability statistics in FG&E, the allocation of capital and operating budgets appears to

be functioning well enough to provide adequate resources in FG&E.


None

[3]

Meeting notes from interview with Robert Schoenberger, November 30, 2010. [4]

Meeting notes from interview with Brock and Northrup, November 30, 2010.

58

6 CUSTOMER & PUBLIC RELATIONS

In this task, the Consultant will review Unitil’s approach, organization and resources in

undertaking its customer service and public affairs functions. This includes communication with

its customers and the public generally, and with local public officials particularly, as part of

providing public-utility service. The Consultant will examine how Unitil has structured this

function, what its goals are, what resources it applies, and how it measures the effectiveness of

performance in this important area.

Overall Assessment

Background

Unitil’s philosophy is to provide exceptional customer service and maintain excellent public

relations in the communities in which it serves. Unitil has a customer service group that handles

billing and cash, credit and collections, customer relations, and a communications services

group that handles public relations, community development, media relations, and web content.

Each of these groups has developed objectives and action plans to better service the customer.

Unitil communications objectives are:

• Develop the short and long-term Communication Strategy to serve as the foundation for

all messaging and communication methods employed by Unitil.

• Implement the Strategic Communication Plan to ensure consistent and effective delivery

of messages to employees, customers, key stakeholders, and other constituents.

To support this objective, Unitil developed several communications action plans:

• Marketing Communication Plan

• Corporate Website Enhancement

• Brand and Image Positioning

• External and Internal Communications

• Community Development

• Emergency Response Communications

Unitil customer service objectives are:

• Continue to improve the Customer Service organization and systems as they relate to

people, technologies, and processes (e.g. bill, web, verbal interactions, smart grid,

energy efficiency, media, etc.) to deliver an exceptional customer experience.

59

• Maintain the customer service emergency capabilities as demonstrated in the 2010 wind

event and continue to improve on those capabilities through drills, customer feedback,

and industry best practices.

• Continue to exceed regulatory mandated quantitative metrics and meet and exceed

newly created qualitative measures (e.g. First Call Resolution).

To support this objective, Unitil developed several customer service action plans:

• Create the optimal Customer Service Organization.

• Continue improvements to the Customer Service Emergency Response Plan.

• Expand upon current metrics with a balance of qualitative indices.

• Effectively manage the day-to-day customer service business operations to ensure high

standards within regulatory compliance.

Unitil benchmarks its customer satisfaction results for each DOC against Edison Electric

Institute’s (EEI) national satisfaction results. An annual survey is sent to customers with

questions on the four key components of their service, reliability, price, and community. The

satisfaction results are determined by the responses on one key question summarizing the

customer’s overall satisfaction. Those results are benchmarked against the EEI national

residential customer results. We have reproduced several of the charts from the 2010 survey in

the following:

60

Figure 25 - Customer Satisfaction Survey - Supplying Electric Service at Fair

and Reasonable Rates23

FG&E’s customer perception relative to rates has lagged significantly behind comparable

statistics for EEI. It is interesting that Unitil as a whole, and its other operating entities, rates

higher in customer perception than the EEI panel average. We believe that FG&E customer

perceptions in other areas could be impacted by this price/rate differential.

23

DR J-66, Attachment 1: Customer Loyalty Survey 2010, Slide 5

61

Figure 26 - Customer Satisfaction for Service Excluding Price24

As depicted in the figure above, FG&E’s level of customer service was severely impacted by the

2008 ice storm, but appears to be recovering. FG&E has historically remained below both EEI

and the other Unitil companies.

24


62

Figure 27 - Customer Satisfaction Survey - Restoring Power

Quickly Following a Power Outage25

As noted above, FG&E’s customer perception of restoration efficacy was significantly affected

following the 2008 ice storm, but is rebounding. Historically, FG&E’s customer perception in this

metric has been closer to the EEI average.

6.1 Call Center Performance

The Customer Service department operates a single call center in Concord, NH. The call center

does not separate calls by state but does separates calls by type. Unitil does not want to get too

specialized (in a small environment) to avoid losing ability to effectively handle cross-functional

calls. They have state specialists, more by call type, that are familiar with the state regulations.

The technologies that Unitil uses to track and monitor customer service call center performance

metrics are Milsoft Utility Solutions Interactive Voice Response Unit (IVR) and a Siemens

25


63

HiPath 4000 PBX Voice Over IP26. In January 2010, Unitil began using the Global Connect

hosted web-based voice broadcasting tool. This application allows for many different utility

specific call campaign scenarios, is easy to use, and has proven to be effective in reaching a

large number of customers quickly and effectively. The system offers Unitil the ability of using

built-in callback options which provide the caller with instructions to press an option to speak

with a Unitil representative or to reach a specific point in our IVR menu. The different types of

call campaigns are:

• Collection Reminder Call

• Critical Care Contact

• Proactive Customer Notification

• Planned Outage Notification27

After the December 2008 storm, Unitil identified areas of concern28 pertaining to the call center

performance. Unitil enacted four major initiatives to correct these areas, and their

recommendations are listed below:

1. Improve training of customer service representatives (CSR) and train Hampton staff

members serving in second jobs on restoration processes and priorities. Train a contingent

of corporate staff to answer calls and establish telecommunications links which allow them to

receive calls in Hampton.

• Conducted additional CSR training for Customer Service Management Team who will

communicate specific restoration communications with customers.

• Established and trained SAL personnel who will act as customer service representatives

during major events. The Hampton Training Room has been permanently equipped with

hardware to quickly manage overflow requirements.

2. Evaluate modifications to the call center facility to improve CSR performance during an event.

• Acquired additional Liquid Crystal Display (LCD) screens and positioned them at the call

center to provide consistent and current outage information.

• Programmed LCD screens to provide real-time outage numbers from the outage

management system (OMS).

3. Streamline IVR selections to shorten time required for customers to report and outage with

IVR call-back features and community specific information.

26

DR J-48: Call Center Performance Metrics 27

DR J-51: Automated Customer Notification System 28

DR J-60: 2008 Ice Storm Report, Attachment 1, recommendation 12, page A-5

64

• Modified IVR scripts to shorten the time customers need to report an outage.

• Programming IVR to provide restoration progress by area

4. Install additional lines and study the potential value of overflow IVR and call center

operations. Redirect overflow calls to virtual CSRs and pursue a monitoring system through

Siemens.

• Installed an additional 72 lines since the outage where 48 are available for customers

reporting outages and 24 for gas emergencies.

• Established contract with Siemens to initiate its Network Operations Center (NOC)

monitoring services to determine line availability.

• Established contract with Milsoft for call-center outage overflow service.

Customer contact call-center performance is typically evaluated on the basis of key measures

such as:

• Average Speed of Answer (ASA)

• Service Level (%)

• Rate of Abandoned Calls (%)

Each of these measures is highly susceptible to the influence of factors such as the number of

customer service representatives available to handle calls and the average or longest duration

of typical calls. These factors are dependent on the circumstances and events being

encountered. During normal operations, the number of customer service representatives may

or may not be adequate, depending on the time of the event, the day(s) on which it occurs, or

the duration involved. Similarly, it is not unusual for the duration of calls to be longer during

emergency situations as explanations tend to take longer than under routine conditions.

Unitil’s call center is staffed 5AM to 11PM, 7 days a week and is adopting a new shift schedule,

as noted below, but has retained some staff on the original schedule, while the new schedule is

being evaluated:

• 7AM – 9PM Monday - Friday

• 8AM - 8PM Saturday

• Closed Sunday

From 11PM – 8AM, all calls are routed to centralized dispatch center.

65

Unitil staffs the call center in accordance to call volume as shown below:

Figure 28 - Call Center Staffing vs. Call Volume29

Unitil’s statistics for 2005 - 2008 included all of Unitil, but they were able to segregate and report

on just the FG&E division in 2009 and 2010. The average speed of answer was not available

from 2005 – 2008 due to the limited retention parameters that were set in the Siemens system.

Unitil expanded their retention parameters in August 2010.

One call center performance measure is the percentage of abandoned calls which can be

measured on system wide (includes IVR) and by agents only. The system-wide abandonment

rates, which are the percentage of total calls that are abandoned, are calculated by number of

29

DR J-78: Call Center Daily Staffing Complement, Attachment 1 and DR J-87: Call Center Call Metrics,

Attachment 1

66

telephone calls abandoned by the caller while waiting to be answered versus total number of

incoming telephone calls.

The Agent Queue Abandoned Rate, which is the percentage of calls that abandoned the queue

after 20 seconds, is calculated by the total number of abandoned calls, divided by the total calls

received by a CSR, versus a targeted percentage.

Figure 29 - Abandonment Rate30

As seen on the chart above, Unitil met the targeted percentage for total abandoned rate five of

the six years, but failed to meet the targeted percentage in four of the six years for agent-only

adbandoned calls31.

30

DR J-48 Attachment 1: Call Center Performance Metrics Last Five Years 31

2009 and 2010 is for Fitchburg Gas and Electric only.

67

Unitil employs a further service level performance measure expressed as a percentage defined

as the percentage of calls answered within 20 seconds, not including the calls resolved in the

IVR. The benchmark is determined by the 10-year historical average of actual results as part of

the MA Performance Based Rate order.

Figure 30 - Call Center Service Level32

Unitil was above the benchmark level in four out of five years.

Unitil has installed a voice broadcast system to notify customers of planned multi-day outages

or during major events, and in 2009, began to segregate and report on just FG&E’s

performance statistics. Tracking of the percentage of busy calls in 2009, Unitil set a target of

2% and recorded 0% for 2009 and 2010.

32

DR J-48 Attachment 1: Call Center Performance Metrics Last Five Years

68

6.1.1 Findings

• Unitil’s call center is staffed 5AM to 11PM, 7 days a week and is adopting a new shift

schedule, as noted below, but have retained some staff on the original schedule while

the new schedule is being evaluated:

o 7AM – 9PM Monday - Friday

o 8AM – 8PM Saturday

o Closed Sunday

From 11PM – 8AM, all calls are routed to Dispatch.

• The call center staffing is matched closely to the call volume.

• Unitil met the targeted percentage for total abandoned rate five of the six years, but

failed to meet the targeted percentage in four of the six years for agent-only

adbandoned calls.

• Unitil was above the service level benchmark level in four out of five years.

• Unitil has installed a voice broadcast system to notify customers of planned multi-day

outages or during major events.

• In 2009, Unitil began to segregate and report on just FG&E’s performance statistics.

• Unitil began tracking the percentage of busy calls in 2009 and set a target of 2% and

recorded 0% for 2009 and 2010.

6.1.2 Conclusions

Unitil staffs the call center in accordance with the flow of call volume and uses technology to

enhance the call center’s ability to service customers in an effective and efficient manner. The

technologies employed include: Milsoft Utility Solutions Interactive Voice Response Unit,

Siemens HiPath 4000 PBX Voice-Over-IP, and Global Connect. Unitil’s call center performance

has met criteria the majority of the time and, in certain areas, continually exceeds targets.


1. Conduct a call center staffing study to better align resources to improve agent-only

service levels.

69

6.2 Communications with Customers

Prior to the storm event of 2008, Unitil employed a traditional utility approach to non-crisis event

communications, meaning a structure primarily related to corporate communication with the goal

of maintaining a solid brand and making opportunistic media contacts. In recent years, Unitil

has made significant strides in redefining its external communications to include a customer-

centric focus that strives to provide education about gas and electric services, seeks to offer

timely and relevant information to customers, and to deliver consistent messages from across

the organization. Unitil’s stated philosophy33 is to provide exceptional customer service and

maintain excellent public relations in the communities in which it serves.

Strategic Communications

Unitil has developed a strategic approach to communications that serves as the foundation for

all messaging and communication methods. Implementing this Strategic Communication Plan34

is seen as ensuring consistent and effective delivery of messages to employees, customers, key

stakeholders, and other constituents. Elements of the plan are: 1) external and internal

communication, 2) website, social and digital media, 3) community development, 4) branding,

and 5) emergency response.

With the development and implementation of the Strategic Communication Plan, Unitil’s

leadership moved its public relations and communication efforts to be more proactive, including

actively going out and introducing themselves to the media and the community. The plan is

intended to provide a road map for resource allocation and targeted methods of reaching

defined stakeholders, all within a cohesive framework, and the plan guides their efforts to be

sure all communications will have the same look and feel, reducing confusion among customers

and other external audiences about the source and accuracy of essential information.

Organizational Structure and Resources

After the storm event of 2008, Unitil renewed its commitment to strengthening the public

relations and communications aspects of its business in order to more effectively reach

customers and the public, as well as to reinforce its management of crisis communications.

Unitil restructured its communication functions and roles based on the impact of the storms and

mergers of companies. The Communications group, which previously primarily managed media

relations during crisis events, was given a broader focus with designated leadership, strategic

resources, and a plan to guide their efforts.

33

DR J-25: Customer And Public Relations Processes 34

DR J-4, Attachment 1: Unitil’s Current Strategic Plans

70

Communication Services is linked organizationally35 with senior management. The Senior Vice

President of External Affairs and Customer Relations reports directly to the President, Chairman

and CEO. Managing communications under the direction of this Senior Vice President is the

Vice President of Communications and Public Affairs. As described in the job description for

this role, the position manages Unitil’s key external relationships with media and elected

officials, as well as assists in the development and execution of Unitil’s overall branding and

communication strategies with all key stakeholders. The person in this role acts as a

communications partner to the customers and the firm overall, and plays a high-visibility role

that interacts with senior leadership and must collaborate effectively with other Unitil

departments and senior management to execute the strategic plan in order to achieve its

mission.

The staff members currently serving in these two key positions - Senior Vice President of

External Affairs and Customer Relations and Vice President of Communications and Public

Affairs - are seasoned communication and management professionals with experience relevant

to guiding the public relations and corporate communication needs of a utility. They have a

vision for continuous improvement of the Unitil’s communications efforts and are able to

articulate it clearly.

The Communications and Public Affairs department has worked to add staff members to the

department that match the objectives of the Strategic Communication Plan. This includes:

Public Relations Executive - Coordinates and implements public relations and media

communications efforts, providing timely and valued information to external stakeholders while

enhancing the positive visibility of Unitil.

Media Relations Manager - Responsible for the day-to-day execution of Unitil’s internal

communications and media relations programs. This includes managing external media

relations resources, responding to direct media inquiries to be sure all official statements

accurately reflect the Company’s positions, as well as making certain information is accurate

and positive in addition to coordination of media response in outage and emergency situations.

Community Development Specialist - Supports the development and implementation of the

Company’s community development strategy, as well as designs, plans, and implements

employee citizenship, leadership involvement, corporate donation and community sponsorship

programs that promote the Company’s business and image with internal and external

stakeholders.

Web Content Manager - Leads the redesign, development, and execution of Unitil’s corporate

website, all related online properties, and interactive marketing strategy and programs.

35

DR J-82, Attachment 2: MDPU Order and Associated ERP Guidelines

71

The responsibilities of each position are focused on a key element of the Strategic

Communication Plan, but linkage across the communication services group ensures goals and

objectives are met strategically and efficiently.

Proactive Customer Communications

Through the Strategic Communications Plan, Unitil has recognized and embraced the

philosophy that public relations have value for customers well before a crisis event.

Customer communication during normal operations is focused on education and building a solid

understanding of Unitil’s services so customers can respond from a well-informed foundation

when crisis and outage events do occur. Unitil has a cross-functional customer communications

team36 comprised of employees from numerous departments including: Communications,

Customer Service, Business Services, Distributed Energy Resources, Regulatory Services, and

Operations that meet monthly to review what topics should be included in each customer

communications tool, which is delivered through monthly bills, bill inserts, customer newsletters,

the corporate website, local media, and the customer service team. Unitil electric customers

receive monthly newsletters, and natural gas customers receive quarterly newsletters with their

bill. Customer education is also provided on safety issues prior to outages, what to do during an

outage, winter preparation tips and lighting, and other topics. Customers receive inserts with

their monthly bills to reinforce these messages. Customers who pay their bills online have

access to both the newsletter and bill messages through their online customer account at

MyUnitil.com. To be certain important and required natural gas safety messaging is

communicated, Unitil also advertises locally in newspapers, on the radio, and on television.

Also, in 2011, Unitil plans to begin advertising its electric safety messages.

In addition to these outreach efforts, Unitil is exploring partnering opportunities to get critical

messages out with third-party credibility to make certain customers are retaining important

safety information. For example, Unitil is developing a closer partnership with the American

Red Cross and has established a cooperative arrangement to include each other’s messages in

public service announcements.

In the FG&E service area, Unitil has developed a strong relationship with Fitchburg Access

Television, Inc. (FATV), an independent non-profit organization, that operates the public,

educational, and government access channels on the cable television system in Fitchburg.

Unitil’s enhanced relationship with FATV began following a Wednesday, October 13, 2010

meeting between the new, recently hired Executive Director of FATV, Unitil’s Vice President of

Communications and Public Affairs, and Unitil’s Media Relations Manager. The meeting was

initially scheduled as part of the Media Relations Manager’s planned outreach to local media

outlets in New Hampshire, Massachusetts, and Maine following his hiring in July 2010. While

36

DR J-67: Unitil’s Outreach Program and Customer Education

72

the purpose of the meeting was to confirm contact information and discuss how best to deliver

information in the event of an emergency, discussion during the meeting led directly to the idea

of creating a Unitil-specific program to address topics important to customers. All parties at the

meeting expressed excitement over the idea, leading to Power Points, Unitil’s ongoing FATV

program. As of March 30, five episodes have been taped on topics such as emergency

preparedness, electric operations, explaining how to read one’s bill, energy efficiency, the

recently filed Massachusetts Rate Case, and natural gas operations. Additional tapings are

scheduled for the spring of 2011, with topics to include vegetation management.

Outside of Power Points, Unitil also continues to tape periodic 4-7 minute segments on energy

efficiency tips along with broadcasted storm-related public service announcements. The taping

of these segments dates back to early 2010. FATV remains an important partner in Unitil’s

efforts to deliver information directly to its customers in north central Massachusetts37.

With regard to outage responsibilities and rates, Unitil’s outreach program, to provide education

to consumers, is accomplished through monthly communication tools, such as bill inserts,

newsletters, and website media. A list of tools specifically for outage education and rates is

presented below38:

Outage Education

• Customer Newsletters Topics (titles of lead stories):

o Summer Storms - Our Prep, Your Prep (June 2010)

o Unitil’s Emergency Preparedness (September 2010)

o Be Storm Ready (December 2010)

o Today’s New Technology (January 2011)

o Outage Management System (scheduled for June 2011)

o Summer Storms (scheduled for July 2011)

o Emergency Preparedness (scheduled for September 2011)

o Winter Storms (scheduled for December 2011)

• Radio Advertising:

o 2010-2011 Storm Season Radio Spots on Storm Safety on WPKZ / Fitchburg

(December 2010 - January 2011)

• Broadcast Television:

o FATV series “PowerPoint” airing monthly December 2010 - May 2011

37

DR J-94: FATV Relationship Enhancement 38

DR J-67: Unitil’s Outreach Program and Customer Education

73

� First episode - General electric operations, EE outreach and bill

components.

� Second episode - Emergency Response Plan, how power is restored and

the ICS system.

� Future episodes - Vegetation Management, New Website, Rate Case

• Unitil Website Communications:

o Outage Center on current corporate website.

o Enhanced Outage Center on new corporate website due to launch year end

2010.

o Customer interface with Outage Management System map due to launch mid-

2011.

o Newsletter PDFs available on current corporate website.

o Enhanced interactive customer newsletters planned for 2011, featuring

information on outage responsibilities, rates, and a variety of other topics.

o Section on “how power is restored” on new corporate website.

Rates

• Bill Messages of rate changes throughout the year.

• Bill Inserts:

o Rate summary brochures mailed with customer bills in August 2010 (annual

mailing); see J-67 - Attachment 1.

• Broadcast Television:

o FATV series airing monthly December 2010 - May 2011.

� First episode - General electric operations, EE outreach and bill

components.

� Future episodes - Rate Case.

• Unitil Website Communications:

o www.unitil.com rate section (current and new corporate website).

o Newsletter PDFs available on current corporate website.

Branding

To communicate its mission and goals clearly to its customers and other stakeholders, Unitil

went through a brand repositioning to reflect mergers that moved them to electric and gas

companies. Unitil engaged a third-party consultant to determine how the existing brand was

74

positioned, and what it needed to more accurately depict Unitil and its services. To understand

the Unitil brand from the inside out, the third-party consultant interviewed one-third of the Unitil

employees and external stakeholders. The new brand, “Energy for Life,” was selected, and is

supported by the messages, “Unitil provides for the necessities of life, safely and reliably

delivering natural gas and electricity throughout New England. Our talented, dedicated people

power technology and innovation that leads to more dependable, efficient energy.” The new

brand and messages were made a rallying point for management and employees with the aim

to make employees the “face” of Unitil. The brand officially launched with the new website

launch39.

Web-Based External Communications

Unitil recently redesigned its external website (www.unitil.com) to be a more user friendly

introduction for customers, businesses, municipal leaders, and investors. The goal of the

redesign is to make the site easier to navigate, improve the convenience of on-line bill pay, and

to provide FAQs40 that are relevant to customers in order to reduce the number of calls that are

sent to the call center.

The sole focus of the website is to further improve the quality and delivery of information to both

Unitil customers and key stakeholders. The site features a more streamlined user interface with

easy-to-use navigational tools.

Social Media

With the launch of the new external website, Unitil is venturing into the use of social media such

as Twitter41, YouTube®, Flickr42, and RSS feeds for press releases. The primary goal is to be

sure information is accurate before it is sent out on these fast-moving mediums so Unitil has

been conducting testing internally before launching externally. Unitil sees value for social media

in sending out critical and timely safety information such as “wires down” and outages, as well

as information on emergency planning and preparation, emergency response, outage and

restoration information, in addition to general corporate news and interest pieces. Adoption of

social media is an increasing trend across the utility industry.

According to Unitil, the Employee Social Media Policy43 includes policy guidelines and is

currently in draft status, pending final approval by management.

39

DR J-1, Attachment 1: Unitil’s Mission and Vision Statements. 40

Frequently Asked Questions 41

www.twitter.com 42

www.flickr.com 43

DR J-55: Policy On Social Media

75

Customer Notification

Customers receive vital information from Unitil through the Customer Service organization,

whether about their bills, to report an outage, or to ask a question about their service.

According to Unitil, the Customer Service organization continues to exceed the MDPU’s

mandated quantitative Service Quality Indices and is in the process of introducing new

qualitative metrics like First Call Resolution44. First Call Resolution is a key measurement

aimed to improve the quality of the call experience and overall customer satisfaction by making

certain the issue is resolved the first time.

In January 2010, Unitil began using the Global Connect45 hosted web-based voice broadcasting

tool. Unitil has found this application to be easy to use and effective in reaching a large number

of customers quickly and efficiently. The system is flexible for many different types of utility

specific call campaign scenarios and, because it is 100% web-based, it provides the ability to

deploy a message from numerous users from any location.

Unitil uses Global Connect for various types of call campaigns including:

1. Collection Reminder Call: Began using the system in January 2010 for this application.

2. Critical Care Contact: Began using the system for this application in August 2010 to

contact Critical Care customers prior to a potential multi-day outage event.

3. Proactive Customer Notification: This option would be utilized during a multiple day

outage event or an emergency event impacting several customers. A specific message

would be developed through Unitil’s Communications department and that message

would be broadcasted to the customers denoted in the file.

4. Planned Outage Notification: This option is used to notify predetermined customers who

will be impacted by a planned outage event (i.e. time required to perform necessary

upgrades or maintenance on the electrical system).

Crisis Event Communication

During emergency events, the Customer and Public Relations process converts to the Incident

Command System, and the Vice President of Communications and Public Affairs becomes the

Chief Information Officer for the organization. Unitil has built a strong team in support of the

Chief Information Officer to include both internal employees and external resources in order to

add depth and breadth in support of any size emergency. During emergencies, there are

dedicated resources for all communications channels including: customer service, municipal

communications, liaison communications (regulatory and state officials), employees, and media.

Each channel has multiple trained, dedicated personnel assigned to it. Each channel has its

44

DR J-25: Customer And Public Relations Processes 45

DR J-51: Customer Notification System

76

own process and protocol for dissemination once they receive information from the Chief

Information Officer46.

Unitil no longer sends “embedded” representatives to city or local government emergency

operation centers during crisis events since they learned this had little success during the 2008

ice storm. Instead, the process calls for Unitil representatives to be located at district operating

centers. If the storms last more than 48 hours, two daily calls are coordinated to provide

updates and address questions. Unitil literally has “media boots on ground” in the local area in a

crisis, and this is accomplished by using resources such as outside contractors. The goal is to

be sure all elected and public officials understand that Unitil is in charge and has control of the

situation and that everyone has the exact same information at the same time. The

Communications Team works to develop messaging such as where outages are located, how

many crews are engaged, etc.

The key account manager handles communications with large customers during small outages.

With regard to employees, information is disseminated literally by hand delivery during a crisis

where technology is not available (internet, phones, etc.). Also, an increased emphasis has

been placed on documenting crisis events so a videographer and/or photographer are sent out

that will allow Unitil to provide information from the perspective of its restoration efforts.

With the launch of the new external website and having moved control of updates from IT to

Communications, even faster updates are possible during a crisis event. Information especially

relevant during a crisis will be included, such as town-by-town shelter locations and online

outage information. Social media will be employed to launch information in a way that gives

Unitil control over accurate messages. There will also be the ability to send text messages to

customers, if they choose to sign up.

Another key focus is on preparation in advance of an emergency event that is forecasted or

predicted. Unitil’s Emergency Response Plan provides a three-day check list for customer and

public communications. As part of the preparation, the Customer Service team makes proactive

calls to Critical Care customers advising them of the forecasted event and precautions they can

take in the event of a power outage. Communication with those Critical Care customers

continues daily throughout an extended, multi-day event. Unitil’s Customer Service team

collaborates with local municipal officials when concerns arise regarding the health or welfare of

Critical Care customers during an event so they can make direct contact with the customers and

provide the required assistance.

Public Service Announcements are sent in advance advising all customers of the impending

emergency. These announcements include important preparatory and safety information, as

well as Unitil’s toll free Customer Service contact numbers to report outages. These 46

DR J-26: Communications Plan For Customers, Public Officials, Regulators And The Press

77

announcements are sent to a predetermined and continuously updated list of media, elected,

municipal, and regulatory officials. If the event turns into a multi-day power restoration,

announcements are sent four to five times a day to the same list of contacts. The assigned

personnel also will have assumed their roles and will have established daily communication with

their channel/constituency.

The wind storm event in February 2010 was a test of the crisis communication process. Based

on the media coverage results and customer feedback, Unitil deemed it a success. Calls were

made to the media four or five times a day.

Media Relations

Unitil views the local media as partners in communication with its customers. Under its new

communications group reorganization, Unitil hired an experienced media manager who is

familiar with the media and the local communities, having been a reporter with a local presence

doing community-based reporting. Unitil has established an information exchange allowing

outgoing calls for general information in addition to providing updates during outage events, or

the station may call Unitil directly for updates.

Communications Training

Unitil sees training on communication essential to ensure accurate and consistent information

reaches customers, the public, elected officials, and others. Unitil has trained all third-party

vendors on the new Communication Plan and has included them on communication drills. Unitil

is also documenting training for media, local, and state officials. Media training will be for

management, while crisis media training will be for trainers and front-line workers. Unitil has

three levels of training as well as drill-specific media training. Executives are trained once a

year as are the managers, and it is planned to eventually train field staff several times a year.

During 2011, proposed messaging and media training sessions47 will feature current scenarios

and messaging as described below:

1. Level One - Messaging and Media Management 101:

Includes responding positively to customer questions; handling media calls, “hold”

responses; messaging overview; messaging and scenarios specific to the trainees; role

playing; video-taping; and real-time feedback.

2. Level Two - Crisis Communications:

Includes review of corporate messaging with a focus on advanced media handling skills

including: bridging heavy focus on role playing using challenging and more controversial

scenarios; real-time feedback will be given based on video-taped interviews.

47

DR J-73: Training Schedule For Communication Plans

78

3. Level Three - Executive Coaching:

Includes one-on-one coaching for senior level spokespeople. This tailored session will

include coaching and role playing related to current events, crisis management, or pending

issues/opportunities.

4. Drill-Specific Media Training:

Includes media training that is fully integrated into specific drill scenarios.

Community Relations

In each of the communities Unitil serves, it works to build and sustain working relationships with

residents, local officials, public safety employees, and diverse local organizations for education,

social services, philanthropy, and environmental protection. Aspects of its Community Relations

Program include: donations and sponsorships, economic development, and environmental

projects.

Performance Monitoring48

Unitil regularly seeks customer feedback and monitors a variety of performance metrics.

Customer service is measured annually through a customer satisfaction survey distributed every

October to randomly selected Unitil customers in all five service territories. The purpose of the

survey is to gain a better understanding of Unitil’s performance and to also compare those

results to national residential results. Customers are asked several questions covering four key

components of Unitil’s service – Reliability, Price, Service, and Community. When analyzing

results, greater emphasis is placed on the question which asks the customer to summarize his

or her overall view of Unitil. The most recent results from the Annual Random Survey,

conducted each October, are tabulated for all questions with specific emphasis on the

customer’s overall view of Unitil: “How satisfied are you with the service, excluding price, you

are receiving from Unitil?” Results are calculated by the sum of “5,” “6,” and “7” responses on a

seven-point scale and are compared against E.E.I. national residential customer averages. This

metric is an important measurement in the Massachusetts Performance Based Rate

requirements.

Figure 31 – Annual Customer Service Survey Results - Service

Residential 2003 2004 2005 2006 2007 2008 2009

Unitil 84% 86% 83% 76% 79% 84% 67%

EEI 78% 81% 78% 63% 72% 79% 73%

48

DR J-10: Employee Performance Metrics, Key Performance Indicators

79

In addition to the annual customer satisfaction survey, customer-specific transactional surveys

are sent to those who have had interactions with operations personnel and customer service

staff. These surveys are mailed on a weekly basis and the recipients are selected randomly

from a recurring program that is automatically generated. Customers are asked a series of

questions regarding their experience, and the results are tabulated by the sum of “5,” “6,” and

“7” responses on a seven-point scale. These surveys are intended to measure the quality of the

customer interaction with Unitil. Results from the survey are tabulated and sent back to

customer service staff for any action steps that may be required and determined as necessary

from the customer’s response; the most recent Customer-Specific Transactional Survey follows.

Figure 32 - Annual Customer Service Survey Results – Transactions

2003 2004 2005 2006 2007 2008 2009 Oct

2010

Unitil 91% 89% 86% 87% 81% 89% 72% 88%

Target 80% 80% 85% 85% 80% 80% 85% 85%

Unitil’s Customer Service operations are also measured against MDPU mandated service

quality indices:

• Telephone Service Factor - Percent of calls answered within 20 seconds (please refer

to Section 5.1 for an in-depth review of this area).

• Number of Complaint Cases – As reported to the Department’s Consumer Division.

Results are shown in the following for FG&E only:

This metric refers to the total number of gas and electric complaints reported to the MDPU

Consumer Division that could not be resolved by Unitil. The benchmark is determined by

the 10-year historical average of actual results as part of the MA Performance Based Rate

order. Unitil expects to have future reports include similar measurements for New

Hampshire and Maine. This metric clearly shows a dramatic increase surrounding the

December 2008 Ice Storm. Early results for 2010 suggest a return to more “normal” results.

Figure 33 – Annual MDPU Received Customer Complaints

2003 2004 2005 2006 2007 2008 2009 Oct

2010

Actual 84 48 32 74 63 93 137 37

Benchmark 74 67 59 61 61 65 73 79

• Amount of Billing Adjustments – This metric refers to the combined total dollar

amount of MDPU ordered billing adjustments where the Consumer Division staff felt an

80

error was made in a customer’s bill. Unitil expects to have future reports include similar

measurements for New Hampshire and Maine.

Figure 34 – Average MDPU Ordered Billing Adjustments

2003 2004 2005 2006 2007 2008 2009 Oct

2010

Actual $1,483 $37 $390 $15 $1681 $0 $2,654 $0

Target $1,500 $1,600 $1,750 $1,750 $1,800 $1,800 $2,000 $2,000

• Service Appointments Met – This metric refers to the percentage of service

appointments met on the same four-hour block of time they are scheduled: Morning =

8AM to 12PM and Afternoon = 12PM to 4PM. The benchmark is determined by the 10-

year historical average of actual results as part of the MA Performance Based Rate

order. Unitil expects to have future reports include similar measurements for New

Hampshire and Maine.

Figure 35 – Percent Service Appointments Met

2003 2004 2005 2006 2007 2008 2009 Oct

2010

Actual 99.3% 99.3% 99.0% 99.4% 98.5% 100% 100% 99.6%

Benchmark 99.0% 99.0% 99.1% 99.1% 99.1% 99.0% 99.1% N/A

• Percent Actual Reads used for Billing – This metric refers to the percentage of actual

readings compared to the total number of customer readings that were used for billing

purposes. This remainder represents the percentage of customers who received an

estimated bill.

Figure 36 – Percent Actual Meter Reads

2006 2007 2008 2009 Oct 2010

Actual 95.7% 94.6% 97.3% 98.5% 99.0%

Target 95.0% 95.0% 95.0% 97.0% 97.0%

Public relations efforts are measured using a third-party media analysis firm, GFSA Consulting

(GFSA). GFSA analyzes media coverage on a daily basis for volume, tone, and trends. The

analysis can be broken down by region, publication/media outlet, and/or journalist/reporter.

GFSA creates favorability ratios, conducts content analysis, and determines coverage themes.

Media clips are monitored and provided daily and more in-depth analysis and trending reports

are provided quarterly.

81

6.2.1 Findings

• Unitil has significantly reoriented and improved its customer communications function

following the 2008 ice storm.

• Implemented a strategic communications philosophy and organizational realignments.

• Established proactive customer communications.

• Implemented web-based external communications and social media outlets.

• Refocused customer notification methods; for example, through Global Connect’s hosted

web-based voice broadcasting tool.

• Implemented enhanced crisis event communication protocols to ensure timely and

accurate communication with customers.

• Improved media relations.

• Implemented expanded communications training.

6.2.2 Conclusions

Unitil has made significant strides in its communications since the ice storm of 2008. By

redefining its external communications to include a customer-centric focus rather than simply

corporate communications, Unitil has addressed many of the gaps that can create issues during

outage events. Providing education to customers prior to events, increasing the communication

channels to reach customers during events, and formalizing the crisis communication processes

and protocols during an event, all indicate a commitment to inform customers and other critical

audiences effectively and responsibly. With the development and implementation of the

Strategic Communication Plan, Unitil’s leadership moved its public relations and communication

efforts to be proactive rather than reactive.

Organizationally, the Communications Group is positioned where it can be most effective -

directly aligned with senior management. By adding staff resources to match the elements of

the Strategic Communication Plan, Unitil ensured implementation of that strategy could move

forward in a timely manner with experienced professionals.

Unitil’s redesigned website is a valuable asset to customers and others seeking information both

before and during emergency events. Before an outage or crisis occurs, visitors to the site can

easily find information about what to do during an outage, how to prepare in advance, how to

report outages, where to go for assistance, and more. During an emergency event, website

visitors who have access to the site can learn where outages are occurring and obtain updates

on restoration efforts. Customers, and others, who have signed up in advance can also receive

this information through Twitter or RSS feeds.

82

One of the strongest elements of Unitil’s newly defined communications approach is its effort to

engage directly with the communities that it serves. By participating in community events,

attending local functions, developing relationships with community leaders, and creating a

presence before outage events occur, Unitil is demonstrating that communities such as

Fitchburg are more than just another service area. This outreach creates linkages with Unitil

that local officials, customers, the media, and others can leverage during an emergency to

ensure the community’s needs are met in a timely and effective manner.

Unitil’s investment in the Global Connect system to quickly reach a large number of customers

is another strong advancement in ensuring communication during outage events is managed

effectively. This web-based system allows Unitil to contact customers directly impacted by

outages and provide critical information of interest such as restoration timeframes.



2. Resources and funding should continue to be allocated for enhanced communications

with customers.

3. Appropriate communications staff should continue to receive support from senior

leadership for communication efforts.

6.3 Communications with Local Officials

Background

Communications with local officials is closely linked with Unitil’s strategic approach to

communications with customers, therefore, this section should be considered within that context

and that written assessment.

As previously noted, prior to the storm event of 2008, Unitil employed a traditional utility

approach to non-crisis event communications, meaning a structure primarily related to corporate

communication with the goal of maintaining a solid brand and making opportunistic media

contacts. In recent years, Unitil has made significant strides in redefining its external

communications to include not only a customer-centric focus, but also to specifically target

public officials for education and dialogue.

Strategic Communications

In its Strategic Communication Plan, Unitil has identified local and public officials as key

stakeholders with unique communication needs and concerns. Delivery methods for reaching

83

these individuals both during outage or crisis events, and nonemergency events, have been

defined to ensure these local community representatives are engaged and informed.

Unitil’s internal and external public affairs team keeps in regular contact with public officials to

collaborate on energy-related legislative issues and to assist with constituent services. State

officials receive phone calls, letters, and emails from constituents requesting help on a myriad of

issues; some inquiries may relate to general energy questions and some may be specifically

related to a problem with their utility service49.

Unitil also has a Manager of Municipal and Community Services who serves as a liaison

between customers, communities, and Unitil to ensure the community’s needs are met. This

role has a direct line of communication with local municipal and emergency officials to facilitate

daily interactions with Unitil and serves as the main point of contact during an emergency event.

The Manager of Municipal and Community Relations also organizes annual forums to update

municipal and emergency responders on Unitil’s Emergency Response Plan.

Unitil communicates frequently with state regulators, such as the Department of Public Utilities

in Massachusetts. Standard communication for “triggerable” events is performed by Unitil’s

dispatch team. This would include gas evacuations, events affecting 500 or more customers,

and events involving a fatality. Typically, this communication is with the MDPU staff. Normal

recurring communication involving business issues depends on the topic; however, in general,

those communications are handled through Unitil’s legal team if a formal response is required.

Crisis Event Communication

Unitil has developed comprehensive emergency response plans to address potential incidents

resulting from storms or other natural disasters, electric or gas system incidents, and other non-

energy related civil emergencies. The framework used in developing these plans is the

nationally-recognized Incident Command System (ICS). ICS is a flexible framework that allows

response organizations to grow or retract as the severity of the incident changes.

With the launch of the new external website, Unitil expanded its ability to provide timely and

relevant information to local and public officials during outage events. Through a secured

network access from the external website Outage Center, these officials can receive up-to-date

information geared toward their specific communication needs. To help public officials prepare

for an extended outage or upcoming weather event, Unitil provides town or region-specific

information to its municipal contacts to assist in emergency response planning and preparation.

Under Unitil’s ICS, multiple agencies can work in conjunction with one another following a

single, comprehensive plan that is nationally recognized, scalable, and flexible. Materials are

49

DR J-26: Communications Plan For Customers, Public Officials, Regulators and the Press

84

provided, such as zone maps, critical infrastructure listings, municipal forms, and other safety

and procedural information to maintain communication and strategic partnerships with municipal

officials during emergencies or periods with extended outages.

Unitil believes “third-party verification” is critical during a crisis so its staff stands shoulder to

shoulder with elected officials and public safety officials.

Unitil no longer sends “embedded” representatives to city or local government emergency

operation centers during crisis events since they learned this had little success during the 2008

ice storm. Instead, the process calls for Unitil representatives to be located at district operating

centers. If the storms last more than 48 hours, two daily calls are coordinated to provide

updates and address questions. Unitil literally has “media boots on ground” in the local area in a

crisis, and this is accomplished by using resources, such as outside contractors. The goal is to

ensure all elected and public officials understand that Unitil is in charge and has control of the

situation, and that everyone has the exact same information at the same time. The

Communications Team works to develop messaging, such as where outages are located, how

many crews are engaged, etc.

Another key focus is on preparation in advance of an emergency event that is forecasted or

predicted. Unitil’s Emergency Response Plan50 provides a three-day check list for Customer

and Public Communications. Unitil’s Customer Service team collaborates with local municipal

officials when concerns arise regarding the health or welfare of Critical Care customers during

an event so they can make direct contact with the customers and provide the required

assistance.

Public Service Announcements are sent in advance advising all customers of the impending

emergency. These announcements include important preparatory and safety information, as

well as Unitil’s toll free Customer Service contact numbers to report any and all outages. These

announcements are sent to a predetermined and continuously updated list of media, elected,

municipal, and regulatory officials. If the event turns into a multi-day power restoration,

announcements are sent four to five times a day to the same list of contacts. The assigned

personnel also will have assumed their roles and will have established daily communication with

their channel/constituency.

As noted earlier, Unitil believes that the wind storm event in February 2010 was a test of the

crisis communication process, particularly for public communications.

50

DR J-26: Communications Plan For Customers, Public Officials, Regulators and the Press

85

6.3.1 Findings

• Unitil has significantly reoriented and improved its customer communications function

following the 2008 ice storm.

• Implemented a strategic communications philosophy and organizational realignments.

• Established proactive public official.

• Implemented web-based external communications and social media outlets.

• Implemented enhanced crisis event communication protocols to ensure timely and

accurate communication with public officials.

• Implemented expanded communications training.

6.3.2 Conclusions

As indicated in the section regarding Communications with Customers, Unitil has made

significant strides in its communications since the ice storm of 2008. By redefining its external

communications to include a customer-centric focus rather than simply corporate

communications, Unitil has addressed many of the gaps that can create issues during outage

events. Providing education to elected and local officials prior to events, increasing the

communication channels to reach them during events, and formalizing the crisis communication

processes and protocols during an event, all indicate a commitment to inform these critical

audiences effectively and responsibly.



2. Resources and funding should continue to be allocated for enhanced communications

with public officials.

3. Appropriate communications staff should continue to receive support from senior

leadership for communication efforts.

86

7 STORM PREPAREDNESS & RESPONSE

PLANNING

In its Order in Docket No. 09-01-A, the Department found the Company’s performance in

responding to the Winter Storm of 2008 was inadequate. The 28 recommendations in the

Company’s Self Assessment were adopted with modifications and the Company was instructed

to implement the recommendations (as modified) and provide periodic status reports to the

Department. In this scope area, the Consultant will confirm and comment upon the status of the

Company’s implementation plan regarding each of the 28 recommendations, as modified by the

Department in D.P.U. 09-01-A. (A copy of the modified 28 recommendations is attached hereto

as Exhibit C.) The Consultant will also provide an assessment of Unitil Corporation’s

management practices which support the Company’s current emergency preparedness and

emergency response plan (“ERP”), including strategic planning, staffing, resource allocation and

customer relations.

Overall Assessment

Jacobs Consultancy reviewed the status of each of the 28 recommendations from Unitil’s self-

assessment as well as an assessment of Unitil Corporation’s management practices which

support its current emergency preparedness and emergency response plan (ERP), including

strategic planning, staffing, resource allocation, and customer relations.

Unitil has provided a document that details its current state of emergency readiness51 in which

Unitil traces its history of emergency preparedness, its approach to emergency management

planning, highlights its responses and lessons learned from the December 2008 Ice Storm in

addition to the subsequent February 2010 Wind Storm in which the revised ERP was

successfully employed.

Unitil has not experienced a storm event resulting in customer interruptions of similar type and

duration to those reported during the February 2010 Wind Event in New Hampshire – Level 3 to

4 events. However, Unitil has prepared and responded to four Level 1 or 2 events during the

winter 2010/2011 period using the following revised Electric Emergency Response Plan or ERP:

• December 26 - Nor’easter

• January 12 - Nor’easter

• January 18 - Snow/Ice

• February 1-2 - Snow

51

DR J-81, Attachment 1: The Current State of Emergency Readiness. (Confidential)

87

Customer interruptions for these storm events have ranged between 1% and 5% of the total

Massachusetts’ customers. Pre-event Staging Reports were submitted to the MDPU for each

listed storm event, as required in the revised ERP, and demonstrate adherence to the new

emergency process52.

7.1 Status on 28 Recommendations from 2008 Storm

In March 2009, the Unitil issued a report entitled “Unitil’s Response to the 2008 Ice Storm Self

Assessment Report.” The principal author of this report is Robert C. Yardley, Jr., former

Chairman of the MDPU and a consultant to the energy industry for over 25 years. Mr. Yardley

was contacted by Robert Schoenberger, CEO of Unitil, on December 19, 2008, and asked to

lead a broad assessment of the Company’s response to the 2008 ice storm consisting of: (1)

performing an objective review of Unitil’s performance, (2) identifying lessons learned, and (3)

providing specific recommendations to improve Unitil’s ability to respond to a storm or other

emergency of comparable magnitude.

7.1.1 Findings

• Unitil has continuously endeavored to satisfy the 28 recommendations included in its

report. The Company submitted status updates on all 28 recommendations to the

MDPU in October and December 2009.

• In October 2009, Unitil reported that most of the 28 recommendations had been

completed with a notable exception being the Outage Management System (OMS)

implementation and full systems integration, which is in progress.

• At present, Unitil has completed 26 of the 28 self-assessment recommendations and the

remaining two are substantially complete.

• Following a review of Unitil’s October 2009 status update, the MDPU via its Final Order

in Docket 09-01-A (issued in November 2009), requested either wording changes to

Unitil’s Electric Emergency Response Plan (ERP), or additional work on

recommendations that were previously reported as complete. The MDPU wording

changes, which were detailed and completed in the December 2009 status update,

pertained to the following areas:

o Recruitment of Crews

o Field Communications

o ERP Updates

52

DR J-92: Major Outage Events During The Winter 2010/2011 Period

88

• Additional work, either reported by Unitil or requested by the MDPU, pertained to the

following areas and recent status updates are indicated:

o Estimated Billing – In November 2010, Unitil submitted an update of changes to

be made to its current billing procedures specifically aimed at billing procedures

during an extended outage and estimated billing procedures.

o Outage Management System – Unitil has regularly reported progress53 in

implementing its new OMS system54. The implementation of OMS is a parallel

implementation, which means that all existing processes were to be kept in place

as a familiarization process took place. As comfort level with new processes was

achieved, old processes were decommissioned. Complete decommissioning of

old processes was expected to be completed by the end of 2010. In addition to

replacing the OMS system, Unitil determined to make other significant

improvements to its IT infrastructure in conjunction with the implementation of

OMS to be sure its high availability during major storm events when systems and

resources are at peak demand. The OMS system is installed and has been used

to respond to outages since early December 2010. The OMS system currently is

integrated with the IVR, CIS, and GIS systems. FG&E has continued to integrate

its OMS with other systems, specifically AMI and SCADA. The interface between

the OMS system and the AMI system is complete and is currently in final

acceptance testing. The SCADA integration is in progress and will be completed

in 2011. At the end of this project, FG&E will have a state of the art OMS

system, which is integrated with its IVR, CIS, GIS, SCADA and AMI systems

o Sub-transmission System (Sub-T) – The Company hired TRC in April 2009 to

inspect the 69 kV system and recommend improvements. The report was

completed in December 2009 with nine specific recommendations. The current

status55 is summarized below:

1. Conduct a rigorous inspection of all static wires on the 69 kV lines to

evaluate any lightning damage or other mechanical damage. Complete.

2. Replace the static wire on lines that have experienced recent failures.

Typical static wire size in the northeast is a 7#8 AW wire. This would

provide additional capacity to dissipate the fault current from a lightning

strike better than the existing static wires currently in use. FG&E plans on

replacing 20 miles of static wire in 2011. The engineering design for this

portion has been completed and RFQs have been issued to seven

53

DR J-32 Attachments 3, 4, 6, 7: Status Update on Each and All 28 Recommendations Issued by the DPU in D.P.U. 09-01-A 54

DR J-93, Status update 55

DR J-32 Attachments 5, 6, 7: Status Update on Each and All 28 Recommendations Issued by the DPU in D.P.U. 09-01-A

89

contractors. The construction is expected to begin in June and will be

completed by November 2011. The engineering design for the remaining

portions of the static wire replacement is in progress and expected to be

complete by August 2011. Construction will continue on the remaining

static wire in 2012 and 2013 with an expected completion in December

201356.

3. Improve the right-of-way clearing to reduce the chance of tree contact

with the conductor. The right-of-way should be cleared 50’ from each side

of the lines centerline, or up to the right-of-way limit, if 50’ is not available.

Complete.

4. Pole replacement is recommended on poles that have excessive

woodpecker damage. In progress – are being inspected and replaced

as part of 10-year inspection program.

5. Reinforce tangent type structures exceeding the maximum allowable

span length, either by adding side guys, replacing structure with a

stronger pole, or some other alternate method. Rejected. Unitil and TRC

agree that existing design is within code, but will monitor.

6. Replace the insulators on all Horizontal Post Medium Angle (HPMA)

structure types using 556 kcm conductors. Rejected. Unitil and TRC

agree that existing design is within code, but will monitor.

7. Further investigate the risks associated with the conductor tensions under

extreme weather conditions for Lines 08/09 to Pleasant Street and to

Townsend Rd. Rejected. Unitil and TRC agree that existing design is

within code, but will monitor.

8. For Lines 01/02 Beech Street tap, further investigate the risks associated

with the long-term use of copperweld as a static wire. Rejected. Unitil

has not had embrittlement failures, but will monitor.

9. Improvements in the records of the 69 kV system would be helpful during

storm repair and typical maintenance. Plan and profile drawings should

be updated to reflect current field conditions and filed in a manner that

assures the most current version can be readily found. Pole numbers

should be placed on every structure that matches the drawings. Aerial

tags on poles should also be updated and missing, or deteriorated tags,

be replaced. FG&E has completed the LIDAR survey of the 69 kV

system. The information collected is being compared to the existing

records and is the basis for the engineering design process. As each of

the engineering designs is complete, FG&E is receiving updated

56

DR J-93, Status Update

90

documentation for its 69 kV system. As-built edits will be completed as

each of the construction projects is completed. FG&E will have a

complete updated set of records for the 69 kV system at the end of

construction in 2013. In progress and expected to be complete by

2013.

• Tree Trimming Program – Unitil contracted with Environmental Consultants, Inc. (ECI),

a leading vegetation management consultant, in late 2009. ECI’s report was completed

and filed in July 2010. ECI reported that Unitil had taken steps to implement a good

vegetation management program, but did find areas of potential improvement. ECI

enumerated 16 recommendations designed to improve the vegetation management

program and to provide improved reliability. The recommendations focused on reduced

trim cycles and ECI provided three program options described below:

1. Option I: Gradual impact on system reliability at a lower annual cost. (Seven-

Year Hazard Tree Removal Program). This option required an annual cost of

$1,004,000.

2. Option II: (ECI Recommendation) Faster impact on system reliability at a higher

annual cost. (Three-Year Hazard Removal Program). This option required an

annual cost of $1,430,000. FG&E submitted the complete ECI report to the

MDPU. In its pending rate case proceeding before the MDPU, FG&E has

recommended adoption of Option II from the ECI report and inclusion of the

associated expense in rates57.

3. Quickest Impact on System Reliability at significantly higher annual cost. (Five-

Year All-Inclusive Program). This option required an annual cost of $2,257,000.

• As evidenced by Unitil’s emergency response performance during the February 2010

Wind Storm that affected its operations in its New Hampshire service territory, the

current ERP appears to be effective.

• While no major events occurred during the 2010/2011 winter, Unitil has followed its

revised ERP, especially regarding pre-event staging activities and communications,

particularly through social media, such as Twitter.

7.1.2 Conclusions

At present, Unitil has completed 26 of the 28 self-assessment recommendations and has

substantially completed most of the tasks associated with the additional work, either reported by

Unitil or requested by the MDPU. OMS is installed and has been used to respond to outages

since early December 2010. It is fully integrated with the IVR, CIS, and GIS systems. Full

57

DR J-95: Clarification on Option Chosen

91

SCADA integration is planned to be completed by the end of 2011. The remaining

recommendations related to the 69 kV sub-transmission system, vegetation management, and

estimated billing practices are either completed or on schedule for completion, as detailed in the

most recent status updates submitted in October and November 2010.


None

7.2 Business Continuity Planning, Crisis Response Planning, and

Enterprise Risk Management

Business Continuity Planning

Unitil is currently in the process of documenting its corporate-wide Business Continuity

Program58 (BCP). The initial focus is on functional groups that provide critical processes

including: (1) Customer Service, (2) Dispatch, and (3) Information Services.

These groups are in the process of conducting a Business Impact Analysis (BIA) of their

activities to identify critical processes. Following the completion of the BIA, three plans will be

drafted:

1. Critical Process Recovery Plan - specific actions by a functional group to be sure key

business activity continues to be performed to the degree that is essential to the

Company.

2. Business Interruption Management Staffing Plan - how an organization will conduct its

business in the absence of up to 40% of its staff.

3. Site Recovery Plan - specific actions to be undertaken in the event that all or part of a

facility location is not available for business use.

The Company intends to have the Business Impact Analysis, Critical Process Recover Plan,

Business Interruption Staffing Plan, and Site Recovery Plan for each process completed by the

end of the third quarter of 2011.

58

DR J-64: Unitil’s Business Continuity Plan and Enterprise Risk Management Plan, J-89: Business Continuity Plans Expected Completion Dates

92

Crisis Response Planning

In addition to specific emergency response plans, Unitil also maintains an active Crisis

Response Plan59 (CRP) that is intended to apply to events that occur internal or external to

Unitil, including, but not limited to:

• Major outages or disruptions of the electric transmission, electric distribution, or gas

distribution systems.

• Acts of war, terrorism, or civil disturbance within Unitil’s service territories, whether Unitil

activities are directly affected or not.

• Hostage, extortion, or other significant criminal acts perpetrated by individuals external

or internal to Unitil.

• Loss of critical corporate communication systems.

• Loss of significant security systems or cyber threats.

• A significant financial event having a serious impact on Unitil’s position.

• Any action that results in the loss of, significant damage to, or the unavailability of

important Unitil assets/facilities.

• Any other event that may have a significant impact on Unitil personnel and/or

necessitates a corporate response.

Various Unitil operational units have developed Emergency Operations plans and procedures in

response to federal, state, and local regulations. These include, but are not limited to,

emergency plans in the following areas:

• Emergency Response – electric transmission, electric distribution, and gas distribution.

• Cyber security emergency response.

• Environmental Spill Management Plans and Emergency Response Action Plans

(ERAPs) for Unitil’s facilities that meet the federal Substantial Harm Criteria guidelines.

The CRP is not intended to supersede these existing plans or to preclude immediate response

by those organizations in accordance with their plans. Rather, the CRP will augment these

plans by providing a strategic level of response that may be required due to the severity of the

event, its effect on Unitil personnel, or its position in the community. In addition, the CRP may

be used to manage those events that do not fall under the umbrella of a pre-existing plan.

59

DR J-83: Crisis Response Plan

93

Enterprise Risk Management

Unitil’s Enterprise Risk Management60 (ERM) program is a component of its annual strategic

planning process. The program is based on the Committee of Sponsoring Organizations

(COSO) model for risk identification and monitoring. The methodology is a bottom-up/top-down

approach with input from employees and management from across the organization. Identified

risk items are grouped and prioritized in the strategic plan. ERM will be reviewed annually and

new objectives will be incorporated in the annual strategic plan to mitigate risk.

7.2.1 Findings

• Unitil is actively engaged in developing and completing business continuity plans for

three critical areas: (1) Customer Service, (2) Dispatch, and (3) Information Services.

The plans are expected to be completed by the third quarter of 2011.

• Unitil actively maintains a Crisis Response Plan that addresses events both external to

and internal to Unitil.

• Unitil maintains an enterprise risk management program as part of its strategic planning

process.

7.2.2 Conclusions

Unitil has comprehensively addressed Business Continuity Planning, Crisis Response Planning,

and Enterprise Risk Management through development of specified planning documents that

complement each other and provide linkages to the emergency response plan, discussed in the

next section.


None

7.3 Emergency Preparedness Plan

Unitil undertook a review of its Emergency Response Plan (ERP), dated July 22, 2005, in

fulfilling one of the 28 recommendations emanating from Section H “Assessment, Lessons

Learned, and Recommendations” of Unitil’s Response to the 2008 ice storm, Self-Assessment

Report, dated March 25, 2009, which stated: “Other utility ERPs should be reviewed to assess

how they strike the balance between providing definitive instructions and providing flexibility that

is needed to respond to events that each have their own unique attributes.”

60

DR J-64: Unitil’s Business Continuity Plan and Enterprise Risk Management Plan

94

Unitil’s review revealed that a definitive shift to the Incident Command System (ICS) for storm/

emergency response was ongoing within the electric utility field. ICS was becoming the

response structure used by a growing number of national and regional utilities. As a result, ICS

became the framework against which Unitil’s ERP was revised.

To better incorporate the adoption of an ICS framework, management roles and responsibilities

were drafted to reflect the scalable nature inherent within ICS. Whether the emergency event is

local, regional, or system-wide, ICS grants the responding utility the ability to adapt effectively

and efficiently.

In addition, the comprehensive update of the former ERP included adoption of the modular

nature of ICS along functional lines (e.g. administration/ finance, planning, operations, logistics,

and communications). The former ERP had all the basic elements for restoration, but was

largely focused on the planning and operations activities, while the rewritten ERP describes how

Unitil will plan and implement the response at the tactical and operational levels following an

emergency event.

Recent improvements to the system include a revised regional ERP plan. This plan has all

employees of Unitil trained in a second job. This includes Electric, Gas, Fleet and Facilities, and

Operations support. These employees have been trained and drilled in the regional plan, and

each member understands their role within the ERP. The section chiefs have a firm

understanding of their direct reports and to the overall ERP.

In spring 2009, Unitil created the Emergency Management and Compliance61 (EMC)

department. This EMC department represents a new function within Unitil and is overseen by a

director who reports to the senior vice president and chief operations officer. A total of five

fulltime equivalents staff the EMC department.

Specifically, EMC is responsible for developing and maintaining comprehensive emergency

response plans. These plans address potential incidents resulting from storms or other natural

disasters, electric, or gas system incidents, internal business interruptions, and non-energy

related civil emergencies (e.g. pandemic influenza).

Prior to the MDPU Order in DPU 10-02-A, FG&E was required to submit the ERP to the MDPU

by September 1 of each calendar year. However, the MDPU did not conduct a formal review of

the ERP or issue an approval. Currently, the ERP is submitted to the MDPU, at a minimum,

annually. The MDPU provided feedback on this year’s submittal of the ERP (i.e. calendar year

2010). The MDPU acknowledged receipt of the plan on May 17, 2010, and docketed the

submittal as DPU 10-ERP-08. Unitil submitted additional revisions to the ERP on June 7, 2010,

and June 18, 2010, to better align it with certain provisions of the recently-issued Order DPU 10- 61

DR J-15: Recent Improvements To Operations

95

02-A. Lastly, a technical review of the ERP by the MDPU, the Attorney General (AG),

Massachusetts Emergency Management Agency (MEMA), and Department of Energy

Resources (DER) was held on June 21, 2010, with Unitil in attendance. On July 30, 2010, the

MDPU issued a letter confirming that the ERP was consistent with the ERP guidelines.

7.3.1 Findings

• The current ERP is well structured and in accordance with industry best practices.

• The ERP follows the Incident Command Structure, with organization, concept of

operations and roles, responsibilities, and checklists clearly defined for each

command/control function at both the system and regional level.

• The ERP is comprehensive and contains major sections pertaining to processes and

triggers, including:

o Decision Flow Chart – A depiction of the overall initial steps taken and the

decisions made before and during the restoration process.

o Escalation Criteria – Guidelines for operations to issue advisories intended to

provide advance warning to the Emergency Response Organization.

o Potential Damage Indices – WSI provides PDI chart based on expected

weather.

o Emergency Event Condition Levels – Defines how each emergency is

classified and when required assistance procedures are implemented.

o Response Actions - Outage Event Level Response Action Matrix.

o Allocation and Deployment Strategy - Subjective analysis is needed to convert

weather or other hazard conditions into a “resource acquisition equation.”

o Mobilization – Links outage levels to notifications to EROs.

o Corporate Communications – Provides guidelines for Communications and

CSC personnel receive and issue information that is consistent in briefing the

news media and general public.

o Demobilization – Guidelines for demobilization.

o Exercises and After-Action Reporting - Describes the steps needed to develop

and conduct effective exercises.

o Emergency Response Preparedness – Contact information and municipal

meetings.

• The ERP has been approved by the MDPU for the 2010 submission62.

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DR J-82: MDPU Approval of ERP

96

7.3.2 Conclusions

Based on our review, Unitil’s MDPU approved ERP is comprehensive and is aligned with proven

ICS methodologies. The plan was developed from proven plans including Florida Power and

Light and National Grid and tuned to Unitil’s service area and system.


None

97

8 APPENDIX

8.1 Glossary

A glossary of terms is set out below to familiarize the reader with the acronyms and industry

terms used throughout this report.

8.1.1 Acronyms

AMR Automated Meter Reading BSC Business Solutions Center CSS Customer Service System CIS Customer Information System CLM Conservation and Load Management CCM Connecticut Conference of Municipalities CRM Customer Relationship Management DA Decision Analysis Model DPUC Connecticut Department of Public Utility Control DSCADA Distribution Supervisory Control and Data Acquisition System EBE Economic and Business Development ETT Enhanced Tree Trimming GIS Graphical Information System IT Information Technology IVR Interactive Voice Response KPA Key Performance Areas KPI Key Performance Indicators

KRA Key Results Area LINKS Employee Performance Evaluation Methodology MAIFA Momentary Average Interruption Frequency Index MIMS Materials Information Management System MIBS Management Information and Budgeting System MDS Mobile Dispatch System NU Northeast Utilities NUCHRIS Northeast Utilities Corporate Hours Information System OMS Outage Management System PES Performance Enhancement System PSNH Public Service of New Hampshire RCM Reliability-Centered Maintenance RMS Route Mean Square SLA Service Level Agreement UTG Utility Group WMS Work Management System

98

8.1.2 Common Electric Distribution Industry Terms

CAIDI - A distribution circuit reliability measure that represents the average time required to

restore service to the average customer per sustained interruption.

CAIFI - A distribution circuit reliability measure that can be used to show trends in customers

interrupted by showing the number of customers affected out of the total customer base.

Distribution automation - A system which is made up of line equipment, communications

infrastructure, and information technology. Used to gather intelligence about the distribution

system and provide analysis and control to maximize operating efficiency and reliability.

Energy management system - Used to monitor and control the flow of electric power by

opening and closing switches to route electricity or to isolate a system for maintenance.

Interruption - Loss of electric service to one or more customers due to an outage.

Load management systems - Systems used to manage loads, and monitor and control

components used by customers.

MAIFI - A reliability measure defined as the total number of customer momentary interruptions

divided by the total number of customers served.

Outage - When the electric system is not available to perform its intended function of

distributing electricity.

Power quality - Momentary interruptions and fluctuations and RMS variations. Has become a

major issue for electric utilities today as a result of many sensitive electronic devices such as

computers, VCR clocks, and timing devices being added to the customers load.

Reliability-centered maintenance - A program that identifies the different functions of the

system and determines the dominant and critical failure modes and their causes. This

information is then used to establish preventive maintenance intervals on the basis of actual

equipment performance, rather than on a fixed time schedule.

SAIDI - Distribution system reliability measure that provides information about the total average

time customers are interrupted. Calculated as customer total minutes of interruption.

SAIFI - Distribution system reliability measure that is information about the average frequency of

a sustained interruption.

SCADA - Systems most often used to monitor and control components within the substation,

including some transmission equipment. SCADA systems can provide graphical representation

of substation functions in a distribution system, as well as display specific information about

operating status of individual lines.