Colorado Springs Utilities Environmental Services Functional Assessment

1. Colorado Springs UtilitiesEnvironmental Services Functional Assessment Presentation for the American Public Power Association’s 2001 Engineering & Operations Technical Conference by Alan Goins and Dave Whitaker

3. Situational Assessment • CSU’s policy expectations of Board (“Ends”) • Citizens value local ownership because CSU responds to community needs and values (viewed as a community partner) • Is a steward of the environment - environmentally sensitive community • CSU must leverage its environmental focus externally as well as internally - “value !”

4. Situational Assessment cont. • Business Drivers • Levels of financial pressures are increasing - costs are trending up • Customer/owner expectations are evolving - continued low price, and strong community role • Role in the community is not as strong as it needs to be - particular attention to CSU’s role in addressing the environment • Deregulation is continuing to evolve

5. Situational Assessment cont. • Current State • Two or thee existing corporate environmental strategies - not wrong, but not integrated • Different criteria used in decision-making • Internal concept of “this is not a corporate issue” • Resulting external concept of “good in spots” • Difficult and time consuming to articulate status on issues and/or costs from a corporate viewpoint • Lack of performance metrics to determine effectiveness of current activities • Staff is held accountable differently

6. Situational Assessment cont. • Future State • Environmental strategies, policies and initiatives are aligned with other corporate strategies • CSU goes beyond minimal compliance when adding value to the community clearly exceeds incremental costs • Environmental decisions are based on consistent criteria and managed in a coordinated fashion • Environmental issues are addressed in a coordinated and consistent manner

7. Situational Assessment cont. • Future State cont... • CSU is clear and consistent in communicating its environmental performance and initiatives to customers • The performance of the environmental programs is measurable and CSU personnel are consistently held accountable for results • Environmental services are provided in a cost-effective manner

8. Project Approach • Objective - Effective and efficient alignment of resources and practices necessary to achieve corporate environmental strategic goals Phase II Phase IV Phase I Phase III Perform Benchmarking Assess Management Processes, Programs and Systems Assess Current Organization Structure Assess Outsourcing Opportunities CORPORATE EH&S STRATEGIES CHANGE MANAGEMENT

9. Project Scope STRATEGY • Development • Planning • Policy Setting The Focus for This Project PROGRAM MANAGEMENT • Program Development • Program Auditing • Technical Support COMPLIANCE • Regulatory Compliance • Regulatory Reporting • Performance Reporting • Open/Close Valves • Operate Controls • Maintain Pumps OPERATIONS

10. Benchmarking Panel • Comparable municipal utilities - 5 • Comparable IOU utilities - 5 • Utility companies of a larger size that are recognized for excellent performance - 4 • Non-utility companies recognized for excellent performance - 4

11. Benchmarking Observations & Conclusions • Decentralizing both environment and safety organizations and putting accountability for results on line managers. • Small central staff addressing regulatory affairs, rule interpretation, policy development and regulatory reporting • Most technical specialists supporting operations report to the operating department manager - gives operations control over technical support resource • Few performance metrics other than those required to track compliance regulations • Organization structure is not critical to getting outstanding results

12. Benchmark - Best Practices • Line managers are held responsible for auditing and corrective action • First line supervisors visit field locations often to communicate with work crews about environmental requirements and procedures • Information management database are developed to track environmental performance and conditions • Line Managers and first line supervisors are held accountable for environmental performance and stewardship

13. Management Process Recommendations • Enhance the planning process to integrate EHSD and Operating Department initiatives • Develop a standard process for EHS issues management that includes involvement of the Marketing Department • Develop a standard processes for regulatory agency interface and commitment tracking

14. Management Process Recommendations (cont’d) • Develop project management expertise for key managers and individual contributors • Develop Service Level Agreements between the EHSD, Governmental Affairs and General Counsel to clearly define the roles and responsibilities for achievement of goals and initiatives • Develop process for determining when CSU will exceed environmental regulatory requirements

15. Strategy Program Management Compliance New Organization Structure Executive Director • Regulatory interpretation • Legislative involvement • External and internal Communications COO Utility Support • Strategy and policy setting • Regulatory interface an intervention • Issues management Operating Departments CEH&S • Operation and maintain environmental equipment • Conduct daily monitoring • Perform recordkeepingand reporting Admin. Services Info. Tech. Services Laboratory Services Permitting Services Technical Services Regulatory Services Safety & Health • Program and plan development and oversight • Technical consulting • Permitting • Auditing

16. Benefits of New Organization Structure • Provides consistent, central strategy, policy and standards for programs and procedures • Improves communications with regulators and public by providing one central spokesperson and clearinghouse • Promotes sharing of resources and leveraging the advantages of a four service utility • Provides facility managers with direct control over day-to-day compliance activities

17. Lessons Learned • Benchmarking effort did not yield the level of information we expected • Key driver was the need to leverage environmental programs with an external customer focus • Organizational change was needed to create efficiencies not possible thru process improvements • Consultative decision making process was needed to expedite decisions around the recommendations • Model for other organizational changes

18. What Would We Do Different Next Time? • Better understand the goals and objectives of the executives earlier in the project - more examples and stories • Less time on benchmarking • More time on identifying outsourcing options • Perform high-level cost/benefit analysis of process improvements - measure value!