2010 March Awwa Cs It Portland

Becoming a Customer Centric

Utility

AWWA CS/IMTechMarch 2010

Elizabeth S. Kelly PEDirector of Project

Management & Engineering Division

Seattle

• Municipal Utility Owned Directly by the City of Seattle

• Funded Entirely by the Rates Paid for our Services

Seattle Public Utilities

• Four Utilities • Over $5 Billion in Assets

The entire Utility Management industry is concerned about infrastructure.

MANAGING INFRASTRUCTURE IS A CORE BUSINESS

Asset Management Offers a New Paradigm for

Customer Centric Decision Making

Managing assets has always been part of running a utility

Our organizations have well developed tools for this work.

But, typically management of utility assets has employed tactical rather than strategic approaches.

Asset Management Philosophy...

Customer centricDeliberate

decisionsTransparencyLife CycleTriple Bottom Line

The Key Elements of Asset Management

Service Levels Risk Management Life Cycle Triple Bottom Line Data and Data Systems Strategic Asset Management Plans Business Cases Decision Making Venues Performance Measurement Benchmarking

Define Service Levels

• Fundamental• Critically Important to

each of the following elements

• Difficult

Define Service LevelsLearn

AboutRisk

• Manage based on risk cost and cost to mitigate

• Reduce asset risk through capital investments, or changed maintenance practices and response protocols

• Understand our highest risk activities and assets

1. Define failure.2. Gather data.3. Compute.4. Analyze options.5. Build business case.

Impactof

failure

Risk Cost =

Likelihoodof

failurex


AboutRisk

FocusOn LifeCycle Costs

Make investment decisions – large and small – based on understanding of life cycle costs and benefits.

Initial Capital InvestmentMaintenance and Operation CostsOther asset costs such as

electricityFuture renewal costsDisposal costs

Retirement Costs Operations &

Maintenance

Life of Assets

FUNDING DECISIONS

Poor ManagementA Project Decision

Capital

Retirement CostsOperations &

Maintenance

ASSET MANAGEMENTMinimising Whole of Life Costs at an Agreed

Service Standard

Poor Management

Life of Assets


AboutRisk


UseTriple

Bottom Line

Assess projects, programs, policies, and initiatives based on the Triple Bottom Line

• Social• Environmental• Financial

Triple Bottom Line Costing: An Example

Rock Creek Culvert Decision Score Components

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

No Action Alt 1 Alt 2 Alt 3 Alt 4 Alt 5 Alt 6 Alt 7

Pipeline Security

Recreational Access

Ambient Light

Aquatic Invertibrates

LWD Transport

Sediment Transport

Fish Passage

Triple Bottom Line Costing: An Example

Rock Creek Culvert: Preferred Alternative

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

No Action Alt 1 Alt 2 Alt 3 Alt 4 Alt 5 Alt 6 Alt 7

Risk

O&M

CIP

Not Permittable

Cost of Preferred Alternative: Alt. 5


AboutRisk


UseTriple

Bottom Line

OptimizeData

And DataSystems

• Gather more, and more accurate and accessible asset attribute information, such as

• Size, material, age• Condition

• Needed for tools and processes such as risk models, programmatic decision models, reliability centered maintenance

• And critical for understanding whether we’re meeting service levels in an equitable way

Main Break


AboutRisk


UseTriple

Bottom Line

Manage Data

And DataSystemsPlan for

Assets

• Planning documents for each asset category

• Allow us to better understand the assets and risks associated with them in order to develop renewal plans and maintenance strategies

Strategic Asset Management Plans


AboutRisk


UseTriple

Bottom Line

Manage Data

And DataSystemsCreate

SAMPsDecision Making Venues

• Create clarity about decision making

• Major decisions are made based on asset management and customer centric principles

• In a transparent manner


AboutRisk


UseTriple

Bottom Line

Manage Data


SAMPsDecision Making Venues

• Focus on efficiency and effectiveness of our work

• Measure results

Measure Results


AboutRisk


UseTriple

Bottom Line

Manage Data


SAMPsElevate

Big Decisions

(AMC)

Measure Results

(e.g., SAs & AMAs)Bench-

mark

• Many opportunities for industry benchmarking efforts

• Our goal is to understand how we’re doing relative to other similar organizations

Our Asset Management Philosophy...

Focuses on the delivery of cost-effective services to customers – today and into the future.

Requires making deliberate decisions regarding allocation of resources.

We intend for these decisions to be made in a transparent manner, • fully informed by knowledge of life cycle triple

bottom line costs, benefits, and risks.

New Paradigm for Decision-Making

Challenges with a Customer Centric Approach

1. Who are they?2. What do they want?

We ask:

• What should their experience with SPU look and feel like?

• What do customers want from SPU?

Sample Customer Outcomes

“All drinking water customers will receive high quality, reliable service.”“Wastewater leaving homes and businesses will be reliably and effectively to the regional conveyance system, even in storm events.”“Customers are informed of the flood risks to their property.”

Establish Service Levels

• Set Service Levels and make investments needed to meet them – now and into the future.

• Establish and measure Performance Indicators.

• Find out from customers what services are most important to them.

Service Levels at SPU are defined as:

statements of desired performance outcome that are high priority to our customers, to the environment, or required by regulators; are

within the control of SPU; and have performance level data that can be accurately

and consistently collected and audited.

Service Category Service Level Objective Service Level TargetDrinking Water Quality Promote a high level of public health

protection and customer satisfaction with drinking water quality.

Meet all health-related and aesthetic regulations administered by the Washington State DOH Drinking Water Program for the Seattle regional water system.

Service Provision - Retail Provide adequate pressure for drinking water supplies.

Fewer than 1% of retail customers will have less than 30 pounds per square inch (psi) of pressure at the meter during normal operations.By the end of 2008, no retail customers will have less than 20 psi during normal operations.

Limit drinking water supply outages. Fewer than 4% of retail customers will experience water outages for one or more events totaling more than 4 hours/year.

Service Provision - Wholesale

Provide agreed-upon pressure and flow for wholesale customers.

Meet wholesale contract requirements for pressure and flow.

Limit drinking water supply outages. Limit each unplanned outage in the transmission system to be within the maximum outage duration set for each pipe segment (24, 48 or 72 hours).

Problem Response -Retail

Respond quickly and effectively to water distribution system problems.

80% of distribution system problems (emergency situations such as a pipe break; potential contamination of water supply; hydrant damage) responded to within 1 hour.

Regulatory Requirements Meet the environmental requirements of our water rights and water supply operations.

Meet instream flow requirements and performance commitments in tribal, regional, state, and federal agreements and permits.

Meet water use efficiency goals to ensure wise use and demonstrate good stewardship of limited resource.

Leakage losses of no more than 10% of total supply, as defined by Washington Department of Health guidelines.Achieve water conservation goals:Save 14.5 mgd from 2000 to 2010 [regional].Save additional 15 mgd from 2011 to 2030 [regional].Meet the Initiative 63 Settlement Ordinance requirements [retail].

Drinking Water Line of Business Service Levels

Service Category Service Level Objective Service Level Target

Service Provision Customers in all areas of the city shall be well served by the SPU sewer system, and should not experience frequent sewer backups.

Less than 1% of customers will experience a backup in any year caused by a problem with the SPU sewer system.By 2020, there will be no more than one backup in 5 years, on average, at any location, caused by a problem with the SPU sewer system.

Problem Response

Respond quickly and effectively to problems with potential health and safety consequences.

•80% of problems (backups, voids, lid off, ponding) will be responded to within 1 hour.•80% of problems will have service reinstated within 6 hours.

Regulatory Requirements

Meet the overflow limits on SPU’s combined sewer system as required by its NPDES permit and state and Federal CSO regulations.

•By 2020, CSOs shall be limited to an average of one untreated discharge per CSO site per year.•Zero dry-weather overflows will occur at permitted CSO sites.

Wastewater Line of Business Service Levels

Try to Understand Your Customer’s Willingness to Pay for Services

Willingness to Pay

Studies

• Focus Groups • Support Defensible

Service Level Choices

• Role of Customers in Setting Service Levels Project

Pilot Work

• In-home water quality• Mainline sewer backups• Planned water outages

It is Imperative to Understand Whether you are Providing Services Equitably to all Customers

Service Equity

• Service Equity• Program Equity• Policy Decisions• Resource Allocation

Decisions• Service Equity/Social

Impact Initiative

Cultural NormValue for Money

• “What would a customer think”

• “Are we providing value for this expenditure?”

• “Is the outcome something our customers would value?”

• “Are we getting enough value out of this investment?”

How does this all related to Social Justice?

Social Justice

• Setting Service Levels• Assessing Customer

Willingness to Pay• Triple Bottom Line Analysis• Considering Service Equity

and Social Impact

Decision MakingTriple

Bottom Line

• Open dialogue• Identification of Social

Impacts• Quantification of Social

Impacts

Multicultural PrinciplesCommunity Engagement

• Include Communities in Planning and Decision Making

• Use Culturally Appropriate Outreach• Employee Responsibility for

Connections

RateSetting

Rates Based on:• Customer Desires• Service Equity• Full Cost Pricing• Intergenerational

Equity• Affordability

Report Back Report Back

At Your ServiceBill Stuffer

LEAKWQ Report

• Asset Management Creates a Launching Pad

• And Offers a New Paradigm for Customer Centric Decision Making

• Elbow Your Way Into the Dialogue• Or Start a New Conversation

Thank you!

[email protected]

2010 March Awwa Cs It Portland

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