DISPUTES & INVESTIGATIONS • ECONOMICS • FINANCIAL ADVISORY • MANAGEMENT CONSULTING Stakeholder Engagement Meeting Transmission Cost Benchmarking Study Work Plan and Peer Selection August 6, 2015 Confidential and proprietary. Do not distribute or copy.
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DISPUT E S & INVESTI GATI O N S • ECONOMI C S • F INAN CI A L ADVISO RY • MANAGEM E N T CONSULT I NG
Stakeholder Engagement Meeting
Transmission Cost
Benchmarking Study Work Plan
and Peer Selection
August 6, 2015
Confidential and proprietary. Do not distribute or copy.
Section 1 »
Section 2 »
Section 3 »
Section 4 »
Section 5 »
Overview
Approach
Peer Group Selection
Performance Metrics
Next Steps
Confidential and proprietary. Do not distribute or copy. 2
Agenda
Overview
Navigant
Confidential and proprietary. Do not distribute or copy. 3
» A global and independent consulting firm, Navigant’s reputation is for assisting our clients across core
industries to address the critical opportunities and challenges of new markets, evolving customer demands,
regulation and business model changes, new technologies, risk, and disputes
» With more than 400 consultants, Navigant’s Global Energy Practice is the largest energy management
consulting team in the industry. Our team of experienced professionals serves leading energy companies
to address their most complex business opportunities and challenges
Overview
First Quartile Consulting
Confidential and proprietary. Do not distribute or copy. 4
» First Quartile Consulting is the leading provider of benchmarking services in the transmission and distribution
and customer service areas for utilities
» Established in 2007, the leadership team has was together for 20 years prior to founding of 1QC
› The 1QC team began conducting large-scale transmission and distribution benchmarking studies in 1989
› Annual studies under the First Quartile Consulting name began in 2008
» Beyond the annual studies, the firm conducts many different tailored benchmarking studies each year for
individual clients, designed to meet specific needs, be it deep concentration on a particular area (e.g. work
management approaches, capital planning, field construction, etc.), or a broader view across geographies or
outside the utility industry
Overview
Study Objectives
Confidential and proprietary. Do not distribute or copy. 5
Design and implement a robust and replicable benchmarking study of Hydro One’s
transmission costs
» The benchmarking study will:
› Include an appropriate group of businesses to use as comparators/peers to Hydro One, taking into
account a number of characteristics, including asset demographics, geography, customer characteristics,
etc.;
› Quantify and evaluate Hydro One’s transmission costs relative to the peer group, taking into account cost
drivers and differentiating characteristics;
› Ensure a common understanding of the comparison criteria through the use of clear definitions;
› Explore cost variations and associated practices and methods;
› Make recommendations on practices that could be augmented or adopted to realise efficiency gains;
› Engage stakeholders in regards to the peer group selection criteria, comparison metrics, and preliminary
findings and recommendations.
Approach
Work Plan
Confidential and proprietary. Do not distribute or copy. 6
» Introductions, scope, logistics
» Finalise timeline and work plan
» Roles, responsibilities, assignments
» Metrics and considerations for identifying peer group
Quantitative Analysis Qualitative Analysis
Project Kickoff
Data Collection and Normalisation
Statistical Report and Comparisons
Analysis and Recommendation
Development
Preliminary and Final Summary Report
Regulatory Support and Testimony (as required)
Local Review and Best Practice Investigation
Opportunity Assessment
Stakeholder Consultation #2
» Interviews, process assessment
» Practice documentation and analysis
» Review current performance metrics
» Comparisons to best practices
» Identification of practice improvement
opportunities
» Gather data (internal and external)
» Validation and normalisation
» Assembly of comparator data
» Statistical report prepared
» Comparisons to leaders
» Hydro One scorecard
» Review results
» Develop conclusions
» Recommendations
» Report and Recommendations
» Review by Hydro One
» Stakeholder review of
preliminary findings and
recommendations
Project Structure Setup and Stakeholder Consultation #1
» Formalise preliminary study design, e.g., peer group,
comparator characteristics, comparator metrics
» Review preliminary design with Hydro One
» Once agreed, present design to stakeholders
Approach
Benchmarking Experience
Confidential and proprietary. Do not distribute or copy. 7