The Wired Group, a leading distribution utility performance consultancy, released its first annual electric investor-owned utility (IOU) Customer Value Ranking, ushering in a new era in utility performance benchmarking and accountability. The Customer Value Ranking measures "customer value" by comparing the IOU inputs for which customers pay (capital investment and operations spending per customer; lower is better) to the benefits customers receive (reliability and overall satisfaction). The Wired Group's Internet-based Utility Evaluator™ performance benchmarking software was used to calculate the Customer Value Ranking.
Reactions to the Utility Evaluator™ and its potential applications have been positive. "There is nothing like it on the market," said one consumer advocate who didn't want to be recognized and who utilized the application to support his organization's position in a utility rate case. "This software will revolutionize how we hold utility companies accountable for rates, performance and reliability. Consumers and utility companies will be most interested in the data and findings."
The Utility Evaluator™ synthesizes IOU performance data from multiple public sources, including the Federal Energy Regulatory Commission (FERC) Form 1, the EIA Form 861, JD Powers and Associates' annual customer satisfaction surveys, SEC 10-K, and state regulatory filings. Of the 136 US electric IOUs serving customers in 2016, 95 had data in all four determinants; 41 IOUs missing one or more were not ranked. "We have worked long and hard to make this data available, and to make sure it is accurate, valid, and relevant" explained Wired Group President and author Paul Alvarez. "We are very excited to usher in a new era of utility performance benchmarking and accountability, and encourage utilities, their suppliers, regulators, consumer and environmental advocates, and Wall Street analysts to take notice."
Top decile electric IOUs (those ranked higher than 90% of IOUs) in 2016:
1. Florida Power & Light
2. MidAmerican Energy
3. Toledo Edison
4. Northern States Power - Wisconsin
5. Indianapolis Power & Light
6. Central Maine Power
7. PPL Electric Utilities
8. Gulf Power
9. Northern States Power - Minnesota
10. Ohio Edison
Consumer advocates are particularly interested in the software developed to synthesize, analyze, and present the publicly-available IOU performance data, "I believe the Utility Evaluator™ is a valuable tool for NASUCA members and for regulators looking to deliver customer value," observed David Springe, Executive Director of the National Association of State Utility Consumer Advocates (NASUCA). "Using the Utility Evaluator™ to benchmark performance against peer utilities offers insight into how effectively customer dollars are being spent and will help us hold utilities accountable."
IOUs with low rankings are likely to question the validity of the Customer Value Ranking, citing business characteristics and customer demographics they claim invalidate comparisons to other utilities. For example, utilities serving regions with relatively lower population densities claim justification for higher distribution costs per customer; smaller utilities claim higher overhead costs per customer than larger utilities; and utilities with high air conditioning loads claim justification for higher distribution capital needs. But the Utility Evaluator™ accounts for these differences, and those capabilities are applied to the Customer Value Ranking. "We've run regression analyses comparing characteristics to performance for the issues typically cited by utilities, and tested dozens of others not typically cited. We've adjusted the rankings for each of the four determinants by the statistically appropriate correlations found in the performance data across all utilities over the last six years," added Alvarez.
"As an indication of the lack of bias in our ranking methodology, you'll notice that IOUs of all sizes, from all regions, serving all types of customer mixes and geographies, are distributed relatively evenly throughout the rankings," Alvarez continued. "We'll continue to adjust rankings based on the correlations found in the data via econometric analyses in future years' Customer Value Rankings."
The full 2016 Electric IOU Customer Value Ranking follows Wired Group and Utility Evaluator™ descriptions. Rankings for each of the four individual determinants are available at http://www.utilityevaluator.com.
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The Wired Group
The Wired Group helps clients unleash latent value in distribution utility businesses. Consumer and environmental advocates, regulatory staff, non-profit utilities, utility suppliers, and industry associations ask the Wired Group to provide them with objective information and decision support regarding vision, strategy, execution, stakeholder engagement, and performance measurement for critical distribution business issues including grid modernization, demand response, and distributed energy. To learn more about the Wired Group, its team, and its contributions to the distribution utility industry, please visit http://www.wiredgroup.net.
The Utility Evaluator™
The Utility Evaluator™ simplifies utility performance benchmarking, and makes it credible. Developed by the Wired Group and available via the internet on a subscription basis, the application combines publicly-available utility performance data from a variety of reputable sources into a single data repository. Aided by an intuitive interface, users access pre-defined performance queries to identify strong or weak utility performance on more than 20 metrics, from reliability to spending. Significantly, users can define peer groups for benchmarking purposes, using utility characteristics such as size, customer density, aggregate customer load profiles, regulatory constructs, and many more to deliver credible analyses that control for factors which could impact a specific utility's performance. To learn more about the Utility Evaluator, please visit http://www.utilityevaluator.com.
Paul Alvarez is the founder and president of The Wired Group, a consultancy that helps clients uncover the latent value in distribution utility business. Active in the utility industry for almost two decades, Alvarez has testified before state utility regulators in California, Colorado, Kansas, Kentucky, Maryland, Massachusetts, and Ohio. His research and his book, Smart Grid Hype & Reality, identify missed opportunities to deliver customer benefits from massive grid investment. The book documents the dramatic differences between customer and community needs and IOU motivations as driven by existing compensation models for regulated monopolies. Mr. Alvarez is an adjunct professor at the University of Colorado's Global Energy Management program, and at Michigan State University's Institute for Public Utilities. He has a bachelor's degree in Business Administration from Indiana University and a master's degree in management from the Kellogg School at Northwestern University.
2016 Electric IOU Customer Value Ranking by the Utility Evaluator™
The Customer Value Ranking compares the rates customers pay (measured by capital and operations spending) to the benefits customers receive (measured by reliability and JDPA Overall Customer Satisfaction scores). Overall rankings are an average of each utility's rank in each determinant. Regression analyses are used to adjust rankings for utility-specific characteristics to the extent indicated as appropriate and statistically significant in the data. Characteristics used to adjust 2016 determinant rankings include customer counts, customer density, system load shapes, and business characteristics. For more information please see the rankings by determinant at http://www.utilityevaluator.com.
See attached value ranking list.
Read the full story at http://www.prweb.com/releases/2017/06/prweb14395139.htm