Oncor Utility Solutions Strategic Outlook

Oncor Utility Solutions Strategic Outlook

“Changing the Way Utilities Work”SM

Wade Freeman Executive Vice President & General Manager

www.oncorutilitysolutions.com 1 800 456 3633 Copyright © 2002 Oncor Utility Solutions2

“Insanity: doing the same thing over and over again and expecting different results. - Albert Einstein

www.oncorutilitysolutions.com 1800 456 36333

Copyright 2002 Oncor Utility Solutions

TXUTXU

Oncor GroupOncor GroupTXU

Business Services

TXUBusiness Services

TXUMerchant

Energy

TXUMerchant

Energy

Electric Company

Asset Owner

Asset Manager

TransmissionServices

DistributionServices

Electric Company

Asset Owner

Asset Manager

TransmissionServices


OncorUtility Solutions

OncorUtility Solutions

Gas Company

Asset Owner

Asset Manager


PipelineServices

Gas Company

Asset Owner

Asset Manager


PipelineServices


Ownership Cost - Rising costs of ownership and shareholder expectations

0

2000

2000 2001 2002 2003 2004

Year

$ i

n B

illi

on

s

Cost to Own Assets

Cost to Manage & Maintain Assets(O&M)

Return to Stakeholder

Overall Revenue Stream

Pressures On Utility Leadership To Improve Business Performance

www.oncorutilitysolutions.com 1800 456 36335

Copyright 2002 Oncor Utility Solutions

Opportunity Snap ShotOctober, 2002

ProspectsContacts

RFPP SubmittedContract


Opportunity for Improvement

4th QuartilePerformer

Avg Performer Best Performer

Cap

ital a

nd O

&M

Spe

ndin

g

65%

Oncor’s position offers significant opportunity

for most utilities

43%

Oncor Current Position


Emerging Business Model

Asset Owner

Business excellence• Focuses on business

performance • Values business strategies

that create opportunity and manage risk

• Core competencies in forecasting and managing revenue and costs

Asset Manager

Asset excellence• Focuses on performance of all

assets (financial, physical, human etc)

• Core competencies in analysis, economic lifecycle and managing risk

• Leverages information technology to manage accurate and timely information

Asset Services

Service excellence• Focuses on efficient and

responsive service delivery• Values customer service and

the quality of the work• Core competencies in work

management and operating acumen

AO directs AM to meet asset performance goals

AM assigns activities to AS


Effective Asset Management Requires Defining The Right Investments To Achieve Owner’s Requirements

Performance ManagementPerformance Management

Do The Right Things Do Things Right

Design & ConstructDesign & Construct

OperateOperate

MaintainMaintain

WorkManagemen

t

WorkManagemen

t

Strategic Resource

Management

Strategic Resource

ManagementAsset Investment

Strategy

Asset InvestmentStrategy

Systems Platform


Results:Substation Capacity Utilization

System Substation Utilization Chart

67.3%

61.3%

82.5%80.2%

81.0%

73.4%72.2%

65.6%

79.2%76.0%

62.3%

60.6%

60.1%

59.1%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

1995 1996 1997 1998 1999 2000 2001 2002 2003

Util

iza

tion

(P

erc

en

t)

Substation Rating Utilization Before Additions

Substation Rating Utilization After Additions

Transformer Nameplate Utilization Before Additions

Transformer Nameplate Utilization After Additions

Savings due to Oncor changes in Substation loading philosophy represents up to30% of System Improvement planned annual Capital spend


InformationSharing

Mutual GoalsProcess Knowledge

BusinessObjectives

& Goals

WorkingTogether

AllianceAlliance

Shared Risks & Rewards

Best Practices Trust

Communication

Effective Outsourcing Through Alliances


Contractor Alliance KeyFeatures

Performance

measures

Firm pricing for extended period

Multi-year agreement

Larger share of

work volumeIncentive

Pay


76% improved to 96% On-time

Project Completion

Projected 2% of total Capital &

O&M Construction budget

Work Management Results

Reduced “Customer Not Ready” Instances

& Construction IssuesAverage 3.1% of total Capital &

O&M Construction budget

Accurate Tracking of Design Time for

Increased Collection of CIAC

Measurable SavingsClear Reasoning

Increased ‘On-time’ Project

Completion


Effective Asset Management Requires A Disciplined Performance Management Process

Performance ManagementPerformance Management

Do The Right Things Do Things Right

Design & ConstructDesign & Construct

OperateOperate

MaintainMaintain

WorkManagemen

t

WorkManagemen

t

Strategic Resource

Management

Strategic Resource

ManagementAsset Investment

Strategy

Asset InvestmentStrategy

Systems Platform


Performance Management “The Concept”

BusinessStrategy

BusinessStrategy

Measurement

BusinessObjectives

BusinessObjectives

Improvement

4. Generate PerformanceInformation

4. Generate PerformanceInformation

3. Set Goals3. Set Goals

2. DefineRequired Measures

2. DefineRequired Measures

1. Define Owner

Requirements

1. Define Owner

Requirements

5. DiagnosePerformance

Gaps

5. DiagnosePerformance

Gaps

6. DevelopInitiatives

6. DevelopInitiatives

7. ImplementInitiatives

7. ImplementInitiatives

PerformanceBenchmarking

ProcessBenchmarking


Goals are then developed using the following approach

Draft Performance

Goals

Draft Performance

Goals

Integrated Performance Management Framework

Integrated Performance Management Framework

Validated Performance

Goals

Validated Performance

Goals

Validation Workshop

s

HistoricalPerfor-mance

IndustryBench-marks

Regulatory Commit-

mentsDomain Measure Goal

Financial $2,585

Process 100.0

Actual 2001

$2,627

89.3

Serve New CAPEX per

New Location - Electric

SAIDI (Non-storm/No

Transmission)

Performance Goals (Example)Performance Goals (Example)


Where are You?

Electric Distribution O&M Spend / Customer (U.S. IOU’s - Regionally Adjusted Wage Rates)

TXU

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Oncor


Why choose Oncor Utility Solutions??

Scale Speed =

Value

Real $$$

SavingsEXTENSIVE

UTILITY

EXPERIENC

E

Experienced

Implementatio

n Focus

Global Scope

Elimination

of Risk

Through

Experience


Contacts

•Wade Freeman - 817.303.2901

•Mark Crowson - 817.303.2902

www.oncorutilitysolutions.com

1.800.456.3633

Oncor Utility Solutions Strategic Outlook

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