Horizon Power Frank Tudor

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Information about Horizon Power Frank Tudor
Business & Mgmt

Published on March 12, 2014

Author: informaoz

Source: slideshare.net

Frank Tudor Change is the only constant.

Agenda •  About Horizon Power •  Changing circumstances •  How did we think about changing? •  The outcome •  Reflections

§  Service 100,000 people and 10,000 business §  2.3 MM sq km §  $1.5 Bn in assets §  40 Networks, 2 Interconnected systems §  70,000 Poles and Towers Our patch Our inheritance §  Ageing assets §  Embedded risks §  Neglected customers §  Motivated people

Agenda •  About Horizon Power •  Changing circumstances •  How did we think about changing? •  The outcome •  Reflections

Horizon Power has evolved to adapt to change Strategic Review 2010/11 •  Shift in strategy to focus on regional priorities •  Focus on delivery and no surprises •  Address organisational inefficiencies •  Effective governance and assurance Outcomes •  Performance Management •  Single point accountability •  Improved capability and capacity in the business •  Enabled the delivery of a significant project pipeline Horizon Power could not have contemplated the Strategic Review in 2013 without first achieving the outcomes of 2010

Heavy regional investment between 2006-2014 Investment of $1 billion directly and $3 billion indirectly •  Additional 200 MW in the Pilbara •  Network integrity significantly improved •  Core system upgraded •  20 Power Stations delivered •  Pilbara Underground Power progressed Now project pipeline has started to slow

Frank presentation v 4.pptx Draft—for discussion only 8 Economic pressures start to bite

Modern energy market dynamics are challenging Fuels •  Gas market maturity •  Rising gas prices Technology •  Renewables costs reducing •  Smartgrid inflection points Policy •  Uniform tariff / subsidy •  User pays/cost reflectivity Usage •  Decreasing load factor •  Increasing inequity Energy prices rising steeply and under scrutiny

In the face of economic pressure, energy industry transformation and the reduction in the project pipeline, a change was required.

Agenda •  About Horizon Power •  Changing circumstances •  How did we think about changing? •  The outcome •  Reflections

All possibilities considered.

Our focus on our regional customers is unwavering Your Local Energy Partner

We benchmarked ourselves against best practice, which helped identify new ways of doing business - regional US electricity co-ops Similar but different •  75 years old; 50MM customers •  Similar customer and network size •  Fully integrated networks •  Less complex governance Despite differences, many lessons learned from benchmarking •  Simple, fit-for-scale processes •  Smart use of technology •  Significantly lower cost in parts BenchmarkHorizon Power We benchmarked against world’s best practice

We agreed up front a number of design principles for our new operating model 8 Design PrinciplesVision Safe and reliable electricity Low cost Sustain- able for long term Remove barriers to technical evolution Capture scale 1 2 Simplicity Optimise cost of compliance 3 4 Accountability driven down as far as practical Empower consumer choice 7 8 KPI design for cost outcomes 6 Scaleability 5 Horizon Power involvement to the extent necessary to provide efficient economic outcomes

Implement longer term changes Change process Design new operating model Design new org structure Implement new org structure Transition to new operating model . 6 weeks 4 weeks 4 weeks 6 months 12-18 months Dec 2013Sept 2013 Jan 2014 June 2014 Jan 2016 •  Clean sheet •  Quick process •  Honest engagement

Agenda •  About Horizon Power •  Why did we need to change? •  How did we think about changing? •  The outcome •  Reflections

MCo Presentation 14112013.pptx 18 Old operating model New operating model RegionRegion Head Office Region Region Bentley Support Services Partnerships Head Office drives decisions and control Regions execute Pilbara Business Kimberley Business Esperance Business Midwest Business Empowered, accountable regions driving operations Central support provides enabling services New operating model drives regional empowerment

Examples of new operating model and application of design principles Simplicity Highly prescriptive centrally controlled Asset Management Plan, updated annually Trigger-based asset management planning, using more templated approach Accountability drive down as low as practical Centrally controlled decision- making, concentrated in senior Head Office executives Greater empowerment of local regional staff in management of customers, assets, spending Gov involvement to extent needed Business development team seeking out new opportunities Provider of last resort, when market can't Principle Old model New model

The outcome •  Decrease in subsidy of $100 Million per year by 2018 •  Annual savings of $36 Million delivered •  Each role redesigned in new structure •  40 separate initiatives in implementation.

Agenda •  About Horizon Power •  Why did we need to change? •  How did we think about changing? •  The Outcome •  Reflections

Learnings •  Benchmark – be brave •  Blank sheet of paper •  Speed - the essence •  People focused •  Proactive stakeholder engagement •  Involvement of Regional Board Members •  Clear accountabilities •  Road maps – assigned accountabilities with rigour testing

There will be challenges ahead •  BCG Cartoon Source: Change Curve created by Jeanie Daniel Duck from The Change Monster © 2001

Change is the only constant – next wave will be caused by growth in distributed generation Shift towards distributed renewable generation is straining infrastructure and shifting revenue away from what has long been our core product: energy Sales declineSales growth Impact of distributed generation on sales forecasts $M 1Source: Horizon Power analysis and estimations

Change is the only constant •  Integration of digital technology

Change is the only constant •  Optimised essential services provision to remote communities

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