CHUGACH ELECTRIC ASSOCIATION
BLUE RIBBON PANEL
The report: Complete version Redacted version
The new reform board at Chugach Electric appointed a third party Blue Ribbon Panel of top executives to review the performance of Chugach Electric and advise the board and the community. Chugach has high service costs. Among other things the Panel looked at is how Chugach should restructure to deliver value more in line with national economic performance standards for electric utilities.
MEMBERS
David R Gottstein – President, Dynamic Capital Management
Robert J Hickel – President, Hickel Investment Company
Loren H Lounsbury – Former APUC Commissioner, Commerce Commissioner
Richard L. Lowell – President, Ribelin Lowell & Co. Insurance Brokers (retired)
John Niles Wanamaker – Vice President, Seattle-Northwest Securities Corporation
Panel facilitator and primary staff member -- William C. Noll, former Alaska Commissioner of Commerce, Community and Economic Development
BULLET SUMMARY
12/19/07 - Major changes recommended at Chugach Electric by Blue Ribbon Panel of top business executives appointed by the new reform Chugach board:
Take all steps necessary to deliver the lowest possible cost power.
Political action efforts on the part of Labor have compromised the natural balance between the board/management and labor, resulting in high costs that cannot be justified.
Chugach must position itself so that it can't be held hostage by Labor. It must be able to bargain from a position of strength, not weakness.
Chugach must develop contingency plans for a strike or, for that matter, the loss of workmen for any emergency situation, such as epidemics or terrorist acts.
It must have the management tools so that it knows, and reports to all, what its costs are.
Comparative benchmarking is a critically important tool in the management and cost containment program of any utility. Benchmarking at Chugach is inadequate. It should be comprehensive and cover all activities, not just select favorites.
Chugach distribution costs could be as much as 60% higher than those of utilities with similar systems. That's on the order of $25 million a year or 2¢ per kwh. Other cost components are reported to be twice national norms suggesting that Chugach has several major and systemic deficiencies in its cost and delivery structure and operations, including among its collective bargaining units.
In keeping with the principle of transparency, benchmarking results should be made public by Chugach.
Information campaign needed to bring honest information on where the utility is now, not only in terms of reliance but also in its quest to deliver the lowest possible rates to its customers, demonstrating where Chugach meets the performance of its peers, where it is lacking and how it is working to improve.
Improve long-term planning, especially for generation and financial matters.
The Chugach board's vision of transparency and dedication to an open process is a stepping stone to a fully informed membership and public which in turn will lead to the most efficient and cost effective system possible.
TIMELINE
5/16/07 - Panel frame of reference Board Motion
on
CEA website One
pager
6/20/07 - Panel appointees, facilitator, resumes Board Motion
on
CEA website
11/14/07 - Panel members attended Chugach board meeting
12/18/07 - Report released at press
conference
1/08 - Chugach
Outlet Major Changes Recommended at Chugach