September 1997
Number 163

Published by Chugach Electric Association, Anchorage.  Chugach is a not-for-profit member-owed electric cooperative and Alaska's largest electricity supplier.

Competing against the
'best performers'

For some time now, Chugach has been preparing for competition by competing against the best utility practices it can find. We've done that by participating in benchmarking projects.

Here's how the process works. The utilities that agree to participate in and fund a study each compile information about the time and costs of performing certain functions. The data is collected and compiled by a professional organization which specializes in this area. Preliminary survey results are returned to the participants for review and correction. The final results are then presented to the utilities in the study, but are governed by a confidentiality agreement which prevents them from being shared with others.

For Chugach, the benefit of joining in these studies is the ability to judge whether our costs in certain area are reasonable or deserve a closer look. We've participated in several benchmarking studies since 1995, and overall it's been very helpful - especially to a board struggling to hold the line on rates without compromising safety or service.

We recognize that in many ways Alaska is different. We have some weather and geography challenges that other utilities don't, and as we all know the cost of doing business here can vary considerably from some Lower 48 locations.  However, we can't use that as a blanket excuse to ignore unjustifiably high costs.

We've already found areas where savings are possible, and management has implemented a number of cost-saving measures as a result. I'm pleased to say that to date the board and management have worked as a team to effect some real savings.

We're currently participating in benchmarking studies of generation, distribution, substations and transmission, infrastructure development and customer services. Some of these subject areas are getting their first review, while others are expanding on earlier studies. .

One of the benefits of this process comes from the reports the coordinators make to the board and management at the conclusion of the study. That's where we, as a board, have an opportunity to hear about -and question -suggestions on how we can bring some of our costs closer to those of the "best performers" in a category. We've also had the pleasure of learning that we are already among the best performers in certain categories.

Competing against the standards set by the best performers in our benchmarking studies has been a good way for Chugach to cut costs and prepare for competition in our industry.