Seattle Public Utilities
Strategic Business Plan
for 2015-2020
Presentation to APWA – December 7, 2016
Melina Thung, SPU
Noel Miller
Karen Reed
The Challenge
• Four lines of utility businesses in one department
• Different rate setting periods for each line of
business
• Ongoing need for major capital investment to
replace aging systems, meet new mandates
• Declining demand for service – additional rate
pressure
2
The Challenge Continued
How can we get more focus on the longer-term
policy and financial challenges for the Department,
ensure reasonable and predictable rates for our
customers and maintain service levels?
3
The Response
• A transparent six-year business plan (2015-2020)
and predictable rate path for all lines of business
•
•
•
•
Maintain current service levels
Identify specific new investments
Commit to efficiencies and savings
Tie these investments and savings to a six-year rate path
• Create customer review panel for input, advice
• Engage employees, customers and policy makers
throughout
4
The Response: Key Benefits
• Transparency for customers, policy makers, staff
• Increased focus on policy issues and service levels
• Engagement of employees, customers and policy
makers
• Accountability
• Rate predictability
• Much easier budget process
5
The Six-Year Planning Process
GUIDING PRINCIPLES:
Mission, Vision, Strategic Role, Values
Mayor, Council, Budget Office, Customer Review Panel, Employee Input
STARTING
POINT
SWOC
Baseline
ANALYSIS
STRATEGIC
BUSINESS PLAN
Programmatic Cuts
Efficiencies &
Benchmarking
New Investments
•Baseline activities
•New Action Plans
& Efficiencies
•2015-2020 Rate
Path
FRAMEWORK
Focus Areas &
Strategic Objectives
Customer
Input
Customer
Input
6
Customer Review Panel
•
•
•
•
Nine customers, appointed by Council and Mayor
Represented a wide range of customer interests
Met twice per month (3 hours each) for 15 months
Also at the table: SPU leadership, Council staff,
Budget Office
• Independent facilitator guided meetings, with
support from Panel Chair and Vice-Chair
7
Guiding Principles (“Promise”)
Mission:
Providing efficient and forward-looking utility
services that keep Seattle the best place to live
Vision:
Our customers will see how their utility dollars
sustain and improve their quality of life
Strategic Role:
Solving problems at the source
8
Values:
Customer focus, Safety, Innovation, Inclusion, Value
for money
Starting Point: SWOC
• Strengths, weaknesses, opportunities, and challenges
(SWOC) developed with input from employees,
Executive Team, customers, and Customer Review
Panel
9
Internal
Strengths
External
Opportunities
Weaknesses
Challenges
Framework: Focus Areas
Initial wording
Final wording
Create an easy & engaged Making it easier to get help
customer experience
and find answers
10
Transform the workforce
Enhancing our services by
continually updating
employee skills
Protect Environment &
public health
Better protecting your
health and our
environment
Achieve operational
excellence
Improving how we work to
deliver consistent, high
quality services
Framework: Strategic Objectives
Focus Area
Strategic Objectives
Create an easy & engaged
customer experience
Minimize customer effort required
to interact with SPU
Making it easier to get help
and find answers
Ensure equitable access for all
customers
Create and opportunity to
participate in utility programs,
such as recycling, rain gardens,
and water conservation
Make SPU transparent to
customers and constituents
11
Starting Point: Baseline
• Definition: The change in annual rates needed to
maintain existing service levels, plus meet firm
regulatory requirements
o Actual service quality (as opposed to targeted
service quality) neither degrades nor improves
o Does NOT include any efficiencies, reductions to
existing programs, or adds to fill gaps
o Most of SPU’s work is represented in the baseline
12
Starting Point: Baseline
• Provides a long-term picture of reality
• Clarifies cost drivers
 Which do you control?
 Which do you not control?
• Increases focus on finding efficiencies to offset cost
of needed / desired investments
• Major analytical effort
• Baseline rate increase starting point: 4.6% per year
13
Starting Point: Baseline
14
Analysis: Programmatic
Reductions
• SPU staff prioritized their O&M programs and CIP
projects using software, using a set of common
criteria that was based on the Plan’s framework
• Staff identified programmatic reductions to the
baseline budget
• Cuts had minimal service impacts and made room for
new investments
15
Analysis: Efficiencies &
Benchmarking
• Independent consultant evaluated SPU in dozens of
operational and capital areas
• Consultants benchmarked SPU against several other
utilities
• 44 potential efficiencies identified
• Executive Team reviewed this list to include items
they felt were achievable within guiding principles,
framework; reviewed with Customer Panel
16
Analysis: Action Plans
• E-Team identified gaps via the SWOC exercise
• Staff developed action plans to address the gaps:
 Rationale, what gap is being addressed
 Outcomes/goals
 Cost and timing of implementation
 How success will be evaluated
• E-Team prioritized all action plans, eliminating lower
ranked items; ended up with 27 action plans
17
Putting the Pieces Together
18
Six-Year Endorsed Rate Path
Average
19
2015
2016
2017
2018
2019
2020
2015-20
Water
0.0%
5.2%
5.2%
4.1%
4.4%
2.6%
3.6%
Wastewater
0.8%
3.9%
1.8%
2.8%
7.2%
8.1%
4.1%
Drainage
9.8%
10.1%
8.1%
7.8%
8.1%
8.0%
8.6%
Solid Waste
4.2%
3.5%
6.0%
4.0%
2.9%
2.4%
3.8%
Combined
2.7%
5.0%
4.7%
4.2%
5.5%
5.2%
4.6%
Customer Outreach – 2 Phases
• Invested in finding community leaders to help do
this right
• 14 outreach sessions, some multi-lingual
• Phase 1: Before we made decisions: What’s
important to you? What level of rates can you
support?
• On-line customer survey
• Phase 2: After we submitted the Plan: What do you
think about the proposed Plan?
20
Employee Input
• Staff developed the Action Plans
• Dozens of employees participated in the efficiency
study
• Staff assisted with customer outreach
• SPU conducted two employee surveys
21
New for SPU
1. Single plan for all four lines of business
2. Using a customer review panel to inform plan
development
3. Engagement of Executive and Council staff
throughout the planning process
4. A six-year baseline
5. A plan that includes a six-year rate path
6. Specific efficiency savings
7. Use of software prioritization tool
22
After Two Years…
• Council adopted Plan with just a handful of
amendments
• SPU required to provide regular progress reports
• Better understanding of our issues
• Transparency for the public
• Accountability agreement for the Utility
• Budget process much easier
• Stronger, more unified Utility leadership
23
Looking Back
What worked well during the planning process?
• SPU director and Executive Team involvement
• Customer Review Panel
• Executive and Council staff engagement
• Public outreach and employee in-reach
• SPU core team and use of consultants
• Detailed analysis of the baseline and future
actions
Info available at http://www.seattle.gov/util
24
Looking Back
What were some challenges?
• The prioritization software had its limitations
• Employees lacked buy-in into the efficiency
recommendations
• It’s hard to quantify and realize efficiency savings
• Employees lacked an understanding of what the
Plan is all about
• Many employees didn’t see themselves in the
Plan
25
Plan Implementation
What we’re doing:
• Detailed out 2015 and 2016 action plans and
efficiency actions and integrated these into staff
work plans
• Received rate increases for all lines of business,
staying within the 4.6% path
• Submitted quarterly progress reports to Council
on service levels, actions items, and rate path
• Worked with customer groups (non-profits and
SPU’s Community Advisory Committees)
• Engaged employees
26
Plan Implementation Continued
Key factors to sustain the Plan – culture change and
continuous improvement:
• Strong sponsorship and designated staff
• Tailored, adaptable implementation approach
• “Operationalize” the Plan – integration into dayto-day work and other initiatives
• Focus on the principles and outcomes
• Employee engagement
27
Plan Update
Development of the 2018-2023 Plan is underway:
• Revised SWOC; included futuring trends
• Updating the six-year rate path
 Adjusting the baseline budget and rates
 Identifying new savings and efficiencies
 Identifying new investments to address gaps
• Convened the Customer Review Panel
• Conducting customer and employee engagement
28
Thank you.
Questions? Comments?
29