Professional Documents
Culture Documents
Re: Case 16-M-0001 – In the Matter of a Comprehensive Management and Operations Audit of
Central Hudson Gas & Electric Corporation
Sincerely,
The criteria for the composition of the CH Energy Group Board of Directors should be modified to
4.2 7
require that it be comprised of a majority of independent directors.
4.3 The Central Hudson Board should reduce its size to not more than nine members. 9
Only independent directors should be compensated for participation on the Central Hudson
4.4 10
corporate board.
Central Hudson Directors should be required to hold the equivalent of one times their annual
4.5 12
retainer in Fortis stock.
Board members should be provided opportunities to visit and tour field locations and operations
centers.
The CEO and/or General Counsel should develop a systematic plan of surveying conferences and
other training opportunities designed to enhance individual director knowledge, to learn about
industry issues applicable to Central Hudson governance, or both.
4.6 The CEO and/or General Counsel should implement a formal process to track director education 13
opportunities and attendance, ensuring that participation includes as any of the independent
directors as possible; giving consideration to issues or training benefiting both the director and
the Company.
The Company should implement a practice of including speakers to make presentations to the
Board on subjects of interest, scheduled at times consistent with its quarterly meetings.
The Corporate Governance guidelines addressing “Access to Management” at page 5 should be
revised to eliminate the need for board members to coordinate their communications with
4.7 senior management or other employees with the CEO. 15
Aside from being requested to make formal presentations to the Board, the current practice of
executive management attending Board meetings should be terminated.
The Business Plan submitted to the Board of Directors should be modified to include comparative
data regarding historic and expected workforce levels, providing
departmental detail, separated by exempt and non‐exempt employees. The Business Plan should
5.1 17
also provide financial (GAAP) earnings and returns, aside from the current emphasis on
“regulatory” results.
The Enterprise Support Service group should develop specific, trackable metrics for Supplier
12.1 19
Diversity and Cost Avoidance.
The Company should clarify its commitment to maintaining its current credit ratings by making
14.1 this a “Team Goal”, elevating it from its current performance designation as a Treasury and 21
Accounting Performance Indicator.
i
Recommendation Page
After the initial round of calculations utilizing the new DRIVE software is completed,
Central Hudson should train their planners in the software. This will enable future DRIVE
15.1 23
software‐ related work to be accomplished in‐house.
Central Hudson should study the need and requirements to develop a linkage between their
existing work management process and their GIS database. The linkage would allow input from
15.2 the GIS database and the development of work orders that accurately track the installs, 25
removals, and transfers of the assets by GPS location. The study should include a Benefit/Cost
Analysis.
Central Hudson should develop a transition process with the present systems that are in place to
15.3 manage the GIS data. In addition, a migration plan should be developed for the maintenance of 28
the data with the arrival of new systems.
Central Hudson should work with programming vendors and other New York utilities to identify
new short‐term forecasting tools that are currently available or being developed to recognize the
16.1 32
addition of distributed energy resources (DER) added to their system.
When Central Hudson replaces its Customer Information System (CIS), it should include a
forecasting module similar to one generally employed by utility peers. In effect, this forecasting
16.2 module would be a data manipulation and extraction program interfacing with the CIS and 33
feature enhanced data gathering capabilities and less manual entry of the forecasting source
data.
As solar farms come on line in the next few years, Central Hudson should increase the frequency
16.3 of its load and sales forecasts with updated data, as the increase in DG will reduce the load 35
directly supplied by the Company.
Central Hudson should explore various proven change management methodologies and make
one change management methodology or model the Central Hudson corporate standard. In
18.1 addition, the Company should identify when and where supporting change management 37
activities and tools can or should be used.
Develop an implementation roadmap for modernizing IT systems, describing the final
arrangements planned five to 10 years into the future. The roadmap should identify attributes
and interdependencies such as the systems, integration, data flows, and system of record. The
19.1 implementation roadmap should recognize all the systems needed to meet future requirements, 39
as well as the critical operational data needed to conform to IEEE Standards for each system to
achieve the overall plan.
Develop as an ongoing project development document, an integration message table for use
during system development and implementation. The table should identify key elements, their
triggers and actions taken, along with the system where they originated. The integration
19.2 42
message table will improve communications and may result in less rework on certain shared or
jointly owned systems.
The assumptions that resulted in normalized sales being consistently (six out of seven years)
20.1 greater than forecast should be investigated and the results applied to future forecasts. 44
Central Hudson should give consideration to other performance metrics for supply
procurement strategies, policies, processes and methods, as two out of the three existing KPIs
21.1 46
are really economic cost trackers.
ii
Recommendation Page
Overland recommends that the Company prepare a quarterly analysis of gas price volatility with
and without hedging. Performing this analysis consistently will give the Company better insight
22.1 47
into the effectiveness of their hedging positions, particularly if they are over‐ or under‐hedged.
The Company should consider reducing its hedging target to 25%‐50% based on the current low
22.2 48
natural gas price and stable supply environment.
Central Hudson should initiate a special program targeted to replace the small segments of cast‐
iron, wrought iron, and bare steel main and services that operate at higher pressures. Present
23.1 49
LPP replacement programs do not prioritize replacing these potentially risky pipe segments on an
expedited basis.
The Company should develop the means to identify, record, and report why a distribution main
23.2 51
or service is being installed.
In its succession planning, Central Hudson should rotate high‐performing managers and
24.1 supervisors between electric and gas to develop future leaders knowledgeable in both areas of 53
the Company in a more formal process.
Expand the quality compliance monitoring of construction and operations and maintenance work
completed by internal gas crews and minor electric construction and operation and maintenance
26.1 work by utilizing dedicated Central Hudson staff or an independent third party contractor to 55
periodically conduct an independent assessment.
Central Hudson should track project and program costs that are expensed within its existing
27.1 57
mainframe accounting system.
Central Hudson should develop a more detailed Comparison of Actual Results Versus Rate
Allowances Report by disaggregating the All Other Net catch‐all expense grouping. All Other Net
27.2 expenses should be no greater than 20 percent of Total Operating Revenue Deductions. In 58
addition, significant variances between actual costs and rate allowances should be documented.
Expand the electric T&D work management and gas T&D ARCOS Crew Manager systems to
include the outside contractor workforce, as they constitute a significant component of Central
28.1 Hudson’s workforce. In 2016, 51 FTE’s (or almost 18% of the electric T&D workforce) were 59
contractors; and 177 FTE’s (or over 75% of the gas T&D workforce) were contractors.
Develop the business case for purchasing and implementing a work management information
system (WMIS) for electric T&D. The business case should be well structured and capture the
reasoning for initiating the project and include a cost benefit analysis. Central Hudson should
28.2 61
commit to following up on and acting upon the results of the study by prioritizing the
development and implementation of the WMIS in its roadmap for modernizing IT systems.
Central Hudson should develop a program focused on reducing the backlog of severity 4 and 5
electric capital and O&M inspection repair work. The goal of the program should be that the
28.3 63
backlog of accumulated work, resulting from 2015 and 2016 inspections, is more consistent with
the historical backlog.
A more robust set of procedures should be developed which documents the performance
management process from Team Goal selection and target setting for reporting of results and
29.1 66
consequences for under‐performance in one comprehensive discussion.
iii
Recommendation Page
Central Hudson executive management should perform a more thorough review of its Team
Goals and group key performance indicators results and formally document its findings and
conclusions. On obvious document that could be enhanced is the Team Goals and Performance
Indicators Dashboards report. At a minimum, all projected and actual failures to achieve targeted
performance should be explained in writing (e.g., Cause & Mitigation column). Corrective actions
for each case of nonachievement should be included with these published results. Errors in the
29.2 report should be corrected. Executive management should also provide a written statement 68
regarding its expectations as to the level of performance to be achieved with these reported
results. To reinforce its commitment to the achievement of all Team Goals, Central Hudson
should consider expanding its performance reporting in its newsletter to all Team Goals on a
routine monthly basis.
The entire Central Hudson Board of Directors should be briefed on all Commission precedents
concerning the cost recovery of incentive compensation in customer rates and any related
guidance produced by the Commission or Staff on the matter. This should occur on an annual
basis prior to the approval of the upcoming year’s incentive compensation plan design for any
29.3 70
Central Hudson employees. After the initial briefing, if the Board wishes to have executive
management make its presentation to the Governance and Human Resources Committee, this
should be permitted.
Central Hudson should expand the use of incentive compensation based upon corporate‐wide
performance to its non‐executive management as an alternative to the continuation of the
current compensation design in which most pay is fixed. Performance measurements used to
determine the level of incentive compensation paid should be designed to appropriately benefit
29.4 customers, employees, and shareholders at targeted levels which encourage continuous 72
improvement over time. Within these parameters, Central Hudson should retain a compensation
consultant to assist in implementing this recommendation. To alleviate any negative impact this
recommendation may have on employees, a multi‐year phase‐in of this proposal is suggested.
Corporate‐wide financial objectives of any short‐term incentive compensation plan offered to
employees working on behalf of Central Hudson should be weighted no more than 30% of total
29.5 Team Goals measured. As with any of the objectives established for incentive compensation 74
plans, the targeted levels should encourage continuous improvement.
Central Hudson should implement a balanced scorecard system or an equivalent method as a
mechanism to improve corporate performance and to better support recognition of incentive
29.6 75
compensation within the executive and management group.
The Vice‐President, Human Resources & Safety should attend industry programs focused on
management performance and incentive compensation, as well as specific programs focused on
29.7 78
the Balanced Scorecard system, should the Company pursue the implementation of this (or some
equivalent) system.
iv
Recommendation Page
Prospectively, Central Hudson should engage in both internal and external benchmarking and the
pursuit of best practices. These efforts should be adequately documented and made available to
the NYSPSC, its Staff, and their representatives, as appropriate. Central Hudson should obtain
releases from third parties that restrict the disclosure of certain information so that
29.8 benchmarking and best practices documentation can be reported to the NYPSC, the Staff, and its 79
representatives. Expenditures made to any third party who does not agree to the release of
benchmarking and best practices information should not be requested in rates by Central
Hudson or otherwise considered in base rate proceedings.
Central Hudson should make the necessary modifications to procedures or the CIS to recognize
meter readings and calculate service bills without manual intervention when service
30.1 consumption precedes the service request date due to the customer’s failure to notify Central 81
Hudson when they move into a residence and begin consuming power.
Central Hudson should make the changes necessary to ensure that when new meters are
installed on existing accounts, the CIS system cannot fail to bill the account based on the new
meter. Given that CIS already captures the usage data for these meters,
CIS should be able to bill the usage, and bills should not have to be estimated due to a failure to
30.2 82
follow through with paperwork. This may require a programming change to CIS, the
enhancement of procedural controls associated with meter changes, or both.
Central Hudson should implement procedures to ensure that necessary action is taken to help
prevent meters from going beyond six months without a reading. This may require escalating
30.3 attempts to contact the customer as the number of consecutive estimates increases. It may also 84
require programming changes in CIS to help alert CAS employees that additional action needs to
be taken.
If wiring inspections are required as a condition for reconnection following the discovery of
30.4 meter tampering, the basis for the policy should be clearly documented and it should be required 86
that the policy be consistently applied.
Central Hudson should clearly document and consistently apply its policy for transferring prior
bad debts into current residential customer accounts. (Note: The Bad Debt Transfer Process
30.5 document Central Hudson provided as evidence of its policy (IR‐384, Attachment 1) does not 87
clearly state the six year age limit on which bad debts may be transferred into current accounts.)
Central Hudson should develop a written policy addressing the circumstances under which social
security numbers are requested or required as a service condition. In addition, to limit
opportunities for identity theft, service applicants should not be requested to fax or mail copies
of their social security card to Central Hudson, unless the Company has a procedure to ensure
30.6 88
the security of paper versions of such documents. The NYSPSC should consider whether and
when a utility may require, rather than just request, social security numbers as a condition of
service.
Central Hudson should develop and post online, as a reference document, a set of written
31.1 guidelines describing the Company’s procedures for complying with residential and non‐ 90
residential customer regulations.
v
Recommendation Page
To ensure that all applicants in similar circumstances are subject to the same requirements,
Central Hudson should develop written guidelines covering the circumstances under which
residential service applicants must provide proof of identification or additional documentation.
When additional documentation is required, the policy should explain what documentation is
31.2 91
required and why. This is not intended to remove the decision‐making process from CSRs;
rather, it is intended to help ensure CSRs apply similar requirements to all applicants with similar
circumstances.
Central Hudson’s written service application form should include additional space and require
additional information concerning the nature of business and power‐consuming equipment to be
31.3 used. The current forms have a “Nature of Business” field, but the space is large enough for only 92
one or two words to describe the business.
Central Hudson should develop a guideline for CSRs to use when deposits are requested from
residential applicants as a condition of service. It should describe the circumstances, consistent
31.4 93
with HEFPA Section 11.12, under which deposits may be request from residential service
applicants.
Central Hudson should describe the reason for requiring deposits in all service denial letters
31.5 applicable to customers for whom a deposit is requested as a condition of obtaining utility 94
service.
Central Hudson should have a guideline addressing its use of courtesy discounts, which are
offered to customers receiving back‐billings, at the discretion of CSRs. The guideline should
31.6 95
describe when the discounts can (and should) be offered and the range applicable to different
circumstances.
Central Hudson should develop and document, in written form, a procedure to ensure that field
collectors check to ensure payment has not been received at the beginning of the day on the
31.7 96
date of scheduled termination, before they begin field termination activities for the day.
vi
IMPLEMENTATION PLAN
Recommendation:
The direct reports to the CEO, aside from administrative support, should be restructured to a
group of not more than four to six senior officers of the Company.
The General Counsel should assume the role of Chief Legal Compliance, Ethics & Privacy
Officer, and he should serve as chair of this committee.
Team Members:
Central Hudson disagrees with this recommendation. The President and CEO believes the
current structure of the Executive Management group is effective, including the number of
executives reporting directly to the President and CEO. The current group of officers who
directly reports to the President and CEO are all well-seasoned Executives with broad
responsibilities that do not require daily supervision or oversight. At the same time, the current
structure provides the President and CEO with efficient and effective direct connection to each
of the critical areas of the Company. The audit report presented no evidence of inefficiencies in
its findings. Management acknowledges that as business needs evolve, including changes in
personnel, including as a result of future organizational changes or retirements, strategy, and
priorities, alternative organizational structures that may allow for a reduced number of direct
reports to the CEO will be considered in the future. The Governance and Human Resources
Committee of the Board of Directors of Central Hudson is responsible for the review of the
overall effectiveness of the officers team of the Company, including the size and structure of the
Executive Management group, and the Committee will continue to evaluate these matters in the
future to ensure the ongoing effectiveness of the executive management structure. The
President and CEO has advised the Governance and Human Resources Committee and Board
of Directors of these findings and recommendations at its November 17, 2017 meeting.
The Company recognizes that one common structure used in connection with legal compliance
is to have General Counsel occupy the role of the Chief Legal Compliance, Ethics, & Privacy
Officer and concurrently serve as the chair of the legal compliance committee. That structure
would not be the most effective structure at Central Hudson. The current structure at Central
Hudson has been in place since the Legal Compliance, Ethics & Privacy Committee was
founded at Central Hudson and management believes that the current structure works efficiently
1
and effectively, with the Vice President – Human Resources and Safety acting as chair. Central
Hudson’s General Counsel is not a full-time employee of the Company and is only on the
property part-time. Under the current structure, General Counsel acts as legal counsel to the
Committee, and assists in the development of the Committee agenda, records and maintains
the minutes of the Committee, attends all Committee meetings, and provides support and legal
input as necessary to the Committee and the Committee Chair. Further, the current structure
allows for the continuation of the attorney client privilege protections that the Committee enjoys
with General Counsel as counsel to the Committee.
Not applicable
Results/Measures of Success
Not applicable
Final Deliverable
Not applicable
2
IMPLEMENTATION PLAN
Recommendation:
The award of cash bonuses to Executive Management should be more restricted, consistent with
the intended objectives and operation of the STI Plan.
Team Members:
Management believes that the award of cash bonuses is consistent with the objectives and
operation of the Short-Term Incentive Plan (STI). The decision to implement this recommendation
is outside of Central Hudson management team’s scope. Under its Charter, the Governance and
Human Resources Committee of the Board of Directors is responsible for administering the STI.
Under the STI Plan, the Committee has the discretion to make certain adjustments to the payouts
in accordance with the criteria set forth in the STI Plan, after reviewing individual performance for
the year. Additionally, if the Committee concludes that an executive’s performance during the
year merits an additional payment, the Committee may award a discretionary bonus to the
executive, provided that the discretionary bonus cannot be awarded to “make-up” amounts that
were not earned under the team and individual goals. There are also limitations on the size of the
discretionary bonus that can be awarded by the Committee. The Committee may also reduce an
award if it concludes that an executive’s performance during the year has been deficient.
The STI Plan provides the Committee with the flexibility to respond to issues that were unforeseen
at the time that the performance goals were established or that increased in importance during
the year. It also allows the Committee to recognize superior individual results by directly linking
pay-for-performance. Central Hudson’s Board of Directors, however, retains the power to make
adjustments to the Committee’s determinations.
The audit report’s review of incentives did not challenge the overall amount of incentive
compensation awarded to Executives and include no findings on incentive compensation.
Considering the scope issue discussed above, management will review the background and
recommendation with the Board for their future consideration in awarding cash bonuses.
Central Hudson management reviewed this recommendation with the Board of Directors at its
November meeting. Subsequent to that review, the Board took Overland’s findings and
feedback under advisement in its evaluation of executive performance for 2017. The Board
3
completed its evaluation at the February Board of Directors meeting. The Board does not agree
that its current or past practices are inconsistent with the STI Plan.
Priority: Low
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
4
IMPLEMENTATION PLAN
Recommendation:
When another individual is added to the Board, serious consideration should be given to
recruiting an individual with a national accounting firm background who is a CPA.
The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the
Board of Directors is responsible for reviewing, and making recommendations to the Board of
Directors regarding, corporate governance matters. The Committee is specifically responsible
under its Charter for the identification and review of new and incumbent nominees for election
as directors to the Board of Directors.
The audit report found that the composition of the Board “is in compliance with the
requirements, spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to
Conditions.” Considering the scope issue discussed above, management will review the
background and recommendation with the Board for their future consideration when identifying
and reviewing new and incumbent nominees for election as directors to the Board of Directors.
Review the background and recommendation with the Board – November 2017
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
5
Completion of milestones.
Final Deliverable
On February 14, 2018 David Bennet resigned from the Board of Directors and on June 1, 2018
Nora Duke resigned from the Board of Directors. Effective June 1 2018 Jocelyn Perry and
Roger Dall’Antonia were appointed to Board. Part of the consideration in appointing Ms. Perry
was her accounting background, her experience with PricewaterhouseCoopers and her status
as a Chartered Accountant.
6
IMPLEMENTATION PLAN
Recommendation:
The criteria for the composition of the CH Energy Group Board of Directors should be modified
to require that it be comprised of a majority of independent directors.
The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. The composition of the Board of Directors of CH Energy Group, Inc. is outside of
the scope of the management audit. Further, as noted by Overland Consulting in its Final
Report, the composition of the Board of Directors of CH Energy Group, Inc. is not a subject that
is specifically addressed by the Commission’s Order Authorizing Acquisition Subject to
Conditions in Case 12-M-0192, issued and effective on June 26, 2013.
The finding in the audit report states that the majority of the Central Hudson Board of Directors
is independent. Considering the scope issues discussed above, management has reviewed the
background, findings, and recommendation with the Boards of both CH Energy Group, Inc. and
Central Hudson for their future consideration; no action has been taken at this time.
Priority: Low
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
7
IMPLEMENTATION PLAN
Recommendation:
The Central Hudson Board should reduce its size to not more than nine members.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Michael Mosher
Team Members:
Joseph Koczko
The decision to implement this recommendation is outside of the Central Hudson management team’s
scope. Under its Charter, the Governance and Human Resources Committee of the Board of
Directors is responsible for reviewing, and making recommendations to the Board of Directors
regarding, corporate governance matters.
The audit report found that the composition of the Board “is in compliance with the requirements,
spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to Conditions.”
Considering the scope issue discussed above, management will review the background and
recommendation with the Board for their future consideration in the structure and composition of the
Board.
On February 14, 2018 David Bennet resigned from the Board of Directors and on June 1, 2018 Nora
Duke resigned from the Board of Directors. Effective June 1 2018 Jocelyn Perry and Roger
Dall’Antonia were appointed to Board. Pursuant to its Charter, the Governance and Human
Resources Committee of the Board of Directors of Central Hudson is responsible for evaluating and
making recommendations to the Board of Directors regarding the performance of the Board, including
its structure and size, and the identify of any proposed nominees for election to the Board. In doing
so, the Committee assesses the qualifications of director candidates with the objective of constructing
a properly sized and effectively functioning Board, as specified in the Company’s Governance
Guidelines (i.e., “a Board comprised of individuals with diverse experience, backgrounds and skill
sets, who participate actively and regularly in the Board’s work, and who consistently demonstrate
objective analysis, practical wisdom and sound judgment”). Such review is conducted by the
Committee on an annual or, as needed, more frequent basis to satisfy its duties under its Board
approved Charter.
Priority: Low
N/A
8
Results/Measures of Success
N/A
Final Deliverable
N/A
9
IMPLEMENTATION PLAN
Recommendation:
Only independent directors should be compensated for participation on the Central Hudson
corporate board.
The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the
Board of Directors is responsible for reviewing, and making recommendations to the Board of
Directors regarding, corporate governance matters. The Committee is specifically responsible
under its Charter for the review of the adequacy and form of compensation paid to members of
the Board of Directors.
Management believes that directors serving on the Central Hudson Board of Directors, other
than the director who is an employee of Central Hudson, should be paid for their service as
directors. Employees of Fortis Inc. or CH Energy Group, Inc. who serve on the Central Hudson
Board contribute their individual time, experiences and expertise to the Central Hudson Board
and are not compensated for that service on the Central Hudson Board other than through
director fees paid by Central Hudson. Additionally, management believes that Central Hudson
benefits from having Fortis Inc. executives on the Board in that they can provide current, first
hand insight into the short- and long-term strategies, business objectives and priorities of Fortis
Inc.
The audit report found that the composition of the Board “is in compliance with the
requirements, spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to
Conditions.” Considering the scope issue discussed above, management has reviewed the
background and recommendation with the Board for their future consideration of Board structure
and compensation of directors; no action has been taken at this time.
Priority: N/A
10
Summary of Cost/Benefit Inputs
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
11
IMPLEMENTATION PLAN
Recommendation:
Central Hudson Directors should be required to hold the equivalent of one times their annual
retainer in Fortis stock.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Michael Mosher
Team Members:
Joseph Koczko
The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the Board of
Directors is responsible for reviewing, and making recommendations to the Board of Directors
regarding, corporate governance matters.
The audit report found that the composition of the Board “is in compliance with the requirements,
spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to Conditions.”
Considering the scope issue discussed above, management reviewed the background and
recommendation with the Board at its November meeting for their future consideration; no action has
been taken by the Board at this time.
Priority: N/A
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
12
IMPLEMENTATION PLAN
Recommendation:
Board members should be provided opportunities to visit and tour field locations and operations
centers.
The CEO and/or General Counsel should develop a systematic plan of surveying conferences
and other training opportunities designed to enhance individual director knowledge, to learn
about industry issues applicable to Central Hudson governance, or both.
The CEO and/or General Counsel should implement a formal process to track director
education opportunities and attendance, ensuring that participation includes as any of the
independent directors as possible; giving consideration to issues or training benefiting both the
director and the Company.
The Company should implement a practice of including speakers to make presentations to the
Board on subjects of interest, scheduled at times consistent with its quarterly meetings.
The current governance philosophy at Central Hudson is to encourage and support an open and
efficient flow of information to the Board of Directors.
Central Hudson has adopted and implemented the recommendation regarding providing
opportunities to the Board of Directors to visit and tour field locations and operations centers.
Management arranged for field tours for the Board of Directors in connection with the May 2017
Board meeting (i.e., tours of the Reynolds Hill Substation, the Poughkeepsie Gas
Works/Receiver Station, the North Water Street MGP remediation site, and the Highland
Substation) and the July 2017 Board meeting (i.e., tours of the Sturgeon Pool Dam and Hydro
Facility and Elting’s Corners storeroom, operations services and satellite offices). Operational
tours, such as tours of the Call Center, have also been offered and conducted. The practice of
arranging for tours in connection with Board meetings, and other ad hoc tours based upon the
interest and schedules of the directors, will continue.
Effective January 1, 2017, a system has been adopted whereby the President and CEO
and the General Counsel coordinate regularly to identify educational opportunities for the Board
of Directors. Additionally, a formal process has been implemented pursuant to which General
Counsel tracks director education opportunities and attendance.
13
Central Hudson has implemented a practice of including speakers who make presentations to
the Board of Directors on subjects of interest; an educational topic has been included as an
agenda item at each quarterly meeting of the Board of Directors since the fourth quarter of 2016
and this practice will continue.
The President and CEO and the General Counsel coordinate regularly to identify educational
opportunities for the Board of Directors – January 2017
Field tours for the Board of Directors including, tours of the Reynolds Hill Substation, the
Poughkeepsie Gas Works/Receiver Station, the North Water Street MGP remediation site, and
the Highland Substation – May 2017
Field tours for the Board of Directors including tours of the Sturgeon Pool Dam and Hydro
Facility and Elting’s Corners storeroom, operations services and satellite offices - July 2017
Operational tours for the Board of Directors, such as tours of the Call Center – Ongoing
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Complete
Final Deliverable
Central Hudson will provide a memo summarizing the tours, presentations to date, and a copy
of the tracking document.
14
IMPLEMENTATION PLAN
Recommendation:
Aside from being requested to make formal presentations to the Board, the current practice of
executive management attending Board meetings should be terminated.
The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. The current governance philosophy at Central Hudson is to encourage and
support an open and efficient flow of information from management to the Board of Directors.
The President and CEO of Central Hudson encourages the Board of Directors to contact
management directly with any questions. The current practice of having executive management
attend Board meetings is to facilitate the unimpeded flow of information and communication,
allowing directors to solicit information from management at Board meetings as questions arise
so as to not limit analysis and decision making at the meetings. It is anticipated that the
language in “Access to Management” at page 5 of the Governance Guidelines referenced in the
recommendation will be modified to more clearly reflect current practice.
Under its Charter, the Governance and Human Resources Committee of the Board of Directors
is responsible for reviewing, and making recommendations to the Board of Directors regarding,
corporate governance matters.
Considering the scope issue discussed above, management proposes as an alternative that it
will review the background and recommendation with the Board for their future consideration
when reviewing the language in “Access to Management” at page 5 of the Governance
Guidelines.
Review the background and recommendation with the Board – November 2017
15
Board of Directors will review proposed updates to the Governance Guidelines –
February 2018
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Completion of milestones.
Final Deliverable
16
IMPLEMENTATION PLAN
Recommendation:
The Business Plan submitted to the Board of Directors should be modified to include
comparative data regarding historic and expected workforce levels, providing departmental
detail, separated by exempt and non-exempt employees. The Business Plan should also
provide financial (GAAP) earnings and returns, aside from the current emphasis on “regulatory”
results.
Team Members:
Eileen M. Lomoriello
Historic and expected future workforce levels and associated labor, fringe and other payroll
related costs are built into the 5-year labor forecast that is prepared annually as part of the
Business Plan. The Business Plan also includes GAAP financials from which GAAP earnings
and returns are calculated.
Because the Company is already providing GAAP earnings and returns in its Business Plan, we
consider this portion of the recommendation already implemented.
To comply with the remainder of this recommendation, historic and projected workforce levels
will be disclosed in a table in the Business Plan, beginning with the 2019 Business Plan to be
developed in 2018.
Labor Costs and Staffing Levels Reviewed February 2018 May 2018
and Approved in Conjunction with Business
Plan
17
Business Plan Reviewed and Approved by June 2018 July 2018
Board of Directors
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
The implementation of this item will be considered completed when it is recommended in the
2019 Business Plan for approval Central Hudson Board of Directors in July 2018.
Final Deliverable
18
IMPLEMENTATION PLAN
Recommendation:
The Enterprise Support Service group should develop specific, trackable metrics for Supplier
Diversity and Cost Avoidance.
Cost avoidance is the savings achieved from proactive management as compared to what
expenditures would have been for example refreshing quotes on term material orders and
getting a lower price. The Enterprise Support Service (ESS) Group is developing a methodology
to define cost avoidance from the competitive bid process and new term orders, which will be
implemented starting in January 2018. In 2018, the ESS Group will track the savings on a
monthly basis and start comparing it against the total spend to develop a target to achieve
savings against the total spend. After having a full year of tracking these savings against the
total spend, a savings target will be established for 2019. (Please see below for Schedule &
Milestones) Tracking will take place via Excel files. (Process will be finalized by year end)
The ESS Group has investigated the current data available for service providers and process for
recording/tracking Supplier Diversity. Data relating to minority and women owned providers is
available in the mainframe system. During 2018, an annual report identifying minority and
women owned status by service provider will be developed through the internal process of
“Request for Programming Services.” Implementation of the generated report will commence in
2019.
2018 – ESS Group to Track Savings and start benchmarking the Savings against total spend.
2019 – ESS Group to Track Savings and implement a target to achieve savings from 2018 total
Spend.
2020 – ESS Group to Track Savings and revise target to reflect 3 years of experience and goal
of year over year improvement.
19
Start Date: In progress
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Monthly report for cost avoidance developed in 2018 and formally issued on routine basis in
2019. Supplier diversity report issued annually starting in 2019.
Final Deliverable
A sample of monthly report for cost avoidance and supplier diversity report
20
IMPLEMENTATION PLAN
Recommendation:
The Company should clarify its commitment to maintaining its current credit ratings by making
this a “Team Goal”, elevating it from its current performance designation as a Treasury and
Accounting Performance Indicator.
Central Hudson’s credit rating metric is currently monitored as a Division Level KPI within the
Finance and Treasury Division. The Company agrees that the credit rating metric is critical and
that maintaining credit ratings in the A range is desirable to secure capital at rates that are just
and reasonable for customers. The credit rating metric will be recommended to the Strategic
Planning Committee as a Team Goal during the Business Planning cycle in 2018.
Add Metric to Team Goals Table in Business May 2018 May 2018
Plan
Review and Finalize Target with Strategic May 2018 June 2018
Planning Committee Members and Incorporate
into Business Plan
21
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
The implementation of this item will be considered completed when it is recommended in the
2019 Business Plan for approval Central Hudson Board of Directors in July 2018.
Final Deliverable
22
IMPLEMENTATION PLAN
Recommendation:
After the initial round of calculations utilizing the new DRIVE software is completed,
Central Hudson should train their planners in the software. This will enable future DRIVE
software- related work to be accomplished in-house.
With the proliferation of distributed energy resources, hosting capacity analysis must become a core
competency of the Electric Distribution Planning process of the future. As such, Central Hudson will
need to develop the skill sets necessary to complete these analyses in-house. While Central Hudson
contracted the initial DRIVE analysis, the Company will develop the ability to complete these analyses
with in-house personnel and is seeking incremental Engineering resources as part of its current Rate
Filing to complete this work.
Hire new Junior Engineer within Electric Distribution Planning to complete on-going hosting capacity
analysis utilizing the EPRI streamlined methodology – June 2018 -- Complete
Train personnel on completing hosting capacity analysis using the EPRI streamlined methodology –
June 2019
Priority: High
Software upgrades to incorporate the DRIVE tool into existing software modules will cost
$150,000 over 2 years. Maintenance is assumed to be covered within the base software
program, but it is possible those costs could increase as well.
In Year 1, a contractor will still complete the analysis while an Engineer is trained.
Hosting Capacity Analysis is currently updated annually. This cost/benefit analysis assumes the
following increase in frequency of analysis: Year 3 – Quarterly, Year 4 – Monthly.
The cost for a contractor to complete the analysis is $115,000 for each iteration.
23
The cost of an Engineer with overheads for expense work is $100,000 per year.
There are additional costs associated with preparing models for analysis and developing the
hosting capacity maps that the Company would incur regardless of whether internal or external
resources conduct the analysis. Therefore these costs are not included in the cost/benefit ratio.
Training $6,000
Benefit Type
Results/Measures of Success
Final Deliverable
The Company will issue a memo to Staff describing how and when each milestone was completed.
24
IMPLEMENTATION PLAN TEMPLATE
Recommendation:
Central Hudson should study the need and requirements to develop a linkage between their
existing work management process and their GIS database. The linkage would allow input from
the GIS database and the development of work orders that accurately track the installs,
removals, and transfers of the assets by GPS location. The study should include a Benefit/Cost
Analysis.
Recommendation Implementation Team
Paul Haering
Executive Sponsor & Team Lead:
Hal Turner, Frank Bailey, Brian Fucco
Team Members:
Central Hudson has current plans to implement a GIS-based design solution for electric starting
in 2018 pending approval of the software that is part of our capital plan included in our current
rate filing. In lieu of the recommended study to establish the benefits of integrating work
management and GIS, which are currently well established, Central Hudson will proceed with
project scoping, planning implementation of the GIS design solution which will integrate the
work management/capital construction design systems with GIS. Completing the design solution
project is also a required component of the continued maintenance of our asset data per
recommendation 15.3.
This GIS based graphical design solution to be developed will allow the graphical creation of
asset installation and removal designs located geographically within the GIS mapping system. It
will also incorporate Central Hudson’s current electric and gas distribution compatible units’
stock listings and related assemblies so that as new distribution designs are created, the
required bill of materials is compiled. Ideally this will also include the estimates for labor hours
for the work as well. Once a complete estimate is developed in this new design solution, it can
then be imported to the legacy mainframe field operating system (FOS) which is currently where
a work order is generated for authorization and material requests are sent to the Stores and
Facilities system.
To complete this project the Engineering Drafting/GIS group will need to work closely with the
Customer Services Estimating Design group. Where the GIS team brings the technical expertise
regarding the existing GIS platform and database, the Estimating Design group will be the
ultimately users of the platform selected and therefore will set forth the functional requirements
needed for the design solution.
A draft schedule for the project at this time would require a core team be tasked to begin work
by December of 2017. Action items to move the project forward as follows:
25
‐ Investigate the available vendor product solutions. In parallel with this effort the team
can begin identifying all core functional requirements for the purpose of generating a
formalized request for proposal that includes the design work flows prioritized for
implementation.
Time to complete: 6-9 months
Objective: Completion of approved, detailed RFP and functional specification
‐ Release completed RFP to selected vendors allowing 1-2 months for submission of
formal bids. With completed bids in hand the team can then begin vendor selection in 3Q
of 2018. Once a vendor is chosen and all project documentation prepared, the team can
then submit the project to the corporate IT Steering Committee for approval of funding to
proceed with contracts.
‐ Completion of contracts and project implementation kick-off Q4 of 2018.
‐ Work contingent on rate case approval of our capital plan.
Estimated Completion Date: 1 year from project kickoff approximately year-end 2019
Priority: High
The estimated cost for implementation includes the identified software that is part of our capital
plan included in our current rate filing. It should be noted Central Hudson has studied and
evaluated ERP solutions to completely replace our current legacy business systems but the cost
to do so was prohibitive. The Estimating Designer package can be implemented on a much
more cost effective basis while still achieving a number of the same benefits.
The efficiencies to be gained from developing a GIS based design solution are as follows:
- A primary benefit are the efficiencies to be gained by Estimating moving from a purely
CAD based design system that requires all CU data to be manually entered with each
design, to a CAD/GIS based graphical design system with all compatible unit catalog
data attached to the objects being inserted into each design. Currently designs are
sketched with AutoCAD and BOM’s for installed and removed assets are entered into
CAD as well. The materials also then need to be entered a second time into the
enterprise mainframe FOS system which is not integrated with AutoCAD but is
integrated with the company’s supply chain system. So the designer solution will
eliminate duplication of effort by allowing the designer generated estimates to be
graphically created with all BOM information and then imported to FOS.
- In addition, improvements in data quality and accuracy will be seen through the use of a
pre-populated CH specific compatible units and assemblies catalog built from our current
standard stock listings.
- Designs created on the new system will be stored in the GIS database in a
proposed/pending construction state. Upon construction completion the GIS group will
be able to retrieve the GIS format designs, apply all as-built changes to the design and
move the changes into the production asset database. Currently Estimating drawings
are not geo-referenced and as a result cannot be imported directly to GIS. This requires
all facilities to be drawn in manually and all asset data to be entered once more. This will
26
result in a large time savings for the GIS team maintaining the electric and gas GIS
databases and will once again improve data quality and accuracy. It is estimated this will
save approximately $40,000 annually in incremental GIS technician labor. The
implementation of the designer software will have costs and benefits as indicated above.
A high level CBA will be completed as part of the implementation analysis. However, the
move to the designer software is primarily driven by our implementation of functional
DMS and the need to be able to incorporate system changes to our DMS models in near
real time.
Results/Measures of Success
This project will have a major impact on the Estimating and GIS departments at Central Hudson.
For this reason representative stake holders of each group need to be included in the planning
and development process. As this represents a major shift in how Estimating completes new
designs and drives the company’s capital construction projects for distribution, care must be
taken to come up with a phased approach that will not adversely impact the execution of the
capital work plan. This will mean starting with the simpler, highest volume category design jobs
such as simple services, smaller local work orders, etc. and later expanding to incorporate the
larger more complex circuit reconfigurations, re-conductor and reinforcement/upgrade jobs.
The main measures of success of this project will be the successful development and
implementation of a design solution that achieves the following:
- Incorporates work flows for 85% of the gas and electric designs created by Estimating
prioritizing by volume and benefits realized.
- All implemented work flows must not only achieve a successful design and estimate
package, but also export and process through FOS and ultimately be recorded as-built
successfully to the production asset GIS.
- Supports integration with the mainframe either via Oracle’s Service Oriented
Architecture platform or via a batch extract transform load process.
- Sufficiently provides training and develops the expertise of the in-house staff to maintain
the new system going forward and if required continue implementation for the remaining
work flows.
- Provide a platform that can in the future integrate with any selected replacement of the
legacy FOS and supply chain systems.
Final Deliverable
The Company will issue a memo to Staff describing how and when each milestone was
completed.
27
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should develop a transition process with the present systems that are in place
to manage the GIS data. In addition, a migration plan should be developed for the maintenance
of the data with the arrival of new systems.
Recommendation Implementation Team
Executive Sponsor & Team Lead: Paul Haering & Hal Turner
There are several concurrent projects in progress that involve electric distribution GIS data
translation between systems. They are as follows:
- GIS to DMS Feeder Export – a manual utility that creates extracts from GIS of DMS
pertinent electric distribution data which is then manually imported to DMS to maintain
the network model.
- GIS Extract load function for SamSIX/NRG – automated nightly batch that exports GIS
data to the SamSIX NRG system, used for web based mapping and published circuit
maps.
- GIS to OMS translation – an automated process developed to synchronize electric
distribution updates to the Outage Management System’s GIS platform Smallworld on a
scheduled basis.
- GIS to Milsoft feeder export – a manual utility that creates extracts of GIS electric
distribution data for import to the engineering modeling software Windmill.
In each case there is envisioned a future state where GIS becomes the core source of
information so that updates to these systems can be consumed via these point to point
interfaces.
Each of these external systems has specific data points that are mined from the enterprise GIS
environment but all depend on the GIS to be brought up to date and maintained. The current
approach to our electric data true up process has been review on a feeder by feeder basis and
to track each feeder where true up is completed. Completed feeders are considered in
production and ready for consumption by external systems if desired. All electric and gas work
order as-built packages are currently routed through the GIS group and are examined. If any
affect a production feeder, they are incorporated by the team of GIS technicians responsible for
maintaining the database. Any functional difficulties or issues are identified by testing the
production feeders in the external consuming systems. The GIS staff works to make any
corrections needed for the feeder import to be successfully accomplished for the external
28
systems. For reference see attached flow chart (Attachment A) of the current electric and gas
work order closeout work flow.
To date this process has worked well and allowed us to begin developing each of the
integrations listed above. However at a certain point these external systems will need to move
the translation/testing process to a state of full production. Due to the different business needs
of each system, this production transition will have to occur at different times. Some systems will
require large amounts of the electric feeder network to have all been trued up whereas other
external systems have a smaller focus and can consume substations worth of feeders and
utilize that data in a production capacity.
Beyond the current projects, additional external integrations are planned for the electric GIS.
The GIS design solution project planned for 2018-2019 will require similar consideration as to
how it will be transitioned to production capacity. The scope of the documentation being created
will detail all interfaces with the company’s asset GIS, both electric and gas related.
With each external integrated system having specific requirements a project to document and
plan for these transitions will require planning meetings led by the GIS staff held with each of
the system owners to gather these functional requirements and determine how future data true
up can be tailored to meet those requirements.
Once these requirements have been identified the GIS team will work together to develop and
document an overall transition plan that will meld the needs of the various systems together with
the planned work to update and maintain the GIS database. The resulting plan can then be
reviewed and approved by the stake holders and ultimately by upper management.
Priority: Moderate
The labor costs would not be incremental and the benefits would be qualitative. Clear concise
direction on electric GIS data work with buy in on the part of all stakeholders will ensure that
GIS team resources are most effectively applied to capture critical information required by the
business.
Results/Measures of Success
Development of a documented overall plan for GIS data true-up, translation/migration and the
transition to production ready state that is both realistic and maintainable. The plan should:
- Document and define all integrations points with the asset GIS system and the system
owners of each external integrated system.
29
- Detail the data requirements of each integrated system and the mechanism by which
data is transferred and translated.
- Summarize the current state of asset GIS data, the correction and QA methodologies
being employed.
- Last it should document the how each interface will be migrated from a test to production
state and any validation required as this is performed.
Final Deliverable
The Company will issue a memo to Staff describing how and when each milestone was
completed.
30
CWIP
Complete Date
Operations work
Plant Accounting Field Clerk Drafting Engineering G.O.E. GIS
order admin.
Establish Gas
Foreman Approval
CCNC 31
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should work with programming vendors and other New York utilities to identify
new short-term forecasting tools that are currently available or being developed to recognize the
addition of distributed energy resources (DER) added to their systems.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Christopher Capone & Jeffrey May
Scope and Plan: The project scope and plan includes identifying possible software applications that
have the ability to consider REV and DER impacts on short-term forecasts, testing available software
applications, evaluating the software application results, and identifying recommendations for next
step(s).
Priority: Low
There are no incremental costs in the initial phase of addressing this recommendation, including
identifying requirements, investigate options, test products, and recommending next step(s).
Depending on the outcome of the team’s recommendation potential costs include the possible initial
purchase, implementation and annual maintenance fees associated with any new software
application. A cost benefit analysis will be conducted as part of the recommendation for next steps.
The benefit of the recommendation might include a better short-term forecasting software application
that has vendor support.
Results/Measures of Success
Final Deliverable
The Company will issue a memo to describing the results of its research into a new software
application.
32
IMPLEMENTATION PLAN
Response to Recommendation 16.2
Recommendation:
When Central Hudson replaces its Customer Information System (CIS), it should include a
forecasting module similar to one generally employed by utility peers. In effect, this forecasting
module would be a data manipulation and extraction program interfacing with the CIS and
feature enhanced data gathering capabilities and less manual entry of the forecasting source
data.
Recommendation Implementation Team
Anthony Campagiorni – Executive Sponsor
Executive Sponsor & Team Lead:
Glynis Bunt – Team Lead
Darlene Clay
Team Members: Amy Dittmar
Jennifer Lorenzini
This team will meet with the IT team identified in Recommendation 19.1 (related to
modernization of IT systems) to solicit information regarding potential CIS technologies to be
pursued and the potential timeframe. The team will develop a survey to be administered to a
peer group of utilities to solicit information including, but not limited to: system utilized, data
extracted for forecasting, method of extraction, forecasting interface, frequency of extraction,
time required to revise data extraction, and coordination of outreach among users regarding
system changes.
The current sales forecasting process relies on billed customer, sales and revenue data
compiled and generated by the CIS. While much of this data is in electronic format, it continues
to be provided in pre-arranged formats, providing little flexibility to address impromptu issues or
necessary data/forecasting revisions. The modification of CIS technology may provide an
opportunity for enhanced data extraction, allowing for greater forecasting granularity, flexibility
and/or modification. The team will prepare a survey, select a peer group of utilities, administer
the survey, compile the results, and prepare recommendations to be provided to the IT team
regarding features that should be considered in any modification of CIS technology in order to
seize opportunities to enhance data availability.
Milestones:
33
October 2018 Recommendations to be provided to IT team, including survey results,
regarding features that should be considered in any modification of CIS
technology
Priority: Moderate
While all work will be performed with existing staff, it is anticipated that additional data entry
automation will offset any additional time required to address an increased number of data
items.
Results/Measures of Success
Enhanced data manipulation and extraction should provide productivity benefits by decreasing
any manual data entry while improving the predictive ability of the sales forecasts allowing for
more robust analysis of actual results.
Final Deliverable
The Company will issue a memo to Staff describing survey results and recommendations made
to IT team regarding features that should be considered in any modification of CIS technology.
34
IMPLEMENTATION PLAN
Response to Recommendation 16.3
Recommendation:
As solar farms come on line in the next few years, Central Hudson should increase the
frequency of its load and sales forecasts with updated data, as the increase in DG will reduce
the load directly supplied by the Company.
In response to the significant PV penetration that the Company started to experience in the mid-
2000s, the Company found it necessary to incorporate a separate forecast of the sales
reductions resulting from PV penetration into the annual sales forecast utilized for regulatory,
financial and operational purposes.
The Company continues to see significant DG penetration resulting from additional regulatory
action in the form of extension of NEM and formulation of a value stack approach to monetary
compensation for CDG, and certain other DG, as policy is formulated in ongoing Case 15-E-
0751. The Company has recently experienced increased activity with this latter element which
addresses large projects, currently up to 2MW. As a result, the Company should consider
increasing the frequency of its DG load and sales forecasts to provide more accurate and timely
information to help address estimation of sales reduction impacts and potential instances of
hourly purchases of net exports exceeding hourly load to be supplied by the Company.
Currently, the system load and sales forecasts are prepared on an annual basis and are utilized
by various internal groups for regulatory, financial and operational purposes. With the continued
regulatory changes emanating from Phase One of Case 15-E-0751, including a transition to a
new compensation methodology for DG net exports, and the continued uncertainty surrounding
the expansion of provisions currently contemplated in the recently initiated Phase Two, a
measured approach to increasing the frequency of system DG load and sales forecasting will be
followed. The accuracy of the three most recent DG forecasts will be evaluated, including
identification of sources of divergence of actual to forecast, and calibration to granular DG
forecast as available based on development and inclusion in the Distributed System
Implementation Planning Process (Case 14-M-0101) . Stakeholders will be canvassed
regarding current and future utilization of such forecasts and optimal timing requirements. The
results of these endeavors will be utilized, along with policy timing considerations, to determine
the frequency and output of the DG forecasting process.
Milestones:
March 2018 Complete accuracy review of prior forecasts and identification of sources of
divergence, as well as calibration to granular DG forecast(s) as available
35
May 2018 Complete canvassing of stakeholders
July 2018 Recommendation for frequency of and output from DG forecasting process
On-going Frequency of and output from DG forecasting process assessed with each
update
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Improvement in the predictive ability and timing of the DG load and sales forecasts will provide
more accurate forecasts for regulatory, financial and operational considerations.
Final Deliverable
Company will provide a memo on the frequency and output of the DG forecasting process.
36
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should explore various proven change management methodologies and make
one change management methodology or model the Central Hudson corporate standard. In
addition, the Company should identify when and where supporting change management
activities and tools can or should be used.
Central Hudson will explore change management methodologies and tools in conjunction with
the organization’s current project management methodologies. Based on that evaluation we will
determine how to identify when and where supporting change management tools should be
utilized and implement appropriate tools where it is determined to be applicable.
Priority: High
37
In necessary, adoption and 11/30/2018
implementation of selected tools.
There are no incremental costs and the benefits are qualitative, therefore no cost benefit
analysis is needed.
Results/Measures of Success
Evaluation complete and methods identified, including when and where supporting change
management activities and tools can or should be used.
Final Deliverable
38
IMPLEMENTATION PLAN
Recommendation:
IT team will identify key systems that are critical to running the business and develop a 5 year
roadmap for them. Some of the considerations while developing the roadmap will be
The age of the technology – is it close end of life or end of support?
total cost of ownership to maintain
Resources – will we have qualified resources available at a reasonable cost?
Current and future business needs – do our systems meet those needs?
Dependencies – are any other systems dependent on these systems, do we need to
upgrade / replace them as well?
Based on the business needs, a roadmap for the key systems will be defined that will lay down
the technologies to pursue and a high level timeline to implement them. The technologies to be
pursued could be an upgrade of the existing technology or a replacement.
Certain IT modernization plans have been defined in the Company’s rate case IT testimony.
Page 10 of Holtermann (IT) Testimony categorizes the initiatives into 2 areas of focus: 1)
foundational investments to maintain, secure, and modernize IT; and 2) investments to enrich
the overall customer experience and improve customer engagement. Investments in the
Foundational category cover the maintenance and replacement our systems.
Pages 14 thru 26 describe the approaches for CIS Modernization – specifically page 25
describes our preferred approach of implementing a full featured modern CIS solution (initially
as bolt-on) while in parallel migrating core CIS functions from the Company’s legacy core CIS
into the modern CIS utilizing a phased-in approach.
39
The Company’s plan to replace Human Resources Information system is covered on page 36
and the plan to replace CH Intranet / Wiki page on page 41 of the IT Testimony.
The roadmap for the remaining systems will be completed based on the criticality and business
needs.
In Central Hudson’s current rate case, the Company has proposed a significant increase for
investment in information technology and systems. In light if its importance in the current
environment, we have changed the priority of this recommendation from moderate to high.
Final Deliverables:
Note: There might be some systems added to the above list based on the 1st activity
mentioned below.
Narrative Including Schedule/Milestones
Identify the key systems that are 2/1/2018 We have a list of all applications and
essential to running the business systems but need to update to reflect
the recent changes
40
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Roadmaps defined for the key systems essential to running the business.
Final Deliverable
The Company will provide a copy of the roadmap for its critical systems.
41
IMPLEMENTATION PLAN
Recommendation:
Develop as an ongoing project development document, an integration message table for use
during system development and implementation. The table should identify key elements, their
triggers, and action taken, along with the system where they originated. The integration
message table will improve communications and may result in less rework on certain shared or
jointly owned systems.
A Technical Specification describes the detail of either all or specific parts of a design, such as:
• the signature of an interface, including all data types/structures required (input data
types, output data types, exceptions);
• detailed class models including all methods, attributes, dependencies and associations;
• the specific algorithms that a component employs and how they work; and
• physical data models including attributes and types of each entity/data type.
• hardware and software used.
42
With the inclusion of Data Flow Diagram in the Functional Specifications, the team will be aware
of all systems that potentially will be impacted by the proposed changes and address it as part
of the implementation.
Currently we have the phases of the project lifecycle defined and templates made available to
the project teams. We’re planning to systematically approve phase gates and required
deliverables for all projects by 30th June 2018.
In Central Hudson’s current rate case, the Company has proposed a significant increase for
investment in information technology and systems. In light if its importance in the current
environment, we have changed the priority of this recommendation from moderate to high.
Data Flow Diagram template included 12/29/2017 Templates for Functional Specifications
in Functional Specification. are in place.
Revised Functional Specifications are 6/30/2018 Functional Specifications are not
reviewed and approved by the team consistently being created and
approved for all projects.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
As part of the Design Specifications, each medium and large project has the Data Flow Diagram
that shows all systems / applications and the key elements that will be impacted by the changes
the project is trying to implement.
Final Deliverable
The Company will provide a copy of the Revised Functional Specifications document.
43
IMPLEMENTATION PLAN TEMPLATE
Recommendation:
The assumptions that resulted in normalized sales being consistently (six out of seven years)
greater than forecast should be investigated and the results applied to future forecasts.
On a monthly basis, actual sales are normalized for weather and are compared against
forecast. This weather normalization process is required since forecast sales are developed
utilizing a definition of normal weather, and estimates of weather occurrence are utilized to
convert calendar weather to billed weather. Other than weather, variations between actual and
forecast levels generally result from billed customer level variations and sales per customer
variations. These variations are routinely analyzed to evaluate whether they are systemic and
can be addressed prospectively through forecast improvements, or whether they are
uncontrollable and cannot be addressed within the forecasting process. Use per customer
variations can result from conservation and energy efficiency efforts implemented by the
customer, modifications to energy efficiency estimates included in the forecast, and changes in
end use or type of service being utilized, for example, firm versus interruptible.
Results for the six years identified above should be reviewed for any discernable pattern in
variations. Results for 2017 should be thoroughly reviewed as well, including assumptions
utilized to convert calendar weather to billed weather as a result of the conversion to monthly
billing in 2016 and the subsequent collection of a full year of monthly billing data. The results of
these analyses should be utilized to determine if the identified source of variations can be
addressed through forecast process improvements.
Milestones:
May 2018 Complete review of prior variance reports (2010–2016) to identify sources of
variation
July 2018 Complete review of 2017 variance reports to identify sources of variation and
determine if calendar month to billed month weather assumptions are valid
Sept 2018 Determine how identified sources of variation can be addressed within the
forecasting process
44
Feb 2019 Complete variation analysis of “shadow” forecast for November 2017 through
January 2019
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Improvement in the predictive ability of the sales forecasts will provide more accurate forecasts
for regulatory, financial and operational considerations.
Final Deliverable
The Company will provide a memo on the recommendations for improvements based on the
variation analysis.
45
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should give consideration to other performance metrics for supply
procurement strategies, policies, processes and methods, as two out of the three existing KPIs
are really economic cost trackers.
Scope: Central Hudson will give consideration to other possible performance metrics for supply
procurement strategies, policies, processes, and methods.
Plan: The implementation plan includes reviewing existing KPIs for on-going applicability and to
give consideration to new metrics including the metric identified in Recommendation 22-1.
Priority: Low
There are no incremental labor costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
The implementation of this item will be considered completed when a review of KPI metrics has
been completed.
Final Deliverable
The Company will provide a memo detailing the findings of the review of KPI metrics.
46
IMPLEMENTATION PLAN
Recommendation:
Overland recommends that the Company prepare a quarterly analysis of gas price volatility with
and without hedging. Performing this analysis consistently will give the Company better insight
into the effectiveness of their hedging positions, particularly if they are over- or under-hedged.
Scope: The scope of this Recommendation includes identifying a stable gas index reference price and
periodically preparing and reporting gas price volatility with or without hedges based on market data.
Plan: this Recommendation is intended to lead to a performance metric, which will be included as part
of the implementation of Recommendation 21-1.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Results: The results will show the Company’s gas price volatility relative to the stable index.
Measure of Success: The measure of success is not possible to quantify for the benefit of customers
due to the uncertainty of required assumptions. It is possible that effective volatility analysis will lead
to lower hedging costs as well as more efficient risk mitigation.
Final Deliverable
The Company will provide a memo on the Company’s gas price volatility relative to the stable index.
47
Recommendation:
The Company should consider reducing its hedging target to 25%-50% based on the current
low natural gas price and stable supply environment.
Scope and Plan: The Company is already compliant with this recommendation.
Priority: High
Results/Measures of Success
Completed
Final Deliverable
The Company will provide a memo demonstrating that its hedging target is between 25%-50%.
48
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should initiate a special program targeted to replace the small segments of
cast- iron, wrought iron, and bare steel main and services that operate at higher pressures.
Present LPP replacement programs do not prioritize replacing these potentially risky pipe
segments on an expedited basis.
Executive Sponsor & Team Lead: Paul E. Haering & Lawrence R. Cambalik
Central Hudson Gas & Electric Corporation is currently replacing leak prone pipe (LPP) at a rate
that will result in its elimination in approximately 10-12 years. LPP elimination projects are
developed and prioritized through the combination of risk assessment software and input from
subject matter experts. The risk rating of a gas facility is based on a number of factors which
include operating pressure, leak history, location, material type, etc. As part of the LPP main
elimination projects all associated LPP gas services are replaced during the project. Currently if
a LPP service is found leaking it is replaced in its entirety.
All existing cast iron main operating at 15 psig and all known cast iron services will be
eliminated by the end of 2018. Wrought iron mains operating above utilization pressure or
unprotected steel mains operating at high pressure will be considered in the scheduling of LPP
projects.
A program will be developed to identify and replace those LPP services which are not
associated with LPP mains. This will address these services that fall outside of the LPP main
elimination program. Additional capital funding must be secured to address the replacement of
these assets.
Priority: High
49
Activity/Milestone Estimated Current Status
Completion Date
Costs to address the replacement of LPP services not associated with LPP mains will be
determined based on the identification of the affected service population.
Results/Measures of Success
Elimination of all cast iron mains and services which operate at greater than low (utilization)
pressure. Identification and replacement of LPP services not associated with LPP pipe.
Final Deliverable
The Company will issue a memo to Staff describing how and when each milestone was
completed.
2
50
IMPLEMENTATION PLAN
Recommendation:
The Company should develop the means to identify, record, and report why a distribution main
or service is being installed.
Currently the Company captures critical gas infrastructure information that is stored in its Gas
GIS database. Asset information is classified as either required or other. Required asset
information is data that the Company has deemed critical for that asset such as size, material,
installation date, test pressure, etc. Other asset information such as project work order number
does not require an entry in the data field. Central Hudson’s gas asset recording software will
be updated to require project work order number to be entered for each service and main
installation. The project work order number will provide the means to identify why the
distribution main or service was installed on a going forward basis.
Priority: High
The benefits of providing reporting of reason for installation of main or service are qualitative
and cannot be quantified.
Labor $10,000
Software $20,000
51
Total Cost $30,000
Net ($30,000)
Cost/Benefit
Results/Measures of Success
Completion of the project will allow for ad hoc inquiries of the Company’s Gas GIS database to
determine the cause for installation of mains and services such as replacement, new business
or expansion for newly installed facilities.
Final Deliverable
The Company will issue to Staff a sample report demonstrating that project work order number
has been added for each service and main installation.
52
IMPLEMENTATION PLAN
Response to Recommendation 24.1
Recommendation:
In its succession planning, Central Hudson should rotate high-performing managers and
supervisors between electric and gas to develop future leaders knowledgeable in both areas of
the Company in a more formal process.
Team Members:
Central Hudson agrees with Overland’s findings that the Company’s criteria for filling a vacancy
should include assessing potential rotation candidates for certain positions, specifically, as it
relates to rotating high-performing individuals between electric and gas.
Central Hudson is in the process of formalizing a rotation development program. Those high
performing employees who may benefit from a rotation between electric and gas will be
identified and a timeline will be put in place based on the needs of the organization and the
roles that need to be filled.
We agree with Overland’s described benefits that future leaders of Central Hudson, with both
electric and gas experience will be able to make a stronger contribution to the Company’s
success based upon first-hand experience in both the electric and gas businesses.
Priority: Moderate
53
Develop Rotation Development Program. 12/31/2017 Draft is currently in progress
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
The progress of the Rotation Development Program will be reported to the Board of Directors as
part of the annual succession planning review.
Final Deliverable
54
IMPLEMENTATION PLAN TEMPLATE
Recommendation:
Expand the quality compliance monitoring of construction and operations and maintenance
work completed by internal gas crews and minor electric construction and operation and
maintenance work by utilizing dedicated Central Hudson staff or an independent third party
contractor to periodically conduct an independent assessment.
Central Hudson has a robust QAQC program to insure the installation of gas facilities are
installed according to their gas construction standards and operating and maintenance
procedures. The Company has utilized third party QAQC inspectors on a limited basis to
oversee the installation of gas facilities by Company forces. The Company will expand its
efforts in this area as well as oversight of maintenance activities on gas facilities.
Priority: High
Qualitative benefits of confirming that existing Company standards and procedures are being
followed.
55
Total Cost $180,000 $180,000 $180,000 $180,000 $180,000 $900,000
Results/Measures of Success
Additional QAQC inspectors in place providing required oversight and reporting and correcting
any identified issues. Ensuring overall quality of work inspected.
Final Deliverable
The Company will issue a memo to Staff on the contract for two additional 3rd Party QAQC
Inspectors.
56
IMPLEMENTATION PLAN
Response to Recommendation 27.1
Recommendation:
Central Hudson should track project and program costs that are expensed within its existing
mainframe accounting system.
Recommendation Implementation Team
Chris Capone
Executive Sponsor & Team Lead:
Lora Gescheidle
Team Members:
Central Hudson does track certain project and program costs within its existing mainframe when
it is determined to be necessary and beneficial. However, Central Hudson chooses not to track
expenses for every individual program or project because there is no identified customer,
regulatory, financial or management benefit.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Final Deliverable
An example of a specific project cost that was specifically tracked through a collect cost work
order is major storm event costs. Recent documentation was submitted on May 18, 2017
(updated September 1, 2017) for major storm event costs deferred under Case 14-E-0318
which can be used as evidence of the Company’s ability to track specific project costs when
determined necessary or beneficial.
57
IMPLEMENTATION PLAN
Response to Recommendation 27.2
Recommendation:
Central Hudson should develop a more detailed Comparison of Actual Results Versus Rate
Allowances Report by disaggregating the All Other Net catch-all expense grouping. All Other
Net expenses should be no greater than 20 percent of Total Operating Revenue Deductions. In
addition, significant variances between actual costs and rate allowances should be
documented.
Recommendation Implementation Team
Team Members:
The Company will adopt this recommendation. A report has been developed for internal use that
provides a comparison of actual results versus rate allowances with the “All Other” category
representing no more than 20 percent of Total Operating Revenue Deductions. This report identifies the
most significant variations between actual results and rate allowances for each completed rate year.
The Company has already applied this recommendation for the first two Rate Years of the 2015 Rate
Plan in Cases 14-E-0318 and 14-G-0319. The Company’s response to PSC Staff IR-387 in Cases 17-
E- 0459 and 17-G-0460 utilizes the new reporting and will continue for internal use going forward.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Complete
Final Deliverable
The Company will issue a copy of its response to PSC Staff IR-387 in Cases 17-E- 0459 and 17-G-
0460.
58
IMPLEMENTATION PLAN
Recommendation:
Expand the electric T&D work management and gas T&D ARCOS Crew Manager systems to
include the outside contractor workforce, as they constitute a significant component of Central
Hudson’s workforce. In 2016, 51 FTE’s (or almost 18% of the electric T&D workforce) were
contractors; and 177 FTE’s (or over 75% of the gas T&D workforce) were contractors.
Central Hudson does not maintain a contractor workforce, instead Central Hudson competitively
bids out projects that cannot be accomplished with internal crews. The Company selects the low
cost, qualified bidder. No agency relationship exists with contractors as they manage and
control the size of their workforce and their work schedule within the subject to their contractual
commitments to Central Hudson.
Central Hudson maintains two types of contracts with contractors, fixed price or time and
equipment. Fixed price contracts require the contractor to perform a specific task or tasks
based upon agreed to terms and price. Central Hudson is not concerned with contractor
resources applied to fixed price contracts because the contractor is tasked with the
responsibility of completing the assignment, not how to complete the assignment. It does not
matter to Central Hudson whether the contractor uses more labor and less equipment to
perform the assignment or less labor and more equipment, as long as the contractor completes
the assignment. Time and equipment contracts are charged hourly rates and must be
completed on time and budget to be cost effective.
The statistics on contractor FTE’s stated in the recommendation are without the necessary
context. Central Hudson uses contractors on a per project basis and therefore the number of
projects and the winning contractor’s preference for crew size will determine the number of
FTE’s on the property at any one time.
Extensive work was done in this area as part of Case 13-M-0449 In the Matter of Focused
Operations Audit of the Internal Staffing Levels and the Use of Contractors for Selected Core
Utility Functions at Major New York Energy Utilities. At the time the Company stated:
“First, Central Hudson does not collect information regarding contractor resources because
Central Hudson does not have an interest in the resources used by the contractor, only whether
the contractor completes its assignment on time and on budget. The number of employees, or
other resources, used by a contractor is up to the contractor. Second, the National Labor
59
Relations Board (“NLRB”) recently broadened the definition of a joint employer such that “[j]oint
employment exists when an employee is employed by two (or more) employers such that the
employers are responsible, both individually and jointly, to the employee for compliance with a
statute.”1 The more information that Central Hudson requires a contractor to provide about its
employees the more likely that a joint employment issue could arise. The joint employment
issue is currently being litigated and it is unclear how it will be interpreted and implemented in
New York, but Central Hudson believes that clear separation of employment is the best policy to
permit Central Hudson, its customers and contractors to avoid costly entanglements that could
arise through joint employment.”
Priority: N/A
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
1
U.S. Department of Labor Wage and Hour Division, Revised January 2016, Fact Sheet #35: Joint Employment
Under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
60
IMPLEMENTATION PLAN
Response to Recommendation 28.2
Recommendation:
Develop the business case for purchasing and implementing a work management information
system (WMIS) for electric T&D. The business case should be well structured and capture the
reasoning for initiating the project and include a cost benefit analysis. Central Hudson should
commit to following up on and acting upon the results of the study by prioritizing the
development and implementation of the WMIS in its roadmap for modernizing IT systems.
Central Hudson will develop a business case that will address the shortcomings that Overland
Consulting identified with the existing systems utilized for Electric T & D work management,
including the timesheet process that currently does not facilitate collecting task times based on
compatible units limiting the work management system to assessing constant time, travel time,
and wrench time, the manual planning and scheduling, the potential for a FERC accounting
misclassification between capital work and O & M, and the integration of the graphic information
system (GIS) with the work management process.
The programming necessary to collect the data to establish a baseline for constant time, travel
time, and wrench time was completed in 2013. In 2014 the necessary reports were developed
utilizing our business intelligence tool to facilitate establishing the baseline and monthly tracking
for constant time, travel time, and wrench time. The project was completed in 2014 and over
90% of the resources allocated to completing the work were internal line resources so the
reports created provided an effective means of measuring crew efficiency and productivity.
In order to continue this progress Central Hudson will develop the business case to initiate an
upgrade to the work management system and will work with IT as they develop their roadmap
for modernizing IT systems. Acting upon the results of the study will depend upon receiving
sufficient funding in rates.
61
System upgrades to allow for 6/30/2018
improved time allocation
Priority: Moderate
There are no incremental costs to performing the business case. Central Hudson will conduct a
cost benefit analysis as part of the business case.
Results/Measures of Success
Improvements to the time allocation between capital installation, capital removal, and O & M
work based on the type of project and work tasks associated with completing the
assignment
Final Deliverable
The system utilized for timesheets will be upgraded to prevent misclassification between capital
work and O & M in accordance with FERC accounting rules. ARCOS crew manager will be
updated on a daily basis as part of the integration process with Mobile Work Force
Management.
62
IMPLEMENTATION PLAN
Response to Recommendation 28.3
Recommendation:
Central Hudson should develop a program focused on reducing the backlog of severity 4 and 5
electric capital and O&M inspection repair work. The goal of the program should be that the
backlog of accumulated work, resulting from 2015 and 2016 inspections, is more consistent with
the historical backlog.
The severity 4 and 5 inspection repair backlog is driven by the number of findings as well as the
number of repairs that are completed. A summary of the starting backlog, inspection findings,
repairs completed, and ending backlog (in hours) for 2011 through 2016 is provided below:
As can be seen in the table above, the backlog of severity 4 and 5 repairs was decreasing in
2011 and 2012 because the hours spent completing repairs exceeded the inspection findings
hours. The inspection findings hours in 2013 compared to 2012 increased by 126% and
although the number of hours spent completing repairs during the same period increased by
55% the ending backlog level increased by 34%. Similarly, the number of hours spent
63
completing repairs in 2014 compared to 2012 increased by 97% but the inspection findings
during the same period increased by 209%. Recognizing that the number of findings is
impacting the backlog of repairs to be completed and that current funding levels for inspection
repairs cannot support completing enough repairs to offset this increase in findings, testimony
was prepared and included in Case 17-E-0459 requesting additional funding for repairs to at
least match the anticipated findings as well as to begin reducing the current backlog levels for
both transmission and distribution. If the requested funding for completing inspection repairs is
approved, then the current backlog of severity 4 and 5 distribution and transmission repairs
would be reduced to historical backlog levels over a three year period beginning July 1, 2018.
A comprehensive ground inspection is completed for each transmission line at least once every
five years. In most cases a comprehensive aerial patrol and infrared survey is scheduled within
the same year as the ground inspection to provide multiple perspectives when assessing the
condition of the structure/pole and associated hardware and conductors. The inspection
schedule is coincident with the Transmission ROW Management schedule to avoid issues
regarding restricted access associated with vegetative growth. Stray voltage testing is also
performed within the same year and in conjunction with either the comprehensive ground
inspection or the Transmission ROW Management.
Similarly, each distribution circuit is inspected at least once every five years by a contractor in
conjunction with the stray voltage testing. All severity 4 and 5 findings are validated by a
Central Hudson Line Foreman or designated Central Hudson employee who has been trained to
evaluate inspection findings. The validation process confirms the findings and the associated
severity rating but also assesses the opportunity for synergy savings or reliability enhancements
that can be incorporated into the inspection repair or replacement. Inspection findings requiring
the creation of a work order (capital work) are forwarded to the Estimating Department to
develop the work order estimate, obtain the required easements, and apply for the necessary
permits before the project is assigned to construction.
As indicated in response to IR-081, transmission and distribution high priority (severity 4 and 5)
repair inventory and repair findings are reviewed and compared to the year to date targets on a
monthly basis as part of our key performance indicators. The status (requires validation, needs
work order, in estimating, or in construction) of every outstanding repair is also tracked on a
monthly basis to ensure that adequate resources are allocated to keep the orders moving
through the process to construction and then ultimately to completion. In addition, the required
completion dates for every repair are monitored on a weekly basis and included in the 30, 60,
and 90 day work plans to ensure that the necessary resources are available and allocated to
complete the work.
Although the majority of the inspection repairs are being completed prior to the required
completion dates, there have been situations where obtaining the required easement or permit
has delayed a repair beyond the required completion date. These situations are documented
and the status is tracked on a weekly basis until the repair or replacement has been completed.
Some of the transmission lines scheduled for a complete rebuild include inspection repairs that
will be due prior to the planned start of the rebuild project. These locations have been reviewed
as part of the project engineering and planning phase to ensure that the finding(s) will not
impact the integrity of the line until the rebuild project is completed. If the severity of the
inspection finding requires completion of the repair/replacement prior to the rebuild project then
a separate work order is developed to complete the high priority repair/replacement.
64
Adopted, modified or rejected recommendation: Adopted
Priority: Moderate
Each inspection finding is assigned a severity rating based on established criteria. The severity
rating also determines the required completion date for the repair/replacement. Severity 5
conditions need to be repaired within 12 months of the inspection date whereas severity 4
conditions need to be repaired within 36 months. The severity ratings and associated required
completion dates were established to ensure that inspection findings were repaired prior to
impacting safety or system reliability. The request for additional funding in Case 17E-0459
included $711,141 for transmission repairs ($135,508 for severity 4 and 5 repairs and $575,633
for severity 1, 2, and 3 repairs) and $508,186 for distribution repairs ($303,157 for severity 4
and 5 repairs and $205,029 for severity 1, 2, and 3 repairs). The qualitative benefits of reducing
the backlog of severity 4 and 5 capital and maintenance inspection repair work to be more
consistent with the historical backlog levels will make tracking the status of outstanding repairs
more manageable as well as improve the integrity of aging electric transmission and distribution
infrastructure.
Results/Measures of Success
Processes and procedures are currently in place to track and manage the backlog of
outstanding severity 4 and 5 inspection repairs/replacements. Approval of our request for
additional funding in Case 17-E-0459 to complete the inspection repairs necessary to at least
match the anticipated findings as well as to begin reducing the current backlog levels for both
transmission and distribution will result in the completion of this recommendation on or before
June 30, 2021.
Final Deliverable
If the Company’s request for additional funding in Case 17-E-0459 to complete the inspection
repairs is approved and that funding is retained through 2021, then it is anticipated that the
current backlog levels for severity 4 and 5 transmission and distribution repairs combined
should be at or below 20,000 hours by June 30, 2021.
65
IMPLEMENTATION PLAN
Recommendation:
A more robust set of procedures should be developed which documents the performance
management process from Team Goal selection and target setting for reporting of results and
consequences for under-performance in one comprehensive discussion.
Central Hudson recognizes the benefits of a clearly defined process. Central Hudson will
develop more procedural guidance within our existing Business Plan Process documentation for
selecting and making changes to the Team Goals.
Central Hudson has an existing process in place that aligns team goals from the employee level
to the highest corporate level as part of our Business Plan Process and performance
assessment. We will evaluate the existing process and procedures related to performance
management in the Business Plan Process documentation to ensure accountability and
alignments are included.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
66
Milestones
Update Business Plan Process documentation to include procedures for selecting and updating
Team Goals. – Complete
Review and update procedures for performance management alignment with Team Goals in
Business Plan Process documentation. - Complete
Results/Measures of Success
Final Deliverable
The Company will issue a copy of the relevant section of the Business Plan Process document.
67
IMPLEMENTATION PLAN
Recommendation:
Central Hudson executive management should perform a more thorough review of its Team
Goals and group key performance indicators results and formally document its findings and
conclusions. One obvious document that could be enhanced is the Team Goals and
Performance Indicators Dashboards report. At a minimum, all projected and actual failures to
achieve targeted performance should be explained in writing (e.g., Cause & Mitigation column).
Corrective actions for each case of non-achievement should be included with these published
results. Errors in the report should be corrected. Executive management should also provide a
written statement regarding its expectations as to the level of performance to be achieved with
these reported results. To reinforce its commitment to the achievement of all Team Goals,
Central Hudson should consider expanding its performance reporting in its newsletter to all
Team Goals on a routine monthly basis.
Recommendation Implementation Team
Chris Capone, Stacey Renner, Eileen Lomoriello,
Executive Sponsor & Team Lead: Ellen Dumbleton
Overland recommended and Central Hudson agrees that executive management should perform a
more thorough review of its Team Goals and group key performance indicators results. The
Company will look to enhance its Team Goals and Performance Indicators Dashboard report and
process.
Central Hudson recognizes that it is important to have well defined Team Goals and performance
measures that clearly and accurately communicate management’s expectations. Currently, the
dashboard report data is collected and stored in an Excel spreadsheet. The data is entered manually,
consolidated manually (which leaves room for human error and formatting mistakes), and is then
presented to the executive team for review. The Company has identified several areas that require
improvement and will continue to improve the dashboard report process in the implementation plan.
Central Hudson recognizes that in addition to monitoring and discussing performance measures that
may require corrective action, it would be prudent to provide explanations for every metric that is not
achieving its target and requires corrective action. These explanations would also serve as a record
for historical performance. Central Hudson will include explanations in its monthly planning and
review processes.
68
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Milestones
Corporate Finance and Planning will work with the Strategic Planning Committee to develop a written
statement regarding its expectations as to the level of performance to be achieved and will include it
in the 2019 Business Plan Process document. – Complete
Central Hudson has identified several areas that require improvement. A more thorough evaluation of
our performance management process will be performed in conjunction with the Balance Scorecard
Implementation Plan (Recommendation 29.6). – Complete
Central Hudson’s monthly planning and review processes will include documenting projected and
actual failures to achieve targeted performance. – Complete
Central Hudson will evaluate alternative ways to expand the distribution of the performance report for
Team Goals. - Complete
Results/Measures of Success
Final Deliverable
The Company will issue a memo to Staff describing how and when each milestone was completed.
69
IMPLEMENTATION PLAN
Recommendation:
The entire Central Hudson Board of Directors should be briefed on all Commission
precedents concerning the cost recovery of incentive compensation in customer rates
and any related guidance produced by the Commission or Staff on the matter. This
should occur on an annual basis prior to the approval of the upcoming year’s incentive
compensation plan design for any Central Hudson employees. After the initial briefing, if
the Board wishes to have executive management make its presentation to the
Governance and Human Resources Committee, this should be permitted.
At the November 17, 2017 meeting of the Board of Directors of Central Hudson, management
briefed the Board of Directors on Commission precedent concerning the cost recovery of
incentive compensation in customer rates and any related guidance produced by the
Commission or Staff on the matter.
Under its Charter, the Govenance and Human Resources Committee of the Board of Directors
is responsible for reviewing, and making recommendations to the Board of Directors regarding,
corporate governance matters. The Committee is specifically responsponsible under its Charter
for matters relating to the compensation of the officers of Central Hudson, including any
incentive plans providing for annual bonuses and long-term equity or other incentive
compensation of officers. In that regard, on an annual basis prior to the approval of the each
year’s incentive compensation plan design, management will update the Committee on any
changes or additions to the precedent and/or guidance from the Commission or Staff regarding
incentive compensation.
Review the background and recommendation with the Board – November 2017
Draft and finalize a summary report of the Board discussion – January 2018
70
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Completion of milestones
Final Deliverable
Central Hudson will provide a memo that summarizes the information concerning this
recommendation provided to the Board of Directors at its November meeting.
71
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should expand the use of incentive compensation based upon corporate-wide
performance to its non-executive management as an alternative to the continuation of the
current compensation design in which most pay is fixed. Performance measurements used to
determine the level of incentive compensation paid should be designed to appropriately benefit
customers, employees, and shareholders at targeted levels which encourage continuous
improvement over time. Within these parameters, Central Hudson should retain a compensation
consultant to assist in implementing this recommendation. To alleviate any negative impact this
recommendation may have on employees, a multi-year phase-in of this proposal is suggested.
Team Members:
In the review of Central Hudson’s use of incentive compensation, Overland is recommending that
the use of incentive compensation be expanded to our non-executive management based upon
corporate-wide performance in lieu of our current compensation structure.
Staff has previously denied recovery of incentive compensation for our non-executive management
employees. Therefore, Central Hudson would like to engage staff in this process so that we are
aligned with the PSC’s position on incentive compensation before any significant changes are
considered. Implementation of any incentive compensation structure would likely be phased in and
considered with labor costs in the development of future delivery rates.
Priority: High
72
Activity/Milestone Start Date Estimated Current Status
Completion Date
The scope of work and precise cost of the compensation consultant has not yet been determined. A
placeholder is included below. Central Hudson does not agree with the estimated benefits
presented by Overland in the audit report. A more thorough understanding of rate recovery and the
potential impact of alternative compensation structures on employee performance and engagement
in Central Hudson’s organizational culture must be determined to gauge future benefits.
Results/Measures of Success
Compensation structure has been reviewed and information provided in order to allow a
determination to be made regarding the structure of management compensation.
Final Deliverable
The Company will provide a memo to Staff on the consultant’s recommendations and Central
Hudson’s determination on a new compensation structure.
73
IMPLEMENTATION PLAN
Recommendation:
Corporate-wide financial objectives of any short-term incentive compensation plan offered to
employees working on behalf of Central Hudson should be weighted no more than 30% of total
Team Goals measured. As with any of the objectives established for incentive compensation
plans, the targeted levels should encourage continuous improvement.
Under its Charter, the Governance and Human Resources Committee of the Board of Directors is
responsible for reviewing, and making recommendations to the Board of Directors regarding, corporate
governance matters. The Committee is specifically responsible under its Charter for matters relating to the
compensation of the officers of Central Hudson, including any incentive plans providing for annual bonuses
and other incentive compensation of officers. Under the Short Term Incentive Plan of Central Hudson, the
Committee is also responsible for establishing Team Goals. Central Hudson does not have an incentive
compensation program for non-executive management employees. This matter is being studied as part of
the implementation plan for recommendation 29.4. Management has advised the Committee of this
recommendation for their consideration at the Committee’s November 17, 2017 meeting.
The Board of Directors took this recommendation under consideration, but decided to keep financial-related
goals at a weight over 30 percent for 2018.
Priority: Low
N/A
Results/Measures of Success
N/A
Final Deliverable
N/A
74
IMPLEMENTATION PLAN
Response to Recommendation 29.6
Recommendation:
Executive Sponsor & Team Lead: Sharon McGinnis & Stacey Renner
A balanced scorecard tool is a strategy performance management tool with several key
characteristics:
In order to determine the value of implementing a balanced scorecard (which done properly will
require a cross-functional team and approach), Central Hudson must first begin to understand
potential project scope, how other Companies have benefited from scorecard implementation and the
total potential costs of this type of project. There is potential to align the development of a balanced
scorecard with the implementation of new system for budgeting in 2018 and 2019. Several of the
system options the Company is considering have the capacity to handle both financial and operational
reporting.
Several preliminary steps (as described in the milestone detail below) are required to determine
whether Central Hudson will fully adopt this recommendation.
Learn more about a balanced scorecard October 2017 March 2018 Complete
approach and benefits through consultation with
vendors and consultants, participation in
webinars, discussion with other companies. All
subsequent milestones are contingent upon
Central Hudson determining that implementing a
balanced scorecard approach beyond our
existing Team Goals has value for Central
Hudson.
75
Hire consultant to assist with evaluation and January 2018 February 2018 Complete
mapping of our current performance
management process, and identification of
improvement areas.
Priority: High
Modest consultant expense is expected in the preliminary phase. Additional expense and capital
investment (IT systems) may be incurred if an improvement project is launched. Annual administrative
expense may be incurred in the oversight of the program. Benefits are expected to be qualitative and
not quantifiable.
76
Total Cost $125,000 $125,000 $125,000 $125,000 $125,000 $725,000
Results/Measures of Success
Final Deliverable
The Company will issue a memo to Staff upon completion of implementation describing changes
made and the expected impact on the planning and performance processes.
77
IMPLEMENTATION PLAN
Recommendation:
The Vice-President, Human Resources & Safety should attend industry programs focused on
management performance and incentive compensation, as well as specific programs focused
on the Balanced Scorecard system, should the Company pursue the implementation of this (or
some equivalent) system.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Sharon McGinnis
Team Members:
The Vice President, Human Resources & Safety attended a conference session on balance
scorecards on October 12, 2017, Balance Scorecard Institute webinar on October 31, 2017,
and will continue to seek opportunities to attend industry programs focused on management
performance and incentive compensation.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Completed and The Vice President, Human Resources & Safety will continue to seek
opportunities to learn more management performance and incentive compensation.
Final Deliverable
The Company will provide Staff with a memo summarizing the conference and webinar content.
78
IMPLEMENTATION PLAN
Recommendation:
Prospectively, Central Hudson should engage in both internal and external benchmarking and
the pursuit of best practices. These efforts should be adequately documented and made
available to the NYSPSC, its Staff, and their representatives, as appropriate. Central Hudson
should obtain releases from third parties that restrict the disclosure of certain information so that
benchmarking and best practices documentation can be reported to the NYPSC, the Staff, and
its representatives. Expenditures made to any third party who does not agree to the release of
benchmarking and best practices information should not be requested in rates by Central
Hudson or otherwise considered in base rate proceedings.
Team Members:
Eileen M. Lomoriello & others TBD
Central Hudson currently engages in benchmarking and the pursuit of best practices, but this work is
not functionally centralized within the organization. Each group conducts this work as it impacts their
part of the business. Third party experts are utilized where appropriate. The Company will continue to
take this approach to benchmarking where it adds value for Central Hudson.
Centralizing Central Hudson’s benchmarking efforts would result in incremental resources and
expense. In the interest of minimizing costs, the Company plans to amend its current business
planning process to document where benchmarking was used, and to identify opportunities where
benchmarking should be considered.
With respect to obtaining releases from third parties that restrict the disclosure of certain information,
Central Hudson plans the following:
1. Central Hudson will reach out to relevant staff at both EEI and AGA to inquire about
information releases.
2. Central Hudson will arrange a call with Staff, CH employees and EEI representatives to
discuss this further.
3. Central Hudson will arrange a call with Staff, CH employees and AGA representatives to
discuss this further.
4. Central Hudson will modify its standard contract language to allow for the sharing of
benchmarking and best practices information from contracted third parties with the NYPSC,
Staff, and their representatives. The Company may not be successful in negotiating such
terms with all third parties.
79
Central Hudson will continue to seek cost recovery for all prudently incurred expenses in accordance
with the NYPSC Statement of Policy on Test Periods in Major Rate Proceedings.
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Completion of milestones
Final Deliverable
The Company will provide Staff with a copy of updated Business Plan Guidance and documentation
of the introduction to Staff and EEI and AGA.
80
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should make the necessary modifications to procedures or the CIS to recognize
meter readings and calculate service bills without manual intervention when service
consumption precedes the service request date due to the customer’s failure to notify Central
Hudson when they move into a residence and begin consuming power.
Central Hudson’s CIS system to the extent possible has already automated the process when we
receive a request from a customer to take over service on a date prior to the day they are notifying
us. There are a number of infrequent scenarios that do need to be handled manually by the
Customer Service Representative based on the customer’s individual situation. The time it takes to
process these manual transactions to complete the request is minimal and would not warrant the
investment in mapping and automating all potential circumstances. Central Hudson has written
training materials for Customer Service Representatives to follow when processing these
transactions. These training materials will be formalized and enhanced to outline various examples
that the Customer Service Representatives manually process per the customer’s request.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated training documentation.
81
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should make the changes necessary to ensure that when new meters are
installed on existing accounts, the CIS system cannot fail to bill the account based on the new
meter. Given that CIS already captures the usage data for these meters, CIS should be able to
bill the usage, and bills should not have to be estimated due to a failure to follow through with
paperwork. This may require a programming change to CIS, the enhancement of procedural
controls associated with meter changes, or both.
Central Hudson will initiate improvements in our procedures that minimize inaccurate bills being
sent to our customers. Currently we have procedures in place for the Meter Readers to verify
the meter number when they are either (1) reading a non-ERT meter and receive a hi/low error
or (2) an ERT meter where the reading is not being picked up. These already established
procedures will be reinforced. In both scenarios mentioned above, Meter Readers currently
enter into the handheld device a Miscellaneous Code and the new meter number and index.
The detail entered is stored on the system, but in some cases may not be seen unless
otherwise prompted for further review. As an improved process, Central Hudson will utilize a
function on the meter reading handheld device where Meter Readers can enter the new meter
number information and index as seen in the field. The meter number and index will generate an
order in our CIS system with the detail to then be worked by a CSR for account updates.
Central Hudson will immediately conduct refresher training with all Meter Readers to ensure
they are confirming meter numbers against system detail when on site. Central Hudson has
tested the handheld functionality to ensure meter change data and index detail is accurately
transferred to CIS for CSR visibility and customer billing.
Priority: Moderate
82
Summary of Cost/Benefit Inputs
Central Hudson’s internal resources will complete the testing. Training costs are all internal and
not incremental. The improvements in Customer Satisfaction from these changes are not
possible to quantify or measure, but they are expected to be immaterial in aggregate due to the
small number of occurrences.
Results/Measures of Success
Once consistent procedures are enforced for meter change updates in the handheld, orders will
be generated thorough CSRO to be reviewed by a CSR to ensure all meter changes are
processed based on the detail provided by the Meter Reader.
Final Deliverable
The Company will provide Staff with a memo on the enforced changes.
83
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should implement procedures to ensure that necessary action is taken to help
prevent meters from going beyond six months without a reading. This may require escalating
attempts to contact the customer as the number of consecutive estimates increases. It may also
require programming changes in CIS to help alert CAS employees that additional action needs
to be taken.
There currently is an “Accounts with 2+ Consecutive Estimates Report” that generates in batch
reports daily. This report identifies accounts that were billed as estimates the day prior and that
have a No Read Reason 2 or more consecutive times. This report is already in place and
available for review.
Central Hudson needs to ensure the current procedures established are being followed as it
relates to the existing listing that is produced daily. Management of this report needs to be
improved and a report should be produced so the manager level employees can see the
statistics in all areas. Improvements are needed in our communication to the customers which
will include programming changes to automate access letters to customers.
The oversight of the daily reports is currently handled by the Director of Meter Reading who will
continue to be responsible for these reports being managed daily. A programming improvement
for automation of access letters to customer has been implemented.
Create report that provides the number of estimates and reads per day: Completed
84
Priority: Moderate
Central Hudson will incur costs for producing a report for management review. Central Hudson
anticipates improved Customer Satisfaction as a result of customers receiving notification
regarding estimated bills more timely. The improvements in Customer Satisfaction from these
changes are not possible to quantify or measure.
Results/Measures of Success
Central Hudson can track and analyze accounts listed on the “Accounts with 2+ Consecutive
Estimates Report.” Reviewing this report timely will allow Central Hudson to determine any
further course of action needed based on circumstance. Additionally, the availability of this data
in a report will provide management insight, which will assist in minimizing estimates beyond 2
billing cycles.
Final Deliverable
The Company will provide Staff with a memo with a sample of “Accounts with 2+ Consecutive
Estimates Report” and an example of the management report.
85
IMPLEMENTATION PLAN
Recommendation:
If wiring inspections are required as a condition for reconnection following the discovery of
meter tampering, the basis for the policy should be clearly documented and it should be
required that the policy be consistently applied.
Central Hudson’s current practice is to require a Fire Underwriters Permit in situations of meter
tampering. Central Hudson will formalize this requirement in our Customer Service Handbook for
Commercial Representatives. The following language will be added to Section 9, under Theft of
Service – section 1.1.112 Responsibilities paragraph (4):
e. Central Hudson will require a Fire Underwriters Permit when a meter(s), that should be locked is turned
“ON” by an individual other than a CH employee without our express permission and it appears there may
have been tampering. This includes instances when wiring and/or bypass devices are found to be
installed that bypass meter registration. This applies to situations where the meter was initially turned off
for safety reasons as well as nonpayment reasons. We require a Fire Underwriters Permit to ensure that
any changes or corrections that may have been made to the service entrance wiring and/or meter pan
wiring that could lead to a public safety situation are corrected to comply with our Bluebook of Electrical
Specifications and NEC Code.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Final Deliverables
The Company will provide Staff with a memo detailing the update to the Customer Service Handbook
for Commercial Representatives
86
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should clearly document and consistently apply its policy for transferring prior
bad debts into current residential customer accounts. (Note: The Bad Debt Transfer Process
document Central Hudson provided as evidence of its policy (IR-384, Attachment 1) does not
clearly state the six year age limit on which bad debts may be transferred into current accounts.)
Executive Sponsor & Team Lead: Charles A. Freni & Linda M. Harrison
Update of the Bad Debt Transfer Policy utilized by the Customer Service Representatives to
clearly state the six year age limit on which bad debts may be transferred into current accounts.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Consistent handling of bad debt transfers and elimination of customer complaints related to bad
debt transfers older than 6 years.
Final Deliverable
The Company will provide Staff with a memo on the updated to the Bad Debt Transfer Policy.
87
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should develop a written policy addressing the circumstances under which
social security numbers are requested or required as a service condition. In addition, to limit
opportunities for identity theft, service applicants should not be requested to fax or mail copies
of their social security card to Central Hudson, unless the Company has a procedure to ensure
the security of paper versions of such documents. The NYSPSC should consider whether and
when a utility may require, rather than just request, social security numbers as a condition of
service.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Central Hudson has policies and procedures in place to ensure the security of paper versions of
documents that have Personal Identifiable Information (PII) such as social security number.
Central Hudson does not require social security numbers as a condition of service; however we
do request them from customers. Central Hudson will enhance our training materials for our
Customer Service Representatives (CSRs) to outline circumstances when social security
numbers should be requested to clarify for our employees when it is most helpful in identifying
the customer of record.
The recommendation for the NYSPSC to consider whether and when a utility may require,
rather than just request, social security numbers as a condition of service is not something
Central Hudson can address. Central Hudson will request that this topic be included in the next
joint PSC-utilities meeting (CMUG), Spring 2018, in order to identify any best practices from the
other utilities.
Central Hudson will update our CSRs training materials for service applications to include
scenarios where we would request that a social security number be provided to identify the
customer. The updates to the training material will be completed by December 31, 2017.
Central Hudson will identify best practices with the other utilities by April 1, 2018.
Priority: High
88
Summary of Cost/Benefit Inputs
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Updated CSRs training materials that define when a social security number would be needed in
order to identify a customer.
Final Deliverable
The Company will provide Staff with a memo on the updated CSR training materials that define
when a social security number would be needed in order to identify a customer.
89
IMPLEMENTATION PLAN
Response to Recommendation 31.1
Recommendation:
Central Hudson should develop and post online, as a reference document, a set of written
guidelines describing the Company’s procedures for complying with residential and non-
residential customer regulations.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Team Members:
Cheryl Ryan and subject matter experts
Central Hudson will create a reference document or table of contents online that will be designed
based on the PSC Regulations outlined in the Rules Governing the Provision of Service by Gas,
Electric, and Stream Corporations to Residential and Non-Residential Customers. Central Hudson
already has written training materials and procedures for our Customer Service Representatives
that we will reference in the table of contents with a link to the location of that training material.
This already existing material will be stored in our ECM system (internal library system). Training
materials will be updated as necessary to incorporate any needed changes or any new programs.
Priority: High
This project will involve internal labor resources to complete. The audit found that Central Hudson
is in compliance with all applicable residential and non-residential customer regulations; therefore
there is no known benefit for this recommendation.
Results/Measures of Success
A reference document for residential and non-residential customer regulations posted in a central
location online.
Final Deliverable
The Company will provide Staff with a memo including a copy of the reference document located
online for residential and non-residential customer training material and procedures.
90
IMPLEMENTATION PLAN
Recommendation:
To ensure that all applicants in similar circumstances are subject to the same requirements,
Central Hudson should develop written guidelines covering the circumstances under which
residential service applicants must provide proof of identification or addditional documentation.
When additional documentation is required, the policy should explain what documentation is
required and why. This is not intended to remove the decision-making process from CSRs;
rather, it is intended to help ensure CSRs apply similar requirements to all applicants with
similar circumstances.
Central Hudson’s current written training materials for service applications outlines guidelines for
circumstances under which residential service applicants must provide proof of identification or
additional documentation. These training materials will be enhanced to outline the various
examples where additional documentation may be required and why. These training materials will
be enhanced to act not only as training materials but as Company procedures. These documents
will be stored in Central Hudson’s ECM system (library storage system).
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated training documentation.
91
IMPLEMENTATION PLAN
Recommendation:
Central Hudson’s written service application form should include additional space and require
additional information concerning the nature of business and power-consuming equipment to be
used. The current forms have a “Nature of Business” field, but the space is large enough for
only one or two words to describe the business.
Central Hudson’s service application form will be enhanced to include additional space so the
proper information can be included to describe the business.
This enhancement to the service application form will be completed by December 31, 2017.
Priority: Low
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated commercial/industrial service
application.
92
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should develop a guideline for CSRs to use when deposits are requested from
residential applicants as a condition of service. It should describe the circumstances, consistent
with HEFPA Section 11.12, under which deposits may be request from residential service
applicants.
Central Hudson’s current training material includes guidelines when CSRs should request
deposits from residential applicants as a condition of service. These training materials will be
enhanced to describe the circumstances consistent with Home Energy Fair Practices Act
Section 11.12, under which deposits may be requested from residential applicants. This
guideline will be stored in our Enterprise Content Management System.
Priority: High
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated training documentation.
93
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should describe the reason for requiring deposits in all service denial letters
applicable to customers for whom a deposit is requested as a condition of obtaining utility
service.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Central Hudson will submit a request to our programming department to add the reason for
requiring a deposit to the automated denial letter that is sent to customers. The creation of the
new letters will be completed by July 1, 2018.
Priority: High
The expected programming hours to complete this request is 30 hours, along with 70 hours for
testing this application; all labor costs are internal The benefit from the letters should result in
clarity to the customers to provide higher levels of customer satisfaction. There are no
incremental costs and the benefits are qualitative therefore no cost benefit analysis is needed.
Results/Measures of Success
Programming changes are completed so that customers are aware of why they are being
denied service.
Final Deliverable
The Company will provide Staff with a memo including copies of sample denial letters that show
the possible reasons for denial.
94
IMPLEMENTATION PLAN
Response to Recommendation 31.6
Recommendation:
Central Hudson should have a guideline addressing its use of courtesy discounts, which are
offered to customers receiving back-billings, at the discretion of CSRs. The guideline should
describe when the discounts can (and should) be offered and the range applicable to different
circumstances.
Central Hudson’s training guidelines for CSRs address courtesy discounts, it addresses when
the discount can (and should) be offered and the range applicable to different circumstances.
These existing guidelines will be enhanced to provide additional clarification to CSRs by July 15,
2018.
Complete the update of the training guidelines for courtesy discounts by July 15, 2018.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated training guidelines.
95
IMPLEMENTATION PLAN
Recommendation:
Central Hudson should develop and document, in written form, a procedure to ensure that field
collectors check to ensure payment has not been received at the beginning of the day on the
date of scheduled termination, before they begin field termination activities for the day.
Central Hudson will document our current procedures for field collectors to check to ensure
payment has not been received at the beginning of the day on the date of scheduled termination
before they begin field termination activities for the day. These procedures will be added to the
Customer Service Manual for Collectors.
The written procedures noted above will be finalized and placed in the Customer Service
Manual for Collectors by December 31, 2017.
Priority: Moderate
There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.
Results/Measures of Success
Final Deliverable
The Company will provide Staff with a memo on the updated Customer Service Manual for
Collectors.
96