Representatives from not-for-profit utilities gathered June 10 - 15, 2022 in Nashville, Tennessee for American Public Power Association’s National Conference. T&D World magazine was there to hear their top concerns, which included: Maintaining reliable service in a time of broken supply chains, keeping costs low with fuel costs rising, recruiting new workers as employees adjust to a post-pandemic workplace, and adding to the economic pressures facing their customers as little as possible.
Joy Ditto, President and CEO of the APPA, said utilities face these issues and many more, but added that the business model of public power utilities gives them the advantage of working collaboratively and staying connected to the communities they serve.
“There is a little bit of a push and pull, I think, in the industry. These are all challenges. But there are opportunities as well, because I think certainly within the public power business model, we are in our communities. We know our customers, we listen to them, they have ample opportunity and to engage with us in various forums. And we are out in the open. We're transparent,” Ditto said.
The publicly owned utilities represented by APPA serve some 2,000 cities and towns with nearly 50 million electricity users. APPA utilities also employ about 96,000 people. The association works with federal government agencies, state and local governments, utility trade associations and utilities of all business models to collaborate on research and strategy to strengthen the industry overall. Outage management, affordable rates, electrification, clean energy, safety and grid modernization are a few of the issues APPA prioritizes in this work.
A Broken Supply Chain
Ditto identified supply chain challenges as one of the top problems of the moment for utilities, and the CEOs and general managers convened at the conference agreed. In May, APPA released an issue brief on supply chain disruptions, which found that shortages of critical infrastructure components as well as skilled labor are triggering longer project lead times and delaying needed power grid improvements.
But it isn’t just distribution transformers that are becoming hard to find.
“Truly, I had my credit card out. I had located the right size and style of envelopes at Costco and was getting ready to buy a few hundred thousand envelopes from Costco that would get us by a month or two,” said John Haarlow, CEO and President of Snohomish Public Utilities District based in Everett, Washington.
Tony Cannon, CEO and General Manager of Greenville Utilities Commission, based in North Carolina, had the same problem on the opposite coast.
“We had to switch envelopes. We couldn't get what we needed. It was going to be months before we could get it. So, we had to reformat our bills. We had to change the envelopes that we're now in a different mode,” Cannon said.
Haarlow said you might not believe during a time of remote work, streaming media and cloud computing that running low on envelopes would be that big an issue, but when a utility is facing not being able to mail out bills or other documents to its customers, it becomes a big issue.
Similarly, facing down a hurricane season in the Florida Keys without enough bolts to perform needed repairs is another major headache.
“Our purchasing supervisor is telling me that we're having trouble even down to the bolts, you know? That bolts that we used to be able to get within two or three weeks now have lead times that go out five, six months. So it's even the very basic things that we're having trouble getting as we're going into hurricane season. And that’s a very scary situation for the southernmost city in the United States,” said Lynne Tejeda, General Manager of Keys Energy Services of Key West, Florida.
Colin Hansen, CEO and General Manager of the Kansas Power Pool, said one of his agency’s member utilities hit a snag trying to find components that are never typically an issue.
“We were trying to set up just a really simple distribution project in one of our member cities and couldn't find the connectors that you normally just go to your supplier and get. We bought them of eBay, you know, like they were delivered a week later and that was the only way to get what we needed to get the thing done,” Hansen said.
These kinds of shortages are making utility leadership look at matters differently than ever before, Tejeda said.
“We have, I guess, historically maybe been a little wasteful when we do pole change-outs and the like. You know, the guys top the poles and put them in the dumpsters. Now we're at the stage where we are scavenging everything we can off the pole. We've never experienced that before. And it's, you know, kind of a new way of life that if it's reusable, it's going to be reused, even if it requires cleanup,” Tejeda said.
Cannon said his utility’s service territory in eastern North Carolina, also often falls in the path of hurricanes. This is an imposing thing in an average year, but without reliable components and people to install them, some utilities are worried about impacts to reliability should the situation not improve.
“We had preordered transformers for this year and actually got an order for next year. And when we ordered the transformers, we had lead times up to 106 weeks for distribution, transformers costing three times what they cost last time we bought them,” Cannon said.
Tejeda added that her utility paid $23,000 for a 1500 KVA transformer last year and paid $100,000 for the same transformer last week.
“It's a real problem and there's only one place for us to get that recovered and that's through our ratepayers. And when you add on the whammy of extreme natural gas prices and trying to build out infrastructure in order to meet compliance requirements,” Cannon said. “When you get overly legislated and timelines aren't realistic, costs are greatly impacted.”
Customers Feeling Pressure
Tejeda said the price of gasoline and natural gas is resulting in some frightening bills for customers.
“In addition to resources I would say the price of gas is scaring me,” Tejeda said. “What we're passing on to our customers as we enter the summer months. I just don't know how our customers are going to handle it. You know, they have the double whammy coming at them with our rate going up and their consumption going up.”
Natural gas prices in the US this May hit $8.17/MMBtu – a high not seen since 2008. The monthly average Henry Hub prices for natural gas nearly doubled from June 2021 to June 2022. Prices are trending upward because demand growth is surpassing domestic production growth, keeping inventory levels low, according to the U.S. Energy Information Administration.
This added financial pressure means customer service representatives and everyone who deals with customers will be in for some rocky times, Tejeda said. When asked whether people could be warned in advance, she said Keys Energy Services has sent out some pamphlets, bill inserts and some website information.
“I just don’t know that there’s any preparation for this and the other thing is people generally don’t want to conserve. You know, in Florida, they want their air conditioning, and telling people that they should conserve you know? They don’t want to hear that. They want their comfort, but they also want the low rates that are just not going to be there as we move through the summer.”
Hansen said fluctuating energy costs have already hit customers in the middle south quite hard as people are still dealing with the fallout from the February 2021 freeze that disabled or disrupted much of the power infrastructure in the area.
“Winter Storm Yuri was a really big hit for my agency and for a lot of the grid power systems, you know, not just in Kansas. Obviously, Texas was the one that was most profoundly hit by that,” Hansen said. “Our hit was financial. And, you know, our agency, the customers of our agency will be paying off those costs that are part of a year and a half to two years on a very aggressive schedule.”
Many of the communities served by the KPP are quite small, and some had to have discussions about dissolving their city governments because of the amount of debt incurred, Hansen said. Of the 24 cities that KPP serves, the median size is about 920 customers, he said.
“You know, workforce development when you're in a town of 2000 people or less is a challenge,” Hansen said. “You've got several [APPA joint action agencies] that are out there actually running line crews because the small systems are having such a hard time recruiting and retaining those line workers. The joint action agency, by bringing that economy of scale together, have been able to successfully do it. It's a really interesting and intriguing model and one that's been really successful for a lot of folks.”
Ditto said these agencies allow small utilities with fewer resources to tap into a collective of utilities, leverage borrowing authority and share knowledge.
“[Joint action has] been a very successful way to kind of get our arms around some of these issues. That doesn't help with natural gas prices. Like we can't control that completely, you know, by banding together. But we can catch more and minimize more of those impacts and kind of get our arms around the need when we're in a bigger community of folks,” Ditto said.
Finding the Right People
Beyond meters, transformers, bucket trucks and bolts, many utilities are experiencing shortages of an even more important and versatile resource: People.
“For me, it's actually more labor – jobs,” Cannon said. “Apprentices and journeyman, particularly than it is the highly technical jobs. We're able to recruit those. We're struggling on the workforce really all across the board.”
Tejeda agreed with Cannon, adding that her utility was now thinking more strategically about who can be deployed where and for how long given the constraints of the labor force.
“We're having those discussions, who's going to do this work? Do we have a lineman do that or do we have someone from another part of the utility do that?” Tejeda asked.
The geographical isolation of the Florida Keys sometimes makes finding highly trained engineers more difficult for her utility.
“We've always been in a situation where we’re isolated in the Keys that when we when it comes to apprenticeships, we're great at recruiting local people and training them from within and bringing them through with some really great training programs that we take advantage of,” Tejeda said. “It's just it's a challenge. And I don't even know if you can pay them enough to get them to relocate to the Keys. So, it's that resource is difficult for us. And again, it's mostly the highly technical jobs.”
Compounding the tight labor market issue is a trend that has grown alongside it: changing workplace expectations after the end of COVID-19 restrictions. Tejeda said her utility has ended remote work barring illnesses or other extenuating circumstances.
“We worked from home for six months when the pandemic started. And I think, you know in the beginning everybody embraced it and everybody wanted to prove that it could be done. And we got to the point that employees miss each other, miss the camaraderie of the office. And most, not all, most wanted to come back into the office,” she said.
Shifting Worker Expectations
Throughout this process, the utility had to navigate how its workers felt about their workplace and how it was changing.
“I think one of the hardest parts for us was there was within our organization different feelings about the working from home,” she said. “I think some of our field workers just couldn't see how some of the administrative staff were really working if they were home. So, it seemed to cause just to be a little bit of morale issue, some tension between the two segments.”
Haarlow said there was initial resistance at Snohomish PUD to the idea of a hybrid schedule for workers, but once working from home was tried, it showed positive effects, particularly among the 80-member customer service group, which has generated “rave reviews.”
“The first statement was from leadership, like, well, you can't manage people at home, which was kind of counter to where we were going culturally,” Haarlow said. “And what we have noticed is our customer service stats have increased and we are there now better than ever. Morale is high and I attribute the customer service performance increase in part due to morale increasing.”
In the end, a better work-life balance was beneficial to Snohomish utility workers, he said, adding that hybrid schedules are still available for some workers whose managers approve it.
“Everybody was struggling through COVID. And when you're dealing with customers who are struggling, both residential and C&I and we've gotten rave reviews from our customers on how our CSRs have handled this conversation I think in large part, again, it's because they're in a good mood, they're in a good place,” Haarlow said.
Cannon said his utility had a stroke of good timing when customer service representatives needed to work remotely.
“We had just finished retooling our drive throughs for customer payment with new technology so that it's face to face. We had monitors outside and it was like we were sitting here talking and our reps could see the customers as well. That came online maybe a month before we closed the offices. So, perfect timing. We anticipated this was coming,” Cannon joked.
Aside from this bit of good luck, Cannon said his utility was taken by surprise and needed to improvise just as many other utilities did.
“I would say that we did have a pandemic plan in our emergency management plan that was absolutely useless. We built it around the bird flu from back in the day and you know, it was absolutely useless. So we had to manage on the fly as well,” he said.
Among the changes Greenville Utilities made were staggering crews, stocking work trucks at night to prepare them for crews who would need them in the morning, and safety training.
“So, we purposefully created silos where we had been working so hard for the last several years to tear silos down. And, and then we had seen great improvements in our safety, you know, and that's a really good indicator of the quality of work that our crews are producing,” he said.
COVID-19 impacted the training done by Kansas utilities, Hansen said. The Kansas Power Pool had a training center that held as many as 100 training events per year, which had to shut down.
“We had this massive building and all these 20 employees at the time. And we want, you know, exclusively to work from home and within about two to three weeks, I had my employees clamoring to come back to work because they wanted to get out of their basements and away from their families,” Hansen said.
People were allowed to return to work in the training center, physically distanced in the large facility, and offered the choice of a hybrid schedule.
“You know, do you want to be in your office or do you want to be from home? And it gets back to what John [Haarlow] was saying about the work life balance,” Hansen said. “I think that's one of the things I love about public power and the public power business model is just it's about the people. It's about the relationships.”
Cannon said he is confident utilities will be able to weather the increasing demands placed on them. The challenges are real, he said, but this is not the first time the utility industry has faced adversity.
“We opened our doors in 1905 in Greenville. So, we had World War I, we had World War II, we had Korea and Vietnam. Those all have presented supply chain issues. And we came through those as an industry. We came through all of that, and we are certainly in a position with smart enough people and enough experience that we can do it now if we're given the opportunity to do it,” Cannon said.