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Utility Performance Improvement Program

A regional utility faced with multiple technology and performance challenges redesigns its operating model.

After several years of significant investment to reinforce its network and bring on new generation plants, a regional utility was confronted with two different challenges. First, bringing new capacity on line had negatively impacted cost discipline in operations—industry benchmarks highlighted a significant potential for improvement. Second, distributed renewables were becoming increasingly widespread, putting additional pressure on the revenue side.

BCG worked with the utility to radically simplify the business and design the future organization. The new organization design was implemented at the end of the third month.

BCG initially helped the company tackle both challenges by implementing a short diagnostic phase. Next it supported an operating model redesign. The diagnosis and benchmarking effort created confidence in the possibility to reduce costs by more than 30%, while still ensuring the company’s ability to innovate and lead. BCG then worked with the utility to radically simplify the business and design the future organization—the new organization design was implemented at the end of the third month.

After 12 months, a 20% cost reduction had already been achieved. With help from BCG, the utility had:

  • Redefined its corporate center
  • Empowered business divisions
  • Revised its approach to insourcing and outsourcing
  • Gained stricter control of its external spending
  • Developed new approaches to investment planning

Several material opportunities, scoped with the BCG team, are still being put into place by the utility to bring continued cost benefits. Most important, the utility’s culture has been changed to one that focuses on enhanced accountability and improved performance.

Energy & Environment
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