1. Colorado Springs Utilities Environmental Services Functional Assessment Presentation for the American Public Power Association’s 2001 Engineering & Operations Technical Conference by Alan Goins and Dave Whitaker

3. Situational Assessment  CSU’s policy expectations of Board (“Ends”)  Citizens value local ownership because CSU responds to community needs and values (viewed as a community partner)  Is a steward of the environment - environmentally sensitive community  CSU must leverage its environmental focus externally as well as internally - “value !”

4. Situational Assessment cont.  Business Drivers  Levels of financial pressures are increasing - costs are trending up  Customer/owner expectations are evolving - continued low price, and strong community role  Role in the community is not as strong as it needs to be - particular attention to CSU’s role in addressing the environment  Deregulation is continuing to evolve

5. Situational Assessment cont.  Current State  Two or thee existing corporate environmental strategies - not wrong, but not integrated  Different criteria used in decision-making  Internal concept of “this is not a corporate issue”  Resulting external concept of “good in spots”  Difficult and time consuming to articulate status on issues and/or costs from a corporate viewpoint  Lack of performance metrics to determine effectiveness of current activities  Staff is held accountable differently

6. Situational Assessment cont.  Future State  Environmental strategies, policies and initiatives are aligned with other corporate strategies  CSU goes beyond minimal compliance when adding value to the community clearly exceeds incremental costs  Environmental decisions are based on consistent criteria and managed in a coordinated fashion  Environmental issues are addressed in a coordinated and consistent manner

7. Situational Assessment cont.  Future State cont...  CSU is clear and consistent in communicating its environmental performance and initiatives to customers  The performance of the environmental programs is measurable and CSU personnel are consistently held accountable for results  Environmental services are provided in a cost- effective manner

8. Project Approach Phase I Perform Benchmarking Phase III Assess Current Organization Structure Phase IV Assess Outsourcing Opportunities CORPORATE EH&S STRATEGIES CHANGE MANAGEMENT Phase II Assess Management Processes, Programs and Systems  Objective - Effective and efficient alignment of resources and practices necessary to achieve corporate environmental strategic goals

9. Project Scope STRATEGY PROGRAM MANAGEMENT COMPLIANCE OPERATIONS The Focus for This Project  Development  Planning  Policy Setting  Program Development  Program Auditing  Technical Support  Regulatory Compliance  Regulatory Reporting  Performance Reporting  Open/Close Valves  Operate Controls  Maintain Pumps

10. Benchmarking Panel  Comparable municipal utilities - 5  Comparable IOU utilities - 5  Utility companies of a larger size that are recognized for excellent performance - 4  Non-utility companies recognized for excellent performance - 4

11. Benchmarking Observations & Conclusions  Decentralizing both environment and safety organizations and putting accountability for results on line managers.  Small central staff addressing regulatory affairs, rule interpretation, policy development and regulatory reporting  Most technical specialists supporting operations report to the operating department manager - gives operations control over technical support resource  Few performance metrics other than those required to track compliance regulations  Organization structure is not critical to getting outstanding results

12. Benchmark - Best Practices  Line managers are held responsible for auditing and corrective action  First line supervisors visit field locations often to communicate with work crews about environmental requirements and procedures  Information management database are developed to track environmental performance and conditions  Line Managers and first line supervisors are held accountable for environmental performance and stewardship

13. Management Process Recommendations  Enhance the planning process to integrate EHSD and Operating Department initiatives  Develop a standard process for EHS issues management that includes involvement of the Marketing Department  Develop a standard processes for regulatory agency interface and commitment tracking

14. Management Process Recommendations (cont’d)  Develop project management expertise for key managers and individual contributors  Develop Service Level Agreements between the EHSD, Governmental Affairs and General Counsel to clearly define the roles and responsibilities for achievement of goals and initiatives  Develop process for determining when CSU will exceed environmental regulatory requirements

15. New Organization Structure Executive Director COOUtility Support Operating Departments CEH&S Admin. Services Info. Tech. Services Laboratory Services Permitting Services Technical Services Regulatory Services Safety & Health  Operation and maintain environmental equipment  Conduct daily monitoring  Perform recordkeeping and reporting  Strategy and policy setting  Regulatory interface an intervention  Issues management  Regulatory interpretation  Legislative involvement  External and internal Communications  Program and plan development and oversight  Technical consulting  Permitting  Auditing Strategy Program Management Compliance

16. Benefits of New Organization Structure  Provides consistent, central strategy, policy and standards for programs and procedures  Improves communications with regulators and public by providing one central spokesperson and clearinghouse  Promotes sharing of resources and leveraging the advantages of a four service utility  Provides facility managers with direct control over day-to-day compliance activities

17. Lessons Learned  Benchmarking effort did not yield the level of information we expected  Key driver was the need to leverage environmental programs with an external customer focus  Organizational change was needed to create efficiencies not possible thru process improvements  Consultative decision making process was needed to expedite decisions around the recommendations  Model for other organizational changes

18. What Would We Do Different Next Time?  Better understand the goals and objectives of the executives earlier in the project - more examples and stories  Less time on benchmarking  More time on identifying outsourcing options  Perform high-level cost/benefit analysis of process improvements - measure value!