Kyle Roadman, EPUD General Manager
Happy June, Emerald Customer-Owners!
As we reach the year’s mid-point, we also find ourselves about halfway through our current Strategic Plan time horizon.
For background, Emerald’s Strategic Plan was approved by our Board of Directors in July 2020. At the time, we envisioned this covering a five-year window, from roughly 2021-2025. Therefore 2023 feels like a good time to check in on our progress.
First, a quick overview. Our Strategic Plan describes six big initiatives that we hope to carry out over this period.
These include:
- Distribution System Enhancements: an effort to place a major emphasis on increased service reliability.
- Load Factor Improvement: a broad effort to encourage efficient use of Emerald’s system.
- Cost of Service Rate Design: an approach to ensure fairness within retail rates.
- Organizational Resiliency: a commitment to preparing Emerald for adverse future events.
- Customer Facing Programs: an effort to leverage our technology for programs that directly benefit customers.
- Finance: a commitment to using a balanced approach to funding Emerald’s long-term investments.
A summary of the 2020 Strategic Plan is shown below.
So how are we doing so far?
Our management team has recently taken inventory of progress to date, as well as work left to do. I’ve provided the quick rundown below (click to enlarge the image):
Key takeaways:
Distribution System Enhancements
We’ve made progress, primarily in overhead line rebuilds and advanced equipment deployments that allow us better control over the system. That said, our capital improvement work has been slower than expected due to supply chain issues. These are starting to ease and the next two years will see a major push across the board: overhead line rebuilds, overhead-to-underground conversions, a new transmission line up north, and major substation upgrades. These, combined with a continued push on tree trimming, should help us reach a new level of reliability by the end of 2025.
Load Factor Improvement
We’ve had success at a small scale: a time-of-use rate pilot , new electric vehicle programs, and continued energy efficiency work. However, for us to meaningfully change the way our customers use energy we are going to need efforts at scale. In the years ahead, this will likely mean a larger time of use rate program (still voluntary, but available to all), larger incentives for energy efficiency projects that reduce peak demand (namely, heat pumps and heat pump water heaters), and a large-scale streetlight replacement program. I expect Load Factor Improvement to receive a lot of attention in 2024 and 2025.
Cost of Service Rate Design
We haven’t made any progress in this area for one good reason: we haven’t had a rate increase since 2019. Typically, we perform cost-of-service adjustments at the same time we implement a general rate increase and this just hasn’t been on the table lately. That said, last year we did offer our Board a number of scenarios to move toward cost-of-service rates in a revenue-neutral way. We’ve also continued discussions with them about a potential discount for multiple meter accounts. In all likelihood, we will propose some kind of rate adjustment in 2024 to help us make progress on these fronts. This may or may not involve a small general rate increase depending on our long-term financial forecast.
Organizational Resiliency
We’ve seen lots of activity in this area and still have many more projects to come. I’m particularly proud of our new Workforce Development Plan, which our staff developed to help us stay up on employee recruitment and retention. We’ve also adopted a Wildfire Mitigation Plan, which has served us very well through the last two fire seasons. Other accomplishments include building out remote work capabilities, adding seismic upgrades to our substations, and finding new ways to forecast, purchase, and store key materials. Still to do here: we’re actively working on a new long-term facilities plan that should lead to a second site somewhere in the northwest part of our District. We’ll also continue working to improve security around our critical infrastructure.
Customer Facing Programs
This is an area to get excited about in the years ahead. We installed an advanced metering system several years ago and continue to rollout new features for customers. This includes the SmartHub system that allows anyone to see their hourly usage. We’ve spent most of 2022 and the first half of 2023 installing additional systems to build on this infrastructure. In the next two years, this will mean features like customer outage maps, outage status notifications with estimated time of restoration, two-way texting communications, and and more targeted marketing of energy efficiency programs. Stay tuned!
Finance
Notably, we’ve been able to fund all of the investments described above without putting undue rate pressure on customers. After decades of financing all of our capital work through rate revenues, we borrowed $35 million in 2021 to help us perform additional system improvement work. Not only does this improve our reliability, it does so in a way that allows customers to pay for these investments over time rather than all-at-once. This move, combined with continued growth in our revenues and prudent expense management, has allowed us to keep customer rates flat since 2019. During a time of historic inflation, I hope this is a welcome bright spot if your household budget. Moving forward, we’ll be working with our Board to determine the best ongoing mix of revenue financing and borrowing.
Clearly, the first half of our Strategic Plan horizon has been full of activity and (mostly) good news for our customers. I’m excited about the work that still lies ahead and look forward to reporting out on all the additional progress in early 2026. See you then!
Please stay safe,
