Improving the Effectiveness of Stakeholder Management

Transcription

1 Improving the Effectiveness of Management A Generation and Transmission Cooperative Strategic Priority February 2013 Contact: Amita Gurbani (amitagurbani@scottmadden.com) Brad Kitchens (sbkitchens@scottmadden.com) Marc Miller (mdmiller@scottmadden.com)

2 Introduction This ScottMadden insight is the last in a series on Five Strategic Priorities for Generation and Transmission Cooperatives. Managing Generation Assets Gaining Gaining Access to Access to Capital Markets Capital Markets Ensuring Grid Security and Reliability Fostering Economic Development Improving the Effectiveness of Management Contents Overview A Key Enabler for the Other Strategic Priorities Effective Management Thinking Strategically Contact Us 1

3 Overview Cooperatives face unique governance challenges: because of their special nature they must confront and reconcile the interests of many stakeholders and do so while serving their members and maintaining transparency. This calls for an effective stakeholder management plan. Cooperatives Face a Balancing Act That Calls for an Effective Management Plan Conflicting stakeholder expectations and financial and strategic constraints combine to form a challenging landscape Promotes transparency and collaboration among stakeholders and the utility Incorporates stakeholder input into strategic planning decisions Expectations Constraints Fosters stakeholder understanding of planning constraints and viewpoints Establishes stakeholder buy-in and support of the planning process Increases support from policy and rate-making authorities Low rates and reliable power Volatile commodity prices Members Customers Sustained earnings growth Aging infrastructure and regulatory uncertainty Academia Governments at All Levels Environmental improvements Decreases in demand Clean Energy Advocates Engagement Generation Partners Investment in renewable energy Higher material and labor costs Environmental Advocates Financial Analysts Chambers of Commerce Misc. Business Interests 2

4 A Key Enabler for the Other Strategic Priorities Effective stakeholder management is essential to managing generation assets and gaining access to capital markets. Managing Generation Assets Gaining Access to Capital Markets Ensuring Grid Security and Reliability Fostering Economic Development Improving the Effectiveness of Management Gaining Access to Capital Markets Managing Generation Assets Constructive relationships with FERC and EPA are essential for involvement in decision making and adaptability to impending orders/regulations Demand-side strategies have become increasingly important as the cost of traditional power sources increases due to stringent new environmental regulations. This requires active engagement with numerous stakeholders serving diverse and complex interests Proactive engagement with customers and customer advocacy groups helps create buy-in and market penetration for demand-side strategies Credit rating agencies consider stakeholder management capabilities when rating G&T cooperatives S&P, Moody s, and Fitch evaluate a G&T cooperative s health based on regulatory relationships, rate-making flexibility, and relationship of management with board of directors, among other factors Good credit ratings are key to securing low-cost funding from capital markets that are required by G&T cooperatives to meet rising property, plant, and equipment/capital expenditure, often including significant environmental upgrades 3

5 A Key Enabler for the Other Strategic Priorities (Cont d) Effective stakeholder management is essential to ensuring grid security and reliability and fostering economic development. Managing Generation Assets Gaining Access to Capital Markets Ensuring Grid Security and Reliability Fostering Economic Development Improving the Effectiveness of Management Fostering Economic Development Ensuring Grid Security and Reliability Active regulatory relationships are vital to an effective compliance model Open communication with NERC and regional reliability councils provides flexibility to adapt to evolving rulemaking and enforcement Organizational compliance programs need to monitor changing standards, update procedures, and train personnel on an ongoing basis Smart grid technologies, microgrids, and distributed generation are adding stakeholders to the security and reliability puzzle Community involvement is key to understanding shifting priorities and aligning efforts with the objectives of local government entities and priorities of members and citizens Many cooperatives feel a special obligation to better their communities, thereby benefitting their members Opportunities to collaborate with communities and customers should be explored and maximized. Examples include fundraising for economic development, development grants, incentives for energy conservation, partnership with local educational institutions, providing professional services for local planning and development management, etc. 4

6 Effective Management A structured process for engaging key cooperative stakeholders is critical to success in planning efforts and executing complex projects. Management Plan Effective stakeholder management is based on the ability to: Identify and prioritize stakeholders Understand stakeholder expectations Manage expectations through tailored communications and engagement strategies s can be categorized based on interest and power to influence Effective Communication Strategy When executing complex projects, G&T cooperatives should rely on a structured, planned communication strategy that engages numerous stakeholders Plan The first step in an effective communication strategy is identifying communication objectives that align with goals and objectives set by the organization A G&T cooperative should decide and document how and when different stakeholders need to be involved Providing plenty of opportunity for public and internal input from key constituents during the planning process ensures effective and efficient vetting of issues Refine Report Constant Communication Engage Collaborate An effective communication strategy involves an iterative process of planning, collaboration, and transparent communication Execute An effective stakeholder management plan builds stakeholder confidence by providing an integrated framework for decision making. 5

7 Thinking Strategically In today s dynamic and challenging environment, it is more important than ever to ask the right questions and truly understand the implications of the answers. Practical Questions for Management Have we identified our stakeholders and their expectations? How engaged are our stakeholders in the organization s major undertakings? Do we have a pre-planned, structured approach for addressing stakeholder expectations? Have we developed a documented framework for information gathering and decision-making that is tailored for each identified constituent/audience? Do we schedule and hold regular touch points with constituents appropriate to their interests and power? Do we have a formal, structured process for soliciting and processing feedback? Are we involved in the community? Possible Goals for Organization Build a structured stakeholder management plan that has a documented communication strategy tailored for each identified stakeholder group Maintain constructive relationships with federal regulatory agencies such as FERC, EPA, NERC and regional reliability councils Structure compliance programs that continuously evolve as a result of changing standards Proactively manage and influence the perception of credit rating agencies regarding the organization s stakeholder management capabilities Build a formal community involvement program that monitors shifting priorities of local government entities, members, and citizens and enhances visibility of the organization by identifying collaborative opportunities best suited to meet the long-term goals and objectives of the organization Adopt performance measures that quantify progress against pre-determined goals Include stakeholder management in the enterprise governance structure for large projects 6

8 Contact Us For more information on improving the effectiveness of stakeholder management, please contact us. Amita Gurbani Senior Associate ScottMadden, Inc Glenwood Ave Suite 480 Raleigh, NC Brad Kitchens President and CEO ScottMadden, Inc Piedmont Rd, Bldg 10 Suite 805 Atlanta, GA Phone: Phone: Marc Miller Director ScottMadden, Inc Piedmont Rd, Bldg 10 Suite 805 Atlanta, GA Phone: