During your brief nine months, what has been your focus?
I've been preaching "four points": improved relationships with stakeholders, cost control, technical training and strategic planning.
How about customer service?
We understand that we're a utility and that we increase rates, trim trees and site power lines. And we hope to do that in a customer-friendly way. We've met with the Nashville Neighborhood Alliance, and we've improved the vegetation management segment on our Web site. We're working with the Nashville Tree Foundation and the Metro Tree Advisory Committee to identify a neighborhood that we can use as a model for the planting of "utility friendly" trees.
How is your relationship with Metro?
We've been meeting with elected officials regarding utility issues. For example, we have a substation near the [to-be-named and under-construction] Briley Building. There has been some concern about the aesthetics, so we will build a wall to conceal the substation.Inside Info
What are your thoughts regarding NES's recent tree-trimming effort? Many citizens were upset.
Vegetation management had been deferred for many years, and it required some drastic cutting in some places. We've completed that $42 million effort, and now we're on a maintenance mode and a three-year cycle. People have gone from the shock of the first cycle. We try to allow homeowners some input, and many of the drastic cuts you see are trees we would have preferred to remove and replace. The ugly "Vs" you see are the result of that. We'll have to look at it going forward. Does the policy make sense if the tree is going to be cut so drastically, and, if not, should we take it out?
What are your thoughts about burying utility lines?
In general, we're supportive of it. But it's a cost issue. Nashville is sitting on rock.
Define NES's business model.
NES is a quasi-business. As a utility, NES has an obligation to serve. I can't look at cost solely as a factor in serving customers. If this were purely a for-profit operation, we would be doing rate-of-return calculations on new-customer installations. And depending on the length of the payback, we would make a decision as to whether or not we would serve those customers. Of course, we can't to that. We've got two lines of business. The first is operating and maintaining the distribution system, and we try to operate that like a business. The other aspect is service restoration.
What about cost control?
We've just completed successful negotiations with the union. The union has agreed to pay increased levels of premiums for its members' health insurance plan. And we're looking at more efficient ways of planning asset additions. For example, we have bought an asset prioritization software application that will help me prioritize projects. The software, which we paid about $200,000 for, is scheduled to be here in the fall.
What is your budget?
Our operating budget is at $800 million, with our capital budget at $64 million. Our primary source of income is rates, but we generate some revenue from poll attachment fees involving BellSouth, Comcast, etc.
What are NES's strengths?
We're strong financially. We have an excellent distribution system and a skilled, trained and motivated workforce.
What are NES's weaknesses?
Our weakness is that as a quasi-governmental entity, we have a number of restrictions, such as civil service rules. Also, with various regulatory requirements, we sometimes can't move as quickly to make decisions or react to change.
We have them. Being a quasi-governmental entity, we're protected by the Tennessee Tort Liability Act.
What has been your greatest frustration while leading NES?
The rate of change given all the regulatory requirements and civil service restrictions. Change comes slowly to NES. I think we've made great strides in affecting change the past nine months. But to make meaningful change in an organization this large will take time. We're still working to make the type change that is obvious to the public.
How about some NES statistics.
We instituted a "customer average interruption duration index" about four or five years ago. We report quarterly, and the general goal is about 70 minutes. For the quarter ending this past March, it was 51.3 minutes. Our goal for calendar year 2005 is 66.9. Another metric we track is our "system average interruption duration index." That figure currently is 120 minutes. The goal is 194 minutes. Our tree-trimming program and recent lack of storms has helped us stay under our goal.
Your background does not suggest you would land this job.
When Don Kohansky retired, NES hired a search firm. I was encouraged to apply and decided I would. At Deloitte & Touche, I spent a lot of time working on public companies. I thought if I left Deloitte, I would be a chief financial officer at a publicly traded company. NES was a Deloitte client. When I later joined utility, I could not have seen myself as a future NES president.