News & Insights

Strategic Planning: Five Things to Consider When Developing a Strategic Plan for Your Municipal Utility

Utility managers often struggle to find the time or resources to engagein a strategic planning initiative. With the swift and radical changes occurring in the electric utility industry, it is more critical than ever that municipal utilities engage in a deliberate and thoughtful strategic planning process. Here are five things to consider when developing a strategic plan for your municipal utility.

Define Your Objectives

Before jumping straight into strategic planning activities, take time at the beginning of the process to define your utility’s objectives. What do you want to include in the scope of your strategic planning framework? What kind of process do you want to engage in? What qualifications should you look for in a strategic planning consultant? How involved is your city council/utility commission going to be in the process? What kind of output do you want at the end of the planning activity? Answering these questions will begin to define the objectives for your utility’s strategic planning.

Conduct Broad Stakeholder Engagement

In today’s utility environment, broad stakeholder engagement is crucial. For decades, municipal utilities have enjoyed monopoly status within their service territory. At times, this has led to utilities becoming out of touch with their customers.

For a strategic planning initiative to be successful, it needs to include broad stakeholder engagement. In addition to a utility’s customers, utility employees, and elected and appointed officials should be considered as part of the planning process.

When developing a stakeholder engagement approach, utilities should consider how to most effectively engage with all stakeholder groups. Your approach should vary based on the unique characteristics of your community.

In addition to learning about your stakeholder’s priorities and key issues, an effective stakeholder engagement process can also be an opportunity to showcase the ways in which your utility supports the local community.

Understand that Technology is Transforming Utility Business Models

The pace and scale of technological change in the electric utility industry is unprecedented. New technology is enabling customers to have more information and control over their electric usage. Customer owned generation and storage is becoming more economical. Although efficiency improvements have slowed growth in many areas, transportation electrification represents an enormous growth opportunity for utilities. The rise of smart metering can be an opportunity for utilities to have a closer relationship with customers by providing more and more useful information to consumers.

All of these technological changes are transforming business models for electric utilities. Simply put, “business as usual” is no longer an option for the future.

Be Customer Focused

As electric consumers have increasing choices regarding electric supply and self-generation, it is critical that municipal utilities be customer focused. Utilities can give customers more choice through effective and innovative rate design, such as renewable rate options or rates that incentivize electric vehicle adoption. Efficiency should not be feared as an opportunity to lose sales but should instead be viewed as a way to develop closer and more meaningful relationships with consumers.

As locally owned and managed enterprises, municipal utilities have an advantage over larger utilities in that they can create product and service offerings to match the preferences and values of their own community. Successfully leveraging this advantage can help municipal utilities retain existing customers and attract new customers.

Choose an Appropriate Analytical Timeframe

A strategic planning process is most likely to be effective and successful if an appropriate analytical timeframe is selected. The rate of technological change suggests that a thirty-year strategic plan might be out of date well before the end of the planning period. Conversely, a five-year timeframe may be too short. We recommend that municipal utilities target a ten- to fifteen-year strategic plan, with interim goals and milestones identified at shorter intervals.

— David Niles, Vice President, Avant Energy, Inc.