Critical IPL performance audit released
/A highly detailed critical performance audit of Independence Power and Light makes several recommendations on improvements for IPL.
The audit looked at the efficiency and effectiveness of the city-owned utility and was done by city management analyst Mark Thoma-Perry.
The 40-page performance audit made 15 specific recommendations which fell into five broad categories:
The timekeeping and payroll practices, particularly within the IPL Transmission and Distribution division
Cost-saving opportunities within Transmission and Distribution operations
The labor/management relationship which limit some opportunities
Potential to save money on the operation of the combustion turbine units through staff reductions
Equipment failures and decay which contribute to electric outages
Some recommendations were agreed to by management, but many would involve changes in long-standing labor agreements which recently approved by the City Council. The agreement expires Oct. 31, 2021.
The audit focused on key critical IPL areas: transmission and distribution, power production, system operations and environmental health and safety.
"I found that while the electrical industry has radically changed in the 21st century, IPL still functions with a 20th century mindset and toolbox," Thoma-Perry commented.
"The culture is steeped in tradition that is able to provide a reliable stream of electricity to its customers which is the name of the game. Reliability is what it is all about. But the reliability comes at a high price."
Thoma-Perry said IPL has adopted software tools - financial statements, project management - which offer opportunities to reduce costs while maintaining reliability.
Transmission and Distribution
Two of the audit findings related to the Transmission and Distribution division - the IPL division which maintains power lines, installs meters and looks after street lights.
The division has 59 employees and an annual budget of $14 million.
Key findings focused on time keeping and payroll practices.
The audit discusses the routine use of sick leave instead of vacation or personal leave, extensive overtime, poor documentation of hours worked, the alteration of time sheets and payroll records with no way of telling when and who made changes and some payroll records which do not match time sheets.
The audit particularly focused was on the 20-plus IPL employees who maintain overhead and underground transmission lines. The crews can work unusual hours, get called out for emergencies and help other utilities with outages through mutual aid agreements.
IPL has 640 miles of overhead customer transmission lines, 564 miles of distribution lines, 25 miles of 161Kv transmission lines and 51 miles of 69 Kv transmission lines. There are approximately 20,000 utility poles. There are 228 miles of underground utility lines.
Here's some of the payroll practices documented in the performance audit.
Early morning scheduling
The audit states:
"It is common for work to be scheduled in the early morning hours, ostensibly is to do work at the least disruptive time of day. However, a job that starts at, say, 4 am will pay 3 hours at overtime rates, or 150% of the cost of doing the work during the day. Additionally, the crew is paid for a meal hour and gets a meal allowance. Then, because of the work rules, the crew is entitled to 4 hours of Rest Period, which they take that day along with personal leave, including sick leave."
Inclement Weather (IW)
The audit states:
"From January 1 – December 7, 2019 crews were paid for 3,933.5 hours of IW. A testing sample indicated that about half of those hours are recorded even though the weather report for the day doesn’t meet the criteria. March 13, 2019 is one example:
- Light rain reported between 2 am and 7 am, but no rain reported from 7 am to 4 pm.
- One crew took 6 hours, another 5 hours, another 4, yet another 3 and one took 2 hours
- 3 individuals took 8 hours"
Additional detail is provided on undocumented hours, light duty and scheduling practices which secured overtime pay outside of storm recovery or mutual aid.
Annual reviews of the highest paid city employees regularly show IPL staff among the highest paid city employees. Of the 50 highest paid city employees in 2019, 39 worked at IPL in some function or other.
The audit recommends use of time clocks, scheduling worker orders - unless a safety issue is involved - to eliminate triggering overtime pay, better documentation of inclement weather hours and better accounting of actual work done.
The payroll-related issues covered the majority of audit recommendations.
One recommendation is to equip IPL vehicles with GPS and internet so work orders and timekeeping could be documented when crews are in the field.
The audit also recommends outsourcing street light maintenance and changing out power poles.
Combustion Turbines
The audit says operation of the IPL combustion turbines can be done with fewer staff and lower costs. The current budget has 17 positions to maintain and operate the turbines at a cost of $4.2 million.
There are six combustion turbines that burn either fuel oil and/or natural gas. All are over 45 years old and run infrequently - usually to meet peak power demand - and produce less than 1% of all IPL power.
During calendar year 2019, Sub J ran 25 days, Sub I ran 29 days and Sub H ran 161 days, according to the audit.
An August 2019 IPL study concluded the continued operation of the six turbines would be the lowest cost option ($46.8 million) over the next 10 years to provide IPL generating capacity.
Decaying Equipment
The audit equipment failures - material defects, design flaws, installation errors, corrosion, abrasion and decay - accounted for 113 electric outages in 2019. These outages affected a total of 10,604 customers with a loss of power over 10 hours.
It notes that IPL's tree trimming helps reduce the outages.
The recommendation suggests whether additional investments in new equipment could reduce outages and benchmarking IPL against national data.
The city's response
Responses to the performance audit were provided by Jim Nail, recently named IPL general manager and Assistant City Manager Adam Norris.
In general, the responses acknowledged difficulty of implementing many of the recommendations because of the labor agreement. The response noted ongoing efforts to integrate existing software programs to track work orders and time spent on the projects and the need for targeted supervisory training.
A strong objection was raised regarding reducing power production staff stating no production staff were interviewed and further adjustment on staff leveling are anticipated over the next 12-18 months.
What's next
A second phase of the performance audit, looking at other IPL divisions, was originally planned. However, management analyst Thoma-Perry in May was terminated by the prior City Council on a 5-2 vote. The position, which works directly for the City Council members, is currently open.
It is expected many of the recommendations will be reviewed by DKMT, an outside management group working with IPL. the consulting firm is undertaking an ambitious review of IPL operations.
The performance audit may also be reviewed by the Public Utilities Advisory Board which has consistently asked questions about overtime pay and IPL staffing levels.