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Utilities Case Study

Case #5198: Enterprise-wide Transformation

Until the mid-90's natural gas distribution was a heavily regulated monopoly, made up of a simple economic chain: producers, pipelines, local utility distributors, and consumers. Deregulation brought a new, complex, open-market industry characterized by lower prices, customized services and greater choices for customers, and the promise of fierce competition for their energy business.

Recognizing that deregulation would remove the market protection and earnings assurance from which the company had historically benefited, this regional LDC saw the need and the opportunity to reinvent itself - to get closer to its customers, to reengineer its business processes, and to create new and innovative businesses, products and services.

We were engaged to help design, implement and manage a comprehensive organizational change process that produced significant operational and financial performance improvements and lasting behavioral/ cultural change. Over a two-year period, the company redesigned literally all of its business processes to improve service, reduce cycle times and significantly lower costs. The company became intensely customer-focused and process-managed, simplifying its work processes and removing unnecessary steps and activities, and greatly reducing resource needs.

Engagement Highlights

  • Industry:
  • Natural Gas Distribution
  • Client:
  • A Regional Gas Distribution Company
  • Approximately 1/2 million Natural Gas Customers
  • Assignment:
  • Identify Opportunities for Improving Service, Cost and Culture
  • Create Volume Tracking, Counting and Performance Reporting Systems
  • Develop a Master Transformation Plan for the LDC and a Blueprint for Change
  • Develop a comprehensive Organizational Change strategy
  • Prepare Organization for Successfully Implementing Sweeping Changes
  • Create methods for Rapid Deployment of approved Process Solutions
  • Create Internal Client Capability to Continuously Improve Business Performance
  • Approach:
  • Identify Core Customer-facing Business Processes and Internal Support Processes
  • Gather Comparative Performance Benchmarks to set Improvement Targets
  • Tailor Balanced Scorecard to Company Needs and to link with Process Performance
  • Train overall Program Manager, Improvement Team Leaders and Members
  • Create Program Management and Reporting System
  • Create Process-Managed Organization Design to replace Functional Hierarchy
  • Perform Executive Coaching and Leadership Development and Project Mgmt Training
  • Create Technology Customer Council to set priorities for IT investment & deployment
  • Redesign Reward and Recognition Practices
  • Duration:
  • 4-Month Assessment & Design; 20-Month Implementation


  • Reduced rates for customers
  • 25% reduction in O&M costs (over three-year period)
  • Non-regulated businesses successfully launched
  • Improved customer service performance levels
  • Earned income above PUC-authorized return on equity for shareholders
  • 15 to 1 Return on Consulting Investment

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