”When you’re sick…you go to the doctor. When your company is ailing, you bring in the experts.”
—Vic Parrish, Former Energy Northwest CEO
Energy Northwest’s Columbia Generating Station had a strong operating record, but senior management believed its costs were too high. Internal and external benchmarking studies confirmed the high costs, but offered no actionable insights or optimization plan. Senior management knew they had to make changes, quickly. With cost optimization as their goal, Energy Northwest asked MCR for help.
MCR conducted a “deep dive” cost analysis that provided insights previously unavailable to management. The analysis led us to focus our efforts in three key areas. We developed a long-term cost strategy with two-year and five-year cost metrics that aligned with “better industry performers.” We worked with the CNO and senior staff to develop and implement targeted staff reductions. Finally, we implemented a new project evaluation and prioritization process, and developed business cases for major projects, including alternative solutions.
The staffing optimization plan was implemented and saved $23 million in O&M expense over three years. The new project evaluation and prioritization process delivered $10 million and $3 million, respectively, in savings in the first and second year. Savings from the existing budget estimates averaged 20% over the two years. The Energy Northwest culture experienced an important transformation and began to focus on cost optimization while balancing safety and reliability.