THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 26, 1995 TAG: 9511250324
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Long : 180 lines
But for an occasional blast on the loudspeaker announcing a batch of coal on one of its massive conveyers, you'd hardly know that Virginia Power's Chesapeake Energy Center was running at near-capacity.
Nary a worker is to be found on the plant's turbine deck. The mills that pulverize coal into powder for its furnaces are also untended. Inside the control rooms, a few workers watch gauges and computer screens, their eyes darting constantly in search of trouble signs.
By all appearances, this is a sparsely populated, highly automated workplace. Even so, sometime early next year, 53 of the plant's 183 employees will lose their jobs. It's the latest step in a cost-cutting process that pared 90 other jobs at the center in the previous five years.
Are the plant's managers worried they won't have enough men and women for the job? Hardly.
``We have to be just as reliable, just as efficient - and even better,'' said one supervisor. ``But we have to do it with fewer people. . . . We're in a new paradigm. We can't do things the way we've always done them.''
That's the philosophy behind what's shaping up to be the most sweeping reorganization ever undertaken by Virginia's largest electric utility.
In a little over eight months since Virginia Power announced the start of its massive makeover, called Vision 2000, the utility has cut or announced plans to eliminate about 850 of its 10,700 jobs. It is also reassigning hundreds of other workers and greatly changing the job descriptions of hundreds more.
Some of its biggest operations are still in the early stages of the shakedown process. They include nuclear power plants and field services.
Along the way, Virginia Power has also overhauled how it deals with customers and set up a new business unit that's aggressively chasing contracts to sell power far outside the utility's service territory.
The reason for this radical makeover is simple: competition. It has arrived in some segments of the electric-utility industry. And it's almost certain to grow more intense.
An increasing number of big customers like cities and cooperatives are shopping for low-priced power. Soon, factories may be able to follow their lead. Eventually, even individual consumers may choose from different generators of electricity.
In this ever-more-competitive world, utilities are doing everything they can to keep from increasing rates.
Virginia Power, a unit of Richmond-based Dominion Resources Inc., is positioned well, but not well enough, said Robert E. Rigsby, who was recently named the utility's executive vice president.
``We think we are right up front, ahead of the pack,'' Rigsby said. ``But there are others out there also aggressively trying to make similar kinds of changes. . . . We will be a moving target for them, as they will be for us.''
Virginia Power has streamlined before. In the previous decade, it had cut about 3,500 jobs. But most of those positions were eliminated through attrition, early retirements and buyout incentives.
This time around, a much-larger percentage of employees are being severed involuntarily. Some passed up earlier opportunities to leave; now Virginia Power executives say the company can't afford to keep them any longer.
Workers who haven't yet had their operations closely scrutinized under Vision 2000 are, understandably, anxious about how far the cost-cutting will go.
``It's got everybody on pins and needles,'' Cindy Wells, a network linewoman with 14 years' experience, said one day last week as she prepared for a repair job near one of Virginia Power's Norfolk substations. ``The only thing you can do is the best you can on the job and hope that it all pans out.''
Other employees have a gloomier view.
``They've already cut the fat. Now they're cutting the muscle,'' one said during a pause in his repair job.
``We're out here being pushed to do more with less so the executives can make more money for themselves,'' added another.
Virginia Power executives said they doubt the cutbacks in some other parts of the company will be as severe as at the Chesapeake Energy Center and the utility's other coal-fired plants.
Close analysis of those plants exposed scores of inefficient work practices, executives said, particularly in how operating equipment is maintained and repaired. Company procedures called for overhauling or replacing equipment sooner than is generally required, they said. And when unexpected problems occurred, repairs were delayed because planning took too long or because operators who had the know-how to perform routine fixes had to wait for skilled craftsmen to step in instead.
By ``de-complexing'' such work procedures, the utility will save tens of millions of dollars in costs each year, said William R. Cartwright, a Virginia Power senior vice president who oversees coal and hydroelectric plants.
Subjecting Virginia Power's North Anna and Surry nuclear plants to such scrutiny won't be nearly as easy, utility executives said. First of all, the plants' processes are highly structured to comply with Nuclear Regulatory Commission rules. And the plants are already ranked among the 10 lowest-cost commercial nuclear plants in the country, which means there is relatively little room for improvement.
``We don't want to mess that up, to be honest,'' Virginia Power's Rigsby said. ``We're going to be very careful about any changes that we implement in nuclear.''
Meanwhile, in commercial operations, the business unit that includes field service and customer service, Rigsby said the company's main focus will be to improve service to customers. Cost savings, he said, should be an outgrowth of that. But it is too early to say how significant those savings will be.
Virginia Power executives concede they have a lot of work to do on the customer-service front, which is why they've made it a high priority in Vision 2000. They say the company must stop acting like a monopoly.
``We're going to step back and take an open-minded look at the whole process,'' said Thomas A. Hyman Jr., vice president of Virginia Power's Norfolk-based Eastern Division and North Carolina Power. ``The bottom line is we've got to behave like any other business.''
Hyman's main office is on Cromwell Drive in Norfolk. He grew up about two blocks away and started with Virginia Power in the early 1970s as a part-time meter reader during his college breaks. Now he oversees about 1,700 employees.
One of his major pushes since taking over his new job in July has been to make the utility more accessible.
The Norfolk, Richmond and Fairfax telephone service centers he oversees expanded their Monday-Friday call-in hours during the summer by three hours each night. That helped the utility respond quicker to thunderstorm-related outages.
Early next year the centers will open for eight hours on Saturdays. By early 1997 they should be open 24 hours a day, seven days a week, Hyman said.
Even more radical is a change in how Virginia Power handles walk-in bill payments. By February, the utility plans to have phased out its dozens of district or regional bill-payment centers and replaced them with more than 200 payment outlets in grocery stores and pharmacies.
About 50 of the outlets will be in Hampton Roads, and some are already open. Most of the new locations are in Farm Fresh, Rack & Sack, and Be-Lo stores. Some of the stores stay open 24 hours.
Aside from the added convenience to customers, Hyman said Virginia Power will save about $4 million a year by ``outsourcing'' the bill-payment operations to a Connecticut company that set up the new payment network.
Hyman is spearheading major changes in field services as well. As part of Vision 2000, the number of districts or regions within his division was reduced from 12 to eight. That increased the areas for which many of the eight remaining territorial managers were responsible. But Hyman said he's encouraging them to think even more broadly and assist each other to accomplish big jobs.
One example: the recent relocation of a 40-mile stretch of power line in northeastern North Carolina. The 3 1/2-month job drew on 30 employees from as far away as Hampton and was completed two weeks ahead of schedule, he said.
``In the old days, that job would have been given to a private contractor,'' Hyman said. ``It would have been too big for any one division to do. This shows what we can accomplish when we're more flexible.''
Hyman's predecessor in Norfolk, Thomas L. Caviness Jr., is pushing his own envelope. He heads a new Virginia Power business unit called Energy Services that is drumming up wholesale power sales for the utility outside its service territory.
Virginia Power's Rigsby said that group has already generated millions of dollars in new revenues.
It has one other responsibility: catering to the needs of Virginia Power's 200 largest customers. Account specialists with expertise in industries ranging from shipbuilding to chemicals have been named to deal with these customers.
``That's the offense part of our strategy,'' Rigsby said.
For now, however, the defense side, the cost-cutting, is having the biggest impact.
Virginia Power's headquarters functions have been subjected to some of the toughest scrutiny, Rigsby said. Made to bid against outside contractors to hang onto their work, managers of everything from accounting to printing have found ways to lower their costs.
``It's amazing,'' Rigsby said, ``how a little competition will cause organizations to go through a thoughtful change process.'' ILLUSTRATION: HUY NGUYEN color photos/The Virginian-Pilot
An increasing number of big customers like cities and cooperatives
are shopping for low-priced power.
In a little over eight months since beginning its reorganization,
Virginia Power has cut or announced plans to eliminate more than 850
of its 10,700 jobs. It is also reassigning hundreds of other workers
and greatly changing the job descriptions of hundreds more.
The utility has set up a new business unit that is aggressively
chasing contracts to sell power far outside its service territory.
The utility also has overhauled how it deals with customers large
and small.
by CNB