Velco: Keeping an Open Mind
Energy Executive Spotlight
Written by Eric Slack   
Tuesday, 01 April 2008
Velco: Keeping an Open Mind - American Executive - RedCoat Publishing
Vermont’s transmission-only electric company learned you really do catch more flies with honey.
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Sometimes it seems state power utilities don’t really care what the rest of us think. However, one New England electric utility learned that leaving the public out of the planning process can come back to bite you. With new management and a fresh perspective on public discourse, Vermont’s Velco is finding business is easier when everyone gets along.

John Donleavy, president and CEO - Velco: Keeping an Open Mind - American Executive - RedCoat Publishing
John Donleavy, President and CEO
“Our challenge is to marry people’s beliefs with engineering solutions. When we propose a new transmission system, we need a lot of public outreach and participation to understand what the community needs from the project,” said John Donleavy, president and CEO. “Everyone needs to understand what it will take to make it electrically complete and not have a negative impact on the state’s aesthetics.”

Reaching out
Velco, or the Vermont Electric Power Co., is a private company founded in 1956 as the nation’s first transmission-only electric utility. The company is owned by Vermont’s 21 distribution utilities with the state’s two investor-owned electric utilities, Green Mountain Power and Central Vermont Public Service (CVPS), owning the majority of Velco stock. Prior to the start of Donleavy’s tenure, Velco operated essentially as a maintenance and operations company for the transmission system, with no major transmission upgrades made in three decades.

With rising demand for power and an aging, inefficient transmission system, Velco needed to improve its project management and construction ability to make needed changes. Donleavy walked into Velco to find the $230 million Northwest Vermont Reliability Project (NRP) staring him the face. Although the project would add hundreds of miles of lines and substations to improve access to reliable power, people weren’t focused on their electric needs. Residents were upset because of a lack of public discourse about project plans. Legislators and regulators were angry at the size of the project and an increase in cost estimates. Much of this venom was due to a lack of transparency, something Velco worked hard to change.

“There was a lot of concern about the NRP, and that was after conducting hundreds of town meetings. So that public outreach was obviously not adequate,” Donleavy said. “On the subsequent Southern Loop project, while recognizing it was needed, we made a conscious decision to conduct an unprecedented public outreach process that lasted a couple of years prior to filing the application.”

The company actively engaged community groups, particularly those it had clashed with in the past. Velco and project partner CVPS worked with Efficiency Vermont, the nation’s first statewide provider of energy efficiency services, to come up with targeted efficiency programs for parts of the state to lift the burden on the transmission system. They considered and continue to analyze non-transmission alternatives, and they planned for most of the project’s lines to run along already accessible rights of way.

In the end, Velco identified key stakeholders in parts of the state affected by the project, brought people together in community working groups to talk about problems associated with the outdated transmission system, and asked for help in developing solutions. Engineers helped people understand what was needed to maintain and operate a reliable energy infrastructure. All options on the table detailing reliability solutions were discussed, giving people the opportunity to contribute to the final plan. In fact, community input substantially shaped the Southern Loop as proposed.

Starting at the top
How did the company experience such a dramatic reversal in its relationship with the public in such a short amount of time? The answer is leadership. While Donleavy is not a native Vermonter, his experience earned when building a transmission grid in Chicago made him a perfect choice to lead reconstruction of Vermont’s transmission system. Part of Donleavy’s approach was to recast virtually the entire Velco leadership team.

Kerrick Johnson left CVPS to become Velco’s vice president of external affairs. VP, chief counsel, and general counsel Leslie Cadwell was an attorney with the state’s department of public service. Neal Robinson agreed to serve as chief financial officer and left a position with a prestigious college in Vermont. The company was also responsible for staffing a new Vermont system planning committee and brought in Deena Frankel, a former executive director of the public service board and director of consumer affairs and public information, to lead it.

Equally critical to the turnaround was construction know-how. Donleavy recruited Ernie Hiatt as general manager and Bob Hoover as construction manager; collectively, they have almost 70 years of transmission project expertise. These changes at the top led to changes in management style that empowered all company associates and proved that change is indeed good.

With efforts to rebuild Vermont’s transmission system under way, Velco has proven utility companies can not only supply people with power, but also make them active participants in the planning process. This is due to a new internal focus on forward thinking. Rather than simply planning for the moment, the company now tries to think 20 years ahead. That is the definition of progressive thinking, even in a state that prides itself on being progressive.

One challenge is ensuring an efficient workforce is there to carry out the task. Much of the engineering, construction, and project management labor pool is aging. As in Vermont, most of the US transmission system was built decades ago. With a massive increase in new construction projects and heavy competition for talent, Velco’s forward thinking leadership set up strategic alliances with contractors and suppliers, providing them with years of work and providing Velco with the expertise to get the job done.

Vermont is also one of the most likely candidates to lead the nation in development of renewable technologies. Its geographic positioning between New York, Canada, New Hampshire, and Massachusetts will be important when states and nations begin to invest in new technologies, connect the systems to the grid, and make them reliable. While growing in population, Vermont is still fairly rural with few major population centers, and its citizens are very protective of the state’s natural beauty. As renewable energy sources become more available, Vermonters are likely the first people who will demand them.

“We’re in a great strategic location, especially looking toward the hydroelectric, wind, and other resources that are going to come down from Canada,” Donleavy said. “New England is hungry for renewables and low carbon solutions. We’re in good position to help provide them.”
 
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