Simulation of Electricity Distribution

Type of Model:           Business Training Simulation

Industry:                     Electricity – Distribution

Client:                         Energy Australia-(in conjunction with BTS)

Background:              

Energy Australia moved from a state based regulator(IPART) to a national regulator (AER) from the 20009/10 Financial Year.  The biggest change was going from an ex post model, where decisions were justified AFTER the event to an ex ante model, where decisions were approved based on a 5 year forecast of demand and capital and returns were regulated based on a cost of capital return.

The Model:                

The simulation involved 5 teams each running their own energy distribution authority, “NRG Austrix”.  They were required to run the businesses for a 3 year timeframe which matched a 3 year regulator period.  Decision were made on capital expenditure, including new and replacement assets, resourcing(staffing levels and training) and network pricing.  Feedback was provided to the teams every “year” throughout the simulation.  The feedback included comparing each teams performance against others and against the regulatory plan.

The main objectives of the program were to:

  • explore leading a business in the new regulatory environment,
  • identify the main challenges and opportunities,
  • understand the key expectations and success factors,
  • reinforcing and continue to grow a culture of performance,
  • demonstrate Constructive Leadership Behaviours,
  • practice personal accountability and commitment to action,
  • develop stronger decision making capabilities to drive higher personal and organisational performance.

Outcomes:                 

The model was successfully rolled out throughout the business and strongly supported by the management team, who each went through one of the training programs.  The overall senior staff were all much more aware of the issues facing the organisation and this awareness made the development of unpopular programs (such as outsourcing), more acceptable.  It also raised awareness of the size of and difficulty of executing the large capital program planned for the regulatory period.


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