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EWEB Navigates Supply Chain Uncertainty on the Path of Resiliency

October 13, 2022

This article was originally published in NWPPA’s Oct. 2022 Bulletin. 

Silence from suppliers, slippage on orders and increasingly competitive contract bidding – these were the beginning signs of a supply chain disruption on the horizon.   

In the fall of 2021, after a year and a half of leaping hurdle after hurdle of pandemic-driven challenges, leaders at EWEB realized the race wasn’t over.  

“Our ears perked up and our team jumped into crisis control mode,” said Tyler Nice, electric operations manager for the Eugene Water & Electric Board.

Like utilities across the nation, EWEB — which is Oregon’s largest customer-owned utility and provides water and electricity to approximately 200,000 people in Eugene and the sur- rounding areas — is no stranger to the clutch of equipment shortages.

EWEB provides water and electricity to approximately 200,000 people in Eugene and the surrounding areas. Like utilities across the nation, EWEB, Oregon's largest customer-owned utility, is no stranger to the clutch of equipment shortages.    

When access to pad mount transformers, cable, and smart meter chips tightened, EWEB only had one choice: double down on our core values to provide safe and reliable electricity. Below are the stories from EWEB staff about how they have navigated the ups and downs of this new frontier.  

The Perfect Recipe for Uncertainty   

Tyler Nice, Electric Operations Manager  

In the fall of 2021, we noticed an information shift from reliable suppliers. Delivery estimates were changing. We were accustomed to delivery windows of nine to 12 weeks on transformers from the day we placed the order, and then we were being told it could take up to 38 months. We asked ourselves: How can we tackle this proactively before it’s out of our control?

We set up biweekly meetings involving a multi-department team, keeping everyone aware and alert to the evolving situation. Those meetings brought in operations, substation, distribution, and system engineering supervisors, as well as our purchasing and communications teams. Our goal: identify the perfect recipe for monitoring and controlling inventory while considering delivery estimates, price, availability, fulfilment, and customer transparency. 

Our concern was not having the necessary equipment in an unexpected incident. While facing uncertainty, there was one thing that we had in our favor – data from the past.

We collected equipment replacement data from the last three large storms, taking note of what materials we used and the amount we had on hand at the time of the storm. One incident we examined was a large ice storm that, because of its unusual nature, provided good information about what we could expect during an uncommon event. We looked at average yearly totals of equipment failures and replacements. We considered the prior two years of customer-driven projects.

With this data in hand, we could justify placing very large and immediate orders.

Once we had an idea on the quantity of material and equipment we needed, the next step was getting creative with competing contracts. We’re in a seller’s market, which means bids are rising and suppliers have the upper hand in negotiations. Our regular suppliers couldn’t fulfill the large orders we were seeking, so we found new suppliers outside of our normal territory.

We asked ourselves: What are we willing to sacrifice to get the quantity of equipment we need? Quality of transformers has always been very important to us and in the past we’ve been very selective. But in this market, we had to be more flexible while maintaining contract protection to ensure high value for our customers. We sacrificed some specific technical requirements and settled on some meeting the baseline. But we still ran into some dead ends and turned away a few suppliers for lack of experience in the utility market.

While we were negotiating and tracking down transformer fulfillments, we were able to jump on other equipment orders, like cable. We didn’t have any indication at the beginning that supplies of cable were going to be an issue, but we did have a gut feeling and an ambitious underground cable replacement plan to consider. So, one of the first things we ordered was 120,000 feet of cable based on historical use and scheduled projects.

Putting our heads together as a team, acting on large orders early, and having the funds available thanks to our long-term capital plan was really the perfect recipe for being as prepared as possible for this shortage.

Eventually, we still got calls from various suppliers and they us they simply couldn’t fulfill any more orders. That’s a scary message to hear when your top priority is providing an essential service to customers. No matter what, the customer relies on us to keep the power on.

We prepared as much as we could, we got very important orders placed, and now it’s a waiting game. We’re still having regular meetings to strategize our next move and we’re trying to be one step ahead as much as possible. Fortunately, we haven’t materially delayed any customer projects because of lack of equipment, but we have had to phase back some projects. 

My advice to another utility would be to listen to the folks on the front lines. Stay open to ideas from your employees in all departments – field crews, design, engineering, purchasing and customer reps. Maintain a space that welcomes unique concepts because it really is a new world and it’s time to start thinking outside the box as we navigate forward.  

The Capital Improvement Plan   

Bo Mackey, T&D Apparatus Supervisor  

In 2019, we started work on a 10-year capital improvement plan. At that time, we didn’t know a pandemic was around the corner and we didn’t know we’d be facing a very tough supply chain shortage in the coming years. Timing, planning, and a little bit of luck all played a role in putting us in a favorable position for what was ahead.

The Capital Plan’s mission is to maintain reliability and increase resiliency. From 2019 to 2021, our electric capital budget increased significantly by 13% to provide funding for projects such as modernizing information technology, upgrading meters, and replacing aging infrastructure.    

Our budget enhancements couldn’t have come at a better time because by fall 2021 we started to hear about extended delivery timelines. We had a robust budget in place when we needed it most and, thanks to our 10-year capital plan, we had already put in the work on strategizing for the big projects over the next decade. We knew we had to start ordering now and not later because delivery estimates jumped from weeks all the way to years in some cases.

Our perspective shifted for how we placed orders. For instance, now we’re placing large orders before we really have the specifics on design and engineering. But we know the plan is set, and that justifies the quantity that we order. This year we were able to secure a five-year contract for 13 large power transformers to support substation rebuilds. We have the confidence to place significant orders like that because even if we don’t use those transformers, it’s still useful for us to have the spare equipment and we’re not losing money. In fact, we’ve already planned for it. 

My advice to others is to remember that it’s not business as usual. Maintaining transparency and frequent communication about wait times for equipment with your large customers is important. Like us, they are accustomed to a certain way of doing business and a certain expectation of time frames on projects or repairs. We need to be proactive and keep them informed when those time frames shift. 

Creativity with Distribution and Supply  

Crystal Williams, Distribution Engineering Supervisor  

I came into this position in December of 2021, and it’s been full throttle ever since. Our distribution engineering team has really taken the lead on contacting suppliers, doing reference checks, making sure we can meet specifications and then presenting our findings to the purchasing department. 

Our goal has been to stay ahead of the issue, and we’ve been able to do that by being creative with our designs and how we use alternative materials. We’ve been able to work closely with the line crews to develop out-of-the-box ways to keep customers connected or to design new connections.

We have a multitude of new development projects; Eugene is expanding rapidly, and it’s been a challenge to make sure we can fulfill those projects on our end. For instance, there are big housing complexes under construction right now and they need large transformers that we just don’t have in supply. Luckily, we have those orders scheduled to arrive this fall and our design techs have been able to partner with customers to phase projects and plan around any impending impacts.

The key has been to keep our customers informed and letting them know we might not be able to start on their project immediately. We’ve made changes to our terms and agreements, including a clause about how project schedules and costs may be susceptible to change because the market is fluctuating so much. So far, our customers understand the issues and they’ve been receptive to change. 

My advice for others would be to find alternatives, whether that’s with your equipment suppliers or your designs. Make sure to do your reference checks because not every supplier is the same. When you’re scoping out a new supplier, you’ll want to be as organized as possible beforehand. Do your research on what you’re looking for and be ready for flexibility in your terms and conditions, because if someone out there has the materials you need, then they’re in the driver’s seat. It’s going to be important that you’re ready to buy even if it’s not on the terms you were hoping for.

Resiliency – the key ingredient  

Frank Lawson, General Manager  

For EWEB, organizational resiliency is the north star of our 10-year Strategic Plan, and not just from the standpoint of operational continuity. Every decision can be evaluated through a resiliency lens, from creating budgets and capital plans with financial headroom, to attracting and retaining diverse and adaptive talent.

But it’s one thing to put words about resiliency into a strategic plan, and it’s another thing to bake resiliency into each business function and to use that plan as a tool to help evaluate tradeoffs between short-term efficiency and long-term value.

I must commend our staff and Board of Commissioners for operationalizing resilience in a way that allowed us to respond effectively to supply chain shortages. Our board approved a Capital Plan and budget with the right amount of absorptive capacity, and consistently engages in proactive and future-oriented decision-making. And before supply chain shortages became an industry-wide crisis, our teams pulled together quickly to find opportunities and come up with innovative solutions.

Providing power and water is a 24/7/365 job with no end date, and we must be prepared to deliver those critical services through both stable and unstable periods alike. Resiliency in all functions is key to operating in a turbulent environment, whether it be influenced by a changing climate, new technology, developing markets, political and regulatory flux, natural and human threats, or evolving and diverse community expectations.