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Anthony S. Campagiorni, Esq.

Vice President – Regulatory


& Government Affairs

June 26, 2018

Honorable Kathleen H. Burgess


Secretary
New York State Department of Public Service
Three Empire State Plaza
Albany, New York 12223

Re: Case 16-M-0001 – In the Matter of a Comprehensive Management and Operations Audit of
Central Hudson Gas & Electric Corporation

Dear Secretary Burgess:


As directed in the Commission’s Order Releasing Audit Report in the above referenced
proceeding Central Hudson Gas & Electric Corporation (“Central Hudson”) submitted its
Management Audit Implementation Plan for the Commission’s consideration on November 21, 2017.
Based on discussions with Staff of the Department of Public Service Central Hudson has made
revisions in order to clarify our Implementation Plan. Central Hudson adopts forty of the
recommendations, modifies seven, and rejects eight. Nineteen of the recommendations are complete.
Enclosed please find our updated Implementation Plan.

Sincerely,

284 South Avenue


Poughkeepsie, NY 12601

Direct: (845) 486-5201


Fax: (845) 486-5544
Email: acampagiorni@cenhud.com
www.CentralHudson.com
Table of Contents
Recommendation Page
The Executive Management group should be restructured to a smaller group of senior executives 
who are responsible for the oversight of corporate activities and, more specifically, the execution 
of corporate business plan objectives.
3.1 The direct reports to the CEO, aside from administrative support, should be restructured to a  1
group of not more than four to six senior officers of the Company.
The General Counsel should assume the role of Chief Legal Compliance, Ethics & Privacy Officer, 
and he should serve as chair of this committee.
The award of cash bonuses to Executive Management should be more restricted, consistent with 
3.2 3
the intended objectives and operation of the STI Plan.
When another individual is added to the Board, serious consideration should be given to 
4.1 recruiting an individual with a national accounting firm background who is a CPA. 5

The criteria for the composition of the CH Energy Group Board of Directors should be modified to 
4.2 7
require that it be comprised of a majority of independent directors.
4.3 The Central Hudson Board should reduce its size to not more than nine members. 9
Only independent directors should be compensated for participation on the Central Hudson 
4.4 10
corporate board.
Central Hudson Directors should be required to hold the equivalent of one times their annual 
4.5 12
retainer in Fortis stock.
Board members should be provided opportunities to visit and tour field locations and operations 
centers.
The CEO and/or General Counsel should develop a systematic plan of surveying conferences and 
other training opportunities designed to enhance individual director knowledge, to learn about 
industry issues applicable to Central Hudson governance, or both.

4.6 The CEO and/or General Counsel should implement a formal process to track director education  13
opportunities and attendance, ensuring that participation includes as any of the independent 
directors as possible; giving consideration to issues or training benefiting both the director and 
the Company.
The Company should implement a practice of including speakers to make presentations to the 
Board on subjects of interest, scheduled at times consistent with its quarterly meetings.

The Corporate Governance guidelines addressing “Access to Management” at page 5 should be 
revised to eliminate the need for board members to coordinate their communications with 
4.7 senior management or other employees with the CEO. 15
Aside from being requested to make formal presentations to the Board, the current practice of 
executive management attending Board meetings should be terminated.
The Business Plan submitted to the Board of Directors should be modified to include comparative 
data regarding historic and expected workforce levels, providing
departmental detail, separated by exempt and non‐exempt employees. The Business Plan should 
5.1 17
also provide financial (GAAP) earnings and returns, aside from the current emphasis on 
“regulatory”  results.

The Enterprise Support Service group should develop specific, trackable metrics for Supplier 
12.1 19
Diversity and Cost Avoidance.
The Company should clarify its commitment to maintaining its current credit ratings by making 
14.1 this a “Team Goal”, elevating it from its current performance designation as a Treasury and  21
Accounting Performance Indicator.

i
Recommendation Page
After the initial round of calculations utilizing the new DRIVE software is completed,
Central Hudson should train their planners in the software. This will enable future DRIVE 
15.1 23
software‐ related work to be accomplished in‐house.

Central Hudson should study the need and requirements to develop a linkage between their  
existing work management process and their GIS database. The linkage would allow input from 
15.2 the GIS database and the development of work orders that accurately track the installs,  25
removals, and transfers of the assets by GPS location. The study should include a Benefit/Cost 
Analysis.
Central Hudson should develop a transition process with the present systems that are in place to 
15.3 manage the GIS data. In addition, a migration plan should be developed for the maintenance of  28
the data with the arrival of new systems.
Central Hudson should work with programming vendors and other New York utilities to identify 
new short‐term forecasting tools that are currently available or being developed to recognize the 
16.1 32
addition of distributed energy resources (DER) added to their system.

When Central Hudson replaces its Customer Information System (CIS), it should include a 
forecasting module similar to one generally employed by utility peers. In effect, this forecasting 
16.2 module would be a data manipulation and extraction program interfacing with the CIS and  33
feature enhanced data gathering capabilities and less manual entry of the forecasting source 
data.
As solar farms come on line in the next few years, Central Hudson should increase the frequency 
16.3 of its load and sales forecasts with updated data, as the increase in DG will reduce the load  35
directly supplied by the Company.
Central Hudson should explore various proven change management methodologies and make 
one change management methodology or model the Central Hudson corporate standard. In 
18.1 addition, the Company should identify when and where supporting change management  37
activities and tools can or should be used.

Develop an implementation roadmap for modernizing IT systems, describing the final   
arrangements planned five to 10 years into the future. The roadmap should identify attributes 
and interdependencies such as the systems, integration, data flows, and system of record. The 
19.1 implementation roadmap should recognize all the systems needed to meet future requirements,  39
as well as the critical operational data needed to conform to IEEE Standards for each system to  
achieve the overall plan.

Develop as an ongoing project development document, an integration message table for use 
during system development and implementation. The table should identify key elements, their 
triggers  and actions taken, along with the system where they originated. The integration 
19.2 42
message table will improve communications and may result in less rework on certain shared or 
jointly owned systems.

The assumptions that resulted in normalized sales being consistently (six out of seven years) 
20.1 greater than forecast should be investigated and the results applied to future forecasts. 44

Central Hudson should give consideration to other performance metrics for supply
procurement strategies, policies, processes and methods, as two out of the three existing KPIs 
21.1 46
are really economic cost trackers.

ii
Recommendation Page
Overland recommends that the Company prepare a quarterly analysis of gas price volatility with 
and without hedging. Performing this analysis consistently will give the Company better insight 
22.1 47
into the effectiveness of their hedging positions, particularly if they are over‐ or under‐hedged.

The Company should consider reducing its hedging target to 25%‐50% based on the current low 
22.2 48
natural gas price and stable supply environment.
Central Hudson should initiate a special program targeted to replace the small segments of cast‐ 
iron, wrought iron, and bare steel main and services that operate at higher pressures. Present 
23.1 49
LPP replacement programs do not prioritize replacing these potentially risky pipe segments on an 
expedited basis.
The Company should develop the means to identify, record, and report why a distribution main 
23.2 51
or service is being installed.
In its succession planning, Central Hudson should rotate high‐performing managers and 
24.1 supervisors between electric and gas to develop future leaders knowledgeable in both areas of  53
the Company in a more formal process.
Expand the quality compliance monitoring of construction and operations and maintenance work 
completed by internal gas crews and minor electric construction and operation and maintenance 
26.1 work by utilizing dedicated Central Hudson staff or an independent third party contractor to  55
periodically conduct an independent assessment.

Central Hudson should track project and program costs that are expensed within its existing 
27.1 57
mainframe accounting system.
Central Hudson should develop a more detailed Comparison of Actual Results Versus Rate 
Allowances Report by disaggregating the All Other Net catch‐all expense grouping. All Other Net 
27.2 expenses should be no greater than 20 percent of Total Operating Revenue Deductions. In  58
addition, significant variances between actual costs and rate allowances should be documented.

Expand the electric T&D work management and gas T&D ARCOS Crew Manager systems to 
include the outside contractor workforce, as they constitute a significant component of Central 
28.1 Hudson’s workforce. In 2016, 51 FTE’s (or almost 18% of the electric T&D workforce) were  59
contractors; and 177 FTE’s (or over 75% of the gas T&D workforce) were contractors.

Develop the business case for purchasing and implementing a work management information 
system (WMIS) for electric T&D. The business case should be well structured and capture the 
reasoning for initiating the project and include a cost benefit analysis. Central Hudson should 
28.2 61
commit to following up on and acting upon the results of the study by prioritizing the 
development and implementation of the WMIS in its roadmap for modernizing IT systems.

Central Hudson should develop a program focused on reducing the backlog of severity 4 and 5 
electric capital and O&M inspection repair work. The goal of the program should be that the 
28.3 63
backlog of accumulated work, resulting from 2015 and 2016 inspections, is more consistent with 
the historical backlog.
A more robust set of procedures should be developed which documents the performance 
management process from Team Goal selection and target setting for reporting of results and 
29.1 66
consequences for under‐performance in one comprehensive discussion.

iii
Recommendation Page
Central Hudson executive management should perform a more thorough review of its Team 
Goals and group key performance indicators results and formally document its findings and 
conclusions. On obvious document that could be enhanced is the Team Goals and Performance 
Indicators Dashboards report. At a minimum, all projected and actual failures to achieve targeted 
performance should be explained in writing (e.g., Cause & Mitigation column). Corrective actions 
for each case of nonachievement should be included with these published results. Errors in the 
29.2 report should be corrected. Executive management should also provide a written statement  68
regarding its expectations as to the level of performance to be achieved with these reported 
results. To reinforce its commitment to the achievement of all Team Goals, Central Hudson 
should consider expanding its performance reporting in its newsletter to all Team Goals on a 
routine monthly basis.

The entire Central Hudson Board of Directors should be briefed on all Commission precedents 
concerning the cost recovery of incentive compensation in customer rates and any related   
guidance produced by the Commission or Staff on the matter. This should occur on an annual 
basis prior to the approval of the upcoming year’s incentive compensation plan design for any 
29.3 70
Central Hudson employees. After the initial briefing, if the Board wishes to have executive 
management make its presentation to the Governance and Human Resources Committee, this 
should be permitted.

Central Hudson should expand the use of incentive compensation based upon corporate‐wide 
performance to its non‐executive management as an alternative to the continuation of the 
current compensation design in which most pay is fixed. Performance measurements used to 
determine the level of incentive compensation paid should be designed to appropriately benefit 
29.4 customers, employees, and shareholders at targeted levels which encourage continuous  72
improvement over time. Within these parameters, Central Hudson should retain a compensation 
consultant to assist in implementing this recommendation. To alleviate any negative impact this 
recommendation may have on employees, a multi‐year phase‐in of this proposal is suggested.

Corporate‐wide financial objectives of any short‐term incentive compensation plan offered to 
employees working on behalf of Central Hudson should be weighted no more than 30% of total 
29.5 Team Goals measured. As with any of the objectives established for incentive compensation  74
plans, the targeted levels should encourage continuous improvement.

Central Hudson should implement a balanced scorecard system or an equivalent method as a 
mechanism to improve corporate performance and to better support recognition of incentive 
29.6 75
compensation within the executive and management group.

The Vice‐President, Human Resources & Safety should attend industry programs focused on 
management performance and incentive compensation, as well as specific programs focused on 
29.7 78
the Balanced Scorecard system, should the Company pursue the implementation of this (or some 
equivalent) system.

iv
Recommendation Page
Prospectively, Central Hudson should engage in both internal and external benchmarking and the 
pursuit of best practices. These efforts should be adequately documented and made available to 
the NYSPSC, its Staff, and their representatives, as appropriate. Central Hudson should obtain 
releases from third parties that restrict the disclosure of certain information so that 
29.8 benchmarking and best practices documentation can be reported to the NYPSC, the Staff, and its  79
representatives. Expenditures made to any third party who does not agree to the release of 
benchmarking and best practices information should not be requested in rates by Central 
Hudson or otherwise considered in base rate proceedings.

Central Hudson should make the necessary modifications to procedures or the CIS to recognize 
meter readings and calculate service bills without manual intervention when service 
30.1 consumption precedes the service request date due to the customer’s failure to notify Central  81
Hudson when they move into a residence and begin consuming power.

Central Hudson should make the changes necessary to ensure that when new meters are 
installed on existing accounts, the CIS system cannot fail to bill the account based on the new 
meter. Given that CIS already captures the usage data for these meters,
CIS should be able to bill the usage, and bills should not have to be estimated due to a failure to 
30.2 82
follow through with paperwork. This may require a programming change to CIS, the 
enhancement of procedural controls associated with meter changes, or both.

Central Hudson should implement procedures to ensure that necessary action is taken to help 
prevent meters from going beyond six months without a reading. This may require escalating 
30.3 attempts to contact the customer as the number of consecutive estimates increases. It may also  84
require programming changes in CIS to help alert CAS employees that additional action needs to 
be taken.
If wiring inspections are required as a condition for reconnection following the discovery of 
30.4 meter tampering, the basis for the policy should be clearly documented and it should be required  86
that the policy be consistently applied.
Central Hudson should clearly document and consistently apply its policy for transferring prior 
bad debts into current residential customer accounts. (Note: The Bad Debt Transfer Process 
30.5 document Central Hudson provided as evidence of its policy (IR‐384, Attachment 1) does not  87
clearly state the six year age limit on which bad debts may be transferred into current accounts.)

Central Hudson should develop a written policy addressing the circumstances under which social 
security numbers are requested or required as a service condition. In addition, to limit 
opportunities for identity theft, service applicants should not be requested to fax or mail copies 
of their social security card to Central Hudson, unless the Company has a procedure to ensure 
30.6 88
the security of paper versions of such documents. The NYSPSC should consider whether and 
when a utility may require, rather than just request, social security numbers as a condition of 
service.

Central Hudson should develop and post online, as a reference document, a set of written 
31.1 guidelines describing the Company’s procedures for complying with residential and non‐ 90
residential customer  regulations.

v
Recommendation Page
To ensure that all applicants in similar circumstances are subject to the same requirements, 
Central Hudson should develop written guidelines covering the circumstances under which 
residential service applicants must provide proof of identification or additional documentation. 
When additional documentation is required, the policy should explain what documentation is 
31.2 91
required  and why. This is not intended to remove the decision‐making process from CSRs; 
rather, it is intended to help ensure CSRs apply similar requirements to all applicants with similar 
circumstances.

Central Hudson’s written service application form should include additional space and require 
additional information concerning the nature of business and power‐consuming equipment to be 
31.3 used. The current forms have a “Nature of Business” field, but the space is large enough for only  92
one or two words to describe the business.

Central Hudson should develop a guideline for CSRs to use when deposits are requested from 
residential applicants as a condition of service. It should describe the circumstances, consistent 
31.4 93
with HEFPA Section 11.12, under which deposits may be request from residential service 
applicants.
Central Hudson should describe the reason for requiring deposits in all service denial letters 
31.5 applicable to customers for whom a deposit is requested as a condition of obtaining utility  94
service.
Central Hudson should have a guideline addressing its use of courtesy discounts, which are 
offered to customers receiving back‐billings, at the discretion of CSRs. The guideline should 
31.6 95
describe when the discounts can (and should) be offered and the range applicable to different 
circumstances.
Central Hudson should develop and document, in written form, a procedure to ensure that field 
collectors check to ensure payment has not been received at the beginning of the day on the 
31.7 96
date of scheduled termination, before they begin field termination activities for the day.

vi
IMPLEMENTATION PLAN

Response to Recommendation 3.1

Recommendation:

The Executive Management group should be restructured to a smaller group of senior


executives who are responsible for the oversight of corporate activities and, more specifically,
the execution of corporate business plan objectives.

The direct reports to the CEO, aside from administrative support, should be restructured to a
group of not more than four to six senior officers of the Company.

The General Counsel should assume the role of Chief Legal Compliance, Ethics & Privacy
Officer, and he should serve as chair of this committee.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher & Sharon A. McGinnis

Team Members:

Description of Scope and Plan

Central Hudson disagrees with this recommendation. The President and CEO believes the
current structure of the Executive Management group is effective, including the number of
executives reporting directly to the President and CEO. The current group of officers who
directly reports to the President and CEO are all well-seasoned Executives with broad
responsibilities that do not require daily supervision or oversight. At the same time, the current
structure provides the President and CEO with efficient and effective direct connection to each
of the critical areas of the Company. The audit report presented no evidence of inefficiencies in
its findings. Management acknowledges that as business needs evolve, including changes in
personnel, including as a result of future organizational changes or retirements, strategy, and
priorities, alternative organizational structures that may allow for a reduced number of direct
reports to the CEO will be considered in the future. The Governance and Human Resources
Committee of the Board of Directors of Central Hudson is responsible for the review of the
overall effectiveness of the officers team of the Company, including the size and structure of the
Executive Management group, and the Committee will continue to evaluate these matters in the
future to ensure the ongoing effectiveness of the executive management structure. The
President and CEO has advised the Governance and Human Resources Committee and Board
of Directors of these findings and recommendations at its November 17, 2017 meeting.

The Company recognizes that one common structure used in connection with legal compliance
is to have General Counsel occupy the role of the Chief Legal Compliance, Ethics, & Privacy
Officer and concurrently serve as the chair of the legal compliance committee. That structure
would not be the most effective structure at Central Hudson. The current structure at Central
Hudson has been in place since the Legal Compliance, Ethics & Privacy Committee was
founded at Central Hudson and management believes that the current structure works efficiently

1
and effectively, with the Vice President – Human Resources and Safety acting as chair. Central
Hudson’s General Counsel is not a full-time employee of the Company and is only on the
property part-time. Under the current structure, General Counsel acts as legal counsel to the
Committee, and assists in the development of the Committee agenda, records and maintains
the minutes of the Committee, attends all Committee meetings, and provides support and legal
input as necessary to the Committee and the Committee Chair. Further, the current structure
allows for the continuation of the attorney client privilege protections that the Committee enjoys
with General Counsel as counsel to the Committee.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Rejected

Start Date: Not applicable

Estimated Completion Date: Not applicable

Priority: Not applicable

Summary of Cost/Benefit Inputs

Not applicable

Results/Measures of Success

Not applicable

Final Deliverable  

Not applicable

2
IMPLEMENTATION PLAN

Response to Recommendation 3.2

Recommendation:

The award of cash bonuses to Executive Management should be more restricted, consistent with
the intended objectives and operation of the STI Plan.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher & Sharon A. McGinnis

Team Members:

Description of Scope and Plan

Management believes that the award of cash bonuses is consistent with the objectives and
operation of the Short-Term Incentive Plan (STI). The decision to implement this recommendation
is outside of Central Hudson management team’s scope. Under its Charter, the Governance and
Human Resources Committee of the Board of Directors is responsible for administering the STI.
Under the STI Plan, the Committee has the discretion to make certain adjustments to the payouts
in accordance with the criteria set forth in the STI Plan, after reviewing individual performance for
the year. Additionally, if the Committee concludes that an executive’s performance during the
year merits an additional payment, the Committee may award a discretionary bonus to the
executive, provided that the discretionary bonus cannot be awarded to “make-up” amounts that
were not earned under the team and individual goals. There are also limitations on the size of the
discretionary bonus that can be awarded by the Committee. The Committee may also reduce an
award if it concludes that an executive’s performance during the year has been deficient.

The STI Plan provides the Committee with the flexibility to respond to issues that were unforeseen
at the time that the performance goals were established or that increased in importance during
the year. It also allows the Committee to recognize superior individual results by directly linking
pay-for-performance. Central Hudson’s Board of Directors, however, retains the power to make
adjustments to the Committee’s determinations.

Narrative Including Schedule/Milestones

The audit report’s review of incentives did not challenge the overall amount of incentive
compensation awarded to Executives and include no findings on incentive compensation.
Considering the scope issue discussed above, management will review the background and
recommendation with the Board for their future consideration in awarding cash bonuses.

Adopted, modified or rejected recommendation: Rejected

Central Hudson management reviewed this recommendation with the Board of Directors at its
November meeting. Subsequent to that review, the Board took Overland’s findings and
feedback under advisement in its evaluation of executive performance for 2017. The Board

3
completed its evaluation at the February Board of Directors meeting. The Board does not agree
that its current or past practices are inconsistent with the STI Plan.

Priority: Low

Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

 
4
 

IMPLEMENTATION PLAN

Response to Recommendation 4.1

Recommendation:

When another individual is added to the Board, serious consideration should be given to
recruiting an individual with a national accounting firm background who is a CPA.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher

Team Members: Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the
Board of Directors is responsible for reviewing, and making recommendations to the Board of
Directors regarding, corporate governance matters. The Committee is specifically responsible
under its Charter for the identification and review of new and incumbent nominees for election
as directors to the Board of Directors.

Narrative Including Schedule/Milestones

The audit report found that the composition of the Board “is in compliance with the
requirements, spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to
Conditions.” Considering the scope issue discussed above, management will review the
background and recommendation with the Board for their future consideration when identifying
and reviewing new and incumbent nominees for election as directors to the Board of Directors.

Adopted, modified or rejected recommendation: Accepted

Start Date: November 2017

 Review the background and recommendation with the Board – November 2017

Estimated Completion Date: Complete

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

 
5
 

Completion of milestones.

Final Deliverable

On February 14, 2018 David Bennet resigned from the Board of Directors and on June 1, 2018
Nora Duke resigned from the Board of Directors. Effective June 1 2018 Jocelyn Perry and
Roger Dall’Antonia were appointed to Board. Part of the consideration in appointing Ms. Perry
was her accounting background, her experience with PricewaterhouseCoopers and her status
as a Chartered Accountant.

 
6
IMPLEMENTATION PLAN

Response to Recommendation 4.2

Recommendation:
The criteria for the composition of the CH Energy Group Board of Directors should be modified
to require that it be comprised of a majority of independent directors.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher
Team Members:
Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. The composition of the Board of Directors of CH Energy Group, Inc. is outside of
the scope of the management audit. Further, as noted by Overland Consulting in its Final
Report, the composition of the Board of Directors of CH Energy Group, Inc. is not a subject that
is specifically addressed by the Commission’s Order Authorizing Acquisition Subject to
Conditions in Case 12-M-0192, issued and effective on June 26, 2013.

Narrative Including Schedule/Milestones

The finding in the audit report states that the majority of the Central Hudson Board of Directors
is independent. Considering the scope issues discussed above, management has reviewed the
background, findings, and recommendation with the Boards of both CH Energy Group, Inc. and
Central Hudson for their future consideration; no action has been taken at this time.

Adopted, modified or rejected recommendation: Rejected

Estimated Completion Date: N/A

Priority: Low

Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

7
IMPLEMENTATION PLAN

Response to Recommendation 4.3

Recommendation:

The Central Hudson Board should reduce its size to not more than nine members.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Michael Mosher
Team Members:
Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management team’s
scope. Under its Charter, the Governance and Human Resources Committee of the Board of
Directors is responsible for reviewing, and making recommendations to the Board of Directors
regarding, corporate governance matters.

Narrative Including Schedule/Milestones

The audit report found that the composition of the Board “is in compliance with the requirements,
spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to Conditions.”
Considering the scope issue discussed above, management will review the background and
recommendation with the Board for their future consideration in the structure and composition of the
Board.

Adopted, modified or rejected recommendation: Rejected

Estimated Completion Date: N/A

On February 14, 2018 David Bennet resigned from the Board of Directors and on June 1, 2018 Nora
Duke resigned from the Board of Directors. Effective June 1 2018 Jocelyn Perry and Roger
Dall’Antonia were appointed to Board. Pursuant to its Charter, the Governance and Human
Resources Committee of the Board of Directors of Central Hudson is responsible for evaluating and
making recommendations to the Board of Directors regarding the performance of the Board, including
its structure and size, and the identify of any proposed nominees for election to the Board. In doing
so, the Committee assesses the qualifications of director candidates with the objective of constructing
a properly sized and effectively functioning Board, as specified in the Company’s Governance
Guidelines (i.e., “a Board comprised of individuals with diverse experience, backgrounds and skill
sets, who participate actively and regularly in the Board’s work, and who consistently demonstrate
objective analysis, practical wisdom and sound judgment”). Such review is conducted by the
Committee on an annual or, as needed, more frequent basis to satisfy its duties under its Board
approved Charter.

Priority: Low

Summary of Cost/Benefit Inputs

N/A

8
Results/Measures of Success

N/A

Final Deliverable

N/A

 
9
IMPLEMENTATION PLAN

Response to Recommendation 4.4

Recommendation:

Only independent directors should be compensated for participation on the Central Hudson
corporate board.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher

Team Members: Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the
Board of Directors is responsible for reviewing, and making recommendations to the Board of
Directors regarding, corporate governance matters. The Committee is specifically responsible
under its Charter for the review of the adequacy and form of compensation paid to members of
the Board of Directors.

Management believes that directors serving on the Central Hudson Board of Directors, other
than the director who is an employee of Central Hudson, should be paid for their service as
directors. Employees of Fortis Inc. or CH Energy Group, Inc. who serve on the Central Hudson
Board contribute their individual time, experiences and expertise to the Central Hudson Board
and are not compensated for that service on the Central Hudson Board other than through
director fees paid by Central Hudson. Additionally, management believes that Central Hudson
benefits from having Fortis Inc. executives on the Board in that they can provide current, first
hand insight into the short- and long-term strategies, business objectives and priorities of Fortis
Inc.

Narrative Including Schedule/Milestones

The audit report found that the composition of the Board “is in compliance with the
requirements, spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to
Conditions.” Considering the scope issue discussed above, management has reviewed the
background and recommendation with the Board for their future consideration of Board structure
and compensation of directors; no action has been taken at this time.

Adopted, modified or rejected recommendation: Rejected

Start Date: N/A

Estimated Completion Date: N/A

Priority: N/A

10
Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

 
11
IMPLEMENTATION PLAN

Response to Recommendation 4.5

Recommendation:
Central Hudson Directors should be required to hold the equivalent of one times their annual
retainer in Fortis stock.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Michael Mosher
Team Members:
Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. Under its Charter, the Governance and Human Resources Committee of the Board of
Directors is responsible for reviewing, and making recommendations to the Board of Directors
regarding, corporate governance matters.

Narrative Including Schedule/Milestones

The audit report found that the composition of the Board “is in compliance with the requirements,
spirit, and intent of the Commission’s Order Authorizing Acquisition Subject to Conditions.”
Considering the scope issue discussed above, management reviewed the background and
recommendation with the Board at its November meeting for their future consideration; no action has
been taken by the Board at this time.

Adopted, modified or rejected recommendation: Rejected

Start Date: N/A

Estimated Completion Date: N/A

Priority: N/A

Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

12
IMPLEMENTATION PLAN

Response to Recommendation 4.6

Recommendation:

Board members should be provided opportunities to visit and tour field locations and operations
centers.

The CEO and/or General Counsel should develop a systematic plan of surveying conferences
and other training opportunities designed to enhance individual director knowledge, to learn
about industry issues applicable to Central Hudson governance, or both.

The CEO and/or General Counsel should implement a formal process to track director
education opportunities and attendance, ensuring that participation includes as any of the
independent directors as possible; giving consideration to issues or training benefiting both the
director and the Company.

The Company should implement a practice of including speakers to make presentations to the
Board on subjects of interest, scheduled at times consistent with its quarterly meetings.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher

Team Members: Joseph Koczko

Description of Scope and Plan

The current governance philosophy at Central Hudson is to encourage and support an open and
efficient flow of information to the Board of Directors.

Central Hudson has adopted and implemented the recommendation regarding providing
opportunities to the Board of Directors to visit and tour field locations and operations centers.
Management arranged for field tours for the Board of Directors in connection with the May 2017
Board meeting (i.e., tours of the Reynolds Hill Substation, the Poughkeepsie Gas
Works/Receiver Station, the North Water Street MGP remediation site, and the Highland
Substation) and the July 2017 Board meeting (i.e., tours of the Sturgeon Pool Dam and Hydro
Facility and Elting’s Corners storeroom, operations services and satellite offices). Operational
tours, such as tours of the Call Center, have also been offered and conducted. The practice of
arranging for tours in connection with Board meetings, and other ad hoc tours based upon the
interest and schedules of the directors, will continue.

Effective January 1, 2017, a system has been adopted whereby the President and CEO
and the General Counsel coordinate regularly to identify educational opportunities for the Board
of Directors. Additionally, a formal process has been implemented pursuant to which General
Counsel tracks director education opportunities and attendance.

13
Central Hudson has implemented a practice of including speakers who make presentations to
the Board of Directors on subjects of interest; an educational topic has been included as an
agenda item at each quarterly meeting of the Board of Directors since the fourth quarter of 2016
and this practice will continue.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Quarterly presentations to the Board of Directors on subjects of interest – Q4 2016

The President and CEO and the General Counsel coordinate regularly to identify educational
opportunities for the Board of Directors – January 2017

Formal tracking of director education opportunities and attendance by General Counsel -


January 2017

Field tours for the Board of Directors including, tours of the Reynolds Hill Substation, the
Poughkeepsie Gas Works/Receiver Station, the North Water Street MGP remediation site, and
the Highland Substation – May 2017

Field tours for the Board of Directors including tours of the Sturgeon Pool Dam and Hydro
Facility and Elting’s Corners storeroom, operations services and satellite offices - July 2017

Operational tours for the Board of Directors, such as tours of the Call Center – Ongoing

Start Date: 4th Quarter 2016

Estimated Completion Date: Complete

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Complete

Final Deliverable

Central Hudson will provide a memo summarizing the tours, presentations to date, and a copy
of the tracking document.

 
14
IMPLEMENTATION PLAN

Response to Recommendation 4.7

Recommendation:

The Corporate Governance guidelines addressing “Access to Management” at page 5 should


be revised to eliminate the need for board members to coordinate their communications with
senior management or other employees with the CEO.

Aside from being requested to make formal presentations to the Board, the current practice of
executive management attending Board meetings should be terminated.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher

Team Members: Joseph Koczko

Description of Scope and Plan

The decision to implement this recommendation is outside of the Central Hudson management
team’s scope. The current governance philosophy at Central Hudson is to encourage and
support an open and efficient flow of information from management to the Board of Directors.
The President and CEO of Central Hudson encourages the Board of Directors to contact
management directly with any questions. The current practice of having executive management
attend Board meetings is to facilitate the unimpeded flow of information and communication,
allowing directors to solicit information from management at Board meetings as questions arise
so as to not limit analysis and decision making at the meetings. It is anticipated that the
language in “Access to Management” at page 5 of the Governance Guidelines referenced in the
recommendation will be modified to more clearly reflect current practice.

Under its Charter, the Governance and Human Resources Committee of the Board of Directors
is responsible for reviewing, and making recommendations to the Board of Directors regarding,
corporate governance matters.

Narrative Including Schedule/Milestones

Considering the scope issue discussed above, management proposes as an alternative that it
will review the background and recommendation with the Board for their future consideration
when reviewing the language in “Access to Management” at page 5 of the Governance
Guidelines.

Adopted, modified or rejected recommendation: Adopted

Start Date: November 2017

 Review the background and recommendation with the Board – November 2017

15
 Board of Directors will review proposed updates to the Governance Guidelines –
February 2018

 Governance documents updated to reflect recommendation – February 2018

Estimated Completion Date: Complete

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Completion of milestones.

Final Deliverable

Central Hudson will provide a copy of the updated Governance documents.

 
16
IMPLEMENTATION PLAN

Response to Recommendation 5.1

Recommendation:

The Business Plan submitted to the Board of Directors should be modified to include
comparative data regarding historic and expected workforce levels, providing departmental
detail, separated by exempt and non-exempt employees. The Business Plan should also
provide financial (GAAP) earnings and returns, aside from the current emphasis on “regulatory”
results.

Recommendation Implementation Team


Christopher M. Capone & Stacey A. Renner
Executive Sponsor & Team Lead:

Team Members:
Eileen M. Lomoriello

Description of Scope and Plan

Historic and expected future workforce levels and associated labor, fringe and other payroll
related costs are built into the 5-year labor forecast that is prepared annually as part of the
Business Plan. The Business Plan also includes GAAP financials from which GAAP earnings
and returns are calculated.

Because the Company is already providing GAAP earnings and returns in its Business Plan, we
consider this portion of the recommendation already implemented.

To comply with the remainder of this recommendation, historic and projected workforce levels
will be disclosed in a table in the Business Plan, beginning with the 2019 Business Plan to be
developed in 2018.

Narrative Including Schedule/Milestones

Major Activities/Milestones Est. Start Date Est. Completion Date Status

5 Year Labor Forecast Developed in January 2018 February 2018


Conjunction with Business Plan

Labor Costs and Staffing Levels Reviewed February 2018 May 2018
and Approved in Conjunction with Business
Plan

Tables Disclosing Staffing Levels by Group June 2018 July 2018


and Employee Classification Developed for
Use in Corporate Business Plan

17
Business Plan Reviewed and Approved by June 2018 July 2018
Board of Directors

Adopted, modified or rejected recommendation: Adopted

Start Date: February 2018

Estimated Completion Date: July 2018

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

The implementation of this item will be considered completed when it is recommended in the
2019 Business Plan for approval Central Hudson Board of Directors in July 2018.

Final Deliverable

Copy of the relevant section of the 2019 Business Plan

 
18
IMPLEMENTATION PLAN

Response to Recommendation 12.1

Recommendation:

The Enterprise Support Service group should develop specific, trackable metrics for Supplier
Diversity and Cost Avoidance.

Recommendation Implementation Team


Christopher Capone & Christopher Carolan
Executive Sponsor & Team Lead:

Team Members: Purchasing Team

Description of Scope and Plan

Cost avoidance is the savings achieved from proactive management as compared to what
expenditures would have been for example refreshing quotes on term material orders and
getting a lower price. The Enterprise Support Service (ESS) Group is developing a methodology
to define cost avoidance from the competitive bid process and new term orders, which will be
implemented starting in January 2018. In 2018, the ESS Group will track the savings on a
monthly basis and start comparing it against the total spend to develop a target to achieve
savings against the total spend. After having a full year of tracking these savings against the
total spend, a savings target will be established for 2019. (Please see below for Schedule &
Milestones) Tracking will take place via Excel files. (Process will be finalized by year end)

The ESS Group has investigated the current data available for service providers and process for
recording/tracking Supplier Diversity. Data relating to minority and women owned providers is
available in the mainframe system. During 2018, an annual report identifying minority and
women owned status by service provider will be developed through the internal process of
“Request for Programming Services.” Implementation of the generated report will commence in
2019.

Narrative Including Schedule/Milestones

Cost Avoidance Schedule:

2017 – ESS group defines and develops methodology to track savings

2018 – ESS Group to Track Savings and start benchmarking the Savings against total spend.

2019 – ESS Group to Track Savings and implement a target to achieve savings from 2018 total
Spend.

2020 – ESS Group to Track Savings and revise target to reflect 3 years of experience and goal
of year over year improvement.

Adopted, modified or rejected recommendation: Adopted

19
Start Date: In progress

Estimated Completion Date: Ongoing

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Monthly report for cost avoidance developed in 2018 and formally issued on routine basis in
2019. Supplier diversity report issued annually starting in 2019.

Final Deliverable

A sample of monthly report for cost avoidance and supplier diversity report

 
20
IMPLEMENTATION PLAN

Response to Recommendation 14.1

Recommendation:

The Company should clarify its commitment to maintaining its current credit ratings by making
this a “Team Goal”, elevating it from its current performance designation as a Treasury and
Accounting Performance Indicator.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Stacey A. Renner
Team Members:
Eileen M. Lomoriello

Description of Scope and Plan

Central Hudson’s credit rating metric is currently monitored as a Division Level KPI within the
Finance and Treasury Division. The Company agrees that the credit rating metric is critical and
that maintaining credit ratings in the A range is desirable to secure capital at rates that are just
and reasonable for customers. The credit rating metric will be recommended to the Strategic
Planning Committee as a Team Goal during the Business Planning cycle in 2018.

Narrative Including Schedule/Milestones

Major Activities/Milestones Est. Start Date Est. Completion Date

Establish 5 Year Performance Targets March 2018 May 2018

Add Metric to Team Goals Table in Business May 2018 May 2018
Plan

Review and Finalize Target with Strategic May 2018 June 2018
Planning Committee Members and Incorporate
into Business Plan

Review and Approval by Board of Directors July 2018 July 2018

Adopted, modified or rejected recommendation: Adopted

Start Date: March 2018

Estimated Completion Date: July 2018

21
Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

The implementation of this item will be considered completed when it is recommended in the
2019 Business Plan for approval Central Hudson Board of Directors in July 2018.

Final Deliverable

Copy of the relevant section of the 2019 Business Plan

 
22
IMPLEMENTATION PLAN

Response to Recommendation 15.1

Recommendation:

After the initial round of calculations utilizing the new DRIVE software is completed,
Central Hudson should train their planners in the software. This will enable future DRIVE
software- related work to be accomplished in-house.

Recommendation Implementation Team


Paul Haering
Executive Sponsor & Team Lead:
Hal Turner, Heather Adams, & Stephanie
Team Members:
Genesee

Description of Scope and Plan

With the proliferation of distributed energy resources, hosting capacity analysis must become a core
competency of the Electric Distribution Planning process of the future. As such, Central Hudson will
need to develop the skill sets necessary to complete these analyses in-house. While Central Hudson
contracted the initial DRIVE analysis, the Company will develop the ability to complete these analyses
with in-house personnel and is seeking incremental Engineering resources as part of its current Rate
Filing to complete this work.

Narrative Including Schedule/Milestones

Attend EPRI DRIVE User Group Meeting – October 2017

Hire new Junior Engineer within Electric Distribution Planning to complete on-going hosting capacity
analysis utilizing the EPRI streamlined methodology – June 2018 -- Complete

Train personnel on completing hosting capacity analysis using the EPRI streamlined methodology –
June 2019

Adopted, modified or rejected recommendation: Adopted

Start Date: October 2017

Estimated Completion Date: June 2019

Priority: High

Summary of Cost/Benefit Inputs

The cost/benefit ratio below makes several assumptions:

 Software upgrades to incorporate the DRIVE tool into existing software modules will cost
$150,000 over 2 years. Maintenance is assumed to be covered within the base software
program, but it is possible those costs could increase as well.
 In Year 1, a contractor will still complete the analysis while an Engineer is trained.
 Hosting Capacity Analysis is currently updated annually. This cost/benefit analysis assumes the
following increase in frequency of analysis: Year 3 – Quarterly, Year 4 – Monthly.
 The cost for a contractor to complete the analysis is $115,000 for each iteration.

23
 The cost of an Engineer with overheads for expense work is $100,000 per year.
 There are additional costs associated with preparing models for analysis and developing the
hosting capacity maps that the Company would incur regardless of whether internal or external
resources conduct the analysis. Therefore these costs are not included in the cost/benefit ratio.

Cost Type Year 1 Year 2 Year 3 Year 4 Year 5 Total

Internal Labor $100,000 $100,000 $100,000 $100,000 $100,000 $500,000

Equipment $100,000 $50,000


(Software Modules)

Contract Labor $115,000

Training $6,000

Total Cost $321,000 $150,000 $100,000 $100,000 $100,000 $771,000

Benefit Type

Contract Labor $115,000 $460,000 $1,380,000 $1,380,000 $3,335,000

Total Benefit $115,000 $460,000 $1,380,000 $1,380,000 $3,335,000

Net Cost/Benefit ∞ 1.30 0.22 0.072 0.072 0.23

Results/Measures of Success

Ability to complete hosting capacity analysis with in-house resources.

Final Deliverable

The Company will issue a memo to Staff describing how and when each milestone was completed.

24
IMPLEMENTATION PLAN TEMPLATE

Response to Recommendation 15.2

Recommendation:

Central Hudson should study the need and requirements to develop a linkage between their
existing work management process and their GIS database. The linkage would allow input from
the GIS database and the development of work orders that accurately track the installs,
removals, and transfers of the assets by GPS location. The study should include a Benefit/Cost
Analysis.
Recommendation Implementation Team
Paul Haering
Executive Sponsor & Team Lead:
Hal Turner, Frank Bailey, Brian Fucco
Team Members:

Description of Scope and Plan

Central Hudson has current plans to implement a GIS-based design solution for electric starting
in 2018 pending approval of the software that is part of our capital plan included in our current
rate filing. In lieu of the recommended study to establish the benefits of integrating work
management and GIS, which are currently well established, Central Hudson will proceed with
project scoping, planning implementation of the GIS design solution which will integrate the
work management/capital construction design systems with GIS. Completing the design solution
project is also a required component of the continued maintenance of our asset data per
recommendation 15.3.

Narrative Including Schedule/Milestones

This GIS based graphical design solution to be developed will allow the graphical creation of
asset installation and removal designs located geographically within the GIS mapping system. It
will also incorporate Central Hudson’s current electric and gas distribution compatible units’
stock listings and related assemblies so that as new distribution designs are created, the
required bill of materials is compiled. Ideally this will also include the estimates for labor hours
for the work as well. Once a complete estimate is developed in this new design solution, it can
then be imported to the legacy mainframe field operating system (FOS) which is currently where
a work order is generated for authorization and material requests are sent to the Stores and
Facilities system.

To complete this project the Engineering Drafting/GIS group will need to work closely with the
Customer Services Estimating Design group. Where the GIS team brings the technical expertise
regarding the existing GIS platform and database, the Estimating Design group will be the
ultimately users of the platform selected and therefore will set forth the functional requirements
needed for the design solution.
 
A draft schedule for the project at this time would require a core team be tasked to begin work
by December of 2017. Action items to move the project forward as follows:

25
‐ Investigate the available vendor product solutions. In parallel with this effort the team
can begin identifying all core functional requirements for the purpose of generating a
formalized request for proposal that includes the design work flows prioritized for
implementation.
Time to complete: 6-9 months
Objective: Completion of approved, detailed RFP and functional specification
‐ Release completed RFP to selected vendors allowing 1-2 months for submission of
formal bids. With completed bids in hand the team can then begin vendor selection in 3Q
of 2018. Once a vendor is chosen and all project documentation prepared, the team can
then submit the project to the corporate IT Steering Committee for approval of funding to
proceed with contracts.
‐ Completion of contracts and project implementation kick-off Q4 of 2018.
‐ Work contingent on rate case approval of our capital plan.

Adopted, modified or rejected recommendation: Adopted

Start Date: December 2017

Estimated Completion Date: 1 year from project kickoff approximately year-end 2019

Priority: High

Summary of Cost/Benefit Inputs

The estimated cost for implementation includes the identified software that is part of our capital
plan included in our current rate filing. It should be noted Central Hudson has studied and
evaluated ERP solutions to completely replace our current legacy business systems but the cost
to do so was prohibitive. The Estimating Designer package can be implemented on a much
more cost effective basis while still achieving a number of the same benefits.

The efficiencies to be gained from developing a GIS based design solution are as follows:

- A primary benefit are the efficiencies to be gained by Estimating moving from a purely
CAD based design system that requires all CU data to be manually entered with each
design, to a CAD/GIS based graphical design system with all compatible unit catalog
data attached to the objects being inserted into each design. Currently designs are
sketched with AutoCAD and BOM’s for installed and removed assets are entered into
CAD as well. The materials also then need to be entered a second time into the
enterprise mainframe FOS system which is not integrated with AutoCAD but is
integrated with the company’s supply chain system. So the designer solution will
eliminate duplication of effort by allowing the designer generated estimates to be
graphically created with all BOM information and then imported to FOS.
- In addition, improvements in data quality and accuracy will be seen through the use of a
pre-populated CH specific compatible units and assemblies catalog built from our current
standard stock listings.
- Designs created on the new system will be stored in the GIS database in a
proposed/pending construction state. Upon construction completion the GIS group will
be able to retrieve the GIS format designs, apply all as-built changes to the design and
move the changes into the production asset database. Currently Estimating drawings
are not geo-referenced and as a result cannot be imported directly to GIS. This requires
all facilities to be drawn in manually and all asset data to be entered once more. This will

 
26
result in a large time savings for the GIS team maintaining the electric and gas GIS
databases and will once again improve data quality and accuracy. It is estimated this will
save approximately $40,000 annually in incremental GIS technician labor. The
implementation of the designer software will have costs and benefits as indicated above.
A high level CBA will be completed as part of the implementation analysis. However, the
move to the designer software is primarily driven by our implementation of functional
DMS and the need to be able to incorporate system changes to our DMS models in near
real time.

Results/Measures of Success

This project will have a major impact on the Estimating and GIS departments at Central Hudson.
For this reason representative stake holders of each group need to be included in the planning
and development process. As this represents a major shift in how Estimating completes new
designs and drives the company’s capital construction projects for distribution, care must be
taken to come up with a phased approach that will not adversely impact the execution of the
capital work plan. This will mean starting with the simpler, highest volume category design jobs
such as simple services, smaller local work orders, etc. and later expanding to incorporate the
larger more complex circuit reconfigurations, re-conductor and reinforcement/upgrade jobs.

The main measures of success of this project will be the successful development and
implementation of a design solution that achieves the following:

- Incorporates work flows for 85% of the gas and electric designs created by Estimating
prioritizing by volume and benefits realized.
- All implemented work flows must not only achieve a successful design and estimate
package, but also export and process through FOS and ultimately be recorded as-built
successfully to the production asset GIS.
- Supports integration with the mainframe either via Oracle’s Service Oriented
Architecture platform or via a batch extract transform load process.
- Sufficiently provides training and develops the expertise of the in-house staff to maintain
the new system going forward and if required continue implementation for the remaining
work flows.
- Provide a platform that can in the future integrate with any selected replacement of the
legacy FOS and supply chain systems.

Final Deliverable

The Company will issue a memo to Staff describing how and when each milestone was
completed.

 
27
IMPLEMENTATION PLAN

Response to Recommendation 15.3

Recommendation:

Central Hudson should develop a transition process with the present systems that are in place
to manage the GIS data. In addition, a migration plan should be developed for the maintenance
of the data with the arrival of new systems.
Recommendation Implementation Team

Executive Sponsor & Team Lead: Paul Haering & Hal Turner

GIS Project Team: F. Bailey, K. Burton, D.


Team Members:
Burkhardt

Description of Scope and Plan

There are several concurrent projects in progress that involve electric distribution GIS data
translation between systems. They are as follows:

- GIS to DMS Feeder Export – a manual utility that creates extracts from GIS of DMS
pertinent electric distribution data which is then manually imported to DMS to maintain
the network model.
- GIS Extract load function for SamSIX/NRG – automated nightly batch that exports GIS
data to the SamSIX NRG system, used for web based mapping and published circuit
maps.
- GIS to OMS translation – an automated process developed to synchronize electric
distribution updates to the Outage Management System’s GIS platform Smallworld on a
scheduled basis.
- GIS to Milsoft feeder export – a manual utility that creates extracts of GIS electric
distribution data for import to the engineering modeling software Windmill.

In each case there is envisioned a future state where GIS becomes the core source of
information so that updates to these systems can be consumed via these point to point
interfaces.

Each of these external systems has specific data points that are mined from the enterprise GIS
environment but all depend on the GIS to be brought up to date and maintained. The current
approach to our electric data true up process has been review on a feeder by feeder basis and
to track each feeder where true up is completed. Completed feeders are considered in
production and ready for consumption by external systems if desired. All electric and gas work
order as-built packages are currently routed through the GIS group and are examined. If any
affect a production feeder, they are incorporated by the team of GIS technicians responsible for
maintaining the database. Any functional difficulties or issues are identified by testing the
production feeders in the external consuming systems. The GIS staff works to make any
corrections needed for the feeder import to be successfully accomplished for the external

28
systems. For reference see attached flow chart (Attachment A) of the current electric and gas
work order closeout work flow.

Narrative Including Schedule/Milestones

To date this process has worked well and allowed us to begin developing each of the
integrations listed above. However at a certain point these external systems will need to move
the translation/testing process to a state of full production. Due to the different business needs
of each system, this production transition will have to occur at different times. Some systems will
require large amounts of the electric feeder network to have all been trued up whereas other
external systems have a smaller focus and can consume substations worth of feeders and
utilize that data in a production capacity.

Beyond the current projects, additional external integrations are planned for the electric GIS.
The GIS design solution project planned for 2018-2019 will require similar consideration as to
how it will be transitioned to production capacity. The scope of the documentation being created
will detail all interfaces with the company’s asset GIS, both electric and gas related.

With each external integrated system having specific requirements a project to document and
plan for these transitions will require planning meetings led by the GIS staff held with each of
the system owners to gather these functional requirements and determine how future data true
up can be tailored to meet those requirements.

Once these requirements have been identified the GIS team will work together to develop and
document an overall transition plan that will meld the needs of the various systems together with
the planned work to update and maintain the GIS database. The resulting plan can then be
reviewed and approved by the stake holders and ultimately by upper management.

Adopted, modified or rejected recommendation: Adopted

Start Date: January 2018

Estimated Completion Date: August 2018

Priority: Moderate

Summary of Cost/Benefit Inputs

The labor costs would not be incremental and the benefits would be qualitative. Clear concise
direction on electric GIS data work with buy in on the part of all stakeholders will ensure that
GIS team resources are most effectively applied to capture critical information required by the
business.

Results/Measures of Success

Development of a documented overall plan for GIS data true-up, translation/migration and the
transition to production ready state that is both realistic and maintainable. The plan should:

- Document and define all integrations points with the asset GIS system and the system
owners of each external integrated system.

 
29
- Detail the data requirements of each integrated system and the mechanism by which
data is transferred and translated.
- Summarize the current state of asset GIS data, the correction and QA methodologies
being employed.
- Last it should document the how each interface will be migrated from a test to production
state and any validation required as this is performed.

Final Deliverable

The Company will issue a memo to Staff describing how and when each milestone was
completed.

 
30
CWIP

Customer Request Commercial Estimating

Is Create Date Enterprise Support Operations


Field work
Customer Estimating Clerical Field Forces completed
Impacted?
Services Gas/Electrical
In Service

Engineering Engineering (not all


Estimating
Request work orders) Depreciation
Begins

Complete Date

Electric T&D Path Electric T&D Operations

Plant Accounting Operations work


Plant Accounting OMS GIS Drafting Order Dispatcher Field Clerk
Drafting order admin.

Gas Operations Path

Operations work
Plant Accounting Field Clerk Drafting Engineering G.O.E. GIS
order admin.

Establish Gas
Foreman Approval

CCNC 31
 

IMPLEMENTATION PLAN

Response to Recommendation 16.1

Recommendation:

Central Hudson should work with programming vendors and other New York utilities to identify
new short-term forecasting tools that are currently available or being developed to recognize the
addition of distributed energy resources (DER) added to their systems.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Christopher Capone & Jeffrey May

Team Members: Scott McDowell & Jen Grabowicz

Description of Scope and Plan

Scope and Plan: The project scope and plan includes identifying possible software applications that
have the ability to consider REV and DER impacts on short-term forecasts, testing available software
applications, evaluating the software application results, and identifying recommendations for next
step(s).

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted with modified priority

Start Date: December 1, 2017

Estimated Completion Date: Recommendation of next step(s) by June 30, 2018

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs in the initial phase of addressing this recommendation, including
identifying requirements, investigate options, test products, and recommending next step(s).
Depending on the outcome of the team’s recommendation potential costs include the possible initial
purchase, implementation and annual maintenance fees associated with any new software
application. A cost benefit analysis will be conducted as part of the recommendation for next steps.

The benefit of the recommendation might include a better short-term forecasting software application
that has vendor support.

Results/Measures of Success

Recommendation of findings and next step(s), if any.

Final Deliverable

The Company will issue a memo to describing the results of its research into a new software
application.

 
32
IMPLEMENTATION PLAN
Response to Recommendation 16.2

Recommendation:

When Central Hudson replaces its Customer Information System (CIS), it should include a
forecasting module similar to one generally employed by utility peers. In effect, this forecasting
module would be a data manipulation and extraction program interfacing with the CIS and
feature enhanced data gathering capabilities and less manual entry of the forecasting source
data.
Recommendation Implementation Team
Anthony Campagiorni – Executive Sponsor
Executive Sponsor & Team Lead:
Glynis Bunt – Team Lead
Darlene Clay
Team Members: Amy Dittmar
Jennifer Lorenzini

Description of Scope and Plan

This team will meet with the IT team identified in Recommendation 19.1 (related to
modernization of IT systems) to solicit information regarding potential CIS technologies to be
pursued and the potential timeframe. The team will develop a survey to be administered to a
peer group of utilities to solicit information including, but not limited to: system utilized, data
extracted for forecasting, method of extraction, forecasting interface, frequency of extraction,
time required to revise data extraction, and coordination of outreach among users regarding
system changes.

Narrative Including Schedule/Milestones

The current sales forecasting process relies on billed customer, sales and revenue data
compiled and generated by the CIS. While much of this data is in electronic format, it continues
to be provided in pre-arranged formats, providing little flexibility to address impromptu issues or
necessary data/forecasting revisions. The modification of CIS technology may provide an
opportunity for enhanced data extraction, allowing for greater forecasting granularity, flexibility
and/or modification. The team will prepare a survey, select a peer group of utilities, administer
the survey, compile the results, and prepare recommendations to be provided to the IT team
regarding features that should be considered in any modification of CIS technology in order to
seize opportunities to enhance data availability.

Milestones:

March 2018 Complete preparation of peer survey

April 2018 Select peer group

May – June 2018 Administer survey

August 2018 Compile survey results

33
October 2018 Recommendations to be provided to IT team, including survey results,
regarding features that should be considered in any modification of CIS
technology

Adopted, modified or rejected recommendation: Modified

Start Date: March 2018

Estimated Completion Date: March 2019

Priority: Moderate

Summary of Cost/Benefit Inputs

While all work will be performed with existing staff, it is anticipated that additional data entry
automation will offset any additional time required to address an increased number of data
items.

Results/Measures of Success

Enhanced data manipulation and extraction should provide productivity benefits by decreasing
any manual data entry while improving the predictive ability of the sales forecasts allowing for
more robust analysis of actual results.

Final Deliverable

The Company will issue a memo to Staff describing survey results and recommendations made
to IT team regarding features that should be considered in any modification of CIS technology.

 
34
IMPLEMENTATION PLAN
Response to Recommendation 16.3

Recommendation:

As solar farms come on line in the next few years, Central Hudson should increase the
frequency of its load and sales forecasts with updated data, as the increase in DG will reduce
the load directly supplied by the Company.

Recommendation Implementation Team


Executive Sponsor & Team Lead: Anthony Campagiorni & Glynis Bunt
Team Members: Linda VanEtten, Jennifer Lorenzini, Darlene Clay

Description of Scope and Plan

In response to the significant PV penetration that the Company started to experience in the mid-
2000s, the Company found it necessary to incorporate a separate forecast of the sales
reductions resulting from PV penetration into the annual sales forecast utilized for regulatory,
financial and operational purposes.

The Company continues to see significant DG penetration resulting from additional regulatory
action in the form of extension of NEM and formulation of a value stack approach to monetary
compensation for CDG, and certain other DG, as policy is formulated in ongoing Case 15-E-
0751. The Company has recently experienced increased activity with this latter element which
addresses large projects, currently up to 2MW. As a result, the Company should consider
increasing the frequency of its DG load and sales forecasts to provide more accurate and timely
information to help address estimation of sales reduction impacts and potential instances of
hourly purchases of net exports exceeding hourly load to be supplied by the Company.

Narrative Including Schedule/Milestones

Currently, the system load and sales forecasts are prepared on an annual basis and are utilized
by various internal groups for regulatory, financial and operational purposes. With the continued
regulatory changes emanating from Phase One of Case 15-E-0751, including a transition to a
new compensation methodology for DG net exports, and the continued uncertainty surrounding
the expansion of provisions currently contemplated in the recently initiated Phase Two, a
measured approach to increasing the frequency of system DG load and sales forecasting will be
followed. The accuracy of the three most recent DG forecasts will be evaluated, including
identification of sources of divergence of actual to forecast, and calibration to granular DG
forecast as available based on development and inclusion in the Distributed System
Implementation Planning Process (Case 14-M-0101) . Stakeholders will be canvassed
regarding current and future utilization of such forecasts and optimal timing requirements. The
results of these endeavors will be utilized, along with policy timing considerations, to determine
the frequency and output of the DG forecasting process.

Milestones:

March 2018 Complete accuracy review of prior forecasts and identification of sources of
divergence, as well as calibration to granular DG forecast(s) as available

35
May 2018 Complete canvassing of stakeholders
July 2018 Recommendation for frequency of and output from DG forecasting process

On-going Frequency of and output from DG forecasting process assessed with each
update

Adopted, modified or rejected recommendation: Adopted

Start Date: January 2018

Estimated Completion Date: July 2018

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Improvement in the predictive ability and timing of the DG load and sales forecasts will provide
more accurate forecasts for regulatory, financial and operational considerations.

Final Deliverable

Company will provide a memo on the frequency and output of the DG forecasting process.

 
36
IMPLEMENTATION PLAN

Response to Recommendation 18.1

Recommendation:

Central Hudson should explore various proven change management methodologies and make
one change management methodology or model the Central Hudson corporate standard. In
addition, the Company should identify when and where supporting change management
activities and tools can or should be used.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Sharon McGinnis & Ellie Rossett

Team Members: Ellie Rossett, Emily Gambacorta, Alexander Tan,


& Heather Waterman

Description of Scope and Plan

Central Hudson will explore change management methodologies and tools in conjunction with
the organization’s current project management methodologies. Based on that evaluation we will
determine how to identify when and where supporting change management tools should be
utilized and implement appropriate tools where it is determined to be applicable.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: January 1, 2018

Estimated Completion Date: November 30, 2018

Priority: High

Activity/Milestone Estimated Current Status


Completion
Date

Evaluation of change management 8/30/2018


methods and tools.

Evaluation and identification of when 9/30/2018


and where supporting change
management tools should be used.

37
In necessary, adoption and 11/30/2018
implementation of selected tools.

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative, therefore no cost benefit
analysis is needed.  

Results/Measures of Success

Evaluation complete and methods identified, including when and where supporting change
management activities and tools can or should be used.

Final Deliverable

Provide any new documentation related to change management processes or tools.

38
 

IMPLEMENTATION PLAN

Response to Recommendation 19.1

Recommendation:

Develop an implementation roadmap for modernizing IT systems, describing the final


arrangements planned five to 10 years into the future. The roadmap should identify attributes
and interdependencies such as the systems, integration, data flows, and system of record. The
implementation roadmap should recognize all the systems needed to meet future requirements,
as well as the critical operational data needed to conform to IEEE Standards for each system to
achieve the overall plan.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Mark Holtermann

Nicole Tancredi, Janith Fohl, Vicki Wheeler,


Team Members: Suzette Mazurowski, Rick McGowan, Mike
Mabey, & Surekha Jadhav

Description of Scope and Plan

IT team will identify key systems that are critical to running the business and develop a 5 year
roadmap for them. Some of the considerations while developing the roadmap will be
 The age of the technology – is it close end of life or end of support?
 total cost of ownership to maintain
 Resources – will we have qualified resources available at a reasonable cost?
 Current and future business needs – do our systems meet those needs?
 Dependencies – are any other systems dependent on these systems, do we need to
upgrade / replace them as well?

Based on the business needs, a roadmap for the key systems will be defined that will lay down
the technologies to pursue and a high level timeline to implement them. The technologies to be
pursued could be an upgrade of the existing technology or a replacement.

Certain IT modernization plans have been defined in the Company’s rate case IT testimony.
Page 10 of Holtermann (IT) Testimony categorizes the initiatives into 2 areas of focus: 1)
foundational investments to maintain, secure, and modernize IT; and 2) investments to enrich
the overall customer experience and improve customer engagement. Investments in the
Foundational category cover the maintenance and replacement our systems.

Pages 14 thru 26 describe the approaches for CIS Modernization – specifically page 25
describes our preferred approach of implementing a full featured modern CIS solution (initially
as bolt-on) while in parallel migrating core CIS functions from the Company’s legacy core CIS
into the modern CIS utilizing a phased-in approach.

39
 

The Company’s plan to replace Human Resources Information system is covered on page 36
and the plan to replace CH Intranet / Wiki page on page 41 of the IT Testimony.

The roadmap for the remaining systems will be completed based on the criticality and business
needs.

In Central Hudson’s current rate case, the Company has proposed a significant increase for
investment in information technology and systems. In light if its importance in the current
environment, we have changed the priority of this recommendation from moderate to high.

Final Deliverables:

1. Roadmaps for following key systems:

1.1 Cyber Security


1.2 CIS
1.3 Enterprise Content Management

Note: There might be some systems added to the above list based on the 1st activity
mentioned below.
Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: February 1, 2018

Estimated Completion Date: December 31, 2018

Activity/Milestone Estimated Current Status


Completion
Date

Identify the key systems that are 2/1/2018 We have a list of all applications and
essential to running the business systems but need to update to reflect
the recent changes

Finalize the criteria that’ll be 4/30/2018


considered to define roadmaps

Start defining roadmaps 5/1/2018

Complete roadmaps for the critical 12/31/2018


systems

40
 

Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Roadmaps defined for the key systems essential to running the business.

Final Deliverable

The Company will provide a copy of the roadmap for its critical systems.

41
 

IMPLEMENTATION PLAN

Response to Recommendation 19.2

Recommendation:

Develop as an ongoing project development document, an integration message table for use
during system development and implementation. The table should identify key elements, their
triggers, and action taken, along with the system where they originated. The integration
message table will improve communications and may result in less rework on certain shared or
jointly owned systems.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Mark Holtermann

Nicole Tancredi, Janith Fohl, Rick McGowan,


Team Members:
Mike Mabey, Vicki Wheeler, Suzette
Mazurowski, & Surekha Jadhav

Description of Scope and Plan


Central Hudson has a project development documents for Technical Specification and
Functional Specification. Central Hudson will update the documents with the relevant data flow
diagram. In CH Project Management Lifecycle, there are 7 phases for a typical Medium and
Large project – Initiation, Analysis, Design, Development, Test, Implementation and Post
Implementation. Each phase has a certain set of deliverables that need to be reviewed and
approved in order to exit the phase. Depending upon the phase, the approvers are determined.
In the Design phase, there could be 2 Design documents – Technical Specification and
Functional Specification. All projects will deliver Technical Specification. If the project is
implementing an end user facing application, it’ll deliver a Functional Specifications in addition
to a Technical Specification.

A Functional Specification is a formal document used to describe in detail an application’s


intended capabilities, appearance, and interactions with users. A Functional Specification may
contain formal descriptions of user tasks, dependencies on other products, Data Flow Diagram
and usability criteria.

A Technical Specification describes the detail of either all or specific parts of a design, such as:

• the signature of an interface, including all data types/structures required (input data
types, output data types, exceptions);
• detailed class models including all methods, attributes, dependencies and associations;
• the specific algorithms that a component employs and how they work; and
• physical data models including attributes and types of each entity/data type.
• hardware and software used.

42
 

With the inclusion of Data Flow Diagram in the Functional Specifications, the team will be aware
of all systems that potentially will be impacted by the proposed changes and address it as part
of the implementation.

Currently we have the phases of the project lifecycle defined and templates made available to
the project teams. We’re planning to systematically approve phase gates and required
deliverables for all projects by 30th June 2018.

In Central Hudson’s current rate case, the Company has proposed a significant increase for
investment in information technology and systems. In light if its importance in the current
environment, we have changed the priority of this recommendation from moderate to high.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: October 1, 2017

Estimated Completion Date: June 30, 2018

Activity/Milestone Estimated Current Status


Completion
Date

Data Flow Diagram template included 12/29/2017 Templates for Functional Specifications
in Functional Specification. are in place.
Revised Functional Specifications are 6/30/2018 Functional Specifications are not
reviewed and approved by the team consistently being created and
approved for all projects.

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

As part of the Design Specifications, each medium and large project has the Data Flow Diagram
that shows all systems / applications and the key elements that will be impacted by the changes
the project is trying to implement.

Final Deliverable

The Company will provide a copy of the Revised Functional Specifications document.

43
IMPLEMENTATION PLAN TEMPLATE

Response to Recommendation 20.1

Recommendation:

The assumptions that resulted in normalized sales being consistently (six out of seven years)
greater than forecast should be investigated and the results applied to future forecasts.

Recommendation Implementation Team


Executive Sponsor & Team Lead: Anthony Campagiorni & Glynis Bunt
Team Members: Amy Dittmar, Darlene Clay, Jay Tompkins

Description of Scope and Plan

On a monthly basis, actual sales are normalized for weather and are compared against
forecast. This weather normalization process is required since forecast sales are developed
utilizing a definition of normal weather, and estimates of weather occurrence are utilized to
convert calendar weather to billed weather. Other than weather, variations between actual and
forecast levels generally result from billed customer level variations and sales per customer
variations. These variations are routinely analyzed to evaluate whether they are systemic and
can be addressed prospectively through forecast improvements, or whether they are
uncontrollable and cannot be addressed within the forecasting process. Use per customer
variations can result from conservation and energy efficiency efforts implemented by the
customer, modifications to energy efficiency estimates included in the forecast, and changes in
end use or type of service being utilized, for example, firm versus interruptible.

Narrative Including Schedule/Milestones

Results for the six years identified above should be reviewed for any discernable pattern in
variations. Results for 2017 should be thoroughly reviewed as well, including assumptions
utilized to convert calendar weather to billed weather as a result of the conversion to monthly
billing in 2016 and the subsequent collection of a full year of monthly billing data. The results of
these analyses should be utilized to determine if the identified source of variations can be
addressed through forecast process improvements.

Milestones:

May 2018 Complete review of prior variance reports (2010–2016) to identify sources of
variation

July 2018 Complete review of 2017 variance reports to identify sources of variation and
determine if calendar month to billed month weather assumptions are valid

Sept 2018 Determine how identified sources of variation can be addressed within the
forecasting process

Oct 2018 Produce “shadow” forecast utilizing forecasting process determinations as


identified

44
Feb 2019 Complete variation analysis of “shadow” forecast for November 2017 through
January 2019

March 2019 Recommendation for improvements and on-going analysis/improvements

Adopted, modified or rejected recommendation: Adopted

Start Date: January 2018

Estimated Completion Date: March 2019

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Improvement in the predictive ability of the sales forecasts will provide more accurate forecasts
for regulatory, financial and operational considerations.

Final Deliverable

The Company will provide a memo on the recommendations for improvements based on the
variation analysis.

 
45
 

IMPLEMENTATION PLAN

Response to Recommendation 21.1

Recommendation:

Central Hudson should give consideration to other performance metrics for supply
procurement strategies, policies, processes and methods, as two out of the three existing KPIs
are really economic cost trackers.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Christopher Capone & Jeffrey May

Ting Chan, Bill Kyle, Kathy Kilkenny, Glynis Bunt,


Team Members:
Ed Ortlieb

Description of Scope and Plan

Scope: Central Hudson will give consideration to other possible performance metrics for supply
procurement strategies, policies, processes, and methods.

Plan: The implementation plan includes reviewing existing KPIs for on-going applicability and to
give consideration to new metrics including the metric identified in Recommendation 22-1.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: December 1, 2017

Estimated Completion Date: December 31, 2018

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental labor costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

The implementation of this item will be considered completed when a review of KPI metrics has
been completed.

Final Deliverable

The Company will provide a memo detailing the findings of the review of KPI metrics.

 
46
 

IMPLEMENTATION PLAN

Response to Recommendation 22.1

Recommendation:

Overland recommends that the Company prepare a quarterly analysis of gas price volatility with
and without hedging. Performing this analysis consistently will give the Company better insight
into the effectiveness of their hedging positions, particularly if they are over- or under-hedged.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Christopher Capone & Jeffrey May

Team Members: Glynis Bunt, Bill Kyle, Scott McDowell, Ed Ortlieb

Description of Scope and Plan

Scope: The scope of this Recommendation includes identifying a stable gas index reference price and
periodically preparing and reporting gas price volatility with or without hedges based on market data.

Plan: this Recommendation is intended to lead to a performance metric, which will be included as part
of the implementation of Recommendation 21-1.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: December 1, 2017

Estimated Completion Date: December 31, 2018

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.  

Results/Measures of Success

Results: The results will show the Company’s gas price volatility relative to the stable index.

Measure of Success: The measure of success is not possible to quantify for the benefit of customers
due to the uncertainty of required assumptions. It is possible that effective volatility analysis will lead
to lower hedging costs as well as more efficient risk mitigation.

Final Deliverable

The Company will provide a memo on the Company’s gas price volatility relative to the stable index.

 
47
 

IMPLEMENTATION PLAN TEMPLATE

Response to Recommendation 22.2

Recommendation:

The Company should consider reducing its hedging target to 25%-50% based on the current
low natural gas price and stable supply environment.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Christopher Capone & Jeffrey May

Team Members: N/A

Description of Scope and Plan

Scope and Plan: The Company is already compliant with this recommendation.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: N/A

Estimated Completion Date: Complete

Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs.  

Results/Measures of Success

Completed

Final Deliverable

The Company will provide a memo demonstrating that its hedging target is between 25%-50%.

 
48
IMPLEMENTATION PLAN

Response to Recommendation 23.1

Recommendation:

Central Hudson should initiate a special program targeted to replace the small segments of
cast- iron, wrought iron, and bare steel main and services that operate at higher pressures.
Present LPP replacement programs do not prioritize replacing these potentially risky pipe
segments on an expedited basis.

Recommendation Implementation Team

Executive Sponsor & Team Lead: Paul E. Haering & Lawrence R. Cambalik

Team Members: Karl Reer & Brianna Peak

Description of Scope and Plan

Central Hudson Gas & Electric Corporation is currently replacing leak prone pipe (LPP) at a rate
that will result in its elimination in approximately 10-12 years. LPP elimination projects are
developed and prioritized through the combination of risk assessment software and input from
subject matter experts. The risk rating of a gas facility is based on a number of factors which
include operating pressure, leak history, location, material type, etc. As part of the LPP main
elimination projects all associated LPP gas services are replaced during the project. Currently if
a LPP service is found leaking it is replaced in its entirety.

All existing cast iron main operating at 15 psig and all known cast iron services will be
eliminated by the end of 2018. Wrought iron mains operating above utilization pressure or
unprotected steel mains operating at high pressure will be considered in the scheduling of LPP
projects.

A program will be developed to identify and replace those LPP services which are not
associated with LPP mains. This will address these services that fall outside of the LPP main
elimination program. Additional capital funding must be secured to address the replacement of
these assets.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Modified

Start Date: In progress

Estimated Completion Date: December 31, 2018

Priority: High

49
Activity/Milestone Estimated Current Status
Completion Date

Identification of all LPP services not included in 2/1/2018 In progress


LPP main elimination program.

Elimination of all cast iron operating at 15 psig. 12/31/2018

Elimination of LPP services not included in LPP To be determined


main elimination projects. based on those
services identified
which are outside
the LPP main
elimination
program

Summary of Cost/Benefit Inputs

Costs to address the replacement of LPP services not associated with LPP mains will be
determined based on the identification of the affected service population.

Reduced costs associated with gas maintenance.

Results/Measures of Success

Elimination of all cast iron mains and services which operate at greater than low (utilization)
pressure. Identification and replacement of LPP services not associated with LPP pipe.

Final Deliverable

The Company will issue a memo to Staff describing how and when each milestone was
completed.

2
 
50
IMPLEMENTATION PLAN

Response to Recommendation 23.2

Recommendation:

The Company should develop the means to identify, record, and report why a distribution main
or service is being installed.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Paul E. Haering & Lawrence R. Cambalik

Team Members: Brianna Peak & Andrea Walsh

Description of Scope and Plan

Currently the Company captures critical gas infrastructure information that is stored in its Gas
GIS database. Asset information is classified as either required or other. Required asset
information is data that the Company has deemed critical for that asset such as size, material,
installation date, test pressure, etc. Other asset information such as project work order number
does not require an entry in the data field. Central Hudson’s gas asset recording software will
be updated to require project work order number to be entered for each service and main
installation. The project work order number will provide the means to identify why the
distribution main or service was installed on a going forward basis.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: October 1, 2017

Estimated Completion Date: December 31, 2018

Priority: High

Summary of Cost/Benefit Inputs

The benefits of providing reporting of reason for installation of main or service are qualitative
and cannot be quantified.

Cost Type Year 1 Year 2 Year 3 Year 4 Year 5 Total

Labor $10,000

Software $20,000

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Total Cost $30,000

Net ($30,000)
Cost/Benefit

Results/Measures of Success

Completion of the project will allow for ad hoc inquiries of the Company’s Gas GIS database to
determine the cause for installation of mains and services such as replacement, new business
or expansion for newly installed facilities.

Final Deliverable

The Company will issue to Staff a sample report demonstrating that project work order number
has been added for each service and main installation.

 
52
IMPLEMENTATION PLAN
Response to Recommendation 24.1

Recommendation:

In its succession planning, Central Hudson should rotate high-performing managers and
supervisors between electric and gas to develop future leaders knowledgeable in both areas of
the Company in a more formal process.

Recommendation Implementation Team


Executive Sponsor & Team Lead: Sharon McGinnis & Jill Sammon

Team Members:

Description of Scope and Plan

Central Hudson agrees with Overland’s findings that the Company’s criteria for filling a vacancy
should include assessing potential rotation candidates for certain positions, specifically, as it
relates to rotating high-performing individuals between electric and gas.

As part of our succession planning process, an individual assessment is made as to what


experiential development an employee needs to be successful in taking on key roles. While
electric and gas are key components, the assessment also includes exposure to other parts of
the business that would be critical to an employee’s development.

Central Hudson is in the process of formalizing a rotation development program. Those high
performing employees who may benefit from a rotation between electric and gas will be
identified and a timeline will be put in place based on the needs of the organization and the
roles that need to be filled.

We agree with Overland’s described benefits that future leaders of Central Hudson, with both
electric and gas experience will be able to make a stronger contribution to the Company’s
success based upon first-hand experience in both the electric and gas businesses.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: In progress

Estimated Completion Date: December 31, 2018

Priority: Moderate

Activity/Milestone Estimated Current Status


Completion Date

53
Develop Rotation Development Program. 12/31/2017 Draft is currently in progress

Evaluation of employees that would 3/31/2018 Review is currently in progress


benefit from a rotation between electric
and gas. & ongoing

Rotation Development Program 12/31/2018


implemented.

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

The progress of the Rotation Development Program will be reported to the Board of Directors as
part of the annual succession planning review.

Final Deliverable

The Company will provide documentation of the Rotation Development Program.

 
54
IMPLEMENTATION PLAN TEMPLATE

Response to Recommendation 26.1

Recommendation:

Expand the quality compliance monitoring of construction and operations and maintenance
work completed by internal gas crews and minor electric construction and operation and
maintenance work by utilizing dedicated Central Hudson staff or an independent third party
contractor to periodically conduct an independent assessment.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Paul E. Haering & Lawrence R. Cambalik

Team Members: Karl Reer & Laurence L. Murphy

Description of Scope and Plan

Central Hudson has a robust QAQC program to insure the installation of gas facilities are
installed according to their gas construction standards and operating and maintenance
procedures. The Company has utilized third party QAQC inspectors on a limited basis to
oversee the installation of gas facilities by Company forces. The Company will expand its
efforts in this area as well as oversight of maintenance activities on gas facilities.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: In progress

Estimated Completion Date: November 1, 2018

Priority: High

Summary of Cost/Benefit Inputs

The costs include two additional 3rd Party QAQC Inspectors.

Qualitative benefits of confirming that existing Company standards and procedures are being
followed.

Cost Type Year 1 Year 2 Year 3 Year 4 Year 5 Total

Labor $180,000 $180,000 $180,000 $180,000 $180,000 $900,000

55
Total Cost $180,000 $180,000 $180,000 $180,000 $180,000 $900,000

Net ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) ($900,000)


Cost/Benefit

Results/Measures of Success

Additional QAQC inspectors in place providing required oversight and reporting and correcting
any identified issues. Ensuring overall quality of work inspected.

Final Deliverable

The Company will issue a memo to Staff on the contract for two additional 3rd Party QAQC
Inspectors.

56
IMPLEMENTATION PLAN
Response to Recommendation 27.1

Recommendation:

Central Hudson should track project and program costs that are expensed within its existing
mainframe accounting system.
Recommendation Implementation Team
Chris Capone
Executive Sponsor & Team Lead:
Lora Gescheidle
Team Members:

Description of Scope and Plan

Central Hudson does track certain project and program costs within its existing mainframe when
it is determined to be necessary and beneficial. However, Central Hudson chooses not to track
expenses for every individual program or project because there is no identified customer,
regulatory, financial or management benefit.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: Completed

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.  

Results/Measures of Success

Completed. Overland’s finding is based on a miscommunication. In IR-842 the line of


questioning was related to engineering topics and the Company’s replies described the typical
process rather than the full breadth of capabilities we have for reporting. The Company
corrected Overland and they acknowledged this in footnotes that appeared in the final report.
Since we have already demonstrated that Central Hudson does have the reporting capabilities
that Overland recommended, and that we do use them regularly, no action is required to
implement the capability in our systems.

Final Deliverable

An example of a specific project cost that was specifically tracked through a collect cost work
order is major storm event costs. Recent documentation was submitted on May 18, 2017
(updated September 1, 2017) for major storm event costs deferred under Case 14-E-0318
which can be used as evidence of the Company’s ability to track specific project costs when
determined necessary or beneficial.
57
IMPLEMENTATION PLAN
Response to Recommendation 27.2

Recommendation:

Central Hudson should develop a more detailed Comparison of Actual Results Versus Rate
Allowances Report by disaggregating the All Other Net catch-all expense grouping. All Other
Net expenses should be no greater than 20 percent of Total Operating Revenue Deductions. In
addition, significant variances between actual costs and rate allowances should be
documented.
Recommendation Implementation Team

Executive Sponsor & Team Lead:


Anthony Campagiorni & David Brideau

Team Members:

Description of Scope and Plan

The Company will adopt this recommendation. A report has been developed for internal use that
provides a comparison of actual results versus rate allowances with the “All Other” category
representing no more than 20 percent of Total Operating Revenue Deductions. This report identifies the
most significant variations between actual results and rate allowances for each completed rate year.

Narrative Including Schedule/Milestones

The Company has already applied this recommendation for the first two Rate Years of the 2015 Rate
Plan in Cases 14-E-0318 and 14-G-0319. The Company’s response to PSC Staff IR-387 in Cases 17-
E- 0459 and 17-G-0460 utilizes the new reporting and will continue for internal use going forward.

Adopted, modified or rejected recommendation: Adopted

Start Date: August 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.  

Results/Measures of Success

Complete

Final Deliverable

The Company will issue a copy of its response to PSC Staff IR-387 in Cases 17-E- 0459 and 17-G-
0460.

58
IMPLEMENTATION PLAN

Response to Recommendation 28.1

Recommendation:

Expand the electric T&D work management and gas T&D ARCOS Crew Manager systems to
include the outside contractor workforce, as they constitute a significant component of Central
Hudson’s workforce. In 2016, 51 FTE’s (or almost 18% of the electric T&D workforce) were
contractors; and 177 FTE’s (or over 75% of the gas T&D workforce) were contractors.

Recommendation Implementation Team

Executive Sponsor & Team Lead: C.A Freni


D.L. DuBois & D.E. Schultz

Team Members: Electric & Gas T & D Planners

Description of Scope and Plan

Central Hudson does not maintain a contractor workforce, instead Central Hudson competitively
bids out projects that cannot be accomplished with internal crews. The Company selects the low
cost, qualified bidder. No agency relationship exists with contractors as they manage and
control the size of their workforce and their work schedule within the subject to their contractual
commitments to Central Hudson.

Central Hudson maintains two types of contracts with contractors, fixed price or time and
equipment. Fixed price contracts require the contractor to perform a specific task or tasks
based upon agreed to terms and price. Central Hudson is not concerned with contractor
resources applied to fixed price contracts because the contractor is tasked with the
responsibility of completing the assignment, not how to complete the assignment. It does not
matter to Central Hudson whether the contractor uses more labor and less equipment to
perform the assignment or less labor and more equipment, as long as the contractor completes
the assignment. Time and equipment contracts are charged hourly rates and must be
completed on time and budget to be cost effective.

The statistics on contractor FTE’s stated in the recommendation are without the necessary
context. Central Hudson uses contractors on a per project basis and therefore the number of
projects and the winning contractor’s preference for crew size will determine the number of
FTE’s on the property at any one time.

Extensive work was done in this area as part of Case 13-M-0449 In the Matter of Focused
Operations Audit of the Internal Staffing Levels and the Use of Contractors for Selected Core
Utility Functions at Major New York Energy Utilities. At the time the Company stated:

“First, Central Hudson does not collect information regarding contractor resources because
Central Hudson does not have an interest in the resources used by the contractor, only whether
the contractor completes its assignment on time and on budget. The number of employees, or
other resources, used by a contractor is up to the contractor. Second, the National Labor

59
Relations Board (“NLRB”) recently broadened the definition of a joint employer such that “[j]oint
employment exists when an employee is employed by two (or more) employers such that the
employers are responsible, both individually and jointly, to the employee for compliance with a
statute.”1 The more information that Central Hudson requires a contractor to provide about its
employees the more likely that a joint employment issue could arise. The joint employment
issue is currently being litigated and it is unclear how it will be interpreted and implemented in
New York, but Central Hudson believes that clear separation of employment is the best policy to
permit Central Hudson, its customers and contractors to avoid costly entanglements that could
arise through joint employment.”

This continues to be Central Hudson’s position on the issue.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Rejected

Start Date: N/A

Estimated Completion Date: N/A

Priority: N/A

Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

                                                            
1
 U.S. Department of Labor Wage and Hour Division, Revised January 2016, Fact Sheet #35: Joint Employment
Under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). 

60
IMPLEMENTATION PLAN
Response to Recommendation 28.2

Recommendation:

Develop the business case for purchasing and implementing a work management information
system (WMIS) for electric T&D. The business case should be well structured and capture the
reasoning for initiating the project and include a cost benefit analysis. Central Hudson should
commit to following up on and acting upon the results of the study by prioritizing the
development and implementation of the WMIS in its roadmap for modernizing IT systems.

Recommendation Implementation Team


C.A. Freni & D.L. DuBois
Executive Sponsor & Team Lead:

Team Members: Electric T & D Planners

Description of Scope and Plan

Central Hudson will develop a business case that will address the shortcomings that Overland
Consulting identified with the existing systems utilized for Electric T & D work management,
including the timesheet process that currently does not facilitate collecting task times based on
compatible units limiting the work management system to assessing constant time, travel time,
and wrench time, the manual planning and scheduling, the potential for a FERC accounting
misclassification between capital work and O & M, and the integration of the graphic information
system (GIS) with the work management process.

Narrative Including Schedule/Milestones

The programming necessary to collect the data to establish a baseline for constant time, travel
time, and wrench time was completed in 2013. In 2014 the necessary reports were developed
utilizing our business intelligence tool to facilitate establishing the baseline and monthly tracking
for constant time, travel time, and wrench time. The project was completed in 2014 and over
90% of the resources allocated to completing the work were internal line resources so the
reports created provided an effective means of measuring crew efficiency and productivity.

In order to continue this progress Central Hudson will develop the business case to initiate an
upgrade to the work management system and will work with IT as they develop their roadmap
for modernizing IT systems. Acting upon the results of the study will depend upon receiving
sufficient funding in rates.

Activity/Milestone Estimated Current Status


Completion
Date

Develop business case 4/30/2018 In progress

61
System upgrades to allow for 6/30/2018
improved time allocation

Upgrade to work management 12/31/2018


system to include integration with
crew manager system

Work management reports expanded 6/30/2019

Adopted, modified or rejected recommendation: Adopted

Start Date: April 1, 2018

Estimated Completion Date: June 30, 2019

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs to performing the business case. Central Hudson will conduct a
cost benefit analysis as part of the business case.

Results/Measures of Success

 Improvements to the time allocation between capital installation, capital removal, and O & M
work based on the type of project and work tasks associated with completing the
assignment

 Reduced manual planning and scheduling of T& D work

Final Deliverable

The system utilized for timesheets will be upgraded to prevent misclassification between capital
work and O & M in accordance with FERC accounting rules. ARCOS crew manager will be
updated on a daily basis as part of the integration process with Mobile Work Force
Management.

62
IMPLEMENTATION PLAN
Response to Recommendation 28.3

Recommendation:

Central Hudson should develop a program focused on reducing the backlog of severity 4 and 5
electric capital and O&M inspection repair work. The goal of the program should be that the
backlog of accumulated work, resulting from 2015 and 2016 inspections, is more consistent with
the historical backlog.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
C.A. Freni & D.L. DuBois

Team Members: Electric T & D Planners

Description of Scope and Plan

The severity 4 and 5 inspection repair backlog is driven by the number of findings as well as the
number of repairs that are completed. A summary of the starting backlog, inspection findings,
repairs completed, and ending backlog (in hours) for 2011 through 2016 is provided below:

Year Transmission Starting Inspection Repairs Ending


or Distribution Backlog Findings Completed Backlog

2011 Transmission 5,845 2,930 2,700 6,075


Distribution 5,743 4,137 4,910 4,970
Total 11,588 7,067 7,610 11,045
2012 Transmission 6,075 740 2,400 4,415
Distribution 4,970 5,509 4,430 6,049
Total 11,045 6,249 6,830 10,464
2013 Transmission 4,415 10,150 7,100 7,465
Distribution 6,049 3,974 3,489 6,534
Total 10,464 14,124 10,589 13,999
2014 Transmission 7,465 6,630 10,790 3,305
Distribution 6,534 12,658 2,655 16,537
Total 13,999 19,288 13,445 19,842
2015 Transmission 3,305 35,495 11,980 26,820
Distribution 16,537 21,184 14,436 23,285
Total 19,842 56,679 26,416 50,105
2016 Transmission 26,820 14,830 18,535 23,115
Distribution 23,285 18,160 11,380 30,065
Total 50,105 32,990 30,295 53,180

As can be seen in the table above, the backlog of severity 4 and 5 repairs was decreasing in
2011 and 2012 because the hours spent completing repairs exceeded the inspection findings
hours. The inspection findings hours in 2013 compared to 2012 increased by 126% and
although the number of hours spent completing repairs during the same period increased by
55% the ending backlog level increased by 34%. Similarly, the number of hours spent

63
completing repairs in 2014 compared to 2012 increased by 97% but the inspection findings
during the same period increased by 209%. Recognizing that the number of findings is
impacting the backlog of repairs to be completed and that current funding levels for inspection
repairs cannot support completing enough repairs to offset this increase in findings, testimony
was prepared and included in Case 17-E-0459 requesting additional funding for repairs to at
least match the anticipated findings as well as to begin reducing the current backlog levels for
both transmission and distribution. If the requested funding for completing inspection repairs is
approved, then the current backlog of severity 4 and 5 distribution and transmission repairs
would be reduced to historical backlog levels over a three year period beginning July 1, 2018.

Narrative Including Schedule/Milestones

A comprehensive ground inspection is completed for each transmission line at least once every
five years. In most cases a comprehensive aerial patrol and infrared survey is scheduled within
the same year as the ground inspection to provide multiple perspectives when assessing the
condition of the structure/pole and associated hardware and conductors. The inspection
schedule is coincident with the Transmission ROW Management schedule to avoid issues
regarding restricted access associated with vegetative growth. Stray voltage testing is also
performed within the same year and in conjunction with either the comprehensive ground
inspection or the Transmission ROW Management.

Similarly, each distribution circuit is inspected at least once every five years by a contractor in
conjunction with the stray voltage testing. All severity 4 and 5 findings are validated by a
Central Hudson Line Foreman or designated Central Hudson employee who has been trained to
evaluate inspection findings. The validation process confirms the findings and the associated
severity rating but also assesses the opportunity for synergy savings or reliability enhancements
that can be incorporated into the inspection repair or replacement. Inspection findings requiring
the creation of a work order (capital work) are forwarded to the Estimating Department to
develop the work order estimate, obtain the required easements, and apply for the necessary
permits before the project is assigned to construction.

As indicated in response to IR-081, transmission and distribution high priority (severity 4 and 5)
repair inventory and repair findings are reviewed and compared to the year to date targets on a
monthly basis as part of our key performance indicators. The status (requires validation, needs
work order, in estimating, or in construction) of every outstanding repair is also tracked on a
monthly basis to ensure that adequate resources are allocated to keep the orders moving
through the process to construction and then ultimately to completion. In addition, the required
completion dates for every repair are monitored on a weekly basis and included in the 30, 60,
and 90 day work plans to ensure that the necessary resources are available and allocated to
complete the work.

Although the majority of the inspection repairs are being completed prior to the required
completion dates, there have been situations where obtaining the required easement or permit
has delayed a repair beyond the required completion date. These situations are documented
and the status is tracked on a weekly basis until the repair or replacement has been completed.
Some of the transmission lines scheduled for a complete rebuild include inspection repairs that
will be due prior to the planned start of the rebuild project. These locations have been reviewed
as part of the project engineering and planning phase to ensure that the finding(s) will not
impact the integrity of the line until the rebuild project is completed. If the severity of the
inspection finding requires completion of the repair/replacement prior to the rebuild project then
a separate work order is developed to complete the high priority repair/replacement.

64
Adopted, modified or rejected recommendation: Adopted

Start Date: July 1, 2018

Estimated Completion Date: June 30, 2021

Priority: Moderate

Summary of Cost/Benefit Inputs

Each inspection finding is assigned a severity rating based on established criteria. The severity
rating also determines the required completion date for the repair/replacement. Severity 5
conditions need to be repaired within 12 months of the inspection date whereas severity 4
conditions need to be repaired within 36 months. The severity ratings and associated required
completion dates were established to ensure that inspection findings were repaired prior to
impacting safety or system reliability. The request for additional funding in Case 17E-0459
included $711,141 for transmission repairs ($135,508 for severity 4 and 5 repairs and $575,633
for severity 1, 2, and 3 repairs) and $508,186 for distribution repairs ($303,157 for severity 4
and 5 repairs and $205,029 for severity 1, 2, and 3 repairs). The qualitative benefits of reducing
the backlog of severity 4 and 5 capital and maintenance inspection repair work to be more
consistent with the historical backlog levels will make tracking the status of outstanding repairs
more manageable as well as improve the integrity of aging electric transmission and distribution
infrastructure.

Results/Measures of Success

Processes and procedures are currently in place to track and manage the backlog of
outstanding severity 4 and 5 inspection repairs/replacements. Approval of our request for
additional funding in Case 17-E-0459 to complete the inspection repairs necessary to at least
match the anticipated findings as well as to begin reducing the current backlog levels for both
transmission and distribution will result in the completion of this recommendation on or before
June 30, 2021.

Final Deliverable

If the Company’s request for additional funding in Case 17-E-0459 to complete the inspection
repairs is approved and that funding is retained through 2021, then it is anticipated that the
current backlog levels for severity 4 and 5 transmission and distribution repairs combined
should be at or below 20,000 hours by June 30, 2021.

65
IMPLEMENTATION PLAN

Response to Recommendation 29.1

Recommendation:

A more robust set of procedures should be developed which documents the performance
management process from Team Goal selection and target setting for reporting of results and
consequences for under-performance in one comprehensive discussion.

Recommendation Implementation Team


Chris Capone, Stacey Renner,
Executive Sponsor & Team Lead: Eileen Lomoriello, & Mike Rivieccio

Corporate Finance & Planning


Team Members: Group Heads

Description of Scope and Plan

In Overland’s review of Central Hudson’s performance management process, Overland found


that some procedures were available in the Business Plan Process documentation, but felt the
procedures were somewhat limited and recommended a more robust set of procedures around
goal selection, target setting and consequence for underperformance.

Central Hudson recognizes the benefits of a clearly defined process. Central Hudson will
develop more procedural guidance within our existing Business Plan Process documentation for
selecting and making changes to the Team Goals.

Central Hudson has an existing process in place that aligns team goals from the employee level
to the highest corporate level as part of our Business Plan Process and performance
assessment. We will evaluate the existing process and procedures related to performance
management in the Business Plan Process documentation to ensure accountability and
alignments are included.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 15, 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

66
Milestones

Update Business Plan Process documentation to include procedures for selecting and updating
Team Goals. – Complete

Review and update procedures for performance management alignment with Team Goals in
Business Plan Process documentation. - Complete

Results/Measures of Success

Completion of the milestones.

Final Deliverable

The Company will issue a copy of the relevant section of the Business Plan Process document.

 
67
IMPLEMENTATION PLAN

Response to Recommendation 29.2

Recommendation:

Central Hudson executive management should perform a more thorough review of its Team
Goals and group key performance indicators results and formally document its findings and
conclusions. One obvious document that could be enhanced is the Team Goals and
Performance Indicators Dashboards report. At a minimum, all projected and actual failures to
achieve targeted performance should be explained in writing (e.g., Cause & Mitigation column).
Corrective actions for each case of non-achievement should be included with these published
results. Errors in the report should be corrected. Executive management should also provide a
written statement regarding its expectations as to the level of performance to be achieved with
these reported results. To reinforce its commitment to the achievement of all Team Goals,
Central Hudson should consider expanding its performance reporting in its newsletter to all
Team Goals on a routine monthly basis.
Recommendation Implementation Team
Chris Capone, Stacey Renner, Eileen Lomoriello,
Executive Sponsor & Team Lead: Ellen Dumbleton

Corporate Finance & Planning


Team Members: Group Heads

Description of Scope and Plan

Overland recommended and Central Hudson agrees that executive management should perform a
more thorough review of its Team Goals and group key performance indicators results. The
Company will look to enhance its Team Goals and Performance Indicators Dashboard report and
process.

Central Hudson recognizes that it is important to have well defined Team Goals and performance
measures that clearly and accurately communicate management’s expectations. Currently, the
dashboard report data is collected and stored in an Excel spreadsheet. The data is entered manually,
consolidated manually (which leaves room for human error and formatting mistakes), and is then
presented to the executive team for review. The Company has identified several areas that require
improvement and will continue to improve the dashboard report process in the implementation plan.

Central Hudson recognizes that in addition to monitoring and discussing performance measures that
may require corrective action, it would be prudent to provide explanations for every metric that is not
achieving its target and requires corrective action. These explanations would also serve as a record
for historical performance. Central Hudson will include explanations in its monthly planning and
review processes.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

68
Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.

Milestones

Corporate Finance and Planning will work with the Strategic Planning Committee to develop a written
statement regarding its expectations as to the level of performance to be achieved and will include it
in the 2019 Business Plan Process document. – Complete

Central Hudson has identified several areas that require improvement. A more thorough evaluation of
our performance management process will be performed in conjunction with the Balance Scorecard
Implementation Plan (Recommendation 29.6). – Complete

Central Hudson’s monthly planning and review processes will include documenting projected and
actual failures to achieve targeted performance. – Complete

Central Hudson will evaluate alternative ways to expand the distribution of the performance report for
Team Goals. - Complete

Results/Measures of Success

Completion of the milestones.

Final Deliverable

The Company will issue a memo to Staff describing how and when each milestone was completed.

69
IMPLEMENTATION PLAN

Response to Recommendation 29.3

Recommendation:

The entire Central Hudson Board of Directors should be briefed on all Commission
precedents concerning the cost recovery of incentive compensation in customer rates
and any related guidance produced by the Commission or Staff on the matter. This
should occur on an annual basis prior to the approval of the upcoming year’s incentive
compensation plan design for any Central Hudson employees. After the initial briefing, if
the Board wishes to have executive management make its presentation to the
Governance and Human Resources Committee, this should be permitted.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher

Team Members: Joseph Koczko

Description of Scope and Plan

At the November 17, 2017 meeting of the Board of Directors of Central Hudson, management
briefed the Board of Directors on Commission precedent concerning the cost recovery of
incentive compensation in customer rates and any related guidance produced by the
Commission or Staff on the matter.

Under its Charter, the Govenance and Human Resources Committee of the Board of Directors
is responsible for reviewing, and making recommendations to the Board of Directors regarding,
corporate governance matters. The Committee is specifically responsponsible under its Charter
for matters relating to the compensation of the officers of Central Hudson, including any
incentive plans providing for annual bonuses and long-term equity or other incentive
compensation of officers. In that regard, on an annual basis prior to the approval of the each
year’s incentive compensation plan design, management will update the Committee on any
changes or additions to the precedent and/or guidance from the Commission or Staff regarding
incentive compensation.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 17, 2017

 Review the background and recommendation with the Board – November 2017

 Draft and finalize a summary report of the Board discussion – January 2018

Estimated Completion Date: Complete

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Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Completion of milestones

Final Deliverable

Central Hudson will provide a memo that summarizes the information concerning this
recommendation provided to the Board of Directors at its November meeting.

 
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IMPLEMENTATION PLAN

Response to Recommendation 29.4

Recommendation:

Central Hudson should expand the use of incentive compensation based upon corporate-wide
performance to its non-executive management as an alternative to the continuation of the
current compensation design in which most pay is fixed. Performance measurements used to
determine the level of incentive compensation paid should be designed to appropriately benefit
customers, employees, and shareholders at targeted levels which encourage continuous
improvement over time. Within these parameters, Central Hudson should retain a compensation
consultant to assist in implementing this recommendation. To alleviate any negative impact this
recommendation may have on employees, a multi-year phase-in of this proposal is suggested.

Recommendation Implementation Team


Sharon McGinnis & Stacey Renner
Executive Sponsors & Team Leads:
Eileen Lomoriello & Jill Sammon

Team Members:

Description of Scope and Plan

In the review of Central Hudson’s use of incentive compensation, Overland is recommending that
the use of incentive compensation be expanded to our non-executive management based upon
corporate-wide performance in lieu of our current compensation structure.

Expanding the use of incentive compensation to our non-executive management employees is


something that the company has considered. An overhaul of an existing compensation structure is a
highly complex initiative with several prerequisites. Notably, recommendations in this report on the
topics of change management, current regulatory treatment for incentive compensation, and
balanced scorecards should be addressed prior to changes to incentive compensation. In order to
embark on such an undertaking, Central Hudson would need to enlist a compensation consultant to
help us evaluate our current structure and develop alternatives that will potentially increase
employee performance and engagement.

Staff has previously denied recovery of incentive compensation for our non-executive management
employees. Therefore, Central Hudson would like to engage staff in this process so that we are
aligned with the PSC’s position on incentive compensation before any significant changes are
considered. Implementation of any incentive compensation structure would likely be phased in and
considered with labor costs in the development of future delivery rates.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Modified

Start Date: March 1, 2018

Estimated Completion Date: March 1, 2021

Priority: High

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Activity/Milestone Start Date Estimated Current Status
Completion Date

Engage discussions with 8/2017 In progress, initial meeting


Staff on new compensation 11/6/17
structures and cost
recovery.

Prepare RFP for consultant 3/1/2018


to perform compensation
structure review.

Make a determination if a 12/31/2019


new compensation
structure will be
implemented.

Summary of Cost/Benefit Inputs

The scope of work and precise cost of the compensation consultant has not yet been determined. A
placeholder is included below. Central Hudson does not agree with the estimated benefits
presented by Overland in the audit report. A more thorough understanding of rate recovery and the
potential impact of alternative compensation structures on employee performance and engagement
in Central Hudson’s organizational culture must be determined to gauge future benefits.

Cost Type Year 1 Year 2 Year 3 Year 4 Year 5 Total

Consulting 100,000 0 0 0 0 100,000

Total Cost $100,000 $0 $0 $0 $0 $100,000

Net $(100,000) $0 $0 $0 $0 $(100,000)


Cost/Benefit

Results/Measures of Success

Compensation structure has been reviewed and information provided in order to allow a
determination to be made regarding the structure of management compensation.

Final Deliverable

The Company will provide a memo to Staff on the consultant’s recommendations and Central
Hudson’s determination on a new compensation structure.

 
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IMPLEMENTATION PLAN

Response to Recommendation 29.5

Recommendation:
Corporate-wide financial objectives of any short-term incentive compensation plan offered to
employees working on behalf of Central Hudson should be weighted no more than 30% of total
Team Goals measured. As with any of the objectives established for incentive compensation
plans, the targeted levels should encourage continuous improvement.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Michael Mosher & Joseph Koczko
Team Members:

Description of Scope and Plan

Under its Charter, the Governance and Human Resources Committee of the Board of Directors is
responsible for reviewing, and making recommendations to the Board of Directors regarding, corporate
governance matters. The Committee is specifically responsible under its Charter for matters relating to the
compensation of the officers of Central Hudson, including any incentive plans providing for annual bonuses
and other incentive compensation of officers. Under the Short Term Incentive Plan of Central Hudson, the
Committee is also responsible for establishing Team Goals. Central Hudson does not have an incentive
compensation program for non-executive management employees. This matter is being studied as part of
the implementation plan for recommendation 29.4. Management has advised the Committee of this
recommendation for their consideration at the Committee’s November 17, 2017 meeting.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Rejected

The Board of Directors took this recommendation under consideration, but decided to keep financial-related
goals at a weight over 30 percent for 2018.

Priority: Low

Summary of Cost/Benefit Inputs

N/A

Results/Measures of Success

N/A

Final Deliverable

N/A

 
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IMPLEMENTATION PLAN
Response to Recommendation 29.6

Recommendation:

Central Hudson should implement a balanced scorecard system or an equivalent method as a


mechanism to improve corporate performance and to better support recognition of incentive
compensation within the executive and management group.
Recommendation Implementation Team

Executive Sponsor & Team Lead: Sharon McGinnis & Stacey Renner

Eileen Lomoriello & Jill Sammon


Team Members:

Description of Scope and Plan

A balanced scorecard tool is a strategy performance management tool with several key
characteristics:

 A focus on the strategic agenda of the organization


 The selection of a small number of financial and non-financial items to monitor through the
scorecard

In order to determine the value of implementing a balanced scorecard (which done properly will
require a cross-functional team and approach), Central Hudson must first begin to understand
potential project scope, how other Companies have benefited from scorecard implementation and the
total potential costs of this type of project. There is potential to align the development of a balanced
scorecard with the implementation of new system for budgeting in 2018 and 2019. Several of the
system options the Company is considering have the capacity to handle both financial and operational
reporting.

Several preliminary steps (as described in the milestone detail below) are required to determine
whether Central Hudson will fully adopt this recommendation.

Narrative Including Schedule/Milestones

Major Activities/Milestones Est. Start Est. Completion Status


Date Date

Learn more about a balanced scorecard October 2017 March 2018 Complete
approach and benefits through consultation with
vendors and consultants, participation in
webinars, discussion with other companies. All
subsequent milestones are contingent upon
Central Hudson determining that implementing a
balanced scorecard approach beyond our
existing Team Goals has value for Central
Hudson.

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Hire consultant to assist with evaluation and January 2018 February 2018 Complete
mapping of our current performance
management process, and identification of
improvement areas.

Develop a recommendation and implementation March 2018 May 2018 Complete


plan.

Execute implementation plan. Key elements of June 2018 July 2020


the plan are noted below.

 Incorporate Tier 1 Balanced Scorecard in


the Company’s 2019 Business Plan.
 Expand strategic planning process to
update strategic themes and objectives.
 Expand updated Tier 1 scorecard to Tier
2 during the 2020 Business Plan
process.
 Develop a plan to improve automation of
Tier 2 KPIs.
 Develop a plan to expand the Balanced
Scorecard framework to Tier 3
(employee performance)

Adopted, modified or rejected recommendation: Modified

Start Date: October 2017

Estimated Completion Date: July 2020

Priority: High

Summary of Cost/Benefit Inputs

Modest consultant expense is expected in the preliminary phase. Additional expense and capital
investment (IT systems) may be incurred if an improvement project is launched. Annual administrative
expense may be incurred in the oversight of the program. Benefits are expected to be qualitative and
not quantifiable.

Cost Type Year 1 Year 2 Year 3 Year 4 Year 5 Total

Labor $125,000 $125,000 $125,000 $125,000 $125,000 $625,000

Equipment $100,000 $100,000

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Total Cost $125,000 $125,000 $125,000 $125,000 $125,000 $725,000

Net Cost/Benefit $(125,000) ($225,000) ($125,000) ($125,000) ($125,000) $(725,000)

Results/Measures of Success

To be determined as Balanced Scorecard approach evolves.

Final Deliverable

The Company will issue a memo to Staff upon completion of implementation describing changes
made and the expected impact on the planning and performance processes.

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IMPLEMENTATION PLAN

Response to Recommendation 29.7

Recommendation:

The Vice-President, Human Resources & Safety should attend industry programs focused on
management performance and incentive compensation, as well as specific programs focused
on the Balanced Scorecard system, should the Company pursue the implementation of this (or
some equivalent) system.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Sharon McGinnis

Team Members:

Description of Scope and Plan

The Vice President, Human Resources & Safety attended a conference session on balance
scorecards on October 12, 2017, Balance Scorecard Institute webinar on October 31, 2017,
and will continue to seek opportunities to attend industry programs focused on management
performance and incentive compensation.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: October 1, 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed. 

Results/Measures of Success

Completed and The Vice President, Human Resources & Safety will continue to seek
opportunities to learn more management performance and incentive compensation.

Final Deliverable

The Company will provide Staff with a memo summarizing the conference and webinar content.

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IMPLEMENTATION PLAN

Response to Recommendation 29.8

Recommendation:

Prospectively, Central Hudson should engage in both internal and external benchmarking and
the pursuit of best practices. These efforts should be adequately documented and made
available to the NYSPSC, its Staff, and their representatives, as appropriate. Central Hudson
should obtain releases from third parties that restrict the disclosure of certain information so that
benchmarking and best practices documentation can be reported to the NYPSC, the Staff, and
its representatives. Expenditures made to any third party who does not agree to the release of
benchmarking and best practices information should not be requested in rates by Central
Hudson or otherwise considered in base rate proceedings.

Recommendation Implementation Team


Stacey A. Renner, Treasurer
Executive Sponsor & Team Lead:

Team Members:
Eileen M. Lomoriello & others TBD

Description of Scope and Plan

Central Hudson currently engages in benchmarking and the pursuit of best practices, but this work is
not functionally centralized within the organization. Each group conducts this work as it impacts their
part of the business. Third party experts are utilized where appropriate. The Company will continue to
take this approach to benchmarking where it adds value for Central Hudson.

Centralizing Central Hudson’s benchmarking efforts would result in incremental resources and
expense. In the interest of minimizing costs, the Company plans to amend its current business
planning process to document where benchmarking was used, and to identify opportunities where
benchmarking should be considered.

With respect to obtaining releases from third parties that restrict the disclosure of certain information,
Central Hudson plans the following:

1. Central Hudson will reach out to relevant staff at both EEI and AGA to inquire about
information releases.

2. Central Hudson will arrange a call with Staff, CH employees and EEI representatives to
discuss this further.

3. Central Hudson will arrange a call with Staff, CH employees and AGA representatives to
discuss this further.

4. Central Hudson will modify its standard contract language to allow for the sharing of
benchmarking and best practices information from contracted third parties with the NYPSC,
Staff, and their representatives. The Company may not be successful in negotiating such
terms with all third parties.

79
Central Hudson will continue to seek cost recovery for all prudently incurred expenses in accordance
with the NYPSC Statement of Policy on Test Periods in Major Rate Proceedings.

All of the above are expected to be completed by December 2018.

Major Activities/Milestones Est. Start Date Est. Completion Date Status

Amend Business Plan Guidance to include January 2018 March 2018


consideration and documentation of
benchmarking in the development of KPI
targets and Group initiatives.

Group Business Plans approved by the September 2018 November 2018


Strategic Planning Committee.

Conduct Exploratory Calls with EEI and AGA TBD TBD


Staff

Arrange Follow Up Calls with EEI and AGA TBD TBD


Staff and DPS Staff

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Modified

Start Date: November 1, 2017

Estimated Completion Date: December 15, 2018

Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.

Results/Measures of Success

Completion of milestones

Final Deliverable

The Company will provide Staff with a copy of updated Business Plan Guidance and documentation
of the introduction to Staff and EEI and AGA.

 
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IMPLEMENTATION PLAN

Response to Recommendation 30.1

Recommendation:

Central Hudson should make the necessary modifications to procedures or the CIS to recognize
meter readings and calculate service bills without manual intervention when service
consumption precedes the service request date due to the customer’s failure to notify Central
Hudson when they move into a residence and begin consuming power.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and other subject matter experts.

Description of Scope and Plan

Central Hudson’s CIS system to the extent possible has already automated the process when we
receive a request from a customer to take over service on a date prior to the day they are notifying
us. There are a number of infrequent scenarios that do need to be handled manually by the
Customer Service Representative based on the customer’s individual situation. The time it takes to
process these manual transactions to complete the request is minimal and would not warrant the
investment in mapping and automating all potential circumstances. Central Hudson has written
training materials for Customer Service Representatives to follow when processing these
transactions. These training materials will be formalized and enhanced to outline various examples
that the Customer Service Representatives manually process per the customer’s request.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: June 30, 2018

Priority: Moderate

Summary of Cost/Benefit Inputs  

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.

Results/Measures of Success

Completion of documentation and training updates and continued achievement of customer


satisfaction targets.

Final Deliverable

The Company will provide Staff with a memo on the updated training documentation.

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IMPLEMENTATION PLAN

Response to Recommendation 30.2

Recommendation:

Central Hudson should make the changes necessary to ensure that when new meters are
installed on existing accounts, the CIS system cannot fail to bill the account based on the new
meter. Given that CIS already captures the usage data for these meters, CIS should be able to
bill the usage, and bills should not have to be estimated due to a failure to follow through with
paperwork. This may require a programming change to CIS, the enhancement of procedural
controls associated with meter changes, or both.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Adrienne Huy, Cheryl Ryan and other subject


Team Members:
matter experts.

Description of Scope and Plan

Central Hudson will initiate improvements in our procedures that minimize inaccurate bills being
sent to our customers. Currently we have procedures in place for the Meter Readers to verify
the meter number when they are either (1) reading a non-ERT meter and receive a hi/low error
or (2) an ERT meter where the reading is not being picked up. These already established
procedures will be reinforced. In both scenarios mentioned above, Meter Readers currently
enter into the handheld device a Miscellaneous Code and the new meter number and index.
The detail entered is stored on the system, but in some cases may not be seen unless
otherwise prompted for further review. As an improved process, Central Hudson will utilize a
function on the meter reading handheld device where Meter Readers can enter the new meter
number information and index as seen in the field. The meter number and index will generate an
order in our CIS system with the detail to then be worked by a CSR for account updates.

Narrative Including Schedule/Milestones

Central Hudson will immediately conduct refresher training with all Meter Readers to ensure
they are confirming meter numbers against system detail when on site. Central Hudson has
tested the handheld functionality to ensure meter change data and index detail is accurately
transferred to CIS for CSR visibility and customer billing.

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: Moderate

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Summary of Cost/Benefit Inputs

Central Hudson’s internal resources will complete the testing. Training costs are all internal and
not incremental. The improvements in Customer Satisfaction from these changes are not
possible to quantify or measure, but they are expected to be immaterial in aggregate due to the
small number of occurrences.

Results/Measures of Success

Once consistent procedures are enforced for meter change updates in the handheld, orders will
be generated thorough CSRO to be reviewed by a CSR to ensure all meter changes are
processed based on the detail provided by the Meter Reader.

Final Deliverable

The Company will provide Staff with a memo on the enforced changes.

 
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IMPLEMENTATION PLAN

Response to Recommendation 30.3

Recommendation:

Central Hudson should implement procedures to ensure that necessary action is taken to help
prevent meters from going beyond six months without a reading. This may require escalating
attempts to contact the customer as the number of consecutive estimates increases. It may also
require programming changes in CIS to help alert CAS employees that additional action needs
to be taken.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Team Members:
Adrienne Huy, Cheryl Ryan & Paula Coppin

Description of Scope and Plan

There currently is an “Accounts with 2+ Consecutive Estimates Report” that generates in batch
reports daily. This report identifies accounts that were billed as estimates the day prior and that
have a No Read Reason 2 or more consecutive times. This report is already in place and
available for review.

Central Hudson needs to ensure the current procedures established are being followed as it
relates to the existing listing that is produced daily. Management of this report needs to be
improved and a report should be produced so the manager level employees can see the
statistics in all areas. Improvements are needed in our communication to the customers which
will include programming changes to automate access letters to customers.

Narrative Including Schedule/Milestones

The oversight of the daily reports is currently handled by the Director of Meter Reading who will
continue to be responsible for these reports being managed daily. A programming improvement
for automation of access letters to customer has been implemented.

Adopted, modified or rejected recommendation: Adopted

Estimate Report Review by Supervisors: Completed

Create report that provides the number of estimates and reads per day: Completed

Programming Improvements automating access letters to customers: Completed

Start Date: N/A

Estimated Completion Date: Complete

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Priority: Moderate

Summary of Cost/Benefit Inputs

Central Hudson will incur costs for producing a report for management review. Central Hudson
anticipates improved Customer Satisfaction as a result of customers receiving notification
regarding estimated bills more timely. The improvements in Customer Satisfaction from these
changes are not possible to quantify or measure.

Results/Measures of Success

Central Hudson can track and analyze accounts listed on the “Accounts with 2+ Consecutive
Estimates Report.” Reviewing this report timely will allow Central Hudson to determine any
further course of action needed based on circumstance. Additionally, the availability of this data
in a report will provide management insight, which will assist in minimizing estimates beyond 2
billing cycles.

Final Deliverable

The Company will provide Staff with a memo with a sample of “Accounts with 2+ Consecutive
Estimates Report” and an example of the management report.

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IMPLEMENTATION PLAN

Response to Recommendation 30.4

Recommendation:
If wiring inspections are required as a condition for reconnection following the discovery of
meter tampering, the basis for the policy should be clearly documented and it should be
required that the policy be consistently applied.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Team Members:
Cheryl Ryan & William Brandt

Description of Scope and Plan

Central Hudson’s current practice is to require a Fire Underwriters Permit in situations of meter
tampering. Central Hudson will formalize this requirement in our Customer Service Handbook for
Commercial Representatives. The following language will be added to Section 9, under Theft of
Service – section 1.1.112 Responsibilities paragraph (4):

e. Central Hudson will require a Fire Underwriters Permit when a meter(s), that should be locked is turned
“ON” by an individual other than a CH employee without our express permission and it appears there may
have been tampering. This includes instances when wiring and/or bypass devices are found to be
installed that bypass meter registration. This applies to situations where the meter was initially turned off
for safety reasons as well as nonpayment reasons. We require a Fire Underwriters Permit to ensure that
any changes or corrections that may have been made to the service entrance wiring and/or meter pan
wiring that could lead to a public safety situation are corrected to comply with our Bluebook of Electrical
Specifications and NEC Code.

Narrative Including Schedule/Milestones

Update Customer Service Handbook as indicated above by December 31, 2017

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.

Results/Measures of Success

Consistent application of policy determined through monitoring of these minimal situations.

Final Deliverables

The Company will provide Staff with a memo detailing the update to the Customer Service Handbook
for Commercial Representatives

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IMPLEMENTATION PLAN

Response to Recommendation 30.5

Recommendation:

Central Hudson should clearly document and consistently apply its policy for transferring prior
bad debts into current residential customer accounts. (Note: The Bad Debt Transfer Process
document Central Hudson provided as evidence of its policy (IR-384, Attachment 1) does not
clearly state the six year age limit on which bad debts may be transferred into current accounts.)

Recommendation Implementation Team

Executive Sponsor & Team Lead: Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and other subject matter experts.

Description of Scope and Plan

Update of the Bad Debt Transfer Policy utilized by the Customer Service Representatives to
clearly state the six year age limit on which bad debts may be transferred into current accounts.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Consistent handling of bad debt transfers and elimination of customer complaints related to bad
debt transfers older than 6 years.

Final Deliverable

The Company will provide Staff with a memo on the updated to the Bad Debt Transfer Policy.

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IMPLEMENTATION PLAN

Response to Recommendation 30.6

Recommendation:

Central Hudson should develop a written policy addressing the circumstances under which
social security numbers are requested or required as a service condition. In addition, to limit
opportunities for identity theft, service applicants should not be requested to fax or mail copies
of their social security card to Central Hudson, unless the Company has a procedure to ensure
the security of paper versions of such documents. The NYSPSC should consider whether and
when a utility may require, rather than just request, social security numbers as a condition of
service.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and other subject matter experts.

Description of Scope and Plan

Central Hudson has policies and procedures in place to ensure the security of paper versions of
documents that have Personal Identifiable Information (PII) such as social security number.

Central Hudson does not require social security numbers as a condition of service; however we
do request them from customers. Central Hudson will enhance our training materials for our
Customer Service Representatives (CSRs) to outline circumstances when social security
numbers should be requested to clarify for our employees when it is most helpful in identifying
the customer of record.

The recommendation for the NYSPSC to consider whether and when a utility may require,
rather than just request, social security numbers as a condition of service is not something
Central Hudson can address. Central Hudson will request that this topic be included in the next
joint PSC-utilities meeting (CMUG), Spring 2018, in order to identify any best practices from the
other utilities.

Narrative Including Schedule/Milestones

Central Hudson will update our CSRs training materials for service applications to include
scenarios where we would request that a social security number be provided to identify the
customer. The updates to the training material will be completed by December 31, 2017.
Central Hudson will identify best practices with the other utilities by April 1, 2018.

Adopted, modified or rejected recommendation: Modified

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: High

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Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Updated CSRs training materials that define when a social security number would be needed in
order to identify a customer.

Final Deliverable

The Company will provide Staff with a memo on the updated CSR training materials that define
when a social security number would be needed in order to identify a customer.

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IMPLEMENTATION PLAN
Response to Recommendation 31.1

Recommendation:

Central Hudson should develop and post online, as a reference document, a set of written
guidelines describing the Company’s procedures for complying with residential and non-
residential customer regulations.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison
Team Members:
Cheryl Ryan and subject matter experts

Description of Scope and Plan

Central Hudson will create a reference document or table of contents online that will be designed
based on the PSC Regulations outlined in the Rules Governing the Provision of Service by Gas,
Electric, and Stream Corporations to Residential and Non-Residential Customers. Central Hudson
already has written training materials and procedures for our Customer Service Representatives
that we will reference in the table of contents with a link to the location of that training material.
This already existing material will be stored in our ECM system (internal library system). Training
materials will be updated as necessary to incorporate any needed changes or any new programs.

Narrative Including Schedule/Milestones

This project will take 12 months to complete.

Adopted, modified or rejected recommendation: Modified

Start Date: January 1, 2018

Estimated Completion Date: December 31, 2018

Priority: High

Summary of Cost/Benefit Inputs

This project will involve internal labor resources to complete. The audit found that Central Hudson
is in compliance with all applicable residential and non-residential customer regulations; therefore
there is no known benefit for this recommendation.

Results/Measures of Success

A reference document for residential and non-residential customer regulations posted in a central
location online.

Final Deliverable

The Company will provide Staff with a memo including a copy of the reference document located
online for residential and non-residential customer training material and procedures.

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IMPLEMENTATION PLAN

Response to Recommendation 31.2

Recommendation:

To ensure that all applicants in similar circumstances are subject to the same requirements,
Central Hudson should develop written guidelines covering the circumstances under which
residential service applicants must provide proof of identification or addditional documentation.
When additional documentation is required, the policy should explain what documentation is
required and why. This is not intended to remove the decision-making process from CSRs;
rather, it is intended to help ensure CSRs apply similar requirements to all applicants with
similar circumstances.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and subject matter experts

Description of Scope and Plan

Central Hudson’s current written training materials for service applications outlines guidelines for
circumstances under which residential service applicants must provide proof of identification or
additional documentation. These training materials will be enhanced to outline the various
examples where additional documentation may be required and why. These training materials will
be enhanced to act not only as training materials but as Company procedures. These documents
will be stored in Central Hudson’s ECM system (library storage system).

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit analysis is
needed.

Results/Measures of Success

Consistent application of policy determined through monitoring of these minimal situations.

Final Deliverable

The Company will provide Staff with a memo on the updated training documentation.

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IMPLEMENTATION PLAN

Response to Recommendation 31.3

Recommendation:

Central Hudson’s written service application form should include additional space and require
additional information concerning the nature of business and power-consuming equipment to be
used. The current forms have a “Nature of Business” field, but the space is large enough for
only one or two words to describe the business.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Lenore Allen and subject matter experts.

Description of Scope and Plan

Central Hudson’s service application form will be enhanced to include additional space so the
proper information can be included to describe the business.

Narrative Including Schedule/Milestones

This enhancement to the service application form will be completed by December 31, 2017.

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: Low

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Non-residential customers being billed on the correct service classification.

Final Deliverable

The Company will provide Staff with a memo on the updated commercial/industrial service
application.

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IMPLEMENTATION PLAN

Response to Recommendation 31.4

Recommendation:

Central Hudson should develop a guideline for CSRs to use when deposits are requested from
residential applicants as a condition of service. It should describe the circumstances, consistent
with HEFPA Section 11.12, under which deposits may be request from residential service
applicants.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and subject matter experts.

Description of Scope and Plan

Central Hudson’s current training material includes guidelines when CSRs should request
deposits from residential applicants as a condition of service. These training materials will be
enhanced to describe the circumstances consistent with Home Energy Fair Practices Act
Section 11.12, under which deposits may be requested from residential applicants. This
guideline will be stored in our Enterprise Content Management System.

Narrative Including Schedule/Milestones

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: High

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

CSRs consistently trained to understand when to make deposit requests as a condition of


service from residential applicants.

Final Deliverable

The Company will provide Staff with a memo on the updated training documentation.

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IMPLEMENTATION PLAN

Response to Recommendation 31.5

Recommendation:

Central Hudson should describe the reason for requiring deposits in all service denial letters
applicable to customers for whom a deposit is requested as a condition of obtaining utility
service.
Recommendation Implementation Team
Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Lenore Allen and subject matter experts.

Description of Scope and Plan

Central Hudson will submit a request to our programming department to add the reason for
requiring a deposit to the automated denial letter that is sent to customers. The creation of the
new letters will be completed by July 1, 2018.

Narrative Including Schedule/Milestones

The creation of the new letters will be completed by April 1, 2018.

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: July 15, 2018

Priority: High

Summary of Cost/Benefit Inputs

The expected programming hours to complete this request is 30 hours, along with 70 hours for
testing this application; all labor costs are internal The benefit from the letters should result in
clarity to the customers to provide higher levels of customer satisfaction. There are no
incremental costs and the benefits are qualitative therefore no cost benefit analysis is needed.

Results/Measures of Success

Programming changes are completed so that customers are aware of why they are being
denied service.

Final Deliverable

The Company will provide Staff with a memo including copies of sample denial letters that show
the possible reasons for denial.

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IMPLEMENTATION PLAN
Response to Recommendation 31.6

Recommendation:

Central Hudson should have a guideline addressing its use of courtesy discounts, which are
offered to customers receiving back-billings, at the discretion of CSRs. The guideline should
describe when the discounts can (and should) be offered and the range applicable to different
circumstances.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan and subject matter experts.

Description of Scope and Plan

Central Hudson’s training guidelines for CSRs address courtesy discounts, it addresses when
the discount can (and should) be offered and the range applicable to different circumstances.
These existing guidelines will be enhanced to provide additional clarification to CSRs by July 15,
2018.

Narrative Including Schedule/Milestones

Complete the update of the training guidelines for courtesy discounts by July 15, 2018.

Adopted, modified or rejected recommendation: Modified

Start Date: November 1, 2017

Estimated Completion Date: July 15, 2018

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Consistent handling of courtesy discounts.

Final Deliverable

The Company will provide Staff with a memo on the updated training guidelines.

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IMPLEMENTATION PLAN

Response to Recommendation 31.7

Recommendation:

Central Hudson should develop and document, in written form, a procedure to ensure that field
collectors check to ensure payment has not been received at the beginning of the day on the
date of scheduled termination, before they begin field termination activities for the day.

Recommendation Implementation Team


Executive Sponsor & Team Lead:
Charles A. Freni & Linda M. Harrison

Team Members: Cheryl Ryan

Description of Scope and Plan

Central Hudson will document our current procedures for field collectors to check to ensure
payment has not been received at the beginning of the day on the date of scheduled termination
before they begin field termination activities for the day. These procedures will be added to the
Customer Service Manual for Collectors.

Narrative Including Schedule/Milestones

The written procedures noted above will be finalized and placed in the Customer Service
Manual for Collectors by December 31, 2017.

Adopted, modified or rejected recommendation: Adopted

Start Date: November 1, 2017

Estimated Completion Date: Complete

Priority: Moderate

Summary of Cost/Benefit Inputs

There are no incremental costs and the benefits are qualitative therefore no cost benefit
analysis is needed.

Results/Measures of Success

Reduction of unnecessary work and improved customer satisfaction.

Final Deliverable

The Company will provide Staff with a memo on the updated Customer Service Manual for
Collectors.

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