POWER May 2011 - 88

BENCHMARKING
Benchmarking Fossil Plant
Performance Measures, Part III:
Metrics Used for Compensation
In Part III of this three-part report, we look at plant- and fleet-level metrics
used to determine compensation. As expected from this EUCG-sponsored
benchmarking survey, there is broad use of quantifiable metrics to
set portions of compensation, but the metrics selected vary substantially
across the surveyed utilities. More surprising was the number of utilities
that used no performance metrics as part of their employee compensation
packages.
By Charlene Foltzer, PSEG Power
I
n the March and April issues we examined
plant- and fleet-level fossil plant
performance metrics in the first two
parts of this summary of a recent EUCG
benchmarking survey. In this final report,
we explore which metrics are favored by
the participating companies for employee
compensation.
The survey did not delve into specific
compensation practices or the portion of the
total compensation package that is affected
by these key metrics because that information
is usually confidential and often varies
greatly between companies. Rather, the survey
was focused on identifying metrics favored
by company compensation programs
and their usage frequency.
The survey was conducted in mid-2010
with a total of 16 major utilities from the
U.S., Canada, Israel, and South Korea. Each
utility's fleet was categorized by size: small
(up to 5 GW), medium (5 GW to 10 GW), or
large (over 10 GW). Of the 16 companies participating
in the benchmarking survey, eight
were classified as having " small " fossil-fueled
fleets, three as " medium, " and five as " large. "
The survey covered all fossil plants within
particular fleets, including coal-fired and natural
gas-fired steam units, combined-cycle
plants, and even combustion turbines used
for emergency peaking. Survey respondents
also operate in different regulatory environments;
some are fully regulated while others
operate in deregulated regions, competing
with merchant generators for energy and capacity
sales.
Many Metrics, Few Used
Of the 16 utilities surveyed, 13 (81%) reported
using some combination of station86
and/or
fleet-level performance measures for
a portion of their employee compensation.
At the station level, five of the participating
companies (one large, two medium, and two
small) did not use performance measures as
part of their employee compensation computations.
Of those that did, the number of
performance measures considered in the
compensation program varied from one to
34 (Figure 1). Of those companies that reported
using metrics in their compensation
decisions, an average of 10 metrics were
used.
Although the specific station-level metrics
used varied widely, there were favorites.
Table 1 shows metrics used by at least three
utilities.
At the fossil fleet or company level,
only six of the 16 survey respondents used
fleet-level metrics in compensation decisions
(Figure 2). Of the fleets that did
report using these metrics, an average of
nine different ones were considered, close
to the number used for station-level compensation
decisions.
Companies using these metrics were
fairly evenly distributed among small,
medium, and large fleet categories. Fleetlevel
metrics favored by at least three companies
are listed in Table 2.
In Part I we examined favored stationlevel
performance metrics. Figure 3 illustrates
the number of station-level metrics
used by each company and the portion of
those metrics that are used for station-level
compensation decisions. The survey found
that an average of 43 station-level metrics
were used and an average of nine were used
for compensation decisions by the 11 companies
using such metrics at all. (The maxiwww.powermag.com
Table
1. Popular station-level metrics
used for compensation decisions.
Source: EUCG
Metric
OSHA recordable rate
O&M cost
Equivalent availability factor
Lost work days/cases
Equivalent forced outage rate (EFOR)
Combustion turbine starts/failures
OSHA lost time rate
First aid cases
Number of opacity exceedances
Opacity compliance (exceedances/
run hours)
Notice of violation
Reportable spills
Number of environmental incidents
SO2 and NOx emission rates
Number of
companies
reporting
7
6
5
4
3
3
3
3
3
3
3
3
3
3
Table 2. Popular fossil fleet-level
metrics used for compensation
decisions. Source: EUCG
Metric
O&M cost
OSHA recordable rate
Equivalent availability factor
EFORd
Lost work days/cases
Number of companies
reporting
4
4
3
3
3
POWER | May 2011
http://www.powermag.com
POWER May 2011

Table of Contents for the Digital Edition of POWER May 2011
