Operational Planning – Utility Modeling Series

Utility Modeling Series
Operational Planning

4m Video

Utility Financial Modeling – Streamlined Operational Planning in Synario

Operational planning and utility rate analysis is a critical step in forecasting sustainability for a utility company. Oftentimes, these two planning functions are performed within a spreadsheet-based financial model, which can limit or completely stifle the ability to analyze the multitude of future scenarios that a given utility could face.

In this video, we break down how Synario helps utility companies model their toughest operational planning and rate analysis questions.

The first half of the video shows how Synario makes it easy to set rate assumptions for multiple scenarios, then toggle those scenarios on and off to watch how they impact the operating statement.

In the second half of the video, we review how Synario can allow utility finance professionals to back into their required rate growth percentages based on target debt and cash-on-hand metrics, as well as impacts from changing capital improvement plans and more.

Be sure to check out our last video covering capital funding and planning for utility companies (it will help in understanding the capital component to this video).

You can learn more about how Synario helps utility companies plan their future with more clarity and insight by visiting our dedicated utility financial modeling software page.

Video Transcript

Welcome back to another Utility-focused Synario demo.

In our last video, we covered how Synario streamlines capital planning for utility companies. In this video, we’ll dive into operational planning, and how Synario helps manage alternative outlooks on rate assumptions.

As a disclaimer, this video uses a generic utility model, which may not look exactly like your utility model. However, know that financial models in Synario can be completely customized to meet your current and future needs, whatever they may be.

Since the future isn’t clear, it’s critical to analyze utility rates with different outlooks in mind. Furthermore, rates are interlinked with capital funding and planning, so analyzing different rate scenarios over time can help your utility better fund its capital initiatives while minimizing outside funding sources.

When capital improvements and projects are completed, they can help utilities better reach their customers, or open up new customers entirely. This in turn affects rates, which affects capital funding, which affects capital improvements.

Synario offers a platform where your capital planning and operational planning are interlinked. Operational planning scenarios can be dynamically combined with capital scenarios, and vice versa, offering a full field view of your financial future.

Let’s jump into our operating statement and its various assumptions. On the right side, we have a panel with our operating statement, including custom ratios and metrics at the bottom.

On the left side, we have our operating assumptions for various utility rates, including commercial, industrial, and residential. Each rate includes a growth rate, discount, and demand growth percentage. Each assumption is editable, so growth rates can be set at constant or variable rates for any projected year.

Let’s open to an alternative assumption set and create a slightly different operational outlook. We can select the alternate one assumption set and then set our operating statement on the right to show the alternate one projection.

Once we save the updated assumptions on the left, you can see the outputs change on the right side. This new outlook can be saved and then directly compared to the baseline. We can even isolate a given year and view only the difference between our alternate one scenario and our baseline.

Synario also includes dashboards that allow utility finance professionals to back into their required rates based on target metric assumptions, capital improvement programs, and more. On this slide, we have our various target metric assumptions on the top left panel, including debt service coverage and days cash on hand. Below that, we have our different customer types, with on/off switches to include or exclude them in our rate analysis.

The larger panel on the right side shows our rate analysis with two different scenarios on top. We will be using baseline and expanded capital improvement program scenarios for this example. By turning on the metric solver, Synario will automatically calculate the rate growth percentages necessary for our baseline scenario, which includes a few capital projects and funding sources.

Let’s flip to our expanded CIP scenario, where we will turn on a facility expansion capital initiative to include alongside our baseline CIP. By selecting the expanded scenario in our scenario toggle, the software will automatically update our rate growth percentages to accommodate the new funding and project needs.

“What if our facility expansion goes over budget?”, with a few clicks, we can account for the increase in budget in our expanded CIP scenario. Additionally, we can turn off a customer type, like residential variable charge, and our rate growth rates will update to show results without that customer type.

In a spreadsheet-based financial model, this type of rapid analysis would be nearly impossible. In Synario, it’s not only possible, but streamlined and easy.

That’s it for this video. Join us for our next video where we will continue to explore how Synario helps utility companies model their financial future.

As always, if you have questions or would like to see how Synario could benefit your unique utility, reach out to us at info@synario.com.