A new way of working at Australia’s Western Power

Western Power transmits and distributes electricity to a large section of Western Australia. Over the past 18 months, the company has seen an extensive transformation led by new CEO Paul Italiano.

“Western Australia is a small space. But what we’re trying to do is to tap into global best practice,” he told Performance. “Small” is a relative term. Western Power covers an area of about 10,000 square kilometers, but with only around two million customers, demand peaks at about 4,000 megawatts (MW).

When Italiano became Western Power’s CEO, the company was facing a number of challenges that needed to be tackled in order for the organization to meet the expectations of its customers, stakeholders and regulators.

Implementing the new operating model has really been about encouraging people to buy into working collaboratively - like a well-oiled machine.

Under its previous operating model, Western Power’s direction and purpose had not kept pace with a changing customer environment. The workforce of highly trained electrical engineers was extremely capable but, overall, there was a lack of cohesion. Areas of specialism built up that were sometimes at odds with the function of the business. Key processes became inefficient and ineffective, and the business lost focus. In addition, decision-making was not always being driven by business acumen. This meant that technological resources weren’t being exploited to drive efficiency and value, and the firm’s key metrics and priorities became misaligned. Finally, there was a lack of clarity about customer and stakeholder needs.

Western Power was also facing significant external pressure. The company had a tarnished image, was in the press for all the wrong reasons, and was struggling to meet the terms of its regulatory contract. Western Australia’s Economic Regulation Authority’s funding forecasts also fell substantially below the company’s projected requirements, amounting to a total shortfall for 2013–17 of AUS$1.08b (US$0.96b).

To address these problems, Italiano initiated an ambitious program of change designed to improve key operational processes and work practices, and realize cost savings. The full article examines how Italiano has approached achieving these ambitions.

Two years on, and Western Power is really still only at the beginning of its change process. But it’s remarkable how tangible the results of the new strategy have been already. You only have to glance at the company’s annual report to see this. In the financial year 2012–13, Western Power reduced operating costs by AUS$25.5m (US$22.7m). On top of this, the time lost to workforce injury is down 50%. Reinforcement of the aging wood-pole infrastructure is up an incredible 96%. In addition, the company has established 23,993 new customer connections.*  “It’s amazing what happens when you actually get a clearer focus on what’s core to the business. And when you do that, performance does start to improve,” Italiano says.

* Western Power Annual Report 2013, available at www.westernpower.com.au/documents/reportspublications/annualReports/wp-annual-report-2013.pdf, accessed 15 November 2013.

The complete article was written by:

  • Ian Rakich
    Partner Advisory Western Australia Power & Utilities Leader EY, Australia
  • Paul Italiano
    CEO Western Power, Australia

Read the full articlepdf420.45 kB

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