Energy is an open field for creative M/WBEs
Here’s what some top energy companies and their diverse suppliers think of current practices and future opportunities
“Utilities are always constructing something, so we’re always looking for suppliers for our projects.”– Ken Huff, Georgia Power
By Jon Boroshok
As the energy industry moves forward and adapts to new technologies and practices, it’s placing greater emphasis on diverse suppliers, especially minority- and woman-owned business enterprises (M/WBEs). It is generally recognized in the industry that supplier diversity benefits the utility companies and the communities they serve, and also pleases the shareholders.
The Women’s Business Enterprise National Council (WBENC, Washington, DC) is the nation’s leading advocate of women-owned businesses as suppliers to American corporations. A recent WBENC survey established a link between buying from women-owned businesses and generating sales. The survey disclosed that women view a corporation more favorably if they know it works with WBEs.
EEI supports M/WBEs
The Edison Electric Institute (EEI, Washington, DC) is an association of U.S. shareholder-owned electric companies and their international affiliates and industry associates worldwide. EEI is committed to inclusion of M/WBEs and other underutilized businesses, focusing on the business benefits of supplier diversity.
As part of this effort the group created two awards. The EEI supplier diversity excellence award recognizes member companies for outstanding achievements in advancing opportunities for M/WBEs; the EEI supplier diversity innovation award recognizes members for forward-looking approaches to supplier diversity development.
EEI spokesperson Ed Legge points to revitalized interest in diverse suppliers in areas like natural gas, energy conservation and renewable and “green” energy. For example, “smart” metering is big in electric distribution, Legge notes. It involves new equipment, installation,
and IT folks to work with the transmitted information, creating demands that can be met by diverse suppliers.
Alliant Energy: a more aggressive effort
Alliant Energy Corp (Madison, WI) has had a supplier diversity initiative for five years. The effort has been getting more aggressive recently, says Jamie Toledo, manager of supplier diversity and development. In fact, the program received a “One Iowa” award, created by the state to highlight diversity efforts.
Alliant Energy is a public utility holding company serving more than 1.4 million customers in Iowa, Minnesota and Wisconsin through 9,700 miles of electric transmission lines and 8,000 miles of natural gas mains. The utility is more than a hundred years old, and employs more than 5,000 people.
Alliant’s supplier diversity program “isn’t just a ‘big warm fuzzy’; it makes real business sense,” Toledo declares. “It’s all about economic development and survival.”
Alliant has been looking for suppliers in growing areas like renewables, environmental engineering, retrofitting, intelligent metering and handheld systems. The utility gains as diverse suppliers competitively bid for business and focus on cost efficiencies. The company also benefits from the creativity and new perspectives the M/WBEs may offer: use of Lean Six Sigma tools, for example.
Alliant Energy has had good experience with small and diverse suppliers, Toledo reports. Last year, when the company decided to put on its first supplier diversity symposium, more than 200 current suppliers and hopeful vendors came to showcase their products and services to Alliant buyers and tier-one suppliers.
Meet WBE Smart Solutions
As a certified WBE, Smart Solutions (Madison, WI) provides knowledgeable contractors to work at Alliant, including consultants, techies to handle QA and enterprise IT; even product managers.
President Jackie Mortell started the company in 1996 with Alliant as her first client. Alliant was willing to work with the small start-up company, and given the opportunity to compete, Smart Solutions has grown to better than eighty employees.
Three years ago Smart Solutions was certified as a WBE. The certification is a big advantage, Mortell reports, as more and more companies have policies to help WBEs get a foot in the door. The designation also helps her company compete for federal and state contracting.
Mortell is active in hiring women for the networking service side of her business, noting that women are underrepresented in this area.
Entergy: a firm commitment
Entergy Corp (New Orleans, LA) is an integrated energy company and the second-largest nuclear generator in the U.S. The utility delivers electricity to 2.7 million customers in Arkansas, Louisiana, Mississippi and Texas. It has annual revenues of more than $11 billion and 14,300 employees.
Entergy has made a firm commitment to supplier diversity. “It’s about economic development, and a win-win situation for us and our suppliers,” says Madlyn Bagneris, supplier diversity manager. “As small business grows, Entergy grows.”
Back in 1987, Entergy was the first electric utility holding company in the nation to commit to the NAACP’s “fair share” principles. It spent $1.7 billion with M/WBEs between 1996 and 2005. Its supplier diversity initiatives have received important awards, including the New York Urban League’s champions of diversity award and the EEI’s supplier diversity award.
In its mission to “identify, pre-qualify and promote the utilization of diverse businesses capable of meeting Entergy’s various procurement needs,” the company has established positive relationships and increased its visibility in its diverse community, locally, regionally and nationally, Bagneris says.
But the search for diversity can add extra steps to the vendor selection process, she adds; finding suppliers with large enough capacity can be a challenge. The suppliers must be capable of growing and developing enough to work in several states. So Entergy looks for companies it can help grow into larger companies.
So far, successful M/WBE vendors have provided everything from office supplies to electrical components and construction. The company even looks for nontraditional suppliers to meet its needs for clearing the utility right-of-way.
PG&E: a win-win advantage
Pacific Gas and Electric Co (PG&E, San Francisco, CA) is among the country’s biggest utilities providing both natural gas and electricity. It serves 15 million customers in central and northern California.
With formal supplier diversity policies in place since 1980, PG&E has a dedicated staff looking for registered or certified businesses owned by women, minorities and service-disabled veterans.
Tita Gray, manager of supplier diversity, says the utility can positively impact the economy in areas it serves by helping diverse businesses grow. About half of the customers in PG&E’s service territory are minorities, she notes. “The suppliers are also our customers and shareholders. It’s a win-win advantage that provides economic development to businesses and families,” Gray declares.
The company is currently undertaking three significant new power generation projects with a combined budget of $860 million. This will create new supplier diversity opportunities, but the challenge is “finding diverse suppliers large enough to work on some of PG&E’s capital-intensive projects,” Gray cautions.
PG&E does supplier diversity training across the entire company, including mentoring and networking and helping small and medium-sized businesses learn how to build capacity.
The utility is achieving the highest levels of diversity spending in the 26-year history of the program. Last year saw $589,847 million, a $100 million increase over 2006. Better than 21 percent of PG&E purchases for 2007 were through diverse suppliers: almost 15 percent with MBEs and 6 percent with WBEs.
Gray says that future opportunities for diverse suppliers will probably include green sustainability, overhead and underground construction, engineering and energy efficiency.
Progress Energy: achieving niche solutions
Progress Energy (Raleigh, NC) is a Fortune 250 energy company with more than 21,000 mw of generation capacity and $10 billion in annual revenues. The century-old company includes two major utilities that serve more than 3.1 million customers in the Carolinas and Florida.
Progress Energy has a supplier diversity organization within its corporate service department. Sherrie Duncan, its manager, says supplier diversity improves business performance and provides a competitive advantage. Diverse suppliers are often smaller, nimbler companies, offering niche solutions that major suppliers can’t always provide.
Peta Vincent-Williams, manager of strategic sourcing, adds that Progress needs this kind of innovative thinking. She sees small suppliers coming to Progress with innovative ideas; the utility is also investing in emerging technology research companies.
Progress tracks the success of its diversity efforts, targeting a goal of 9.8% of spending done with M/WBEs. Duncan says the utility is aiming for a supplier roster as diverse as its customer base.
Mesa Associates: power delivery and generation work
Mesa Associates, Inc (Madison, AL) is a lively M/WBE supplier to Progress Energy. Led by Ranjana Savant, widow of founder C. N. Savant, the firm provides architectural and engineering design and services, consulting and surveying.
Mesa began in 1988, starting with projects for the Tennessee Valley Authority (TVA). About five years ago Mesa and Progress were introduced at a supplier diversity event run by EEI. Mesa started in power delivery work for Progress, and is now also working in power generation.
Mesa VP Tim Cutshaw says the relationship began with small jobs in the Carolinas and has expanded into Florida. Typically, fifteen of Mesa’s 400 employees are working for Progress at any one time. Mesa also does work for TVA, Duke Energy, Southern Co and E.ON U.S. “A lot of people do what we’re doing, but not a lot of minority firms,” Cutshaw explains.
Savant notes that diverse suppliers tend to be more responsive and focused because they’re likely to be given just one chance to succeed. Besides, being a smaller company, there’s often a greater sense of “ownership” on the part of employees.
Southern Co: “Supplier diversity is the way we do business”
With 4.3 million customers and more than 42,000 MW of generating capacity, Southern Co is a premier energy company serving the Southeast. It owns and operates Alabama Power, Georgia Power, Gulf Power and Mississippi Power. Southern is also involved in fiber optics and wireless communications.
The company is committed to supplier diversity. “It’s the way we do business,” says Ken Huff, supplier diversity manager at Georgia Power and chair of Southern Co’s four-state diversity council.
Huff says the key driver is not compliance but economic development. Southern Co looks for the best and widest-ranging suppliers to compete on quality, reliability and price, and to help give back to the communities it serves.
The four Southern operating companies and Southern Nuclear spent a record $676.7 million with diverse suppliers in 2007.
The operating companies bring in diverse suppliers, and may mentor them to help them compete. Formal educational opportunities are available through the Georgia Governor’s mentor program and Dartmouth College’s Tuck Minority Executive Program.
“This is a holistic approach to supplier development and recruitment,” Huff notes. “Utilities are always constructing something, so we’re always looking for suppliers for our projects. But all suppliers, diverse and otherwise, must be competitive.”
|S.L. King & Associates: “Do what you’re comfortable with”
|S.L. King & Associates Inc (SLK, Atlanta, GA) started working with Southern Co on the generation side of the business and is currently doing retrofit design. Stan King, SLK’s president, started the consulting firm in 1996, and began to focus on utilities about five years ago.
S.L. King employs a hundred engineers, designers and support staff. Many, like King himself, come from a utility background. The company works in systems and infrastructure, including water and wastewater services.
King sees great opportunities for diverse suppliers in the utility industry. “But you can’t afford to overstate your capabilities. Don’t oversell what you can do,” he warns.
And by the same token, don’t spend too much time chasing work you probably won’t get. “You need to identify opportunities, risks, and solutions. There’s no room for mistakes,” he advises.
Jon Boroshok is a freelance writer in Groton, MA.
SOME ENERGY COMPANIES WITH ACTIVE SUPPLIER DIVERSITY PROGRAMS
See websites for M/WBE registration and current opportunities.
|Company and location
|Regulated electric and natural gas service for Midwestern customers
(London, England; Houston, TX)
|Oil, gas and energy
(San Ramon, CA)
(New Orleans, LA)
|Integrated energy; electric and nuclear power generation
|Pacific Gas and Electric Co
(San Francisco, CA)
|Natural gas and electricity
|Energy for the Carolinas and Florida
|Electricity for the Southeast
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