| Velco: Power in the Green Mountains |
| Featured Spotlights | |||
| Written by Meghan Flynn | |||
| Wednesday, 30 June 2010 | |||
 The transformation of this little transmission company resulted in a reliable model for the rest of the country, especially in terms of its positive relationship with the community.
But roughly six years ago, ISO New England, which is responsible for making sure the region’s internal electrical system and connections with other regions’ systems are reliable, identified roughly $8 billion worth of improvement projects necessary for the region’s systems to meet its reliability criteria during a peak load time. Every system needs to be able to continue operating even after the loss of two major pieces of equipment. That’s how John Donleavy, former president and CEO of Velco, explained it. The report from ISO New England was a key reason the company hired him in as COO in 2004 and planned to have him replace the retiring CEO a few months later.  John Donleavy, former president and CEO He had a solid foundation to start on. Donleavy spent 20 years working at Public Service Electric and Gas (PSE&G) of New Jersey before he was recruited to serve as the vice president of Commonwealth Edison of Chicago after the blackouts of 1999. There, he and his team oversaw 11,000 square miles of territory, covering 3.5 million customers. Donleavy likened the experience transforming that organization into a reliable one to changing the engine on an airplane while it’s flying. He said the only way he was able to succeed was with a committed, honest, transparent, and collaborative team. His first priority in coming to Velco was to create such a team there as well. “Velco was small operation then, it was full of young, bright people eager to learn and ready to work hard for the long haul; it was a perfect starting point.” Teambuilding When Donleavy arrived, the company had just finished the permitting and approval process for its first major construction project in almost 30 years. In order to hit the ground running but maintain internal control, the company hired a project management firm to jumpstart the project while Donleavy and his team carefully recruited experienced people interested in training and supporting a growing team. This hybrid team slowly unified new recruits, company veterans, and third-party contractors into a cohesive group. “The result of that process is a hard-working, high-performing team that works hard and succeeds time and again,” Donleavy said proudly. Today, Velco is valued at more than $1 billion, and its 150 full-time employees and roughly 200 contractors manage an annual budget close to $200 million. Based on Donleavy ’s experience in the industry and the new team, Wall Street granted the company an A-low credit rating in 2005. Last year, it bumped Velco up to an A-stable rating, which allowed the company to raise $135 million at 4.81%—the best deal on Wall Street since the recession began, according to Donleavy. And Velco’s team has continued to prove its mettle. The company earned The Project Management Institute’s Distinguished Project Award in 2008 for its Northwest Reliability Project (NRP). Donleavy said that project had a number of challenges at the beginning, but the team at Velco was able to deliver it at $1.3 million per mile, that project had the lowest cost per mile than any other similar projects completed in the US. Importance of public outreach That award is even more impressive in light of the challenge Donleavy and his team overcame at the beginning of the NRP. He said when he arrived, Velco had just finished the regulatory process required in Vermont; the Public Service Board had reviewed the company’s preliminary designs and plan for the 60-mile line from West Rutland to Burlington and granted it a Certificate of Public Good (CPG). That process took 45 days of hearings over 18 months in front of the board, during which individual landowners and the state’s department of public service, which is in charge of both electric reliability and protecting rate payors, testified about the project. After that, it was another two years of approving the final drawings before the entire project could get underway. “One of the most important changes we made for the future of Velco was establish a new way of going through the approval process: we took a pause before our next project and spent a full two years on public outreach,” Donleavy said. That meant talking about the challenge—reliability in Southern Vermont—with local business and political leaders, giving them an opportunity to contribute to the solution. That also meant producing final and complete drawings, rather preliminary designs, for the project before the Public Service Board hearings. And, lastly, that meant Donleavy met with landowners personally to negotiate compensation for the power lines Velco wanted to run through their lands. The result was one and a half days of hearings, rather than 45, and the company received its CPG about a year after Velco brought the project to the board. After winning approval, the company waited just two weeks for the construction permits to start on the Loop Connector Project, which, as of April, was close to 50% completed and will link Coolidge with the Vermont Yankee Power Substation with 60 miles of new line and add a $50 million substation to strength the system. “This process was crucial because it saved us time and money and showed our community that Velco listens and is fair,” Donleavy said. “Earning that reputation is almost a more important success than any financial ground we’ve gained in the last few years and will ensure a long and healthy future for the company.” |
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