Puerto Rico's electricity provider renews contract with AlixPartners

01 September 2016 Consultancy.uk

Puerto Rico’s main electricity provider, Prepa, is heavily in debt – the company owes creditors around $9 billion. In a bid to stave off default Preda has called in a number of external financial advisors, management consultants and lawyers to restructure its debt, including restructuring experts from AlixPartners. 

The Caribbean island of Puerto Rico, one of the US unincorporated territories, has found itself in financial strife. The territory is heavily in debt, to the tune of $70 billion or 68% of Puerto Rico's GDP, but lacks the sovereignty to deal with the issue itself – while US congress continues to kick the can down the road.

As the problem comes to a heads, certain segments of the highly indebted country, such as Prepa, the country’s main electricity provider, have sought to restructure their debts. Last year the company hired a range of external consultants and lawyers to develop a restructuring plan for the company’s $9 billion debt burden.

AlixPartners was, in 2014, called in by Prepa to restructure around $6.8 billion in debt. The consulting firm has worked with creditors as well as the company itself to create a way forward that would avoid default while improving operational efficiencies and cutting costs. According to AlixPartners’s Harry Rodriguez, President of the Preda’s Board of Directors, the firm has so far delivered $212 million in one-time cash relief and $202 million in recurring savings. A restructuring deal with creditors was also recently completed, which is set to, in exchange for a 15% haircut, prevent a default through a restructuring of the debt.

Electricity provider Prepa renews contract with AlixPartners

The restructuring deal with creditors involved a 3.10 cent per kWh surcharge for residents, on top of other previous price increases, which means costs have risen by up to 4.2 cents per kWh, or 22%, in less than a year – drawing a considerable backlash from residents and businesses.

Based on the successful collaboration to date, Prepa has extended its contract with AlixPartners until at least 15 December – the management consultancy has so far received more than $43.5 million for its support. “AlixPartners will remain with Prepa leading the restructuring process and ultimately secure a sustainable capital structure and long-term business plan. It is important for Prepa to keep the continuity and forward movement of the process uninterrupted at this time”, states a spokesperson of the energy company.

Questions about the fees being paid to consultants and lawyers working on the restructuring processes are though being raised by outside parties. In total more than $100 million has been paid, with AlixParnters and other consultancies earning well above the 1% of total debt seen as the normal rate for external advisory in a restructuring deal. 

The Puerto Rico Energy Commission has interested itself in the situation, stating that there is “concern that PREPA’s customers will be exposed to fees without limit” and is said to be exploring court options – however, the Revitalization Act passed by the Puerto Rico Legislature has stripped the commission of any means of reeling in potentially excessive fees taken in by external advisors.

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How data insights helped Network Rail improve the South-East route

11 April 2019 Consultancy.uk

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.