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Energy without limits February/ March * 2011 N潞21
DISTRIBUTION 2012 Program prepares EDP for the future SPOTLIGHT IN DISCUSSION The advantages of outsourcing in the different markets
Directors speak about the challenges of Distribution
SOCIAL NETWORKS EDP in the new communication platform
WHO IS WHO Ant贸nio Sarmento speaks about the Windfloat project
EDP WAY Program takes stock of the last two years
RESULTS Profits up 5% from 2009
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editorial
on EDP and social networking: Like! t was inevitable. The impact of online social networks on society has led companies to rethink their paradigms and develop new connections. The image-building of a company and the products/services it offers has become all-encompassing. It is a new world, one that is in development, and for which we must be prepared. Like it or not, the company is commented on, either positively or negatively. And if it is not present in the social networking universe, its capability to react is more limited. This is another challenge that calls for thinking “outside the box." Social networks are like doors that open to the whole wide world, waiting to be explored and conquered. Several studies indicate that the number of Internet navigators interacting in social networking will exceed 800 million by 2012, making it increasingly difficult for a company to monitor all the content entering and leaving its network.. Which means, it will be increasingly difficult for a company to monitor all content entering and leaving its network. And if consumers are strong enough to support or eliminate a brand, employees are also key to building its image: one must be aware of the dangers posed by social networks, which can originate from within the company itself. One simple comment can destroy what took so long to build. Company rules for the use of social networks are, in this sense, an essential tool for every employee of the EDP Group. This Best Practices manual, which can be viewed in full on the company Intranet, seeks above all to protect our corporate image, establish rules, set limits and guide employees in a new means of communication, one that we are all still learning. EDP Group, as a recognized international player, could not be excluded from this form of global communication. Businesses cannot be “social�, or they will be left behind. We want to become always closer to our employees, customers, suppliers and investors, demonstrated the same policy of openness and transparency that has long characterized our company. What are you waiting for to become our friend?
I
Paulo Campos Costa Brand and Communications Manager
We want to become always closer to our employees, customers, suppliers and investors, demonstrated the same policy of openness and transparency that has long characterized our company on 3
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index February | March Implementation, commitment, simplicity and innovation — these are the main messages of the 2012 Program, the goal of which is to prepare EDP Distribuição for the major challenges of the coming years
56
‘On’ is a bimonthly publication Property EDP – Energias de Portugal, SA Praça Marquês de Pombal, 12, 1250-162 Lisboa Tel: 210 012 680 Fax: 210 012 910 gmc@edp.pt Director Paulo Campos Costa
4 on
Photo Essay The photography group from Central Térmica de Aboño shares some of its portfolio
Publisher Península Press SL Rua dos Correeiros 120, 4º esq , 1100-168 Lisboa Executive Director Stella Klauhs info@peninsula-press.com Editors Eduardo Marino (editor), Joana Peres (staff writer), Art Marta Conceição, André Noivo Photography Hugo Gamboa, José Reis e Adelino Oliveira, iStockphoto, SXC Copydesk Ana Godinho EDP Coordination Margarida Glória Complimentary distribution Portugal – 23,000 copies; Spain – 2,000 copies; Brazil – 2,500 copies; Renew – 500 copies Lisgráfica - Impressão e Artes Gráficas, Rua Consiglieri Pedroso, nº90, Casal de Sta. Leopoldina, 2730-053 Barcarena - Portugal Telf. +351 21 434 54 00; Fax. +351 21 436 01 83 Exempt from registration with the ERC, per decree 8/6, article 12, item 1-a
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i n d ex
18 EDP Group staff made a deep commitment to the Collecting Goods Campaign and managed to gather 73 tons of donated goods! See the results in Portugal, Spain and Brazil
6 forum We asked EDP employees which area they thought would most contribute in the next five years to the Group's sustainable development
7 stock 8/9 market Highlights from the second vendor meeting in Gaia
26
10/17 edp culture
on cover EDP Group Distribution Picture
An in-depth look at the EDP Way program, EDP social networking and the Group's 2010 results are some of the topics not to miss!
22/25 innovation HC Energía is responsible for the first fully operational micro-cogeneration facility in Asturias
Who? 42 Who’s António Sarmento, president of the board of directors for Wave Energy Center
46/48 human capital Being an “EDP Leader” reinforces leadership skills
50/51 our energy The news that connects production centers to their surrounding communities
64 in focus Joaquín Suárez Saro, HC Energía’s Director of Regulation and Institutional Relations
34 Spotlight: Interview with Miguel Stilwell D’Andrade, Ângelo Sarmento and João Torres
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forum* R E S E A R C H , D E V E LO P M E N T A N D I N N OVAT I O N · A n ‘ O n ’ q u e st i o n
R&D+i At EDP, the area of Research, Development and Innovation (R&D+i) is aligned with its strategic pillars of growth-oriented development, superior efficiency and controlled risk. The R&D+i team is working to achieve these goals by implementing projects that contribute to the Group's plans for sustained growth; seeking solutions to improve production processes; and developing initiatives that mitigate EDP’s exposure to risks, namely, regulatory, environmental and business risks. In your opinion, which area will contribute most in the next five years to the Group's sustainable development?
WE ASKED OUR EMPLOYEES AND RECEIVED 563 ANSWERS 30 25 20 15 10 5 0 Renewable Energy
Energy Production
Energey Efficiency
Smart Grids
Electric Mobility
Markets
Technologies
• Renewable energy (offshore: wind and wave; solar): 161 answers 28.6% • Energy production (clean power generation and CO2 capture and containment): 112 answers 20% • Energey efficiency: 96 answers 17% • New energy distribution technologies (“smart grids” and “micro grids”): 93 answers 16.5% • Electric mobility: 65 answers 11.5% • Markets and value-added services – “marketing”: 21 answers 3.7% • Information technologies – “webization” of the business: 15 answers 2.7%
COMMENTS "Taking into account the new environmental philosophies and a more efficient sustainability policy, considering the constant high burden of oil prices, I think that electric mobility will most definitely move forward.”
"I think power distribution, with its related losses, is the area where efforts should be concentrated to provide a more sustainable development, although I have no doubt that within the next five years we will see it develop.”
"It's very important that all the energy that is produced be managed properly (given some smart grids), and that its distribution is made in the same way."
"Certainly I think smart grids are the future, as the Internet was for the communications sector, as well as the globalization of business and knowledge. Its large boom will, maybe, not happen within the next 5 years, but certain steps will be taken for this to become a reality for many ‘prosumers’."
"The focus should be on remodeling the distribution grid to enable a progressive start-up phase (with measurable results) for smart grids and micro grids which potentiate innovative value-added services for EDP customers." 6 on
"There are more areas that could contribute to sustainable development, one of them – Human Resources –
since sustainable development implies a good and efficient operation of the company and, to that effect, we have to take into account the employees who make it possible. "The socio-political instability of oilproducing Arab nations and the need to lower CO2 emissions to preserve the ecological balance is essential to resorting to energy production through renewable sources, which will ensure global energy and economic business sector sustainability." "The production of energy, especially its water component, will certainly contribute to the sustainability, in the medium and long term, of new practices of energy consumption.
Over the next five years the effects at this level may still be incipient, but they will become noticeable with the introduction of industrial service power reinforcements coming out of Picote, Bemposta and Alqueva. The optimization of the generation system (namely at the level of its dichotomy: wind generation / hydric production (reversible system) will make its mark." "I believe given market liberalization, that it is desirable to suffer the lowest loss of customers, especially important clients, and I think that the ‘Markets and Value Added Services-marketing area’ may have a great impact on the sustainable development of the Company.”
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t h e st r i n g s o f t h e m a r ke t
EDP Portugal 2.90
3.0
2.5
2.0
1.5
1.0
0.5
0.0 Jan/03/2011
Feb/03/2011
Mar/03/2011
Amounts in Euros (from January 1 to March 3)
EDP Brazil 40
39.45
35
Stock market evolution between January 18 and March 9
30 25 20 15
Analyst
Date
Recommendation Price
USB
Mar/09/2011
Neutral
2.75
N+1
Mar/07/2011
Neutral
2.85
BoA - Merrill Lynch
Mar/07/2011
Buy
3.15
JP Morgan
Fev/25/2011
Accumulate
3.5
5
BPI
Fev/25/2011
Hold
2.75
4
Goldman Sachs
Fev/17/2011
Buy
3.6
3
BES
Fev/17/2011
Buy
3.3
2
Fidentiis
Fev/16/2011
Hold
2.91
1
Collins Stewarts
Jan/21/2011
Buy
3.25
Société Generale
Jan/18/2011
Buy
3.00
10 5 0 Jan/03/2011
Feb/03/2011
Mar/03/2011
Value in Reals (from January 1 to March 3)
EDP Renewables
4.55
0 Jan/03/2011
Feb/03/2011
Value in euros (from January 1 to March 3)
Mar/03/2011
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market EDP Business
Second vendor meeting in Gaia
More productive relationships
F
or the second year in a row, EDP Group sponsored “Vendor Day.” EDP’s investment plan was presented at this event, offering vendors the capability to prepare in advance for tenders to be launched either in Portugal or abroad. For 2011 and 2012, the existing investment plan remains in place: valued at the equivalent of around 2 billion euros per year, of which 1.5 billion are assigned to Portugal. And, in response to the planned investments, vendors have a key role to play. Nowadays, Portuguese companies already represent the largest segment of EDP providers: in one year, this figure increased 10 percent (from 20 to 30 percent). “Portuguese companies are more prepared, more informed, so given this situation, they can plan their resources better,” said CEO António Mexia. Over the past three years, EDP has supported the internationalization of more than 100 Portuguese companies, with a volume of inquiries approaching the level of 500 million euros. In Vila Nova de Gaia, about 200 vendors envisioned new business opportunities — in the areas of distribution, production, renewables
and gas — not only in Portugal, but in other locations where the Group is active. During the meeting, Nuno Alves, EDP’s chief financial officer, explained that the Group's objective is also to encourage partners in Portugal to become international. According to Luis Marques Ferreira, of EDP Valor, between June 2009 and December 2010, 72 Portuguese companies were contacted by EDP regarding doing business outside of Portugal and have since accepted the internationalization challenge. But business deals must also be socially sustainable. As such, EDP Group and its vendors have committed to involving the communities where they do business to promote job creation and better living conditions. To that end, Sérgio Figueiredo, deputy director of the EDP Foundation, launched a challenge to the Group's vendors: "Let us share a part of ourselves." Through this volunteer initiative, each person at EDP has the capacity to help improve conditions at designated health facilities, through the sharing of materials, technical support, team management, and contribution of labor and monetary funds.
HC Energía: Customers trust us! With a retention rate of 94 percent, HC Energía's customers are the most faithful in the Spanish energy sector. This is one of the conclusions of the National Energy Commission’s final report on the analysis of purveyance to each of the major distribution groups in Spain. 8 on
Despite the ability of end-users to contract their energy supply with a company other than the distributor, the majority prefer to continue with HC Energía. Moreover, HC has entered the market distribution competition: its market share is 23 percent in Spain. "On" holds 5 percent in Iberdrola and has a 1 percent sha-
re in Gas Natural Fenosa. Data from this same report indicate that no other electric utility enjoys such a high level of customer loyalty, with HC exceeding by 8 and 13 percentage points Endesa and Iberdrola, companies that retain 86 percent and 81 percent, respectively, of customers in their natural environments.
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m a r ke t
Naturgas: + than 100,000 customers in the Basque Country Naturgas Energía recently surpassed the 100,000 number of "dual" home customers (gas and electricity), this time in Basque Country. In addition, the company has more than 116,000 “Funciona” maintenance contracts for light and gas services. Naturgas was the first operator to offer the market dual supply services, i.e. an integrated offer of gas and electricity in the same bill, added to the “Funciona” service, which covers maintenance and repair electric and gas installations.
The last National Energy Commission’s report, issued November 2010, highlights Naturgas Energy’s and HC Energy’s services offering as one of the best in the Spanish market. In another report, the Minority Electricity Market Supervision report, CNE notes that, "the company with the highest percentage of dual supplies is EDP Group (HC Energía and Naturgas Energía)." With this dual service, customers earn points that can be exchanged for energy or gifts through the loyalty program.
New impulse in EDP Services
The renewed EDP Services kick-off meeting took place at the end of 2010. The goal of the meeting, which was attended by all EDP Services employees, the board of directors, as well as the executive management team of EDP Commercial, was to initiate a new stage for EDP Group’s energy services exploration and business development arenas. As part of the day's discussion, EDP Services’ strategic and organizational model was introduced: in particular, this model reflects the perspective of macro-processes along the value chain of this new Group business arena in order to support new priorities and the inherent challenges associated with growth, as well
as any operational initiatives already under way. Subsequently, in January 2011, EDP Services presented its business plan for the 2011-2012 Biennium. All company personnel attended this event, through which they were able to meet and explore the main objectives and initiatives of EDP Services, as well as the respective business units for that same period. In recognition of everyone’s effort and commitment and in a spirit of celebration, gifts were handed out to all employees who contributed to the success and recent growth of EDP Services, which saw a tripling of sales in energy services in the last three months of 2010 alone. These sessions led to greater alignment with, and commitment from, the employees of EDP Services employees in relation to the company's strategy, which consists of a set of ambitious objectives and is leveraged by the growing investment and commitment of EDP Group in the area of energy services. Learn more at: http://avs3.sl.pt
More than 1 million MWh HC Energía’s hydropower generation surpassed, for the first time, more than 1 million MWh. In 2010, the hydraulic station’s power generation totaled 1,053,553 MWh, which represents an increase in production of more than 10 percent over the previous record of 940,481 MWh achieved in 1996. The power generation station is the same, but the difference is that 2010 was a year with lots of rainfall. However, the growth is due mainly to the excellent behavior of the production stations and of the entire team in the Generation area.
Solidal: EDP Services New Success Case Due to the acquisition of a new machine for the production of Very High Voltage (VHV) copper cables, as well as the creation of a new testing laboratory, Solidal contracted the increase of EDP Serviços (EDPS) voltage level in order to go from the Medium Voltage (MV) to the High Voltage (HV) level. EDP Services designed and built a substation with a 6 MVA 60 KV/15 KV TP and a 60 KV mixed line with an aerial span of about 5,900 meters in iron and concrete posts with 160mm2 aluminum/steel conductors, and an underground line with about 150m of 630mm2 mono-polarity LXHIOLE cable. Subsequent to the voltage increase, Solidal saved the equivalent of about 250,000 euros in annual tariffs. The substation started operations in December 2009, and EDP Services is in charge of maintenance and quality control, monitoring activities to identify solutions aimed at improving energy quality. Solidal, which is based in Esposende, produces and markets electrical conductors.
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culture edp the most efficient methods and the values that serve as example
Record profits of € 1.079 billion
+5%
Profit: (1.079 billion)
+7%
EBITDA: (€3.613 billion in 2010) Savings: million
+159
Install d Capacity: (21.990 MW)
+7%
EDP profits in 2010, increased 5% over the previous year up to € 1.079 billion, a result above the € 1.061 billion forecasted by several analysts These are EDP Group’s best results ever, excluding extraordinary earnings! “These results were obtained within a very difficult market framework," as underlined by António Mexia, EDP’s CEO, at the presentation of results on March 3, 2010. More than half of the Group’s results, (55%) originated in the 12 countries where the company operates, Brazil in particular, through a currency appreciation of the Real vs. the Euro, and the resumption of electricity production in 10 o n
this country - for the gas regulated market and the United States, a country where EDP is the third largest operator in the area of renewables. In the presentation of results, António Mexia emphasized "a significant reduction in the cost of debt" which allowed the stabilizing of the Group’s financial results. EDP closed 2010 with a gain of € 1.079 billion (an increase of 5%) and an EBITDA of € 3.61 billion, up 7% from previous reference point. António Mexia valued the savings
achieved by the group. "Our goals in terms of efficiency have been achieved two years ahead of time,” said the CEO of EDP whose savings reached € 159 million in 2010. As to debt, EDP currently holds € 16.3 billion of net debt estimated at a value "slightly below" that level, according to Chief Financial Officer, Nuno Alves. The CEO’s outlook for the current year is optimistic: "We took the necessary measures in advance, which allowed us to look with confidence towards 2011."
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6
c u l t u re e d p
Excellence Awards 2010 The Portuguese Association of Communications and Public Relations Consultancy Companies launched the first edition of the Excellence Awards 2010, which rewards the best works and best corporate communicators and public relations professionals. EDP took the stage six times. See what categories were distinguished by APECOM: • António Mexia, EDP’s CEO: Communication Personality of the Year
• Project "Your energy": Energy, Environment and Ecology category; • " EDP’s Annual Report": Financial Communications, Mergers and Acquisitions category; • "The Alqueva Dam Concert": Events category; • "edpON, Corporate TV": Corporate TV & Video category; • "ON Magazine": Business Publications category.
Information technologies meet in Óbidos
Óbidos village was chosen to host ISM’s (Information Systems Management) Iberian Conference held, on December 9 and 10, where 2010 results and the new challenges for 2011 were presented to the many employees of the Portuguese and Spanish operations. On the first day, António Vidigal, EDP’s Innovation Director, provided the welcome address to the event’s participants by giving a lecture on innovation and technology, which was followed by a dinner. The work sessions began early the next day with the introductions of the various leaders and area managers, among them, ISM’s Corporate Director, Vergílio Rocha, and Communications Director, António Venâncio. During the mid-morning session there was still time for a leisure activity focusing on social networks. The tables decorated with depictions of social networks and technology in reference to ISM’s contemporary and technological context were brought to life when employees and management created a profile and imagined themselves occupying
"The focus on improving what has been done so far on an integrated Iberian platform is one of ISM’s objectives for 2011", Jorge Cruz Morais different job positions, with the possibility of choosing a "like" and "comments" in the different responses. This meeting spawned new challenges This year, ISM’s mission is, not only to reduce costs, but also to acquire value for the entire EDP family, always bearing in mind the use of the Best IT Practices. The information, quality, safety, efficiency and the promotion of a unique group culture represent ISM’s values. Jorge Cruz Morais, ISM’s Portfolio Manager, closed the meeting with a special emphasis on the strategic framework, revealing the concerns and expectations associated with the IT function within the Group.
Formacão indoor atravessa o Atlântico EDP embraced the challenge of building a thermoelectric project in a new location—a coal plant in Pecém, Brazil, whose model was, of course, inspired by the Sines Station. The Sines Thermoelectric Power Production Produção Termoelétrica de Sines – PTSN unit was called upon to actively participate in the training of the Brazilian interns, who will be geared to performing two distinct functions: Room and Field operators in the Pecém Thermoelectric Station in the Brazilian state of Ceará. The training took place between August and October, by employees who perform similar tasks and involving others who, given their characteristics and areas of activity provided a richer and multifaceted transmission of knowledge.
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c u l t u re e d p
Quality evaluation
Azucena Viñuela, diretora corporativa da DAI recebeu o certificado em Madrid, por ocasião das Jornadas de Auditoria Interna promovido pelo Instituto de Auditores Internos de Espanha.
Azucena Viñuela, corporate director of the IAD-Internal Audit Department was certified in Madrid at the time that the Internal Audit Conference, organized by the Internal Auditors of Spain, took place. The Iberian IAD-Internal Audit Department received a certificate from The Institute of Internal Auditors (IIA), of the U.S., as a result of the quality evaluation of the Internal Audit Function for the EDP Group, HC Energía, Energía Naturgas and EDP Renováveis. The evaluation was conducted by a team of independent experts using direct questionnaires and individual interviews with about 140 EDP employees, most of which have responsibilities at the Senior Management level. The rating given for the category "Generally Complies"
(GC) corresponds to the highest rating awarded by the IIA. Regardless of the maximum classification obtained, it was possible to capture areas needing improvement that will be implemented in the next business plan. This—a certificate that was only made possible thanks to the strategic choices implemented by the IAD, the adoption of international job performance standards, the unconditional support of supervisors and the commitment and determination of all employees. The future will be punctuated by the ongoing monitoring and maintenance of the quality required in tandem with the Group's evolution and function in order to continue to provide appropriate comfort to supervising entities and customers.
SHARE THE PRESENT, PREPARE THE FUTURE
Developing Value "We will not teach you how to wear the “jersey”, we will show you why you should feel proud to wear it" was the message delivered to every EDP Valor young person together with a t-shirt, which left them thinking! "How do you explain an EDP bill?" or, "What are the differences between the various technologies for producing electricity?" These are some of the questions asked of our employees and to which they sometimes do not have the best answer. The “Desenvolver Valor” (Developing Value) Program seeks to integrate and provide the participants with tools, which will enable them to better understand the Group and put into practice new attitudes and behaviors. On the first day, these young people attended a presentation of EDP Valor “seniors" who dispensed information about the Group and participated in the "Techniques for State-of-the-Art Presentations" workshop. At the end, with the groups identified by the colors of the tshirts distributed among them, the challenges were drawn. Three weeks later, the Ribatejo Station was the venue picked for the presentation of the works. The young people answered the challenge questions put to them using the information and techniques they had received in the first session. WHO? 60 young people aged up to 36, employees and non-employees, divided into10 heterogeneous groups 12 o n
The macrostructure of the EDP Soluções Comerciais (EDPSC) met in Evora, on December 3rd to take stock of 2010 and present the Operational Plan for 2011. 2010 - Challenge Overcome
João Matos Fernandes, an EDPSC Director, took stock of 2010 activities, highlighting that they met their targets—a result of everyone’s contribution and involvement. With the presentation of the 2011 Operational Plan he placed the challenges and the following strategic commitments on the agenda: 1. Pursue operational costs efficiency 2. Extend Contact Center operation to Iberia 3. Drive forward a more efficient and effective Contact Management 4. Develop the webization of the relationship with the Customer 5. Align, motivate and involve employees "Solutions are in People”
Manuela Silva, manager of EDPSC, presented the “People Plan”, a program outlining a set of measures organized by five aspirations: 1. Align employees in tandem with strategy 2. Reinforce key skills 3. Retain the best performers 4. Timely attract the right skills 5. Increase the Organization’s efficiency and flexibility Which reflects the Company’s strong commitment to optimizing the management of people, strengthening skills to ensure the achievement of the strategic objectives sustained by the conviction that "Solutions are in People
Congratulations to all Employees!
The President of the Board of Directors, Martins da Costa, referred to the meeting as an excellent sharing opportunity enabling a better understanding of the organization and its main axes of activity. As for 2010, he stated that EDPSC is to be congratulated in a year in which, despite some economic difficulties, it was possible to achieve the objectives set. For 2011, he considers essential to maintain and strengthen team spirit, to continue the performance culture focused on exceeding the goals, the required involvement of everyone, efforts to which having leadership guidance is decisive. Innovation in Evora
The participants were welcomed by EDP Distribuição's shop Inovcity, providing specialized information and close contact with the bet on new intelligent management technology for power distribution that will substantially change the Company’s relationship with customers, enhancing their satisfaction and practicing a policy focused on energy efficiency.
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Research
Initial Page Profile Account
edp Wall
Everyone • EDP
What are you thinking about…
edp Employees cannot speak publicly on behalf of the company. The border between professional and personal information is rather tenuous, so that a social networker should be careful to note that the information shared is his/her responsibility and does not necessarily reflect EDP’s position on the matter. An explicit reference that the information shared is a personal opinion and not the Company’s is imperative.
258.966
Lisa Areias Is freedom of expression not a given right?
People like this edp Sure, but be aware that what is posted on a social network has consequences.
EDP is preparing to burst into the social networks scene. Accordingly, the Board of Directors recently approved the Regulations for the Use of Social Networks. It seeks to determine the rules of engagement in these channels in order to avoid disputes arising from disparaging comments made in a social or even dynamic network that do not positively portrait the EDP Group. The existence of social networking is, nowadays, an unquestioned reality. The phenomenon is ingrained to such a degree in people that companies cannot ignore them. EDP recognizes the benefits of its use, but is aware that, if not used properly, the social networks may be a threat to the security of the information and the credibility of the Company. Get to know some of the basic rules for communicating in this new medium.
Diana Costa I agree. When we move beyond the private sphere, the information conveyed in social networks can have repercussions at a national or even international level and serious consequences for the Company.
Ricardo Torrado Each one of us must be responsible for the information we spread and take into consideration that what we publish can be (rightly or wrongly) used by others.
edp Employees must comply with the Code of Ethics and the requirement of confidentiality, not disclosing confidential information. They cannot make any mention or reference to EDP.
Lisa Areias These guidelines apply to all, regardless of the company they work for or of their job title?
edp Yes, the Code is applicable to all, without exception. Before disclosing information about the Company, including products and services, employees should make sure of its accuracy and confirm it with their superiors, to ensure alignment with the Group’s communication strategy.
Diana Costa Who manages the information? Is there anyone responsible for the social networks?
edp There is a "spokesman" who must act in tandem with the principles of the Code of Ethics and protect all information considered as confidential in the EDP Group. By posting information in public arena, the Company representative must take care to identify him/herself properly. The information must be clear and current; therefore, before being published it must be confirmed with the individuals having the oversight for the subject matter in question.
edp EDP does not intend to monitor its employees, but rather to point to the consequences of their comments, ideas and dissemination of information harmful to the Company.
Ricardo Torrado What advice does the Company have as to the type of language used?
edp There should, obviously, be no use of improper vocabulary (swearing, obscene or prejudice-based words), which gives EDP a bad image.
Lisa Areias What do you think about the company employees who sign on to social networking sites during work hours?
edp It is important that employees know how to manage their work time. The use of social networks should o n not 13 interfere with their professional commitments. Employees who are users of personal social networks must do so outside of normal working hours.
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e d p c u l t u re e d p w a y
EDP Way taking stock The EDP Way program was launched in January 2009. Two years and eight quarterly reports later, it is time to take stock of this program, which is responsible for five projects across the entire Group, by examining the results already achieved, the geographies involved and the most significant facts
Start date: January 2009 Number of indicators per project: EDP Way Prog ram: 5 Projects (Sou+Edp, EDPro, Lean, Opex, SharEDP) Locations: • Portugal • Spain • U.S.A. • Brazil
• Romania • France •Belgium • United Kingdom
• Sou+edp: + 340 • EDPro: + 220 • Lean: + 300
• Italy • Poland • Canada
SharEDP
27%
21%
14 o n
Opex Lean
12%
SharEDP Opex Lean number of indicators in the EDP Way prog ram: + 1280
• Opex: +150 • SharEDP: + 270
23%
17%
EDPro Sou+EDP
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e d p w a y c u l t u re e d p
Significant facts
10 companies involved
3,100 initiatives
EDPD, EDPP, EDPSC, EDP, SA (DSI and pilots in DCG and UNGE), EDPR, EDPBR, HC, Naturgas,EDP Valor, EDPGas
900 created in 2010
New prog rams 2009/2010 EDP Gas / EDP Valor / EDPR-U.S. (pilot) / Relaunching EDP Distribution (included in the “Distribuição 2012 program”) / EDPPCP Lares / Re-launching EDP Brazil
2,000 employees directly involved 750 in 2010
2,000 initiatives implemented 650 in 2010
• Support for new programs: Lean Diagnostic at EDP Gas, EDPP-PTLR launch, New EDPSC teams, relaunching EDP Brazil, creation of a Lean office at EDPD, Lean workshop and launch at EDPR / Horizon • Development and approval of a Lean corporate manual • Implementation of six Lean Days: Lisbon (2), Coimbra (2), Setúbal (1) and Porto (1) - EDPSC, EDPP, DSI, EDPD, EDPV • Availability of cross-communication material • Implementation of an inter-company Lean forum (EDPP / EDPD) and preparation of an EDPP / HC forum • Creation of a Lean training structure/catalog for the entire EDP Group via the EDP Valor catalog • Lean course given at the School of Production and Lean theme included in the Challenges of Distribution in the School of Distribution • Creation of a Lean information-sharing tool (lean.edp.pt) • New wave of inter-company Lean Experts training • Lean corporate booklet • Implementation of a “Learn More About Lean EDP Way” • Regular Lean activity in companies: Lean committees, presentations and employee-trainings • Startup team partnerships with the EDP University, and meetings with three Universities on cooperation within the Lean edpway
Significant facts • Start-up of the Iberian Contact Center • Implementation of Treasury tool – Target • Coordination of payroll processes in the various EDP Group locations • Start-up of the Commercial Services-only organization in Spain • Standardization of Business Negotiation Processes in Iberia • Implementation of the Logos platform for the integrated management of logistic and materials • Integration of Treasury and Other Processes in Spain at EDP Valor • Development of the Iberian Scorecard for Commercial Management Information • Implementation of the automatic data-capture system CAFC at HC Energía and Naturgas Energía • Selection of Iberian suppliers of firefighting equipment, rent-a-car, working and cleaning uniforms • Completion of Phase I of EDP Commercial Solutions' information management system • Start of the Lince SAP R/three multi-location rollouts
12 companies involved 16 projects 9 ShareCorp / 7 ShareCom
11 locations involved
277 employees 211 ShareCorp 45 ShareCom 21 Crisscrossings 204 Portugal / 65 Spain / 3 U.S.A. / 5 Brazil o n 15
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e d p c u l t u re e d p w a y
320 maturity surveys on the management of analyzed processes (2010) 260 priority key processes raised in the Group • 26 corporate processes
• 56 transversal processes • 178 processes local to business
12 companies / business units involved in all locations 1,80 0 KPIs defined in the iBPMS tool
Significant facts • Implementation of a governance model for managing processes common to all businesses and locations of the Group • Focus on regular measuring and optimizing management processes • Valuation and accountability of the roles process owners • Process owners appointment and formalization • Adoption of the BPMN (Business Process Modeling Notation) symbology as a benchmark for the design of process flowcharts across the entire Group
• Adoption of the APQC (American Productivity and Quality Center) process classification framework as a reference for process architectural design • Definition and dissemination of specific guidelines for the management of cross-Group processes • Integration of SCIRF controls in the mapping of processes • Installation and provision of a framework program supporting the activities of process owners in the business units • Annual launch of planning cycles for
process optimization in conjunction with the Group’s planning and budgeting process • Implementation of the IT support tool adopted in the governance model (iBPMS) • Establishment of a biannual survey that assesses the maturity of processes management within the Group
In figures (Learning Maps) 1,750 Actions 8 Countries 8,711 employees involved 251 Energizers
89,4% Participation Rate 26,133 Hours of Training
Significant facts • Brochure On Top • Recruitment brochure • Partnerships with schools in the areas of influence of new power plants • Development of the internal mobility policy • Placing mobility offers in EDP Pessoa • "Rotation Breakfast" with HR directors and managers 16 o n
• Training of leaders to become mobility managers • Development of the HR Policy Manual • Preparation of the Welcoming Manual • Publication of the EDP Leader's Guide • HR processes brochures • New Opportunities Initiative: Cooperation and certification agreements for employees
holding different levels of schooling • HR 2010 Annual Meeting • Meeting on the integration of new 2009 employees • Executing Learning Maps "Sou + EDP: Portugal and Spain • Volunteering in schools: lessons in entrepreneurship
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e d p w a y c u l t u re e d p
Significant facts
Savings targets € 160M by 2012 Total annual savings target € 120M (2010) (€ 96M in Iberia and € 24M in Brazil)
€ 159M of savings generated due to the initiatives implemented by the end of 2010 (132% of annual target), with € 135M in Iberia and € 24M in Brazil
• IT team: cost reduction in information technology — a savings of € 25M. • EDP Production: Lean Project — savings of €4M; reducing costs with Alstom materials — a savings of €1.5M, lower operating costs with the decommissioning of the Setubal and Carregado production centers — saving more than €2M . • EDP Distribution: cost reductions in network maintenance — a savings of €17M; renegotiation of the georeferenced SI exploration services provider contract — a €1.6M savings; reduction in communications costs — a savings of €1.6M; reduction and optimization of the warehouses and depots operations — a savings of € 1.1 million. • EDP-SC: Reduction in the average cost of documents issued due to the dematerialization of the business cycle — a savings of €1.3M; renegotiation of contracts with meter-reading service providers — reducing the reading unit cost and achieving a savings of €1.2 M; renegotiation of the contract with the Contact Center’s telecommunications supplier for savings of €800K. • HC: Renegotiation of the CCGT Castejon 1 maintenance contract — a savings of €2.6M; cost savings in network maintenance — a savings of €2M; reducing O&M costs in cogeneration plants — a savings of €1M; termination of lease contracts — savings of € 500K. • EDP Gas: Reduction in marketing costs of €1M; cost reduction with P&D post and delivery and mail (bimonthly billing) — a savings of €600K; cost reduction with meter readings (smaller quantity) — a savings of €500K. • EDP Valor: Reduced spending on land and mobile telephone services — savings of €3.3M. • EDP SA: Reduced costs for EDP Group’s specialized work — a savings of about €15M. • EDP Brazil: transformational program — a savings $R 18M; optimization of overtime spending — a savings of $R 8.1M; optimization of airfare costs — a savings of $R 3.6M. o n 17
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causes
edp
Economic capacity and social commitment
Goods campaign collects 73 tons of donations "More and better." EDP employees committed themselves wholeheartedly to the Group's campaign to collect goods for charity, managing to gather an impressive 73 tons of donations! Check out the results of the Goods Collection campaign in Portugal, Spain and Brazil.
"The demand is increasingly higher" considered Mexia
F
or next year we need to do more and better. "The challenge was launched by the Chairman of the Executive Board António Mexia, in the closing ceremony of EDP’s 2010 Goods Collection Campaign. The ceremony, which took place Feb. 1, 2011, gathered partners, institutions and volunteers at the Museum of Electricity in Lisbon to celebrate the initiative's success. Everyone was proud. "The demand is increasingly higher," said Mexi, in commenting on the need for donations. This campaign has exceeded all expectations. The 10 tons collected in 2009 more than tripled this year to 34 tons of goods, which include garments, furniture, computer equipment and toys, among other items. These donations will now be channeled to 100 charities, benefiting a total of 336,000 people in Portugal. The numbers are even more impressive when you add up the results achieved by the Group's companies in Spain and Brazil, which were also invited to participate this year. Energias do Brasil gathered 37 tons of donations, and Naturgas, in Spain, donated 2 tons, bringing the grand total of campaign collections to 73 tons of goods. For now, the success of this year's Goods Collection Campaign - to which the Urbanos, Fundação Benfica, Activism and Mop have joined as partners, as well as the Diário Económico, Lu-
“
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causes
37 36 tons in Brazil
tons in Portugal and Spain
NATURGAS DELIVERS TOYS Fernando Bergasa, general director of Naturgas Energía, delivered on Feb. 10, 2011, to Mikel Ruiz, director of Caritas de Vizcaya, 22 boxes of toys obtained by Naturgas employees. The toys were collected during the company's Solidarity campaign, "This Christmas give more to those who have less," which ran from Dec. 20, 2010, to Jan. 14, 2011, and benefited from the participation of all the Group's companies. Naturgas also donated several sets of school supplies, which will come in particularly useful for the work that Caritas has been developing with children: after school hours, the institution helps these children do their homework, contributing to their education and general culture.
sa news agency and TSF as media partners – also measured by the participation of 172 volunteers. "At the end of the day, it is extremely motivating to feel that we were able to improve the world around us. EDP fully assumes its willingness to look more and more to the surrounding
Smiles that generate solidarity More than fulfilling their roles within the Group, EDP employees in Brazil know how to do their duty by society. Through the “Goods Collection Campaign Brazil,” held throughout 2010 by the EDP Institute, hundreds of company employees and volunteers in the most diverse locations in Brazil embraced the campaign with such initiatives as SOS Cidades in Emergency States, the Book Campaign, the Sweater Campaign, Christmas Outreach and EDP in Schools. All the campaigns gathered donations of food, toiletries, cleaning products, clothes, toys and furniture, to name just a few of the items. In December 2010, through the Christmas Outreach initiative, employees brought this positive energy to 27 municipal schools in seven Brazilian states: São Paulo, Espírito Santo, Santa Catarina, Tocantins, Ceará, Rio Grande do Sul and Mato Grosso do Sul. Through the hands of volunteers, more than 1,000 children participated in the Christmas Movies session, and during the 2011 academic year, about 8,000 students will benefit from the EDP School Program, with each school receiving a DVD player, multimedia projector and movies for children.
communities and to mobilize employees to participate in social causes — this contributes to a greater sense of belonging and pride in working for a company with this social dimension," says Human Resources Director Maria João Martins, a volunteer herself in this campaign. o n 19
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causes
500,000 EUROS for institutions
Through March 3, the EDP Foundation accepted applications for the 2011 EDP Solidarity Program, which this year has again been reinforced by a 500,000 euros prize. This reinforcement is justified by the increasing number of requests for support: in 2010 the program received 445 applications, from among which 19 projects were selected. Any nonprofit organization, namely social solidarity institutions or nongovernmental organizations, may apply to this support program. The jury, which is once again headed by Francisco Sánchez, will announce the 2011 winners on April 29 as part of a conference on social innovation, to be held at the Museum of Electricity in Lisbon.
Against Climate Change
This past October, HC Energía, through Naturgas, signed a collaboration agreement with the city government of Murcia, through its Local Energy Agency (ALEM), to fight against climate change. The mayor and chairman of ALEM, Miguel Ángel Cámara, initialed the agreement with Yolanda Etxauri, director-general of Naturgas in Levante. The main purpose of this agreement is to promote local measures in energy savings and efficiency, tackle climate change, and promote renewable energies in Murcia. Through this agreement, HC Energía will participate in all activities implemented by ALEM, including its sustainable energy plan. This plan, which will be framed within Murcia’s European Union Covenant of Mayors, aims to cut 20 percent of greenhouse gas emissions by 2020.3
SOLIDARY DAY: CHALLENGE OVERCOME! his past October, HC Energía, through Naturgas, signed a collaboration agreement with the city government of Murcia, through its Local Energy Agency (ALEM), to fight against climate change. The mayor and chairman of ALEM, Miguel Ángel Cámara, initialed the agreement with Yolanda Etxauri, director-general of Naturgas in evante. The main purpose of this agreement is to promote local measures in energy savings and efficiency, tackle climate change, and promote renewable energies in Murcia. Through this agreement, HC Energía will participate in all activities implemented by ALEM, including its sustainable energy plan. This plan, which will be framed within Murcia’s European Union Covenant of Mayors, aims to cut 20 percent of greenhouse gas emissions by 2020.
T
Time to dig in!
After the donations, it's time to roll up your 20 o n
Thanks to HC, a health center in West Africa already has electricity— all with the help of employee donations!
sleeves and implement the project. Through the Outreach Project page on the intranet, you [employees] can follow all the stages of implementation to the final goal. HC Energía seeks to establish a general system of electrification for the health center by using photovoltaic panels, a reliable and lowcost operational system to replace the current small power generators. The teams and the materials that make up the photovoltaic system will be purchased in Spain and transported to Benin by sea.
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causes
GALA AIDS PROJECT IN INDIA In December 2010, Naturgas Energy co-sponsored a very special gala, held by the Vicente Ferrer Foundation in Bilbao, to raise funds for a health development project in Anantapur, India. For over an hour and a half, more than 200 people enjoyed the performances of Mikel Erentxun, dancers from the Igor Yebra School of Dance, El Mentón de Fogarty, Kirmen Uribe, Felix Ardanaz, Jon Allende and Kepa Junkera. The gala was attended by Anna Ferrer, Vincent Ferrer’s widow and president of the foundation. Very aware of the situation of women in India, Anna has been and remains one of the strategic pillars of the foundation, raising her voice in the fight for women's rights.
Hooray to Our Energy in Bilbao! On Jan. 8, "Live Our Energy" Day was held on the San Mames Promenade in Bilbao for the children of employees, between the ages of 6 and 9 years. The activity developed was a small example of what will take place in schools in the Basque Country, during the first and second cycles of the 2010-2011 school year. The primary goal is to educate and raise children's awareness of renewable energy and efficient use of natural resources. In this event, multiple monitors explained serious matters to the children in a fun way. At the end of the activity came the ultimate final test, in which the children, divided into teams, answered all the questions correctly. Besides being informed, the young participants left with many memories of a day full of energy: backpacks, pencils, paints, pencil sharpeners and more.
Foundations support YOUNG STUDENTS By 2013, the EDP Foundation will have donated 495,000 euros to this project, which could benefit 500,000 young people in Portugal.
This is one of the largest agreements to come out of the social philanthropy scene in Portugal. The EDP Foundation and Benfica Foundation will join forces to combat absenteeism and improve school attendance and educational achievement among at-risk children and youth, between the ages of 6 and 16. This partnership, formed through the project "For You If You Are There," is designed to use sports to promote social inclusion and gender equality, develop individual and social skills, and provide guidance on the value of merit and hard work The "For You If You Are
There" program, whose main patron is the EDP Foundation, will be developed throughout Portugal in tandem with school groups located in economically and socially disadvantaged environments. The project will be developed in Porto, Portalegre and the region of Tua, focusing on areas where EDP is making new hydroelectric investments. Along with numerous sporting activities, the "For You If You Are There" initiative will also implement programs in the areas of information technology and communication, Portuguese, and mathematics. o n 21
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innovation* The first fully operational micro-cogeneration (micro-CHP) facility in Asturias is already up and working. HC EnergĂa can boast of having been a pioneer in implementing a project of this type. Learn more about this new form of alternative energy
HC: pioneer in micro-CHP
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i n n ova t i o n
www.hcenergia.com have already started installing micro-cogeneration equipment in office buildings and housing.
Combustion Gases
Heat -70%
How would it work at my house? Electricity -30%
Fuel 100%
Engine / Turbine Alternator
H
C Energía achieved a new goal: he pioneering of the first fully operational micro-CHP facility in Asturias. The plant is installed at the Asturian Foundation for Attention and Protection of Persons with Disabilities and Dependence (FASAD), including the operation of electricity export to the grid. All this was accomplished in spite of the inherent difficulties of handling the technical and administrative issues associated with implementing a new system of this magnitude. The FASAD project becomes, thus, the first fully operational micro-CHP facility in Asturias, and HC the first company to execute a project of this type. What is micro-cogeneration?
Micro-CHP (which stands for combined heat and power) is an alternative energy that is materialized by the installation of smallscale equipment, normally engines or turbines fired by natural gas, with the characteristic that it can generate, store and supply power consumption at the same location of consumption. The generated power is injected at a later time in the distribution grid. This system allows consumers to convert their “home” or business in small power stations. Thus, energy is generated at the same location where it is consumed, avoiding the cost of transportation and distribution. In which places can you implement it?
Micro-cogeneration systems can be implemented successfully in hospitals, hotels, offices, educational centers, residences, multisports areas, heated swimming pools or large supermarkets. Some construction companies
As follows: The micro-CHP equipment begins to generate electricity and releases heat. The electricity generated is then sold to the power plant or used to supply residential energy. The residual heat is redirected to a storage tank, where it's converted into useful heat. Micro-CHP is the most suitable system for users looking for excellence in their buildings’ energy efficiency. What are the advantages?
Reduces primary energy consumption and greenhouse gas emissions while saving money for the consumer; - Contributes to hot water needs and produces income through selling of electricity to the grid; - Assumes a savings of between 30 and 40 percent; - Occupies less room and doesn't need to invade architectural spaces, such as facades and roofs; - Prevents electrical system losses. In Spain, more than 10 percent of electricity produced by the centralized system is lost in transport and distribution. HC Energía can help
The micro-CHP is a highly beneficial system; however, it becomes complex for customers to manage all of its associated aspects: legalization, implementation, maintenance, supply of primary energy, energy sales to the grid, among others. For this reason, HC Energía’s Energy Efficiency Services Department has launched a new service that offers comprehensive energy management for such facilities, including all aspects inherent to the system. Thus, the end-user can enjoy the energy produced and take advantage of the economic and environmental benefits of micro-CHP without having to worry about the management aspects associated with operating such energy facilities. Currently, the company is already working on several management projects, which makes it attractive to the customer, as well as serving as an important tool for eliminating the barriers that may exist in driving this type of facilities forward. www.hcenergia.com
New features, Better service To improve its customers' online service experience, HC Energía has launched new features for Internet users. The Lean team for the B2C commercial cycle has worked to incorporate these new features into HC's portal, providing significant cost savings for the company. The initiative has also led to the optimization of working time while easing customer management. What's Involved: • Customers can consult their point balances at any time and download the information into a PDF file, through the web page's "Client Area." More than 50,000 customers will stop receiving this information by snail mail, thus saving paper and reducing the effort and costs of printing and postage. • Ability to expedite the request for Account reconnection requests can be expedited after disconnections due to nonpayment. • Working time is optimized through new features such as access to online billing and accounting information, allowing staff to identify pending invoices, with priority given to the oldest ones.
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Co-creation: a community challenge OR a challenge to the community EDP Innovation believes that "the best ideas do not, necessarily, have to be generated from within the company." This is one of the reasons that led the company recently to launch the co-creation.pt platform to encourage the community and EDP stakeholders to participate in the innovation process. In the sequence of recent successes, such as Procter & Gamble and Nike, now considered world references in this field, to bet on open innovation and co-creation practices not only allows one to add value to the internal process of innovation, but also contributes further to the development of the respective sector. The start-up of the
co-creation.pt platform, which invites the participation of any citizen, university or company that wishes to contribute with a good idea to the area of energy, provides yet another bridge between the community and industry at a stage in which the latter faces exciting challenges. In parallel with the reception and treatment of external idea contributions, the platform provides users with a set of challenges associated with major projects / issues relevant to the Group. Thus, the community is invited to participate in finding solutions to industry challenges. Here, the Group’s business units find a tool that allows them not only to stimulate participa-
tion within the community through specific challenges, but also to interact with it and, thereby, identify relevant contributions to their activities. The new platform, accessible at http://cocreation.pt, besides supporting co-creation activity within the Group, will boost the development of communities of interest around topics relevant to the energy sector. In fact, when social networking components are included (an innovative element in sites of this type), the cocreation.pt platform encourages networking and promotes the creation of thematic discussion groups and the sharing of knowledge in areas relevant to the industry.
IWebReport - EDP Services’ Public lighting remote management system EDP Services provides its clients with the IWebReport system, an innovative Web platform that controls public lighting (PL). This multi-vendor system supports flow regulation equipment from different brands and models in order to allow municipalities to install equipment that is best suited technically and financially in every area. Customers have access to the PL network by remote control and configuration — namely the creation of multiple operation profiles for different days throughout the year, allowing the visualization of states and measures and enabling the troubleshooting of failures. The service also provides data to support predictive and preventive maintenance as well as determine the actual levels of energy savings. The municipalities reduce their energy costs through the management of operational profiles that allow the lighting level to adapt to the intensity of road users' movement over the night hours, thus ensuring the minimum recommended levels for each location. The system was installed for client EDP Distribution in Évora on 24 circuits, under Inovcity. It led to a 24 percent savings in the PL cost of those circuits, and EDP Distribution is currently executing an improvement program that will increase the level of savings. 24 o n
Learn more here: http://www.wikiedp.edp.pt/index.php/Iwebreport
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Smart Solutions In Brazil, EDP took another important step toward the smart grids it launched, in partnership with the National Institute for Space Research, the ClimaGrid project, which will add to the technology of electrical grids the intelligence of scientific research. This project, one of the first in the world in this area of activity, and expected to be completed within three years, is designed so that data from wind, rain, vegetation, lightning and temperature become part of the electrical system in a simple and intuitive manner. Because of its broad scope, the project encompasses diverse areas, including sustainability, innovation, telecommunications, information technology, and the distribution and transmission of electrical energy. The project will enable the creation of never published climate studies in a way never before done as well as assist in the planning of EDP’s logistics services in Brazil.
1
2
Lisbon MBA Case Competition
E
DP Innovation sponsored the Business Case Competition of the Lisbon MBA international program (Católica | Nova ― a collaboration with MIT). The objective of this competition of strategy, which has been under way for the last three years, is the resolution of a real case by students. The students must apply all the concepts they've learned during their MBA program and, simultaneously, provide solutions that add value to the sponsoring company. The initiative lasted for one week in December 2010, culminating in a one two-day session at the Hotel Sana, in Lisbon. The topic of discussion was smart grids and energy efficiency. The challenge, launched by EDP Innovation’s John Maciel with the support of EDP Distribution and Corporate Marketing
Management, was as follows: "Assuming that there will be an infrastructure of smart distribution grids, develop a strategy and a business model that allows EDP to create a deeper relationship with customers in their homes downstream from that infrastructure." Behind this challenge, sponsors would get answers to questions like, What can we / should we sell? How should we position ourselves in relation to new interfaces (mobile phones, television, iPads ...)? How can we leverage communities and extract value from co-creation with our customers? What practices from other industries would apply, and which potential partnerships would make sense? The competition went very well, and a series of ideas emerged that are being analyzed by the respective business units.
Such initiatives grant us low-cost access to students’ ideas, with great potential for bringing a fresh perspective to the challenges we are already working on," António Vidigal, president of EDP Innovation 1. The audience during one of the presentations 2. Antonio Vidigal awarding a symbolic prize to the winning team
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in focus Distribution Program 2012
EDP DISTRIBUTION Follow this light EDP Distribution presented its strategy for meeting the challenges ahead. The 2012 Distribution program has four main messages: perform, engage, simplify and innovate. A profile of the company can be seen in the following pages.
T
he 2012 Distribution program is EDP Distribution's response to future challenges. Four strategic axes and a fifth, transversal to the program, are under the responsibility and direct involvement of the members of the company's board of directors, which coordinates the monitoring committees of each of the initiatives. Board members João Torres, Ângelo Sarmento and Miguel Stilwell d'Andrade discuss the outline of this program for EDP Distribution, a company that is responsible for about 22 percent of the EDP Group’s net results. (See interview in the Spotlight section, page 34.) To communicate the results of the initiatives across the organization, to create a forum for discussions of issues with potential impact, to simplify the reporting of projects, to anticipate needs and monitor the company's results — these are some of the decisive issues connected to the construction and consolidation of a new organizational culture at EDP Distribution.
26 on
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in emfocus foco
EDP around the world distributing electricity (2009 data) Kilometers of grid Number of distributed GWh customers
Portugal
Spain
Brazil
218.246
21.874
82.164
6,119.805
650.000
2,700.000
46.146
9.131
23.749
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in focus
2010 Structure
The Culture of Example
Executive Management and Senior Management Middle Management and Dept. Heads Highly Skilled Professionals Qualified Professionals Specialized Professionals
620 64 1,131 1,641 68
TOTAL
3,524
Customers per employee (regulated market + free market) 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600
10.04% year
2002 2003 2004 2005 2006 2007 2008 2009 2010
Evolution of the total number of customers (regulated market + free market) 6,200 6,100
1.03% year
6,000 5,900 5,800 5,700 5,600 5,500
How the Distribution works
5,400 2002 2003 2004 2005 2006 2007 2008 2009 2010 28 on
A recent survey of EDP Distribution's management revealed some aspects where the Company’s mode of operation offered opportunities for potential improvement. "Let’s reflect on these issues and determine what is likely to become a behavior guide, because only by practicing by example can we make the necessary cultural adjustments", reveals board member João Torres. Established in February 2000 with about 10,000 people from various companies with different structures and sensibilities, EDP Distribution has learned over more than 10 years to adjust its organization to market demands. The Company has modernized itself, and has learned to redefine its approach to outsourcing, having, nowadays, achieved much higher levels of efficiency than it possessed at the beginning of the decade. "This Company has been transforming at all levels. Nowadays our pickets operate with PDAs, where they receive the orders, the reporting of failures. A few years ago, all they were given was a sheet from the hands of the hierarchy, or a telephone call. This is an example that illustrates how a lot of people in our Company had to gain skills and adapt to the times", says Torres, president of EDP Distribution’s Board of Directors. "The challenge is growing. Just remember the development of intelligent networks, which can completely change the way that electricity distribution works — hence the importance of launching the 2012 Distribution Program, in a moment so critical to the company," noted João Torres. "I think the way we are able to change EDP Distribution and timely identify the next steps is essential to the company's future. And this can only be achieved with everyone’s participation."
When the energy reaches the customer,v
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in emfocus foco
it has already come a long way. To bring the energy from the producing centers to our houses, suppliers use transmission and distribution grids. In Portugal, EDP Distribution operates the distribution grid. Apart from this territory, EDP Group develops the activity of electricity distribution in Spain, mainly in Asturias, and to a lesser extent, in Madrid, Valencia, Alicante, Barcelona, Huesca and Zaragoza. In Brazil, EDP is present in the distribution of electricity through EDP Bandeirante, in the state of São Paulo, and EDP Escelsa, in the state of the Espírito Santo (see following pages). The distribution of electric energy is a regulated activity consisting of transmitting, through the distribution grid, electricity between substations of the national transportation grid and end-consumer points. Under this activity, EDP builds, operates and maintains, the networks and facilities responsible for electricity distribution. EDP Distribution holds about 99 percent of the distribution of electricity in continental Portugal; it does not own self-producers or small cooperative networks. The distribution networks, in addition to underground cables and overhead lines of HV (60 kV), MV (mainly 30kV, 15 kV and 10 kV), and LV (400/230 V), consist of substations, transformer posts and other accessories needed to operate them. The equipment connected to public lighting areas is also part of the distribution networks. The number of electricity customers in continental Portugal recorded an average annual growth of around 2 percent over the past five years. In late 2010, the number of users connected to EDP Distribution’s electrical grid exceeded 6 million. The EDP Group has evolved to respond to a growing number of customers, increased levels of consumption and to requirements of market liberalization.
TECHNICAL SERVICE QUALITY Technical Service Quality is measured by the TIEPI (Installed Capacity Equivalent Interruption Time) indicator. This indicator has registered significant improvements in recent years despite the negative effects of the devastating fires that are recurrent in the summer. This improvement in the quality of service is mainly due to:
• the high investment and maintenance effort made in recent years at the level of the distribution grid; • the combined action of a broad range of initiatives both technical and organizational, including the LEAN Project, which aims to reduce the recovery time after failure in all Grid Areas; • favorable weather conditions.
General Indicators of Service Quality - 2010 Budgets extension of BT (up to 20 business days)
Customers with reconnection service up to 4 h (subsequent to accidental supply interruptions )
Execution of extensions (up to 20 business days)
90
80
70 Written request for information up to 15 business days)
Links to BT network (up to 2 business days)
Centralized call centeres (up to 60 sec. waiting time)
Call Centers (up to 20 minutes waiting time)
Pattern (%
2010(%)
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in focus
Facilities and equipment in service
Investment and conservation
December 31, 2010 Substations
2010 Investment (excluding financial charges)
Nº of substations
404
HV
54,084
Nº of transformers
712
MV
78,098
LV
120,212
Networks
252,394
Installed capacity (MVA)
16,538
Lines (including branching lines in kms)
82,455
Aerial power lines HV (60/132 kV) MV (6/10/15/30 kV)
66,431 8,485 57,945
Underground cables HV (60/132 kV) MV (6/10/15/30 kV)
16,024 496 15,527
Systems and others
30,847
Conservation (total costs) HV
14,708
MV
30.585
LV
82,130
Transformer stations Other Units
63,223
Installed capacity (MVA)
19,040
TOTAL
7,374 134,798
Investment in IFRS technical costs (current prices in M€) LV networks (km)
137,864
Aerial lines
105,751
Underground
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HV/MV distribution
132,2
LV distribution
120,2
32,113 Other
30,8
TOTAL
283,2
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in focus
Who regulates the market?
Service Quality
The need for EDP Distribution to adapt to new market conditions, which are a result of the liberalization of the electrical industry, has imposed the following priority goals: increased customer satisfaction and retention, improved quality of service, and effective promotion of EDP Distribution's image. The electrical energy distribution networks, like the transport networks are in a continuous process of modernization and reinforcement. The need to respond to increased consumption, with different evolutions in different locations, has received an adequate response from EDP Distribution, which significantly improved the quality of the required service and substantially reduced losses in the network. Likewise, EDP Distribution has promoted the adjustment of its network, in appropriate technical conditions, at the level of optimization of the connections, micro-producers and new power plants, namely, SRP (special regime producers).
The Portuguese Energy Services Regulator (ERSE) is the entity responsible for regulating the nation's gas and electricity industries. ERSE is an independent organization whose functions are to protect consumer interests in terms of prices, service quality, information access and security of the supply; promote competi-
tion, particularly in the construction of the internal energy market, ensuring regulated companies the economic and financial balance within an appropriate and efficient management; encourage energy efficiency and environmental protection; as well as arbitrate and resolve disputes, encouraging extrajudicial settlement of disputes.
HV, MV and LV underground cables 49 47 45
EDP Distribution in figures Gross electricity margin EBITDA Net results
43
2009
2010
1,214
1,215
+0.1%
569
558 242
-1.9% +14.4%
212
41 37 35 2002
2003
2004
2005
2006
2007
2008
2009
2010
Figures in million euros
HV, MV and LV overhead lines
Evolution of ERP installed capacity
175
5500 5000
170
4500 165
4000 3500
160 3000 2500
155
2000 150 2002
2003
2004
2005
2006
2007
2008
2009
2010
2002
2003
2004
2005
2006
2007
2008
2009
2010
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in focus
Spain
Employees: 298 Network kms:
High voltage = 50 e 132 kV Medium voltage = 22 kV Low voltage = 400 V High voltage = 1,416 km Medium voltage = 5,931 Low voltage = 14,679
Age (years)
Below 30 Between 30 and 40 Between 40 and 50 Between 50 and 60 Over 60
11 54 101 113 19
Job classification
Executive management Senior management Middle management Intermediate management Qualified and highly skilled professionals
5 37 44 147 65
Training (hours)
Specific Corporate EDP University
2,951 3,924 404
HC Energía Distribuicíon already reaches 650,000 customers! HC Energía Distribuicíon, whose new director is currently Luís Álvarez Arias de Velasco, operates in the regulated activities of distribution and marketing of electricity. The company, whose natural market is Asturias, has been expanding itsactivities to other parts of Spain and is currently present in Madrid, Valencia, Alicante, Barcelona, Huesca and Zaragoza. These booming markets possess a strong industrial component and a large number of liberalization- impacted customers, leading to no redundant distribution structures in the area (which allows for the maintenance and upgrading of real servers without the need to make the service unavailable). Main Challenges a) Amending the regulatory model
• Return on investment and operating and maintenance costs in accordance with a network model of reference: the model adopted by the Ministry of Industry for all companies is very similar to HC Energía’s proposal, so that the payments to distribution become more connected to network extension and the difficulties associated with construction and maintenance, rather than to actual consumption, as has happened up to now • Bonus for the quality of supply: the adopted subsidy model also has to do with the quality of supply that each distributor provides in its networks. In this way, HC Energía recorded a much higher quality of 32 on
supply than the national average, and its TIEPI (installed capacity equivalent interruption time) — an indicator that measures the quality of supply — has registered significant improvements in recent years. b) Improving efficiency
OPEX and Lean project cases. Innovation
HC Energía is collaborating with the EDP University and other companies on some projects. Of note is the assessment of the condition of medium-voltage underground cables, in accordance with the partial online discharges and the storage of electrical energy systems through redox batteries. Environment
A task force was set up to obtain ISO 14001 certification. Indicators: landscaping integration, SF6 emissions to air, soil contamination, waste, by-products and noise. Network Management Systems
GIS (geographic information system): a system that stores geographic data on all of HC Energía Distribución's facilities, allowing for faster reporting and locating of incidents and more efficient recovery of supply. The GIS possesses the properties of each element and all the detailed information on the supply grid. NM (network manager): real-time operating system used at the control center (distribu-
tion dispatch center). It includes SCADA and advanced applications (failure management, brigades, calculation of quality indicators, etc.). HC Energía Distribución also has a control center in the substation of La Corredoria and a replica of the system in the La Gesta (Oviedo) shops, which shows the actual situation of the network, and which, because it is controlled remotely, minimizes the supply delivery time. SAP, RM/PM: provides management of maintenance orders and network extension projects. They possess a contractor communication module. DPLAN: network planning system, the same as that used by EDP. Sales
EDP Distribution of Portugal does not sell in Spain. All the energy is sold by the generators to suppliers. EDP Distribution operates only in the network. The energy circulating through the network is equivalent to 9,751 GWh. Investments in service quality
In the last business plan, investments in electric power totaling 300 million euros. were budgeted. These included the extension to new territories, the maintenance of current networks and the strengthening of distribution areas.
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in focus
Brazil Distributors serving 2.7 million customers Distribution headed by Miguel Setas since early 2010, held a unique experience in the EDP Group. Strategic planning of the area was determined jointly with employees through an Intranet survey and from the results, a roadshow was organized to promote the strategy to the approximately 2,000 employees. Economic growth in Brazil has influenced the increase in energy consumption. The capacity sold and distributed also rose. It was a year of many achievements for EDP Bandeirante and EDP Escelsa distributors. • EDP Bandeirante exceeded 1.5 million customers • Unjustified travel was reduced – from 30 percent to 12.69 percent at EDP Escelsa, and from 30 percent to 14.56 percent at EDP Bandeirante. • A new call center opened, integrating both distributors. • Employee accidents decreased by 25 percent and service provider accidents by 10 percent. • Commercial losses were reduced when compared with figures for December 2009 (0.38 percent for EDP Bandeirante and 1.05 percent for EDP Escelsa). • The 2010 Organizational Climate Survey revealed improved employee motivation (motivation at EDP Distribution rose from 60 percent to 70 percent). • The Lean project implemented 245 ‘5S’ actions and 117 actions for other activities with good results (a 48 percent reduction in reposition demand completion time, a 16 percent decrease in material replacement time, 10 tons of paper and six debris trucks). [NOTE: are the paper and trucks actions too? i don't get how they relate to the other two reductions.]
Innovation Worth highlighting is the launch of the first electric vehicle supply grid in Brazil, with 20 offices across several cities of São Paulo and Espírito Santo states, as well as the donation of 90 bicycles to municipal and public safety entities.
The distribution smart grids are another area of activity. Besides placing wireless control and metering systems for HV and MV customers, the ClimaGrid project was launched in partnership with the National Institute for Space Research [NOTE: Is INPE used later in magazine? if not, pls delete (INPE).] (INPE), which is expected to be carried out in three years and plans to collect wind, rainfall, vegetation, lightning and temperature data that will integrate the electrical system in a simple and intuitive way. EDP’s 2020 Awards, which aim to encourage and reward the development of innovative projects in the energy sector, had its first winner, Gabriel Domingos, who was honored for his work on the bio-recycling of domestic organic waste. By 2020, EDP will invest $ 1 million in ideas that value new paradigms in the energy sector.
Service Quality Indicators Vitória, in Espírito Santo, is among the best performing capitals of DEC (average interruption duration per customer) and FEC (frequency of interruptions per customer). Over the past three years, it has maintained a rate of three interruptions per year (FEC), and in 2010 it was below three hours of interruption (DEC). The average required by ANEEL (the National Electric Energy Agency) for the region is five interruptions per year and a duration of six hours per year.
Energy Efficiency In 2010, the EDP Group invested about R$ 25 million in energy efficiency the Efficient Traffic Lights project (featuring the use of high-efficiency LED lighting in traffic lights systems), which in four years has led to a 90 percent reduction in energy costs. It has also invested in energy efficiency for low-income communities: The "Boa Energia Solar” project, in partnership with the Urban Housing Development Company of São Paulo state, replaces incandescent bulbs with compact fluorescent ones and installs solar water-heating systems; the "Good Energy in the Community" project, besides serving and identifying households with illegal connections,
delivers efficient lighting kits and implements actions in the rational use of energy. EDP Escelsa also acts in the communities it serves. In the state of Capixaba, 75,000 customers have received new bulbs, refrigerators and regularization of the electrical energy patterns. Later this year, the program is expected to replace more than 6,000 refrigerators. EDP Group has gained prominence in the industry in recent years with the implementation of actions that have reduced energy consumption. Various organizations have recognized this effort, which has already led to the Group winning several awards, including the FIESP State Award for Conservation and Rational Use and the National Procel Award.
Social Investment: Distribution has invested about R$ 2.4M in actions and programs focusing on education, culture, local development, sports and social assistance, of which the EDP in Schools, EDP Solidarity, EDP Child Friendly and Letters of Light initiatives merit mention. Investments EDP Bandeirante and EDP Escelsa, together, invested R$ 376.7M, demonstrating EDP’s commitment to the development of the regions in which it operates. EDP Bandeirante investments totaled R$ 188.9M — the highest since the company was privatized in 1998, with funds going to the expansion of the power grid, the improvement of lines and distribution grids, the combating of non-technical losses, as well as the Light for All" program. In addition, the company invested in the expansion of five substations, the construction of the Pedreira Substation in Itaquaquecetuba, and the addition of approximately 1,401 kilometers of networks. In Espírito Santo, 10 new substations and extensions to another 16 were built, with a reinforcement of 497.5 MWAs to the system in two years, representing a growth of 30 percent of installed capacity.
DISTRIBUTION IN 2010 FIGURES Net income EDP Bandeirante: R$ 278.24M EDP Escelsa R$ 178.6M
Main challenges for 2011
Energy sold EDP Bandeirante: 9,038 GWh EDP Escelsa: 5,211.89 GWh
• Develop skills
• Satisfy customers • Maximize revenue • Surpass the reference company • Plan investments
Energy distributed free to customers • Promote technological innovation • Optimize management of suppliers EDP Bandeirante: + 12% EDP Escelsa: + 38.5% • Disseminate EDP culture Total energy distributed EDP Bandeirante: 14,310 GWh EDP Escelsa: 9,439.12 GWh
• Implement the management excellence model • Manage risks
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spotlight Talking to ...
JOÃO TORRES ÂNGELO SARMENTO MIGUEL STILWELL D’ ANDRADE
The challenges of Distribution The 2012 Distribution program is the result of a strategic plan for the period between 2010 and 2012, with four axes of action: controlled risk, superior profitability, excellent service quality and constant innovation, as well as a transversal axis of the program, called organizational culture. The common feature is the high degree of monitoring, punctuated by regular monthly meetings, between promoters of different initiatives and the first echelons of the company. It is a forum for sharing information and defining the next steps. In this interview, EDP Distribution's Board of Directors traces a portrait of the company at a time considered crucial for the sector
J
oão Torres, chairman of the board of directors, EDP Distribution, and members of his team, Ângelo Sarmento and Miguel Stilwell d'Andrade, are the major individuals responsible for the 2012 Distribution program. This ambitious initiative aims to prepare the company for future challenges. In general terms, how would you define the 2012 Distribution program? João Torres (JT): This is a mobilization pro-
gram, structured around four axes, in order to achieve the goals we set for this business plan. It is a plan that calls for great involvement by the board of directors and that, by its diversity and scope, we want to mirror the involvement of the entire company. That is why we mobilized a lot of people to 34 o n
work on the various teams and initiatives. It is a very dynamic program, and it has been running quite well. What are the main objectives of the controlled risk axis? Miguel Stilwell d’Andrade (MSA): Within
the theme of risk management, there are four main objectives: the management of regulatory challenges; management control — including the quality of information provided to third parties; the outsourcing model, which is also associated with human capital management; and lastly, environmental management and sustainability. The distribution is highly regulated, and there is a constant dialogue with ERSE, which is particularly relevant in 2011 because the next regulatory period is
being defined. We created, in fact, working groups specifically related to this matter. Under the theme of environment and sustainability, it is undisputed that society is becoming increasingly more demanding ― a fact that creates a series of new challenges that EDP Distribution must overcome in order to implement its business plan. What key initiatives are planned within the superior profitability axis? MSA: It is an axis that is closely linked to the
one before. We aim to clearly improve EDP Distribution's profitability. To achieve it, we must first control costs by promoting programs such as OPEX, and second, by optimizing investment and asset management — knowing where and how we invest. We must
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also ensure this investment is allocated to those projects that will have a greater impact on quality of service and reduction of losses and costs. EDP Distribution has a wide berth. By creating a forum and clearly defining what our policies, priorities and objectives are, we find here a space for people to share their own best practices. An example is the OPEX theme. It is very easy to have a top-down program, but what we have here is the opportunity to share OPEX-specific initiatives from among different departments. On the theme of travel and costs, we have adopted practical measures, such as introducing more videoconferences, starting training activities one hour later in the morning and avoiding numerous trips, including overnight stays. We have quickly disseminated and shared something that makes a significant contribution to the question of profitability. How are you ensuring the transmission of knowledge? MSA: This is a critical issue for Distribution.
Ten years ago, the company employed almost 10,000 people. Currently, we are around 3,700, and 10 years from now, it is expected that the number will be below 2,000. 36 o n
There is a need to manage this knowledge and ensure that it is maintained internally. There is a work team, "In & Out," that is delineating which type of skills we want and can maintain internally and which we can outsource to service providers. JT: Understanding what EDP Distribution's activities and skills will be in the future is a decisive and strategic task, one aligned with the company’s longer-term vision. In the meantime, we have launched a range of initiatives, because we cannot stop the building of this new company. We have recruited heavily in recent years, hiring about 100 new employees. Currently, about one-third of senior managers in positions of leadership are less than 40 years old, thanks to a policy of rotation and placement of new challenges. Alongside the management of wisdom, which involves using the skills of our most experienced staff, we are downright innovative in our policies for monitoring these young people — specifically, we offer internally supported mentoring and coaching programs, in which we challenge these senior people to help the younger ones. More recently, we have all been very involved in EDP Distribution University. Ângelo Sarmento (AS): One objective of
the school is precisely this: to retain internal core knowledge of Distribution's business as well as data on how it is transmitted from older to younger generations. Another new reality is mobility. How have employees reacted to these changes within the company? JT: We strive to be a dynamic organization.
We believe that people have much more potential than they realize, and when they are faced with new situations, they bring new ideas. We have challenged a lot of people to perform other job functions, and what we have seen exceeds our best expectations. In the regular meetings that we hold, we do take the opportunity to have open discussions. It is part of the process of cultural transformation. We feel we have evolved; we are a more efficient and approachable company with a wider set of knowledge skills in which people view change as a positive outcome. At EDP Distribution we have a satisfaction index, clearly unusal for what one would expect from a company of this size, because there is this ongoing monitoring of people, which we demand from all our leaders. The results, in terms of employee satisfaction, reflect the fact that the action plans for each business unit
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are closely monitored, making motivation essential. AS: We are stressing a set of values that are lining up well with the culture we want for the company, a development that is very evident in each axis. Returning to the rationalization of costs, how can we bring together this objective and the need to continue pursuing an investment policy? MSA: Rationalization of costs implies being
more efficient at what we do. The investment focus is to realize where we must apply the money. We can better optimize resources in order to reach the target with the biggest impact. These are not incompatible forces. A good investment can, and should, allow a reduction in costs. Investment and service quality go hand in hand in hand at EDP Distribution, with results that reflect very careful management. What are the main environmental risks of EDP Distribution's activities? JT: I feel like answering that they are less
and less, according to the measures we have
We organized an "Environment and Sustainability meeting" in 2009, and another one in 2010. The next month of June will see another new meeting. These are considered discussion opportunities in which EDP Distribution and other Group companies, as well as outside parties that we invite, can gather to take stock of what has been achieved and to discuss our priorities for the future. May regulation somehow condition the goals concerning the controlled risk and superior profitability axes? MSA: It is the aspect of business that may
have the most impact on Distribution. We are now entering a time of discussion for the next regulatory period, from 2012 to 2014. We have to realize, along with the Regulator, how to align Distribution's interests with those of consumers and of the industry as a whole. This is the work we do with ERSE, seeking that the Regulator is in fact the balancing act. JT: Achieving the balance between the business sector and the end-user — the more information we provide, the better and more accurately we convey what are our issues, the
This performance is essential to the Group's image, since a large part of the criticism made about EDP comes from this area ... AS: We must be prepared not only for those
days that we call "spring" in which, invariably, the network performs very well, but also for the days when there are strong disturbances to the atmospheric level that, in fact, cause us some problems, forcing us to be ever more vigilant and better prepared. But it is also necessary to improve in terms of customer communication in order to provide the information needed quickly and accurately. However, even in our troubled network response has been more effective which has greatly contributed to implementing the POAC (Operational Plan of Action in Crisis) which, within a short period of time, allows us to mobilize teams for such periods as may be necessary, operate and manage the resources appropriate means to restore normalcy, in a work involving civil protection, municipalities and fire prevention. Communication has been a recurring theme in this conversation ... JT: We're all learning how to communicate
We strive to be a dynamic organization. We believe that people have much more potential than they realize, and when they are faced with new situations, they bring new ideas. We have challenged a lot of people to perform other job functions, and the results that they achieved have frankly been very positive more the decisions will be considered. We have used this approach, which seeks to explain what is Distribution's day-to-day and the challenges we face. We know that the Regulator wants to regulate well, and that our contribution is essential. Turning to another axis of the P2012, excellence in quality of service, can we say that this same quality of service has improved substantially in recent years? AS: Definitely. In terms of the main indi-
cator of quality of service, the TIE-PIMT, aka TIE (time equivalent interruption), I would say that over the past 10 years, it has improved gradually and safely. From an initial value of 480 minutes, we are currently stabilized below 120 minutes, which means a reduction of 75 percent. Of course, this reduction is at the global level. There are always some areas that are not as good as others. In Distribution’s 2012 Program for the Excellence in Quality of Service axis, we are emphasizing the reduction of asymmetries, putting effort into leveling areas where our performance is more positive.
more effectively. In fact, this is an ongoing effort in determining the objectives of EDP Distribution. Only through hard work, great professionalism and a cohesive team capable of performing better each time were we able to improve our quality of service by 75 percent in 10 years. This organizational culture has allowed us to make judicious investments, which in this period reached about 3 billion euros. We always seem to take away very positive experiences, but we have a very high level of exposure and therefore it is much easier to be criticized than to be given credit for our performance. The quality level of service we provide is already internalized — it is normal, an acquired quantity. We have done a good job, but people are becoming ever more demanding about quality of service, which undoubtedly a reflection of one's quality of life. With regard to external service providers, what measures are to be implemented to sustain the improvement in work performance? JT: It's hard to live without the service
providers. But we have a balanced level of outsourcing, and we make decisions about what v
been adopting. But the environment and sustainability theme is, increasingly, on our agenda. MSA: The environmental risks associated with the distribution business have not changed much; rather society’s demands are growing. There are risks from the distribution activity itself, such as the treatment of waste, which must be managed carefully. There is also the need to bring together activities we develop and that are subject to various restrictions. For example, we cannot lay networks through protected areas without certain licenses; as we are everywhere, it is necessary to work with various entities in order to minimize the environmental impacts that may arise in the field. JT: The creation of airline protection zones, for example, is a decisive issue — not only because of the impact on the quality of service but also as a factor in fire prevention and protection, as well as biodiversity conservation. As we have about 220,000 kilometers of lines, EDP Distribution has a responsibility to learn to do better. This must be a distinctive and constant feature in our work. MSA: The subject is dear to Distribution.
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v
they consider the appropriate level for this company. In this area, one of the hallmarks of recent years is that we deal with our external service providers as our partners, assuming they have an ever increasingly important role. But we do not shy away from demanding tenders or from entering service levels aligned with our own. Years ago, EDP Distribution offered a significant number of direct services, which we have since reduced, keeping the market competitive. And we have a partnership idea for a long-term relationship, which our PSEs need to improve in many respects. We realize that the performance and qualifications of external service providers — which reveal themselves not only at the level of the contract, but also in such important areas as prevention and security, where we promote joint actions — are strategic to Distribution's performance. It is true that currently we treat our service providers as we do our employees, and from this perspective, we want them to internalize the values of our code of conduct when they present themselves before the customers. In customer service, what initiatives exist to reduce connection times, complaint resolution and service reconnection? AS: We are about to publish the "Connec-
MSA: By the way, the business line was already launched in late November. The largest corporate customers in continental Portugal now have direct and priority access to this information. It has been a great success, and we have received very positive feedback from customers. We started with a group of about 2,000 customers, which we plan to triple. Turning to a no less important area, public lighting (PL) ... JT: The issue of PL is also one that we have
worked on closely with municipalities at the demand level, implementing the best and most appropriate solutions, which are supported by new technologies that contribute to greater energy efficiency and reduce associated costs. On the other hand, we've realized that about a third of the communications we receive at the contact center are related to PL. We are, at this point, experimenting with a dedicated line for public lighting, with specialized services that we believe will enable us to take a qualitative leap. The InovCity project also contributes to energy efficiency. What has it done so far? AS: Feedback for InovCity is very positive.
It is a project that completely changes the paradigm in the energy business, in distribu-
materialization of the idea of innovation — we are very proud of this development project for intelligent networks, which places EDP and EDP Distribution at the forefront of what we do, both in Europe and globally terms. It required a massive mobilization of technology in the first phase, and more recently, the mobilization has focused more attention on the consumer, as well as what outcomes this technology might have. Electric mobility is on the agenda. Are the results meeting the expectations? AS: This ambitious program set by the
government is being fulfilled. It focuses on the installation of charging points throughout the country. There are 25 district capitals that will constitute the pilot cities for this project. By now, we have about 300 charging points that are already beginning to be installed in certain fast-charging stations. And until the end of the year we calculate that, within the scope of this program, we will have installed at least 1,300 slowcharging points and about 50 fast-charging points. This will allow, for example, companies with fleets of electric vehicles to have, in the short term, guarantees of charging points for their vehicles. JT: It's a very demanding national challenge. You need to identify the places, have
The InovGrid - InovCity project is the materialization of the idea of innovation – we are very proud of this development project for intelligent networks, which places EDP and EDP Distribution at the forefront of what we do, both in Europe and globally. tion Manual," an instrument that defines a set of procedures and recommendations to convey to customers and, which, internally will allow the standardization of these procedures, thus improving customer response time. At the level of complaints, we are examining the entire process, identifying bottlenecks, as the best internal practice for optimizing this cycle. We have to be faster and more effective in how we communicate with customers; respond in a clear, less technical manner that brings us closer to the customer — a common but equally rigorous language. At the level of service reconnection, one of the aspects that customers value most is how long it takes us to repair a defect, especially one that affects them. One focus area for this team is the definition of the most effective way of transmitting information to the contact-center level, specifically the support and type of communication that needs to be established. 38 o n
tion, and in the way we relate to and communicate with customers. The network will be modernized in order to attract and integrate a set of new ways to produce energy, from microgeneration to electric vehicles. We will raise customer awareness of energy efficiency and be able to show them their actual consumption within a short time period. We are undergoing a pilot phase to validate this whole concept, and it has been a very enriching experience for everyone. MSA: InovCity was released on April 6, 2010, in Évora. We shall not fail to note its first anniversary. We can then begin to take stock of this process, not only in operational terms, but also from the standpoint of the consumer, between 2011 and 2012, to understand if we do a “roll-out,” what extending this project to the Portuguese territory will look like. JT: The InovGrid - InovCity project is the
interactions with the municipalities and the GAMEP (Office for Electric Mobility in Portugal), find the electric solutions, and liaise with the various suppliers of equipment. This pivotal role has been handed over to EDP Distribution, and as was previously said, we have fulfilled it in a determined and already recognized way. In compliance with the legal requirements of electric mobility, EDP Distribution has created two companies: SGORME (Sociedade Gestora de Operações da Rede de Mobilidade Elétrica), which ensures equipment installation and maintenance. We had to take steps to mobilize even in organizational terms, in order to respond more effectively to the law’s requirements. Is it fair to say that in this area we are at the forefront in Europe? JT: Definitely. The Portuguese project has
a number of innovative features that distin-
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guish it from others. Moreover, equipment already is being exported. There are conditions that lead to electric mobility’s success. From the infrastructural point of view, let’s hope that more vehicles appear in significant numbers that will meet the corresponding availability in this network. AS: In terms ofindividual consumers, I admit that it might be more difficult to implement this system, but at the level of companies we already see positive signs beginning to emerge. They perform shorter circuits, and it is more compatible at this time, with the charging point’s dimension and availability. EDP Distribution has a structure that tracks everything in relation to the constant innovation axis. There is even an innovation government ... AS: In fact, we created a structure in EDP
Distribution to monitor and streamline all initiatives related to innovation. All these issues we have talked about – smart grids, electric vehicles and others — are clearly innovative, but they do not end here in a com-
pany with our dimension. There are a number of good ideas at various levels that must be channeled and handled in an organized and systematic manner. To this end, we have created an innovation committee comprising macrostructure elements of the various business areas, and we have also formed the "Magnet Team" to energize the various operational units. What are the key words of the organizational culture axis? JT: The 2012 Distribution program is a
mobilization program. It contains four key words that did not result only from a decision of the board of directors; they also resulted from the work developed at several levels to enable us to structure the program. The business plan and the 2012 Distribution program have been reflected on previously through a significant mobilization of EDP Distribution's management echelons. The four words reflect our way of living, the distinctive traits of the company's organizational culture, which is a transversal axis of this program. First, "Execution" -- because this compa-
ny executes. It is a company that is called on when things need to happen. And from the point of view of cost control and deadlines, it is a very disciplined company. The second key word is “Involvement.” In a previous program we had used the word “closeness,” but it was not enough to translate the reality, as proximity by itself does not mirror what is another hallmark of this organization — the effective involvement. Then, "Simplicity." Doing things in a simple way, deciding in a simple manner, eliminating waste ― these are all examples of the company's simplicity in terms of operation and in its relationships with customers, municipalities and various other entities. We want these relationships to be as simple as possible, and the other parties all felt that access to Distribution was easy to obtain. And lastly, "Innovation" — not only technological and processes innovation, but also innovation in how we relate to and manage people and, moreover, in how we identify that potential. These are the key ideas that we desire to be defined by and transmit forward. o n 39
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in discussion JORGE VENTURA - V e n d o r Ma n a g e m e n t D e p a r t m e n t
Outsourcing Companies turn to contract services as a way to help them achieve the objectives set by management. What are the advantages of this practice for the EDP Group?
T
he outsourcing onus for infrastructure companies, particularly in the utilities sector, has been growing and now represents about 48 percent of the total workload. Companies turn to outsourced services as a way to help them achieve the objectives set by management, thus ensuring the greater adaptability and flexibility needed to respond to market changes.
40 on
Also at EDP Distribution, the demand for greater flexibility and efficiency in response has led to a progressive increase in outsourced services leveraging the know-how and expertise of outside firms in certain key functions, enabling the company to focus its energies on the essential business competencies. Strategically, EDP Distribution has focused on planning, defining Project-types,
in network control and monitoring and in the execution of some maintenance works. Our path in outsourcing has allowed us to achieve the following: • Reduce costs, scale back investments in terms of financial commitments and allocate them more efficiently, and decrease structural expenses; • Improve performance and efficiency, ensuring specialization and optimization of resources in routine and very high volume tasks; • Ensure greater availability of internal resources in identifying new areas of growth, methods and work habits oriented toward service and flexibility; • Comply with greater flexibility and speed to changes stemming from new regulatory requirements. We have thus been progressively aligning the contractual model with the objectives and strategy set by the business, using outsourcing as a management tool to align the contractual model to the established strategy. This model seeks to foster lasting partnership and mutually beneficial relationships, guaranteeing a sharing of risk consistent with what each party does best. In the constant search for improvement — a decisive factor in business sustainability— the contract stipulates the commitments regarding the level of service to achieve (SLAService Level Agreement), in addition to measuring the performance of technical quality, environmental and security markers. All these factors influence, in aggregate, the application of incentives and penalties resulting from the compliance, or non-compliance, with the value traded and negotiated.
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in discussion
Perspectives on Outsourcing
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Márcio Franco
José M.ª Rey Paredes Clara Maia
· EDP Brazil’s Executive Procurement Manager
· Head of HC Energía’s Technical Services
· EDP Production
One of the main issues in the current business scenario is the need for organizations to act competitively. The main advantages of outsourcing are financial, technological, competitive and businessfocused. The financial sphere is linked to reducing operating costs and the economic use of company resources. Another advantage is technological, i.e., the vendor delivers the innovations that appear in the market, as service providers are in general constantly looking to new technologies to improve processes and reduce costs. A company that adheres to outsourcing becomes competitive by becoming more agile, since its energy is concentrated on the issues and strategies of real importance to the company. All these elements justify choosing outsourcing.All these elements justify choosing Outsourcing.
The degree of outsourcing at HC Distribution has been increasing gradually, as a practice that allows greater flexibility (fluctuations in workload) and reduction in costs (less specialization of companies and less investment in equipment) for certain jobs. These are either repetitive and of little difficulty, or more complex and can be performed by specialized companies following HC Distribution’s general criteria. Among them, carrying out projects, plant construction and maintenance; remote command of the facilities; customer service center, as well as activities where specialized companies exist in our industry. There are, however, other non-outsourcing jobs that require a keen knowledge of our network and comprise activities that can majorly impact our Company’s quality and image indicators before our clients. In the last contracts executed in December 2010, a series of criteria was established placing special importance on quality and safety. And thus, the deals were valued 70 percent by price; 20 percent by quality and 10 percent by safety.
In the process of optimizing the engineering of EDP Production, its core competencies and defined strategies for the realization of non-core activities were defined. Among them, we highlight the outsourcing policy that freed non-core activity resources, allowing us to focus on other core activities and better adjust to the volatility of engineering activity. Later, the introduction of a significant number of new water projects changed the scenario underlying the outsourcing policy, which had originally focused on the company's non-core needs by extending its core activities, for which it had the capability but not the resources needed to meet a demanding schedule. From a scenario where outsourcing already covered almost all aspects of supervision, coordination and safety, topography, and land activities, we went to a framework in which many projects were also awarded externally, given the company’s inability to develop them in opposition to others executed with internal means. In spite of the identified benefits, applying outsourcing to a specific engineering area is not done without difficulties, given the the inadequate market response both in terms of quality and deadlines.
At EDP Distribution, the demand for greater response flexibility and efficiency has led to a progressive increase in the recruitment of services. This new approach leverages the know-how and expertise of outside firms in certain key functions, enabling the company to concentrate its activities in the essential business competencies.
Jorge Ventura has been an employee of the EDP Group since 1978. He worked as a project manager in the construction and maintenance of high-, medium- and low-voltage substations in Portugal and was also employed by the Electric Company of Macau, where he was a member of the “Technological Exchange Group" with the People's Republic of China. In 1999, he became part of the "Distribution Reorganization Team.” With training in electrical engineering, he has worked in several areas within the company. Currently, he manages EDP Distribution's Vendor Management Department.
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w h o ’s w h o ? P ro fe ss o r a t t h e I n st i t u to S u p e r i o r T é c n i co ( H i g h e r Te c h n i ca l I n st i t u te )
ANTÓNIO SARMENTO What is the WindFloat project?
It is an innovative project in the area of offshore wind energy, which is scheduled for installation in relatively deep waters. We have already had great experience with offshore wind energy but in relatively low water depths of 20-30 meters (65-98 feet). For such low depths, we roughly use technologies that are applied on land and adapt them to the sea. That is, there is a tower with a turbine on top, and this tower has a foundation set into the seabed. As we move into deeper waters, this
structures and instead replace them with floating structures. It is this step that EDP is now taking. At what stage are you now?
EDP knows this better than me, but it is in progress. Most materials have been purchased. Construction is already under way. The first phase needs to be finished by assembling all the components that are being built. The turbine comes from Germany. Larger pieces of the floating structures are being made in
Offshore wind energy: the next step To take advantage of the waves and the wind off our coasts is the goal of WindFloat — a project developed in a pioneer way by EDP, which intends to revolutionize the way we produce energy. In this interview, António Sarmento, president of the Wave Energy Center and a professor at the Higher Technical Institute, in Lisbon, talks about the advantages and the risks of this technology type of structure requires more complexity. And of course, it is more expensive. What are the main constraints of the project?
There is a compromise encompassing the structure’s cost, reliability, safety, etc. The fact that it is subject to the impact of the waves ― which cause vibrations in the turbine and affect the structure — brings a whole set of technical problems that are beginning to mount. And if there is something we know, it is that all operations at sea are very expensive. While we remain in the lower depths, the solutions are close to what we already have. They are considered merely incremental advances. But the belief is that when those depths get to the 50- to 60-meter mark, the solution will have to be different. It is a disruptive innovation; it breaks with our past experience. And this breaking point is when we stop having fixed 42 o n
Setúbal at Lisnave, and the entire assembly will come together there. This stage marks the end of the production and assembly phase. Then comes the installation phase at sea ...
However, before this phase we have to transport it from Setúbal to Figueira da Foz. And then we have the installation. There is the placement of moorings in the seabed, then the connection of those structures to the moorings. Before this, there is also a detailed characterization of the site that has already been made but can still be improved. And then we enter the testing phase proper. It comprises several steps. The initial phase is more difficult because all the components must be checked. And it is very demanding in terms of the number of employees. As we gain experience and confidence with this type of equipment, monitoring this whole process will naturally diminish.
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P ro fe ss o r a t t h e I n st i t u to S u p e r i o r T é c n i co ( H i g h e r Te c h n i ca l I n st i t u te ) w h o ’s w h o ?
All teams work to prevent problems, but they can happen, from the simplest to the most critical. And it is evident that some issues will appear. What I hope is that they are easily circumvented. And I say this because it is my experience that in certain types of projects, problems inevitably do arise. By insisting on this aspect, I am not praising my abilities to guess, just reminding people: If we can be sure of something, it is that there will be problems. And it's important that people are psychologically and financially prepared to face this situation. I think that EDP is. Any innovation process has an associated learning curve.
the project to end right there, it will be critical, although no one expects or desires it. I think the likelihood of this type of problem occurring is very small. But even if a 100 percent failure occurs, we cannot look at it with a mind-set that is very typical for us ― that of not forgiving mistakes. I usually give this example: It is like putting a kid on a bike to get him to learn how to ride it and hoping the kid never falls. We all know that children fall from bikes, even if they know how to walk. This seems obvious, but not so obvious when it becomes reality. If this happens, it means that expectations have been poorly managed.
What would be a critical event?
In your opinion, how is EDP managing these expectations?
If there is the type of problem that causes
I think EDP is managing them well, from
the conversations and contacts I have had. But obviously, the management of expectations is not just EDP’s responsibility. It also belongs to the public bodies funding the project, to the entities that oversee the project, etc. Everyone has to realize that this is a project with a certain amount of risk, that it will have problems, and that it can even go wrong. But the fact is that this path must be taken. Is there a schedule in place for when this structure will be installed?
We expect it to be installed in August. Now, my experience tells me that it's difficult to keep up with these schedules; these are innovative systems and problems appear where least expected. So far I do not know of any project that has not been delayed. I do v
And if things do not go as smoothly as planned?
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w h o ’s w h o ? P ro fe ss o r a t t h e I n st i t u to S u p e r i o r T é c n i co ( H i g h e r Te c h n i ca l I n st i t u te )
not mean that there isn’t a plan and that people will try not to follow it. No, I am referring to some delays that may have nothing to do with people. In August, the sea is calm, but the climate can change and cut that operation short. It may also happen that there is a delay in the yard or in transport. And we see structures as trivial as buildings or bridges that are constructed by the dozen, where a lot of them get delayed for years. Again, I repeat: Many of the difficulties have to do with people’s expectations. Therefore, an effort must be made here to present the project with all its qualities while also recognizing what the risks are and being prepared to accept them. Why the need to move forward with such a project in Portugal?
Our coast sinks relatively quickly. Wind turbines make a relatively large visual impact, even more so those that generate more power, like the ones that will be operational at sea, and that are therefore larger in size. Nobody, I think, would like to go to the beach and see the skyline awash with turbines. There is some concern that these turbines be put far enough from the coast that they cannot be visible or at least be visible in a way that is not distracting. And what are the implications in terms of efficiency?
In regards to long-term costs, there is an opportunity for these turbines to produce energy that is not more expensive, for two reasons: First, the wind strength is greater if we move slightly away from the coast. Second, a solution such as the WindFloat can be entirely manufactured at a fabrication yard, so the cost of installing the turbine is relatively cheap when compared with the cost of installing fixed turbines, because those types of turbine require the use of specific vessels that are extremely expensive.
ANTÓNIO SARMENTO Sarmento is an associate professor at the Higher Technical Institute (IST) and president of the Wave Energy Center, in Lisbon. He is a board member of the European Ocean Energy Association and Directorate of the International Society of Offshore and Polar Engineering (U.S.A.), as well as an adviser to the Scottish government and the Energy Technology Institute (U.K.). Sarmento began his work in the field of wave energy in 1978, in hydrodynamics, and in 1985 obtained his doctorate in the same subject matter from the IST. In 2003, he founded the Wave Energy Center, where he has played a role in the dissemination of wave energy use and the development of inherent public policies. Within this framework, Sarmento has also carried out strategic studies for both domestic and foreign companies.
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Do you think Portugal needs a project like this to take advantage of its coastline?
This project allows you to explore a resource that otherwise would not be possible to explore in a meaningful way. If successful, it will allow exploration of this resource in Portugal and in other coastlines. EDP is now an international company and, therefore, has the opportunity to develop a technology that allows it to explore this resource before others. And that, I think, is one of the company's goals. If it turns out to be, in fact, a product of great industrial value, EDP will also take some advantage of the industrial component.
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P ro fe ss o r a t t h e I n st i t u to S u p e r i o r T é c n i co ( H i g h e r Te c h n i ca l I n st i t u te ) w h o ’s w h o ?
Any idea how much has been spent on this area of wave energy?
Over the past 10 years, we will have spent 500 to 600 million euros across Europe. But to give you an idea, we spend 1 billion euros per year on the development of photovoltaic technology. Today, all successes are built at the expense of some failures, and people have to keep that in perspective. Is there an example of success in obtaining energy offshore?
Take away oil and gas, and we cannot even talk about it. In the non-fossil fuel arena, the wave and offshore wind farm technologies in Portugal are both potential industries. Elsewhere, there are other energy sources. There are tidal currents. There are gaps associated with the tides themselves, but in Europe they are difficult to implement due to their environmental impact. There is the thermal gradient, which allows you to leverage power in
be in a clearer situation as to which technological path to follow: the one under development by EDP, or one being developed by a competitor. Personally, I think this has great potential; however, we must then show that it is technically reliable, and later still, that it is commercially feasible. In Portugal, dam construction began around 1940 and was completed 30 years later. I think that if things go well, if no significant environmental impacts or conflicts of use occur, and if the cost of energy can be made attractive, it could take maybe 4050 years to exhaust our resource. What is the Wave Energy Center?
It is a private, nonprofit organization. It was established in 2003, and it is not just a research center. We have one, but our perspective is somewhat different. Our goal is that offshore renewable energy be a commercial reality. That one da, there is an industry that can produce electric power from it. We have one,
I would like to take my hat off to EDP for embarking on this project, which has great potential. It is to be congratulated for taking on this initiative. I wish them the best of luck. And, at the same time, I would like to ask everyone involved that if things don’t go as well as expected, please not to throw the first stone the equatorial tropics, using the temperature difference between the seabed and surface. There is the saline differential, a technology that is being developed in Norway — if you have a very voluminous river flowing into the salty sea, this difference in salinity can be harnessed to produce electricity. And then, in a completely different area, we have the production of seaweed, among other things, for biofuels. In how many years can we produce energy from offshore wind resources?
It will take a few decades. We are currently testing a technology that is not unique. There are other companies exploring the same concept of floating turbines in different ways, but we need to show that this technology is reliable. This will require building a second turbine group whose objective is not cost-oriented but is to be used to show that this technology works. Then we must show that there is a potential to reduce costs. It is necessary to convince insurers and banks that the risk is limited. So when we're not talking about technology, we get into the commercial aspect. I think that in the next five years we could
but our perspective is somewhat different. Our goal is that offshore renewable energy become a commercial reality ― that one day, there be an industry that can produce electric power from it. We are clearly intending to create the prospect of commercial activity resulting from our efforts. With this mind-set, we must then identify the barriers before us and how they can be overcome or even removed. This compels us to work in almost all areas where we have the capacity. We have people working on more technological parts of the project; we have a group focusing on the numerical modeling, which develops calculation tools that allow us to study different systems of wave energy. We have a group that deals with the environmental aspects, and another that works on public policy, trying to promote legislation to facilitate all processes. Yet another group works to disseminate information to society at large or to a specific segment of the population. And, every year we have intern trainees here at the center working from three months to, in some cases, up to one or two years. And besides all this, we also want our work to contribute to the enrichment of the labor market.
WindFloat The WindFloat is a simple and economical patented-design floating structure used to support offshore wind turbines. The innovative features of WindFloat, which mitigate the motions induced by waves and wind generators / turbines, allow the deployment of offshore wind generators to places previously inaccessible, where the water exceeds 15 meters (50 feet) in depth and the wind resources are greater. The system will be tested in Aguçadoura, at an EDP park, and connected to the network for a period of no less than 12 months. Its goal is to confirm the performance integration between the WindFloat and the turbine. Studies will also be undertaken regarding the commissioning / decommissioning, operation and maintenance of these structures.
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human capital “Leadership is a process of influence that seeks to unleash the power and capabilities of individuals and institutions" - António Mexia
“Being an EDP Leader” reinforces leadership skills
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he training and awareness sessions on “Being an EDP Leader,” which lasted through March, involved all the leaders of the various Group companies in Portugal. This initiative, which is directed at all positions of leadership within the Group under the auspices of the EDP University, seeks to strengthen the skills and leadership behaviors of employees with this profile while disseminating the “Leader's Guide"(see box) more thoroughly. The three-hour training was based on an interactive methodology. Participants were organized into six-people teams, and each of these groups was accompanied by an "energizer" who was responsible for helping the team go through a set of exercises. Group dynamics
In the first phase of training, the participants worked on a map with information on what it is to be a leader. We have included here some leadership examples and stories, along with the EDP leader skills and behaviors associated with them. 46 o n
Once the map closed, each team was invited to participate in a game of questions and answers related to HR processes. In the end, everyone received a certificate of participation and a CD with the digital version of the “Leader's Guide." For “Being an EDP Leader,” 50 energizers were prepared and about 700 employees were trained in managerial tasks. It took a total of two sessions to prepare those energizers and more than 30 sessions for the other oversight roles.
processes in the 'Leader's Guide' — a good working tool.” The initiative began in Portugal, and at a later stage it will be shared and replicated in other locations where EDP exercises its activities and has employees, with the necessary adaptations made in terms of language and content.
Exchange experiences
Maria Julieta Cuiça of EDP Production was one of the energizers for this initiative: "I really enjoyed it, and I think it is a very interesting initiative in terms of both the objective and the dynamics. It is very important to make people aware of the contents of the Leader's Guide, and I see the exchange of experiences that happens here as a very important aspect of this exercise. For EDP Valor’s Luis Damião, this meeting "was important for exchanging experiences among participants and visiting all the HR
Leader's Guide This document consolidates the main human resources-related issues that hierarchies encounter in performing their activities while managing people and where the role of leader in each of the HR processes is reinforced.
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human capital
“Learn More About” transcends frontiers
+Conciliation Juniors distinguished for good performance "It's always very important to see that what we do has value and is recognized," said one of the winners of the Junior Citizenship Awards 2010. The awards ceremony took place Dec. 22 at the Museum of Electricity.
For the third consecutive year, and within the program +Conciliation, EDP recognized the children of employees who have excelled in academic performance and participation in civic affairs, be it volunteer work, sports or cultural activities. EDP received a total of 107 applications for the competition. According to Human Resources Director António Pita de Abreu, the goal of this award is “to honor employees’s children who early on display concern and interest in citizenship, interact well with others around them, and give a little of themselves to society." Carlos Carvalho Samouco (son of a retired EDP Distribution employee) and Francisca Ribeiro Neves (daughter of an EDP Production employee) took first place in the ninth-grade group. In 2010, exceptionally and given the proximity in terms of score, EDP recognized three winners of the second echelon. Thus, Filipa Ribeiro Neves (daughter of an EDP Production employee) and Frederick Ladeira, Ana Dias and Regina Vieira de Castro (children of EDP Distri-
bution employees) were the top finishers in the 12th-grade category. The quality of the applications was also evident in the higher education group, in which three winners were chosen: Filipa Lopes Fernandes, Pedro Marina Basil Sylvester and Sarah Smith (children of EDP Distribution, Production and Valor employees), respectively, who took home the first-place prize for this category. Besides recognition for their performance, the eight young people received gift cards valued between 500 and 1,500 euros. The remaining candidates were awarded participation prizes. These excellent students also scored points for their participation in extracurricular activities in the fields of citizenship and solidarity, thus setting an example for their peers to follow. According to one of the winners, "It's good for other young people, children of EDP employees, to see that it is worth paying attention to the society in which we live and that work can be recognized by a company like EDP."
"Learn More About (LMA)," an initiative aimed at sharing knowledge that informs EDP employees about what is done best in each area, was held for the first time outside Portugal in collaboration with the Group's various Human Resources departments. The theme for this LMA was ‘Shopping in Brazil’ and included the presence of EDP Brazil’s president, Pita de Abreu, and vice-presidents, Miguel Amaro and Miguel Setas. Two sessions were held, one at EDP Bandeirante (São Paulo) and the other at EDP Escelsa (Vitória). Both counted a large number of participants, with a very positive final assessment, which demonstrates a great acceptance on the part of EDP Group's employees to this type of session. Themes presented included examples of procurement processes from EDP Brazil and an interactive online trading (e-auction) event in which participants had the opportunity to make bids and check the progress of the event in real time. Organized by EDP Brazil employees and directed by their managers, Luis Gouveia and Márcio Franco, this event also had the presence and support of the EDP Group’s CPO, Luis Ferreira, and employees from EDP Valor (João Marques Almeida) and HC Energía (Pablo García Menéndez).
The themes presented in LMA • Procurement in EDP Group • EDP Brazil’s Purchases Balanced Scorecard • Vendor Management • Maximizing Synergies • Evolution of the Purchase Model • Market Price Analysis • Market Trends • Internet Trading
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human capital
Sports Festival In order to impart to employees the importance of reconciling the activities of their everyday professional lives with their personal lives, EDP Brazil’s Human Capital Management area organized, under the banner of their Conciliation program, a traditional sports festival in their respective localities. Employees from different areas in São Paulo, Espírito Santo, Mato Grosso
do Sul and Tocantins spent a day of physical activity full of fun and sweat. The sports festival reinforces the Group's initiative to promote a collective culture of physical activity for employees. EDP's conciliation actions, such as the festival itself, were vrecently recognized by the energy sector with the 2010 Sodexo Professional Life Award, in the Quality of Life category.
Share our people’s know-how The pilot phase of the "Valuing Experience" program is coming to an end. This innovative project occurred in two phases, which resulted in many proposals for knowledgesharing initiatives.
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fter the awareness workshops for the program’s target population, the employees submitted numerous ideas showing a trend toward more proposals for initiatives related to their daily activities. Within the technical area and project management, for example, the themes included "knowledge based on logic / language SAP," "operation of thermal power plants," "operation of hydric projects," "safety and health at work: rules/security procedures related to the consignment of equipment," “integration in international projects," "planning of communication actions," among many others. According to the participants, these initiatives should be aimed not only at the internal public, newer employees, and/or employees with less experience and knowledge in the specific areas, but also at the external universe, such as professional schools, universities and service providers. Although in this edition of the program, and in the two phases total, approximately 300 employees have been involved, we recall that in the
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In late spring, this cycle will close with a meeting to "Celebrate Initiatives" Group's companies in Portugal, EDP has almost 3,000 people with more than 30 years of seniority and 50 years of age who, over their long association with the company, have accumulated knowledge and experience. With this program, we intend to give all our employees the opportunity to find new ways of delivering and enhancing that knowledge. The program "Valuing Experience" is part of EDP's strategy because it contributes to the cultural changes desired by the Group as it strengthens execution capabilities and promotes greater efficiency throughout the organization. This initiative is based on the idea that experience is of enormous value, provided that it serves as a springboard to "new heights"and not as a static comfort zone. In other words, knowledge becomes all the more valuable the more it is shared. Share your knowledge!
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edp is more than energy, it’s life
EDP is part of people’s life. Over 20 million people in 12 countries make our energy their own, at home, at work, at school, everywhere. This is why we continue to invest in development and technology, in minimizing the environmental impact of our operations and, above all, in initiatives that preserve the environment, that preserve life. For all this we can say that EDP is more than energy, it’s life.
www.edp.pt
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Our energy* Biodiversity in schools This past November, EDP Production promoted biodiversity appreciation through projects with the EB 2 / 3 Sendim Community School, in the municipality of Miranda do Douro, and the Visconde Vila Maior School, in Torre de Moncorvo. Both groups of project participants, consisting of about 40 students and teachers, were accompanied by EDP staff members Vitor Batista, from DSA, and Anabela Peres, from DPI, as well as Anabela Amado, a biologist and project coordinator, who is mapping and characterizing the region’s native plants. After a foray into the field to collect the respective seeds, the participants sent the specimens to a laboratory for germination, followed by a phase of growth in greenhouses in central Setúbal. Then the seeds will be returned to their home environment, where they will be planted and sponsored by the students who gathered them.
Discussion on sustainable management The "Water Resources - Management and Value" conference was held last October in Pedrógão Grande, near the Cabril dam. The discussions sought to analyze the country's efforts at sustainable water resource management. The newspaper Região de Leiria has launched an initiative to examine what is being done in the area in terms of correcting waste and destruction trajectories. The conference featured a panel of speakers consisting of António Castro, EDP Production manager; Nuno Bravo, director of the ARHC Interior Water Resources Department; Pedro Teiga, a river and stream rehabilitation specialist; Amável Santos, managing director of Águas do Centro; and finally, António Martins, a representative of the Tourism Center of Portugal. 50 on
MORE SUSTAINABLE STUDENTS During vacation, there is time for everything: to play and to learn too. That idea undoubtedly occurred to the children of HC employees who, during their last school holidays, participated in a series of sustainability workshops at the Museum of La Eria, in Oviedo. This program is a replica of a similar initiative in Lisbon, through which children are awakened to three fundamentals of sustainability and energy: the source of energy, energy efficiency and electrical safety. Created by the HC Energía Foundation, the initiative has involved more than 10,000 children in Astúrias and the Basque Country. After school, from which the children leave in a good mood, the program allows them to enter the various worlds of energy and sustainability and raise awareness of these issues among their families.
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Our energy
The Geração Orchestra plays music to Mirandela Portugal launched an expansion of the Geração Orchestra (Generation Orchestra) project for three years, with the support of the EDP Foundation, Ministry of Education, Calouste Gulbenkian Foundation, Music School of the National Conservatory and municipal councils of the regions involved. In December this initiative came to Mirandela, where the first 27 disadvantaged children from Trás-os-Montes received their musical instruments. The delivery of the stringed instruments (14 violins, five violas, five cellos and three basses) represented early Christmas presents that, otherwise, hardly any of these young people might ever get. The expansion of this initiative is linked to the hydropower investments made by EDP. Through a set of development initiatives and promotions, the Group shares the benefits of hydropower with the populations living in areas covered by new projects.
Party in Picote On Dec. 4, 2010, EDP hosted the latest celebration of the Santa Barbara Feast at the site of the Picote Voltage Reinforcement project, in the municipality of Miranda do Douro. The feast, which included a mass and dinner, is held every year to celebrate St. Barbara's Day, which honors the patron saint of miners. It was heavily attended by workers, and everyone was in good spirits. At the request of the Barrocal do Douro Chapel community, it was decided that when the Voltage Reinforcements works are finished, St. Barbara's image will be shown ad aeternum in the chapel.
MP visits Baixo Sabor Member of Parliament Agostinho Branquinho, of the PCP party, visited the construction site of EDP's hydroelectric project in Baixo Sabor this past November. He was accompanied by colleagues from his party on this trip to Bragança and Torre de Moncorvo. Branquinho stressed the importance to his work of seeing the construction process firsthand and receiving explanations on how it works from EDP and other stakeholders (ACE Baixo Sabor, Consulgal and Tabique).
NEW LOOKOUT POINT IN FOZ DO COBRÃO The Foz Cobrão has a new outlook point, the Portas de Almourão Monument, which opened on Dec. 14. Here you can enjoy the beauty of the surrounding landscape and the biodiversity specific to the region. The monument was built by the Vila Velha de Ródão municipality with EDP’s support, and it will bring attention to the region of Portas de Almourão, located downstream from the future Alvito dam. The ceremony, during which a plaque was unveiled symbolizing the work's completion, was followed by a tour of the lookout point by António Castro, director of EDP Production; Sérgio Figueiredo, assistant director of the EDP Foundation; Maria do
Carmo Sequeira, mayor of Vila Velha do Ródão; and Armindo Taborda, Castelo Branco's civil governor representative. o n 51
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sustentability R e s p o n s a b i l i t y fo r t h e e n v i ro n m e n t
EDP in Brazil is well certified Both in Distribution and Generation areas EDP Brazil proved to be on track to reduce the risks and impacts of its projects
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s its global strategy, EDP in Brazil reinforces its growth with gains in the environmental and management certifications arena. In the field of Distribution, EDP Bandeirante went through the 2nd maintenance certification audit of substation operation and maintenance activities for OHSA’s 1800:2007 Standard, and the Vale do Sol ETD, ETD Maresias and EDT Dutra substation operation and maintenance activities for the ISO 1400:2004 Certification in Decem-
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ber 2010, without any "non-compliances." The Generation area, Enerpeixe, which operates the Peixe Angical Hydropower Project in Tocantins State, took another step in the quest for sustainability with the ISO 9001 - Quality Management System QMS Implementation and Certification. Enerpeixe was the first company in the Tocantins River Basin to receive these certifications, which confirms the success of actions implemented to reduce risks and impacts of this project.
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100 TONS of CO2 avoided per year
Peter Sirgado, EDP Instituto’s Director, participated once again in the COP-16, the UN Conference on Climate Change, held in Cancún, Mexico. Acting as EDP representative in the Brazilian government mission, Sirgado met with business leaders and rulers of different countries to discuss climate change and increase the Copenhagen Agreement, which seeks to limit the temperature increase to no more than 2 º C above those recorded in pre-industrial times. Today, the Instituto EDP manages a portfolio of around 100,000 tons of avoided CO2 per year, which may represent revenue of about 2.9 billion Reais.
HC Energía is already traveling sustainably!
HC and Toyota partners in the electric vehicle The president of Toyota Spain, Katsuhito Ohno, along with HC Energía’s Corporate General Manager, Javier Sáenz de Jubera, signed the cooperation protocol between the two companies to boost electric vehicle sales in Spain. Katsuhito Ohno announced that this is a plug-in hybrid vehicle, one of the first Toyota Prius in the world that can connect to the network and that is already circulating on the roads. Achieving the goal outlined by the Government to push these vehicles into the market depends on four factors: technological development of batteries, the vehicle cost, energy cost and the development of the necessary infrastructure. The collaboration between Toyota and HC Energía allows end users to feel confident that the four factors are addressed by each agent according to their specialty: the development of batteries and a more cost-effective vehicle by Toyota on the one hand, and the energy supply and
Toyota seconded a hybrid vehicle to HC, which will be dedicated to the long distance transportation of its employees recharging infrastructures by HC Energía, on the other hand. HC Energía already possesses its own strategy. The aim is to install 2,700 private and public recharge points in Asturias by 2012. To this end, HC has launched a campaign on this new model of sustainable transport and on how to recharge in four areas: singlefamily dwellings, parking lots and fleets, public roads and facilities. This past 25th of January, the Company formalized a protocol that not only covered the temporary surrender of the vehicle, but also supported its introduction into the Spanish market.
EDP fleet with more autonomy Combining innovation and sustainability, a project was designed to convert five Toyota Prius already existing at EDP Pools (Lisbon and Coimbra) into Plug-in vehicles. The result: the electrical autonomy almost doubled. This project, led by EDP Innovation with support by EDP Valor, began in September 2010 and involved the installation of the Hymotion L5-PCM system, which is nothing more than an additional battery. Although the vehicles remain under the operating mode of a hybrid vehicle, i.e., they keep the electric motors and internal combustion engine automated management, the vehicle’s electrical autonomy component is higher. This lets you use it in a wider range of situations and for longer periods of time, reducing fuel consumption and consequent CO2 emissions and (by about 2/3 compared to the original Prius). Once again, EDP Group sets the example and takes another step forward in the constant evolution of its responsibility vis-a-vis our society in the pursuit of excellence in sustainability. Toyota seconded a hybrid vehicle to HC, which will be dedicated to the long distance transportation of its employees • Increase of the total distances traveled in electric mode between 50 and 65 km; • Decrease of consumption (depending on driving / circulation conditions) by about 2.35L/100km; • The total battery charging time is about 3.5 hours; • The battery pack weighs about 85 kg. o n 53
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foundation* The Museum of Electricity is to be congratulated. "Povo / People" was voted the best exhibition of 2010. Already on exhibit this year is another must-see show: "Opera" photos of the S達o Carlos National Theater, Lisbon
The foundation illuminates change to: The EDP Foundation "rendered account to" society through a campaign disseminated in the media from the end of December through the beginning of January. "Lights" was the motto of this creative and innovative work, which had as its main characters a National Ballet Company dancer, a Youth
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Symphony Orchestra cellist and a dr. Operation Red Nose Clown. The campaign highlighted the foundation as a social, cultural, scientific and environmental project that illuminated the lives of 1.7 million people last year by promoting social inclusion and giving visibility to the best practices in Portugal.
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edp foundation Joana Bastos, "I'd rather be a cleaner."
“POVO / PEOPLE” THE BEST EXHIBITION OF 2010 The exhibition "Povo / People," with which the EDP Foundation joined the celebrations of the centenary of the Portuguese Republic, was voted the best show of the year by a panel of 40 experts invited from the magazine "L+Arte." The exhibit's success also translated into numbers: Between June and September 2010, "Povo/People" attracted 30,000 visitors to the Museum of Electricity.
"Opera" at the Museum of Electricity How many faces, facets and secrets can one building hold? Through March , the Museum of Electricity hosted an exhibition of photographs by Augusto Alves da Silva, whose main subject was the exterior façade of the São Carlos National Theater in Lisbon, a building classified as a national monument. The exhibition, titled "Opera" and produced by the EDP Foundation, was the result of a partnership with the theater, which in 2006 asked several photographers to do a survey of the facilities of the building, which remains the only opera house in the country. "Opera - The São Carlos National Theater inside and out” is the first step in a series that, as of March 25, follows with a second photographic exhibition — this time through the eyes of Paul Catrice, whose work will take us to the interior of the São Carlos.
Ending the year with energy End the year with great energy and pace. This is exactly what more than 3,000 participants did in the São Silvestre road race, the long-distance running competition that traditionally ends most athletes’ year in Spain. The HC Energía Foundation sponsored this popular race, and T-shirts with the slogan "Long live our energy" invaded the streets of the ancient city of Oviedo, as did thousands of smiles. The route passed through the most emblematic areas of Oviedo, to finish, as is usual every year, at the gothic cathedral in the city center. The novelty this year was an electric HC Energía vehicle. Thus, the athletes and the organization moved by means of cleaner energy.
Looking for Talent! Applications for the 2011 EDP New Artists Prize were accepted until Feb. 25. A biennial initiative of the EDP Foundation, this event recognizes national talents early in their careers in the visual arts. From among the candidates, five to nine new artists will be chosen to receive grants to develop works for an exhibition to be held between June and September 2011 at the Museum of Electricity. During this period, an independent jury, usually composed of museum directors, art critics and other experts, will choose the winner. The art ist will receive a cash prize of 10,500 euros, which is to be applied to skill development or the implementation of a project.
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photographic essay A n n u a l A b o 単 o Powe r S t a t i o n P h o t o g ra p h y Aw a rd
Title: Tranquilidad (Tranquility) Author: Julio Cesar Areces
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Objective: Photography The Aboño power station awards were inaugurated in 1992, and during these 18 years since, many colleagues have participated in the annual contest, sharing their passion for photography. This show, published in the "Photographic Essay," showcases many of these artists’ savoir faire. Alberto Villar, Ramón Vina and Julio Areces are the three individuals responsible for this project, which has its own website at www.grupofotoc-
ta.com, where you can enjoy some of these works. The photo studio is equipped with all the necessary means to develop photographs, as well as equipment for the development of new digital technologies. A calendar with great pictures and various exhibitions constitutes the most visible work of the group's members, who are grateful for the cooperation of those who have supported them throughout all these years!
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Title: Despues de la tormenta (After the storm) Author: Óscar Álvarez Pérez
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Title: Caseria (Farmhouse) Author: Montse del Rio Rodriguez
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Title: Luces (Lights) Author: Marce Iglesias Lebrato
Title: Colores (Colors) Author: Juan Quintana Alonso
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Title: Noria (Ferris wheel) Author: Julio Cesar Areces Suรกrez
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Title: Atrapados en el cristal (Trapped in crystal OR Trapped in the glass) Author: Carlos Lorite Martinez
Title: Se vende (For sale) Author: Óscar Álvarez Pérez
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Title: Por el arte hacia la posteridad (For the art of the past OR Looking back toward the art of the past ) Author: Jaine Escobar Aparicio
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in focus JOAQUÍN SUÁREZ SARO, HC Energía’s Regulation Services Chief Which has been, until now, your biggest challenge?
During all these years, I have had the opportunity to participate in several business initiatives, which were important milestones in HC Energía’s current configuration and which have fulfilled me professionally. In the business of distribution, I cannot forget when we exceeded our traditional territory in Asturias. Supporting the legal team which then led this business line (Santiago Bordiú, José Manuel Vicente, Bautista Rodríguez, Jesús Fernández, ...) we were able to set up in the Valencian community after crossing an authentic "calvary" of judicial and administrative procedures put up by frontal opposition encountered at Iberdrola. It was with great satisfaction that we achieved unanimous support for our aspirations from the regulatory bodies and the subsequent confirmation by the courts. And in the area of generation?
In terms of generation, it was very rewarding to give legal support to the so-called "Navarra Operation,” led by Marco Antuña with the invaluable collaboration of Patricio Conesa, which ended with the start-up of the first combined cycle group in Castejón. With this project we had to promote urban re-qualifications on the land where the facility was built, thus overcoming the initial restrictions of water usage imposed by the Confederación Hidrográfica del Ebro, maintaining the support we received from the city council and neutralizing the opposition of some environmental groups ... Until the regulation came …
It was a real challenge to accept the offer of Santiago Bordiú to cooperate with him to implement a multidisciplinary format and impart substance to the current regulation scheme. HC’s regulation group is made up of a group of young engineers with business knowledge that enables them to aspire to positions of responsibility within the 64 on
I try to make life better for those around me Company, as well as by lawyers, my closest colleagues who already are genuine experts in Energy Law. A few years ago, the activities of our Company were given special attention by the National Antitrust Commission, and thus they are also becoming experts in competition law. In this team, it is only fair to mention Noelia, who with great efficiency manages files and our very complex schedules. How is your daily routine?
Weekdays ensue smoothly, and the time is divided mainly among trips, meetings and many hours of work. After work, the days are filled with reading, attending concerts or plays, or drinking a few beers with my friends.
How do you reconcile your professional and personal lives?
At this stage of life, when our children are fairly grown (the oldest is living and working in Germany, and the youngest is in second grade), my professional and family lives are fairly easy to reconcile. In any case, I confess that it is my wife who, with a generosity for which I will never cease to be grateful, has been effectively addressing all the logistical problems that have arisen in the our family. What is your life motto?
After the years of experience that life gives us, I prefer to get away from lofty goals and direct all my efforts to trying to make life better for those around me.
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EDP WAY Day
EDP Day powered by EnergyIN
European Week of Sustainability
Employees involved in EDP Way’s five projects (OPEX, Lean, Sou+EDP, EDPro and SharEDP) will meet with the objective of increasing their intra-project knowledge, promoting synergies and celebrating goals achieved.
The EDP Group will give a presentation of the activities to be developed over the next year to members of the PCTE (Energy Technology Competitiveness Pole).
The month of April will be more sustainable in Europe. In Portugal, EDP will play an important role in the various sustainability initiatives that it will launch for the benefit of the general population.
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Arbor Day
EDP Renewables will be at the biggest event in the U.K. dedicated to renewable energy, in Aberdeen, Scotland.
HC Energía celebrates Arbor Day in a very special way. More than 1,000 people will be planting trees for a better world
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Inauguration of our headquarters in Oporto The company’s new facilities opened its doors across from the Casa da Música in Oporto’s center. 13
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Annual Shareholders Meeting
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The shareholders meeting will be held to approve different proposals, including those from the 2010 Annual Report.
EDP Renováveis inaugurates its wind farm in Roman Blondey, France.
HR will initiate the third edition of the project in Brazil. Employees will be invited to participate in table and card games—a leisurely way to convey EDP's culture.
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EDP´s Annual Meeting
Women's Race
LMA Communication
This year, EDP's shareholders will meet in Porto, at the new EDP headquarters. The Group's board of directors will present several proposals.
This year marks the sixth year of the "EDP - Lisbon, Women and Life" competition, a race exclusively for women. Sign up and run for your health.
The subject of this year's “Learn More About” project is "communication." The event will pass through Mogi das Cruzes, Tocantins, São Paulo and Espírito Santo and take place May 12, 13, 17 and 19. 12
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