MBA-FPX5002_RockholdAmy_Assessment1-Attempt1

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1 Jacksonville Electric Authority Must Save Fuel Costs Amy N. Rockhold Master of Business Administration, Cappella University MBA-FPX5002: MBA Leadership Katherine Hyatt April 24, 2023

2 Jacksonville Electric Authority Must Save Fuel Costs Any business, large or small that can stay in operation for a long period of time will, at some point, need to make changes to the people and industries they serve in order to stay afloat in this ever- changing economy and customer service environment. A great example of a company that had to make changes to the way its customers were served is Panera. Panera had a customer service problem with the amount of time customers had to wait to order food which caused people to have to spend a long time in line. The issue also caused problems in the kitchen because due to the volume of orders coming back-to-back, mistakes were made, and orders were often made incorrectly. This resulted in management using critical thinking and VUCA to devise a solution. After spending years working on the solution, they implemented online ordering and ordering kiosks in the dining room. They allowed customers to place their orders online and receive a pickup time to expect their orders to be completed. This has greatly improved customer satisfaction at Panera. Another company that is facing issues that impact customers is Jacksonville Electric Authority (JEA). JEA is an electric, water, and sewer utility that serves the Northeast Florida area and is community owned . The leadership at JEA is focusing on finding a solution to the steadily rising fuel costs and how to lower the cost to the company, thus lowering the cost to the customers. The topic at the forefront of stakeholders’ concern for JEA is the increasing cost to customers. There are two primary factors that the company must focus on to find a solution to the problem - the increase in energy use in summer months and the cost of the fuel that is used to generate electricity. These two factors will be discussed, and we will use critical thinking and VUCA to develop potential solutions to the increased energy costs to JEA and its customers. One benefit that JEA has over other utility providers is that it has several sources of fuel production through an ownership interest in power plants as well as agreements with solar fields and landfill gas facilities, as well as several fuel substations

3 that JEA has built. In 2022, JEA rolled out the Electric Integrated Resource Planning Process (IRP), which will result in strategic planning to make JEA’s electric system more efficient and affordable for years to come (JEA, 2023). Critical thinking is useful in solving problems because it gives you a framework to think within and plan your success. Critical thinking begins with identifying a problem that needs to be addressed. We have identified that JEA needs to find the best way to reduce fuel costs for the company, which would lower the customers' electricity costs. After identifying the problem that needs to be addressed, a list of possible solutions must be made. In the case of JEA, the possible solution could be choosing the most inexpensive means of generating electricity, whether through using the most inexpensive source that JEA already owns, such as the substations or the power plants JEA has access to. Another option would be to use JEA’s funds to offset the cost to residential customers and cap the cost to the customers once they have reached a certain amount of usage. The next stage of critical thinking is the decision; a decision is the final step in completing the critical thinking framework. In this case, the most effective way of making long-term improvements to the cost of energy for consumers is to use financially beneficial ways to generate electricity using the most cost-effective resources that JEA already owns. The idea of offsetting the cost to JEA’s customers using JEA’s own funds will only work in the short term, as the funds will eventually have to be recovered by JEA in some way, and that almost always falls back on the customers. Once critical thinking has been applied to the situation, the VUCA acronym can be used to prepare for any risks associated with the plan. VUCA stands for volatility, uncertainty, complexity, and ambiguity (Bennett & Lemoine, 2014). The plan to save fuel production costs is quite volatile because many things are currently unstable in the economy. To offset this volatility, JEA must leave some room in the plan to adjust for natural disasters, economic downturns, or other unforeseen occurrences that may

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4 change how JEA allocates funds and other resources to the project. The uncertainty in this project feeds off the volatile nature of the task. Economy stability and access to resources are assumed but not guaranteed, so JEA has to invest in information that will allow planning for multiple scenarios and create backup plans for the issues that are most likely to arise. The complexity of harnessing energy and creating a fuel supply for millions of people is a great responsibility and needs to be planned accordingly. Calling in researchers and specialists to review plans and help create backup plans can greatly help ensure the process goes as smoothly as possible, even if unforeseen problems arise. The ambiguity comes with finding new ways to obtain cost-efficient fuel sources and pass those savings on to the customer. It is important to experiment and test theories around this plan to ensure that JEA has prepared as much as possible for any unforeseen negative or positive outcomes of this project. VUCA is an important tool that can bring possible problems and solutions to the forefront of planning and allows for adjustments or additional research to be made before getting too deeply into a project. Due to the rising cost of fuel needed to generate electricity-based resources, JEA must figure out a way to save on the cost of fuel production. The demand for lower energy costs for consumers is at the forefront of the industry’s to-do list, as most consumers cannot afford electricity. The inability to afford electricity is a massive problem that energy providers must solve. JEA has used a critical thinking framework to determine that the best way to save on the cost of fuel is to generate power using the most cost-effective production methods currently available to JEA. JEA has an ownership interest in power plants and agreements with solar fields and landfill gas facilities. Once it was decided that this is the route JEA will take, VUCA assessed the plan's volatility, uncertainty, complexity, and ambiguity. After additional planning and research, JEA will be able to start the journey to making electric costs lower for its customers.

5 References Bennett, N., & Lemoine, G. J. (2014). What VUCA Really Means for You. Harvard Business Review. What VUCA Really Means for You , 92 (1/2), 27–27. Retrieved April 20, 2023, from https://web-p- ebscohost-com.library.capella.edu/ehost/detail/detail?vid=0&sid=201e63f7-cc84-4716-a02a- 3d757bbe9682%40redis&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=93302155&db =bth. JEA. (2023). JEA: About: Electric integrated resource planning process . www.jea.com. Retrieved April 20, 2023, from https://www.jea.com/irp/

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