Electric utilities have a great responsibility to provide a stable and secure infrastructure in the communities in which they operate. At the same time, the electrical system is undergoing a transformation, where the technology and innovation hinder traditional business models. In general, 3 major trends are underway that are changing the operation of utilities: (1) Electrification of large sectors of the economy, such as transport and heating; (2) Decentralization, driven by a sharp reduction in the costs of distributed energy resources (DERs) such as distributed storage, distributed generation, demand flexibility and energy efficiency; and (3) digitalization of both the network, with smart metering, smart sensors, automation, and other digital network technologies, and in addition to the meter, with the advent of the Internet of Things (IoT) and a surge of power-consuming connected devices 

To follow this path, utilities must respond quickly to these changes, in addition to complying with current regulatory standards. In this way, companies have accelerated the adoption of intelligent technologies, data digitization, data processing and many other technologies and processes to maximize the return of this new scenario.  

However, while digitalization in the power sector increases, it can also increase the vulnerabilities that utilities may face in cybersecurity. The concern with cybersecurity is essential, because in addition to causing power outage and affecting the health and safety systems, it can also damage the company's reputation, expose sensitive company information, steal customer information and more. Thus, utilities must adopt preventive measures to avoid these exposures, but they must also have contingency plans when these attacks occur. In the current context, utilities can be threatened by individuals who want to carry out attacks for monetary gains, as well as states and terrorist threats with well-defined political agendas. For the power sector, the greatest risk lies in losing control of its assets and attacks causing widespread blackouts. 

In general, the utility must follow three basic objectives in information systems and that its cybersecurity policy must be directed: (1) confidentiality: any important information must be kept confidential. The information should only be accessed by people and systems with permission. (2) integrity: maintain the integrity of information assets to keep everything complete, intact, and uncorrupted. and (3) availability: maintain the availability of systems, services and information when requested 

This activity of technology, digitalization, and cybersecurity in the utilities is currently under development and will be incorporated soon. 

The spread of new information technologies has also allowed the collection of large volumes of data on the operation of the power systems, increased control and operation of generation, grids, and cargo in an accelerated way. And this large volume of data has encouraged utilities to adopt new technologies for data analysis, machine learning, artificial intelligence, and others to maximize the return on its assets and explore new possibilities in its decisions. 

All of this is opening the possibility of new business models with the potential to simultaneously provide more value to consumers and generate new revenue for companies, in addition to the emergence of new players in the market. As these technological innovations mature, it is expected that at some point there will be an inflection point in which new business models will be inevitable for the survival of utilities and technologies such as blockchain are only part of this process. 

In this new scenario of great technological advances, new business opportunities are driving potentially disruptive changes in the electricity sector, forcing modernization new business models. The changes that the energy sector will face in the next decade may be at least as deep as the transformations experienced during the liberalization of the energy markets and the utility that is not prepared for this may face many difficulties. 

This activity of modernization and vision of the future is currently under development and will be incorporated soon.

In the power sector, there are successful cases in innovative products and processes that have changed the way activities are carried out. However, it is still difficult to establish which environment was created in each company that led to such innovation. It is also observed that in the power sector, mainly in utilities, there are no companies clearly recognized as innovative and of reference in the theme, as it exists in other sectors 

According to extensive research conducted by MIT (MIT Sloan Management Review. “How Innovative Is Your Company’s Culture?”), an innovative culture can be defined into six main blocks: resources, processes, values, behavior, climate and success. Each block can be described as follow:

* Resources comprise three main factors: people, systems, and projects 

* Processes are the route that innovations follow as they are developed 

* Values drive priorities and decisions, which are reflected in how a company spends its time and money  

* Behavior describes how people act in the cause of innovation (leaders and employees) 

* Climate is the tenor of workplace life  

* Success reinforces the enterprise’s values, behaviors and processes, which in turn drive many subsequent actions and decisions

In this sense, in recent paper (“Un pilar para la transformación sostenible: Guía para la elaboración de planes de innovación en empresas prestadoras de servicios de agua y saneamento”) BID understands that these six blocks are divided into two main categories: (i) character: all intangible aspects that constitute the substrate of the innovative culture of a company. It includes three blocks: behavior, climate and Innovative business context; and (ii) specification: the manifestations that reflect the materialization and accumulation of evidence of the innovative culture. It includes three blocks: resources, processes, and projection (or values). 

Both studies indicate characteristics related to the climate, behavior and values of the company have a greater impact in innovative environments. In this way, the utility that wishes to foster this environment must apply efforts to the pillars mentioned above. 

This activity of innovation in the utilities is currently under development and will be incorporated soon.

In this scenario, for the electricity sector, although the focus of climate change is on electricity generation, electricity distribution companies play an important role in mitigating climate change. Utilities can help in a very important way in advances in the use of electricity, that is, in energy efficiency gains in their assets and supporting the customers they serve. Several experiences have already shown that utilities can be the main agent to achieve great advances in energy efficiency and thus contribute to the mitigation of climate change. 

In addition to the direct effects of climate-induced volatility, companies will continue to experience increasing political pressure, as well as greater expectations from consumers and investors about the responsibility for climate change and their contribution in this context, especially for companies with generation electricity in their active. Thus, a more proactive strategy and innovations that really represent actions that mitigate climate change are expected. 

This activity of climate change mitigation in the utilities is currently under development and will be incorporated soon. 

The importance of these main areas can be briefly described: 

Strategic planning: One of the elements necessary to achieve efficient management in an organization is the existence and implementation of a strategic plan, which is understood as an integrated set of actions aimed at achieving the institution's medium/long term objectives and goals, together with the allocation of required resources. The strategic plan establishes objectives and goals, specifies policies and lines of action to achieve these objectives and sets concrete and explicit deadlines, which must be met for the plan to be successful. 

Organizational structure and management control: The organizational structure is one of the elements that influence the efficiency of business management. Although there is no single or ideal organizational structure, some elements of good practice must be analyzed, such as the existence of an updated organization chart; organizational focus on the user; existence of basic functions related to the supply of electricity; and clearly defined roles, authority, and job descriptions for each position. The existence of a management control system is a key factor in monitoring the utility's performance. The objective is to assess whether the utility has a system that allows the measurement, evaluation and monitoring of institutional performance in pursuit of the established objectives and goals, whether in the strategic plan, or in any other mechanism . Some criteria that can be considered are completeness of the system, systematic assessment, and degree of compliance with the established goals. 

Human resource management: Human resource management is a key factor in any organization, as people are the fundamental and decisive element for business performance and management quality. This criterion should assess the management aspects considered most relevant to recruit, evaluate, develop and retain the human capital necessary to achieve the institution's objectives. 

Gender gap: The utility must act to reduce the gender gap in the different environments in which it operates. This action should start with its human resources policies, but it should also cover its community. The utility must work in the training and empowerment of women, developing specific programs to advance gender equality. 

This activity of strategic planning, organizational structure, and human resources in the utilities is currently under development and will be incorporated soon. 

Autonomy, accountability, and transparency are the key concepts and criteria assessed in this area, all of which are relevant to the quality of the utility’s corporate governance, whether publicly or privately owned. The importance of these main areas can be briefly described: 

Autonomy: Utility autonomy contributes towards effective management. In a context in which service delivery objectives and associated responsibilities are clearly defined, management autonomy to decide about key aspects of management, such as staffing and remuneration, procurement, making payments, incurring debt, etc., will facilitate effective utility management and help it to achieve its objectives. 

Accountability: Accountability to representatives of utility owners and other stakeholders is an important condition that contributes to ensuring that those who have the duty and the power to do so manage third party resources responsibly and in accordance with governance rules established for the organization. 

Transparency and control: Transparency is necessary to make accountability effective and to hold the utility responsible for the outcomes of its management, neither of which are possible without ordered, timely and publicly available information. Accounting and financial information play an important role, as transparency of these is essential to assessing utility management and exercising public control. 

This activity of autonomy, decision making, controls, and transparency in the utilities is currently under development and will be incorporated soon.

The measurement and billing of electricity consumed by users is an integral part of the commercial management of an electricity utility. Another critical task is the collection of billed amounts. Effective performance in both roles is critical to ensuring the company's financial viability. From an operational point of view, measurement-billing and collection are distinct functions and require specific management approaches. 

This activity of commercial management in the utilities is currently under development and will be incorporated soon. 

This activity also assesses the entity’s liquidity and financial solvency, i.e., its capacity to access financing to meet its short- and long-term financial obligations, and to hedge financial risk. In addition, application of mechanisms to assess and improve the internal control system is reviewed due to its impact on appropriate management of financial resources. 

Some of the most common accounting standards used in the industry are the International Financial Reporting Status (IFRS) and International Accounting Standards (IAS) which depending on each country these standards are required for domestic public companies. There are specific IFRS guidelines for the Power and Utilities sector, and these will be mentioned in the reference section of this section. 

This activity of financial sustainability in the utilities is currently under development and will be incorporated soon. 

* Technical losses: correspond to all the energy dissipated in the transport of electrical current in conductors, equipment, and connections due to resistance in the distribution network. Technical losses can be further divided into: (i) fixed technical losses (caused by physical inefficiencies such as hysteresis, Eddy Currents losses in the iron core of transformers, and the corona effect in transmission lines) and (ii) variable technical losses (which can happen when power current flows through the lines, cables, and transformers of the network. These are also called load losses, or series losses). 

* Non-technical losses or commercial losses are those usually associated with the sale of energy supplied to the end user. There is a part of the energy that is produced, transported, and supplied; however, it is not invoiced. These losses can be caused by internal or administrative problems (such as errors in measurement, accounting or record keeping) but they are usually associated with the consumer's own illegal intervention, such as thefts, fraud, alteration of meters, or unmetered supply (when the consumer is responsible). 

In this context, the reduction in electricity losses brings important financial benefit to the distribution utility but they cannot be an isolated activity. The reduction of losses is usually part of a strategic transformation of the utility with other performance improvement activities as it requires prioritization of investments and allocation of resources. These are described later in the best practice section. 

For most countries the main issues related to the technical aspects of quality of service can be grouped in two main fields of power quality: 

* Continuity of supply (CoS) or supply quality is measured by means of interruptions in electricity supply identifying the events during which the voltage at the supply terminals of a network user drops to zero or nearly zero. These interruptions of supply are generally described by two quality dimensions, the number of interruptions and their duration. On system level, most common continuity indices related to long interruptions are SAIDI (System Average Interruption Duration Index), SAIFI (System Average Interruption Frequency Index), CADI (Customer Average Interruption Duration Index), and ENS (Energy Not Supplied). Most countries use separate classifications for planned (notified) and unplanned interruptions, and there is not a single standard if exceptional events (usually weather events) are included (or not) in the calculation of SAIDI and SAIFI. 

* Product or voltage quality covers a subset of possible variation of voltage characteristics from the desired values (excluding interruptions) such as: supply voltage variations; rapid voltage change; voltage swells; flickers; voltage unbalance; harmonic voltage distortions; transient overvoltage; and mains signaling voltage. For example, delivery of high-quality, flicker-free power are important considerations for industrial or commercial customers due to equipment damage and data loss. Large industrial customers that are energy intensive can suffer significant financial losses when voltage dips occur at their sites, but this is less relevant in residential customers. Measuring the voltage quality however can be a complex task due to technical difficulties to select the proper indicator and establish the limits. Standard EN50160 establishes the limits set for voltage disturbances. 

To face these challenges, due to a managerial decision or encouraged by the current regulation, the search for high levels of service must be present in the following pillars: (i) quality indicators: selecting indicators to describe their performance; (ii) performance standards: level of quality that company is expected to supply; and (iii) financial incentives to void penalization for the performance below the standard.