Pa­tri­cia K. Poppe

Patti Poppe, pres­i­dent and CEO of CMS En­ergy, be­lieves that a re­cent re­or­ga­ni­za­tion of the com­pany is lead­ing to gains for peo­ple, planet and profit.

CEO Magazine North America - - CONTENTS - BY PAUL IMISON

Pres­i­dent & CEO, CMS En­ergy

WHEN PATTI POPPE took over as pres­i­dent and CEO of CMS En­ergy Cor­po­ra­tion in 2016, the com­pany was com­ing off 13 years of con­sis­tent fi­nan­cial and op­er­a­tional ex­cel­lence, leav­ing her with the chal­lenge of tak­ing an or­ga­ni­za­tion that was al­ready close to best-in-class in many ar­eas of its op­er­a­tions to an even higher level of per­for­mance. It was a chal­lenge she ea­gerly wel­comed.

“When I met with the board prior to my ap­point­ment and they asked what my plans were, I think they were hop­ing I’d say that noth­ing was go­ing to change,” Poppe says. “But as an in­sider at the com­pany, I saw tremen­dous op­por­tu­ni­ties, par­tic­u­larly in the realm of im­prov­ing our cus­tomer ex­pe­ri­ence and my co-work­ers’ abil­ity to de­liver on that ex­pe­ri­ence while re­duc­ing cost.”

Based in Jack­son, Michi­gan, CMS En­ergy is an en­ergy com­pany that is mainly fo­cused on util­ity op­er­a­tions in the state of Michi­gan. Its prin­ci­pal busi­ness is Con­sumers En­ergy, a pub­lic util­ity that pro­vides elec­tric­ity and nat­u­ral gas to more than six mil­lion of Michi­gan’s 10 mil­lion res­i­dents. Its non-util­ity busi­nesses are pri­mar­ily fo­cused on do­mes­tic in­de­pen­dent power pro­duc­tion, along with En­erBank USA, which specializes in pro­vid­ing home im­prove­ment pay­ment op­tion pro­grams. In 2017, CMS en­joyed its fif­teenth con­sec­u­tive year of con­sis­tent fi­nan­cial per­for­mance with $6.6 bil­lion in rev­enue.

Yet while CMS En­ergy op­er­ates across the US, for Poppe, serv­ing the lo­cal com­mu­nity in her na­tive state of Michi­gan is the most cru­cial part of the com­pany’s mis­sion and pur­pose, one re­flected in the fact that many of its staff make their liv­ing by de­liv­er­ing en­ergy to friends, fam­ily, and neigh­bors, in­clud­ing those of Poppe her­self.

“When I say this, I mean it lit­er­ally,” she said. “My Dad lives just next door. Our busi­ness is

like that. We re­ally do take pride in serv­ing the peo­ple of Michi­gan.”

A PLAN FOR THE FU­TURE

Upon tak­ing her cur­rent role, Poppe im­me­di­ately went about look­ing to the fu­ture, and her vi­sion for the com­pany has proven to be a fruit­ful one. Guided by the Con­sumers En­ergy Way, a newly im­ple­mented op­er­at­ing sys­tem, CMS En­ergy has gone about re­tir­ing its older, fully-uti­lized coal fa­cil­i­ties and is cur­rently in the midst of re­plac­ing them with cleaner, re­new­able re­sources, uch as the 111-megawatt Cross Winds En­ergy Park fa­cil­ity which be­gan con­struc­tion in 2014 and has brought new jobs and other eco­nomic ben­e­fits to the im­me­di­ate area and beyond.

“The CE Way is a clas­si­cally lean op­er­at­ing sys­tem that has re­ally built on our pre­vi­ous strengths, but also cre­ated a plat­form for con­tin­u­ous im­prove­ment go­ing for­ward,” Poppe stated. “I truly be­lieve that we are uniquely po­si­tioned, for a cou­ple of rea­sons. One, we have the lean mind­set, and I don’t think that’s preva­lent in our in­dus­try yet, and two, it elim­i­nates a lot of waste that’s in­her­ently built into this huge infrastructure with which we work.”

Fur­ther­more, by free­ing up cap­i­tal, the com­pany is look­ing to in­vest in its nat­u­ral gas de­liv­ery busi­ness by build­ing and re­new­ing pipe­lines, in­clud­ing the $610 mil­lion Sag­i­naw Trail pipeline cur­rently be­ing up­graded in the Lower Michi­gan re­gion. At the same time, in­vest­ments are

“Be­cause of th­ese trusted re­la­tion­ships and our leaner op­er­at­ing sys­tem, we’ve never served our cus­tomers bet­ter than we serve them to­day.” PA­TRI­CIA K. POPPE / Pres­i­dent and CEO CMS En­ergy

also be­ing made in tech­nol­ogy to en­able CMS En­ergy to be­come a leaner, more ef­fi­cient or­ga­ni­za­tion still.

“Right now, our elec­tric sys­tem, par­tic­u­larly in the US, and specif­i­cally in Michi­gan, is de­signed to serve a peak load which oc­curs a cou­ple of hours a year, and so un­like many other kinds of man­u­fac­tur­ing busi­nesses, we have a dra­matic over­sup­ply and over­ca­pac­ity just to serve that peak,” she ex­plained. “Be­cause we’re re­tir­ing that sup­ply right now, we have the op­por­tu­nity to re­place it with less, at least partly by lever­ag­ing tech­nol­ogy, such as smart ther­mostats and grid man­age­ment de­vices, and data an­a­lyt­ics.”

“For ex­am­ple, when we in­stalled our smart me­ters across our en­tire sys­tem, we not only uti­lized the tech­nol­ogy, but also changed the ac­tual work process, as well as the billing prac­tices and elim­i­nated mil­lions of dol­lars of waste and de­fects in our sys­tem,” Poppe added.

THE TRIPLE BOT­TOM LINE

When talk­ing about CMS En­ergy’s com­mit­ment to cus­tomers and share­hold­ers, Poppe refers to what she calls a triple bot­tom line of peo­ple, planet, and profit, and she be­lieves th­ese three aims can co-ex­ist. As an ex­am­ple, she de­scribes how the Con­sumers En­ergy Way team re­cently con­ceived of new, more sus­tain­able ways to dis­pose of wa­ter on gas pipeline projects by uti­liz­ing state-of-the-art mud recla­ma­tion equip­ment to re­cy­cle the wa­ter back into the ground and leave it cleaner than be­fore.

“As an in­sider… I saw tremen­dous op­por­tu­ni­ties, par­tic­u­larly in the realm of im­prov­ing our cus­tomer ex­pe­ri­ence and my co-work­ers’ abil­ity to de­liver on that ex­pe­ri­ence while re­duc­ing cost.” PA­TRI­CIA K. POPPE / Pres­i­dent and CEO CMS En­ergy

“We re­al­ized we were wast­ing wa­ter be­cause when we do a bor­ing oper­a­tion, we end up with a lot of mud and were ac­tu­ally hav­ing to pay for trucks to come and dis­pose of it else­where,” Poppe ex­plained. “Now, we save mil­lions of gal­lons of wa­ter, which is great for the planet; mil­lions of dol­lars, which is great for profit, and fur­ther­more, it makes the job eas­ier for my co-work­ers, which is great for peo­ple.”

As part of its broader com­mit­ment to the en­vi­ron­ment, CMS En­ergy re­cently made a pub­lic com­mit­ment to re­duc­ing its car­bon foot­print by 80% in the com­ing years, a goal it aims to sur­pass by re­tir­ing its coal fa­cil­i­ties a decade ear­lier than rec­om­mended by the global science com­mu­nity.

“The over­ar­ch­ing theme for CMS En­ergy is our pur­pose, which is world-class per­for­mance in de­liv­er­ing home town ser­vice.” PA­TRI­CIA K. POPPE / Pres­i­dent and CEO CMS En­ergy

“We know that sets us apart from our peers and re­ally is very at­trac­tive to both in­vestors and the peo­ple we serve here in Michi­gan,” Poppe said.

On the way CMS En­ergy in­ter­acts with its work­force, many of whom hail from the very com­mu­ni­ties the com­pany serves, Poppe was also keen to stress the im­por­tance of the com­pany’s roots in Michi­gan.

“The over­ar­ch­ing theme for CMS En­ergy is our pur­pose, which is World Class Per­for­mance De­liv­er­ing Home­town Ser­vice,” she in­sisted. “In or­der to be world-class per­form­ers, we rely on our lean op­er­at­ing sys­tem, but it’s de­liv­ered by my co-work­ers who are an ex­tra­or­di­nary group of peo­ple. A por­tion of my work­force is rep­re­sented by the Util­ity Work­ers Union of Amer­ica, and I can en­sure you that our per­for­mance is bet­ter be­cause of them.”

“The CE Way is a clas­si­cally lean op­er­at­ing sys­tem that has re­ally built on our pre­vi­ous strengths, but also cre­ated a plat­form for con­tin­u­ous im­prove­ment go­ing for­ward.” PA­TRI­CIA K. POPPE / Pres­i­dent and CEO CMS En­ergy

KEY PART­NER­SHIPS

CMS En­ergy is able to de­liver such re­li­able ser­vice be­cause of key part­ner­ships with fel­low elec­tric­ity providers, which, above all, are nec­es­sary when de­mand ex­ceeds sup­ply. Poppe points to the chal­lenge pre­sented by peak work­load in­creases dur­ing ex­treme weather con­di­tions in Michi­gan which the com­pany man­ages through an in­ci­dent com­mand struc­ture it shares with such part­ners to re­spond quickly to cus­tomers in mo­ments of cri­sis.

“Peak work­load for an elec­tric util­ity hap­pens when we have an ice storm or high winds,” she ex­plained. “We can’t staff up to serve those peak mo­ments so we have a core group of elec­tric con­trac­tors who are ex­tremely im­por­tant to us. They can plug right into our sys­tem, be­cause we de­signed it to­gether. As a re­sult, we have had some sig­nif­i­cant weather events where ma­jor restora­tion was re­quired and those strate­gic part­ner­ships en­abled us to re­ceive na­tional recog­ni­tion for re­spon­sive­ness.”

In­deed, CMS En­ergy has re­peat­edly been rec­og­nized for the qual­ity of its ser­vice, and its val­ues. In July, an in­de­pen­dent na­tional sur­vey by mar­ket re­search and con­sult­ing firm Mar­ket Strate­gies In­ter­na­tional named CMS En­ergy the most trusted util­ity brand in the Mid­west and Top 15 in the coun­try. In Fe­bru­ary, Forbes ranked Con­sumers En­ergy as Best Em­ployer for Di­ver­sity in Michi­gan where it was the only util­ity com­pany among the Top 100.

Yet Poppe is par­tic­u­larly proud of the com­pany’s safety record. Con­sumers En­ergy has been rec­og­nized as the safest com­pany in the util­ity in­dus­try, and also re­ceived the Dr. Charles Drew

Life­saver Award from the Amer­i­can Red Cross for its ded­i­ca­tion to emer­gency first re­sponse train­ing—a com­mit­ment she be­lieves is shared by her com­pany’s most val­ued part­ners.

“Our em­ploy­ees work very closely with our con­trac­tors on the sys­tem, which means our part­ners are work­ing equally safely along­side us,” Poppe stated. “Be­cause of th­ese trusted re­la­tion­ships and our leaner op­er­at­ing sys­tem, we’ve never served our cus­tomers bet­ter than we serve them to­day.”

“We have had some sig­nif­i­cant weather events where ma­jor restora­tion was re­quired and those strate­gic part­ner­ships en­abled us to re­ceive na­tional recog­ni­tion for re­spon­sive­ness.” PA­TRI­CIA K. POPPE / Pres­i­dent and CEO CMS En­ergy

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