An Industry Pioneer in Alliances

It’s common knowledge that more gets accomplished when people work together. It’s also true that the more people invest in relationships, the greater the returns. These concepts are at the heart of “Alliance” relationships, which are long-term relationships between two parties founded on collaboration and integration. Though Alliances have been part of the business world for a long time, NPL was a pioneer in applying them in the natural gas distribution industry.

Prior to deregulation in the 1980s, many local gas distribution companies (LDCs) used their own crews for installations, maintenance, and replacements. As market dynamics changed, LDCs began to replace their internal crews with contractors, whom they treated like internal crews. In this business environment, contractors were typically hired for 1-2 year bid contracts that were based on low price and that required renegotiating when they ended. The management of this process was cumbersome for both parties, resulting in significant cost and administrative time.

With the goal of streamlining their processes, several LDCs began looking for alternative long-term relationships with their contractors. NPL adjusted to this need by pursuing long-term partnerships with select customers in the mid-1990s. Later in 2002, NPL took this approach to the next level with Washington Gas. NPL called this partnership an Alliance, the first of its kind between a contractor and a LDC. What made this Alliance unique was the level of integration between both companies. Not only did both companies work together to plan and problem solve, but they built common processes, practices, and technology platforms to be shared seamlessly.

Lead consultant for the Alliance, Mark Bridgers, said this about the effort: “The collaboration and integration efforts undertaken by WG and NPL were and remain unprecedented. The work to move from a traditional arm’s-length relationship between a contractor and local distribution company to embrace both collaboration and integration were transformative and served as an example to others [in the industry] who later adopted this type of business relationship. I know of no other local distribution company and contractor business alliance that yielded higher performance improvement in cost, safety, quality, and customer satisfaction while standing the test of time over its current 15-year timeline.” Pictured left is the WG-NPL Alliance Charter that is on display at the corporate office in Phoenix.

NPL’s Alliance approach gained momentum in the next few years with the establishment of Alliances with Nicor in Illinois and Questar in Utah, both of which are still intact (though NPL’s operations in Utah have reorganized into a separate company called Canyon Pipeline, and Questar has changed its name to Dominion).

In the words of NPL’s president Mark Wambach, “When we go to work for a customer, we go to work for them for life.” It should come as no surprise that NPL has set the industry standard for Alliance relationships. As a company defined by it’s vision for the long-term, this is business as usual for thinking ahead.