06.19.08Warren Causey, Vice President, Sierra Energy Group, a division of Energy Central

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Only a few years ago, it wasn’t uncommon to see articles about the climb from basement data processing centers toward the executive suite by utilities’ top information technology (IT) staffers, or chief information officers (CIOs). At most utilities today -- although there still are exceptions scattered around the country -- they have arrived. Most utility CIOs now are considered a part of the strategic “think tank” and management structures of their organizations.

Some of them may be wondering if making the climb was such a good idea.

Never before has the utility industry been inundated with so many problems all at the same time. And, many of the other executives sitting in those boardrooms are increasingly looking to IT for solutions that they needed “last week.” Information technology didn’t create most of the problems, but technology certainly is expected to come up with answers, and quickly. Now CIOs are part of the “we” that has to face a myriad of problems being served up by politics, economics, demographics, regulation, terrorism, war, etc.

“We in the United States built the best electrical system ever devised; it was out on the edge,” said Austin Energy CIO Andres Carvallo at a Transmission and Distribution Conference in San Antonio. However, when that system was built the “edge” in electricity consumption was a home that had a few light bulbs and maybe a radio, he pointed out. Today’s “edge” is energy-gulping homes and businesses with computers, televisions, and a host of kilowatt-hungry appliances and devices. And there are many more of those homes. The U.S. faces major a massive supply/demand disconnect with a system that is old and largely based on 50-year-old technology.

The U.S. Energy Information Agency estimates demand for electricity in the U.S. will increase 41 percent from 3,660 billion kilowatt-hours in 2005 to 5,168 billion kilowatt-hours in 2030. Other estimates put future demand much higher. Estimates of the number of conventional power plants that would be necessary to meet that demand range from 1,500 to more than 3,000. Building that many power plants in the United States is something that just isn’t going to happen. Besides the sheer astronomical cost of that many plants, the U.S. political, regulatory and social climate just won’t allow them to be built unless the NIMBY (not-in-my-back-yard) group changes its song or environmental regulation is relaxed. Neither is likely to happen in the 22 years between now and 2030.

Demand explosion (especially for electricity) is the major problem facing the U.S. utility industry today and its CIOs and other executives in the boardroom. But it is only one of a host of problems. Others include the aging infrastructure, the aging workforce, the Global Warming political storm, transmission congestion/instability and the political difficulty of building more, fuel prices, market instability, terrorism and related security regulation, etc., etc.

So why are Information Technology and CIOs so much in the cross-hairs in the boardroom? For the simple reason that they have been so successful in the past and technology is seen as holding the magic wand for all the problems of today and in the future. IT was able to extend the life of aged systems by providing better command and control of the distribution and transmission networks. IT was able to multiply the productivity and efficiency of linemen and other field workers by pushing maps, work orders and the right parts into the field through mobile systems. Technology was able to vastly reduce the number of workers needed for such things as getting out bills and collecting remittances. Technology was able to automate call centers and get people to talk to machines rather than “live workers.”

The problem for CIOs now is that all those “miracles” have been used up and there still is demand for more -- more cost-cutting, more efficiency, more productivity. And, there still is some room for improvement. According to CIOs surveyed by Energy Central’s Sierra Energy Group, there still is a lot of integration of systems yet to be done, as shown in this chart of CIO’s major issues:

Integration of existing systems is critical before CIOs can move on to the next steps to help their utilities solve their problems. This includes the deployment of automated, self-healing, self-operating "Smart Grids" and coupling them with "Intelligent Enterprises" that provide rapid, comprehensive analytical and decision-support mechanisms to the boardroom. This is the only way utilities can hope to meet the demands likely to be placed on them over the next 20 years.

While CIOs are likely to be in the forefront of deploying new “smart” systems, they also still have to fight “rear-guard” action against the traditional “silos” of technology that developed over the last 30 years. At the same conference where Carvallo spoke about progress his utility has made toward the Intelligent Enterprise, a senior operations engineer at a major utility made the observation, “IT doesn’t understand SCADA and DA.” SCADA (supervisory control and data acquisition) and DA (distribution automation) are the primary information systems traditionally involved in operating the grid.

While most CIOs would disagree with the operations engineer’s observation -- SCADA and DA are not rocket science -- whether they understand the arcane intricacies of these systems is irrelevant to the overall operation of the utility and meeting the demands of the future. The Intelligent Enterprise must receive “data” from SCADA and DA -- hopefully next-generation, self-healing, self-reporting SCADA/DA systems -- and convert that data into “information” necessary to run the utility. CIOs will be at the top of that information chain helping make critical decisions on investment and response to the host of issues utilities face. But they must have the critical information about the day-to-day operation of the grid -- something that has been held in the “operations silos” for too many years. Attitudes such as that espoused by the operations engineer die hard, however, and are just another one of the tangled web of issues CIOs face. As most of them will attest the “cultural” and “change management” aspects of their jobs usually are far more challenging than understanding the technology. Many utilities still haven’t dealt with the “silo mentality.”

Time is running out, however, and unless utility leadership gets a good grasp on a complete picture of what they have, how it operates, its limitations and strengths, and its needs, they will be totally unable to meet the increasing demands. Demand Response -- programs to cut demand through advanced metering, in-home networks, etc -- will help some, but can substitute for only a fraction of the need for the future. “Green Energy” systems will help, but that will be slow -- only about 3% of U.S. energy currently is supplied by such systems. Increased generation, possibly even new nuclear plants, will help, but they can’t be built fast enough or in enough places to meet that demand bubble.

With the current political/regulatory/legislative environment in the U.S., it is extremely unlikely that enough generation or transmission will be built to meet that EIA-anticipated increase in demand by 2030.

The only place left to look is toward more efficiency and more productivity out of what utilities already have. That means more, faster, better-integrated technology.

When other top executives reach that conclusion, where do they turn -- the CIO. Welcome to the boardroom…and the “hot” seat!

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Reader's Comments

Date	Comment
Bhaskar PV 6.17.08	Totally agree. It's happened in most other mature industries, it'd be odd if we didn't expect it'd happen in utilities! Question is, where do CIOs turn to fidn answers? Are consultants enough? Do software firms have sufficient domain knowledge? Are there enough such firms? Where are they?
Bob Amorosi 6.18.08	Bhaskar, Other mature industries have long recognized that investing money in IT ultimately makes them more competitive and more efficient. In the utility industry however there is little or no competition for a utility company, and energy efficiency is much more of a consumer problem than it is a utility distribution problem. There is plenty of help being offered to the utility industry's CIOs, one only has to look for it from both the AMI meter manufacturers and the huge electronics industry. Many of the companies in these industries are salivating developing or have already developed a myriad of technology solutions. These include Smart Grid automation of distribution functions, and in-home technologies to foster consumer awareness with real-time energy displays, real-time energy pricing, demand response load-control devices with the AMI communications capabilities to handle them. There is also a growing number or more efficient consumer products e.g. Energy Star appliances that can also easily be automated for demand responses because their manufacturers already implement considerable electronics in their appliances. The REAL problem in the utility industry is two-fold. The first part is a lack of industry-wide open standards for infrastructure communications which has resulted in a patchwork of system solutions that are not interoperable nor are they optimized for lowest cost. The second and more daunting part is the need for the huge capital investments to build the electronics infrastructures and deploy (Smart Grid and consumer in-home) devices to implement them. It begs the question who is willing to pay for implementing them on a wide scale it in a timely manner instead of taking many years to implement piecemeal. Smart Grid can benefit utility companies financially whereas consumer in-home technologies tend to benefit consumers much more than the utility company. So building a business case for a utility to invest money in Smart Grid systems is easier, but it’s the engaging of consumers through in-home technologies that has the potential to mitigate the big disconnect coming between energy supply and demand. It has been my experience sadly that most utility companies are loathe to even consider getting involved with products and systems that are under a consumer’s control, and are certainly unwilling to bear most of their costs. I submit that the only ways utility companies will be able to pay for widespread implementation of these technologies is to a) massively raise billing rates to finance the loans they will need, or b) change their business models to become more like telephone and CATV companies where they sell specific products and services to targeted consumers who are willing to pay for in-home devices, and the profits from them would then fund the infrastructure upgrades just like the telco and CATV have practiced for decades now. This may be wishful thinking however as long as utilities have no competition for their services, and no political will inside our governments to force them to do much more. Bob Amorosi, M.Eng., Resident of Ontario Canada
Bob Amorosi 6.18.08	Furthermore, implementing better data integration in SCADA/DA using the latest Smart Grid technologies will not change the supply and demand numbers, it will only help utilities to ration energy more responsively and more efficiently as the supply-demand disconnect grows. ANY rationing of energy however will be very painful in our energy hungry society unless most consumers are much more actively engaged in participating in demand responses. If consumer in-home technologies for demand response will only be a fraction of the help needed for the coming demand bubble, there will be no other choice but to build much more generation to avoid energy rationing. And distributed local generation that customers invest in are the only alternative if big central stations like nuclear cannot be built fast enough.
Len Gould 6.18.08	"distributed local generation that customers invest in are the only alternative " NB.
Alok Misra 6.25.08	First of all the utility is apower enterprise. Take it or leave it it is essentially the area of Power Engineer- whaever that might mean to you- electrical/ mechanical engineers who spend their life thinking energy. Next if they are not in the picture or are not leading the applications forget about it as gar as Power industry is concerned You have MBA/ Environmentalists etc headingf power projects. Where in the world the power Industry is more robust or have been- Sweden/ China/Russia/ and in the past India. Since the time it was decided that any body could run a utility was decided in India , we have chaos and nothing else! They say they can not control theft !What was the case when Engineers were in charge! Now where was the aerliest and most Succeful computerization Sweden/ South Africa Who were these cpeople- all power engineers trained in software even developing them. So there is no need to keep on harping that government should insist about implementing IT etc. True there is the issue of Protocol- but that is for industry to decide.Current IT chiefs may be ignorant of power system engg but so is the case with power engineers being ignorant of IT applications.Make all this part of Power engg course and educate the existing power engineers - you do not need the govt support! Alok Misra M.Tech

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