October 8, 2007
Top technology officers have arrived. Today, most chief information officers are now considered a part of the strategic "think tank" and management structures of their organizations. Some are wondering if making the climb was such a good idea.
Never before has the utility industry been inundated with so many problems. And, many of the other executives sitting in those boardrooms increasingly are looking to the tech experts for solutions that they needed "last week." Modern tech didn't create most of the problems, but it is certainly expected to come up with answers, and quickly. Now chief information officers (CIO's) are integral to ensuring the organizations are insulated against politics, economics, demographics, regulation, terrorism and war.
"We in the United States built the best electrical system ever devised; it was out on the edge," says Austin Energy CIO Andres Carvallo, at a recent transmission and distribution conference in San Antonio. However, when that system was built, the industry was relatively modest with fewer requirements. Today it is more advanced and entails energy-gulping homes and businesses with computers, televisions, and a host of kilowatt-hungry appliances and devices.
Supply and demand are out of kilter in the United States. At the same time, the transmission system is dated and based on 50-year-old technology. The U.S. Energy Information Agency estimates demand for electricity here will increase 41 percent from 3,660 billion kilowatt-hours in 2005 to 5,168 billion kilowatt-hours in 2030.
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 plants in the United States is something that just isn't going to happen. Besides the sheer astronomical cost of that many facilities, the U.S. political, regulatory and social climate just won't allow them to be built unless the NIMBY (not-in-my-backyard) group changes its song or environmental regulation is relaxed.
Demand explosion (especially for electricity) is the major problem facing the U.S. utility industry today and the CIO's and other executives in the boardroom. Other issues include the aging infrastructure, the aging workforce, the global warming political storm, transmission congestion and volatile fuel prices.
CIO's are front-and-center in the boardroom. Technology has been able to extend the life of aged systems by providing better command and control of the distribution and transmission networks. It has also been 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 has furthermore vastly reduced the number of workers needed for such things as getting out bills and collecting remittances. Technology, meanwhile, has been able to automate call centers and get people to talk to machines rather than "live workers."
More Miracles
CIO's feel pressured. Now that all those "miracles" have been used up, boards are asking "what have you done for me lately?" More cost-cutting, efficiencies and productivity are all demanded. According to CIO's surveyed by Energy Central's Sierra Energy Group, there is still a lot of integration of systems yet to be done.
Integration of existing systems is critical before CIO's can help their utilities solve other 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 CIO's are likely to be in the forefront of deploying new "smart" systems, they also still have to protect their existing investments. According to some experts, information technology is still trying to master supervisory control and data acquisition and distribution automation - primary tools involved in operating a grid.
The next step is to apply those technologies to the so-called Intelligent Enterprise. That is, they must take data received those tools and convert it into "information" necessary to run the utility. CIO's will be at the top of that information chain and helping make critical decisions. But they must have the important information about the day-to-day operation of the grid. That's something that has been held in the "operations silos" in the past.
CIO's, of course, are far better informed than many give credit. They are atop the latest technologies and they are in tune with corporate missions. As most of them will attest to, 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.
Some solutions are out there. Demand Response is one, or programs to cut demand through advanced metering and in-home networks. "Green Energy" systems are another, although that will be slow as just 2.3 percent of U.S. energy is currently supplied by such fuel forms. Increased generation will also help, but such facilities 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 we already have. That means more, faster, better-integrated technology.
It's a conclusion that corporate boards are destined to reach. When they do, all eyes will be on the CIO's.
Warren Causey
Sierra Energy Group
Guest Editor
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