Maximizing Performance

Maximizing Performance

May 04, 2009

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

Times are tough. But utilities are buckling down. It's about maximizing performance for the betterment of shareholders, customers and employees.

With rising energy prices, utilities are encouraging conservation while also holding down price increases. And with credit rating agencies more vigilant than ever, they are working to streamline operations. The dynamics are requiring utilities to try new ideas and technological innovations. Driving efficiency is therefore paramount. What gets measured gets managed.

Establishing benchmarks is essential. And technological advances make possible cutting energy consumption, improving outage management services and bettering power plant performance. Indeed, utilities may be seen as corporate giants, says EPIS, an electricity forecasting company. But what separates them from other companies is how they evaluate their business propositions and the affect those decisions have on their bottom line -- all at a time when budgets are tight and projected expenses will likely rise.

"In these tough times, real costs are assumed by real people," says Deborah Austin-Smith, vice president of the Sandpoint, Idaho-based software maker. "How will utilities plan and be profitable and how will technology help them to do this? They must still report their performance to their shareholders and to their board."

EPIS, for example, simulates energy market conditions taking into consideration such things as emissions requirements and renewable portfolio standards. It then runs scenarios to determine which fuel sources a utility may dispatch at a given time or whether it should buy power on the spot markets.

Others aggressively focus on customers. Utilities, for instance, can wirelessly transmit not just voice and paging but also e-mails and other relevant documents like status reports and invoices. In doing so, they are reforming operations, improving efficiencies and allowing management to make more informed decisions.

Consider those field engineers who restore power after a storm: They can now access their mobile devices to get the latest information on when they are to make calls, as well as to learn the histories of particular facilities and what supplies they are to bring with them. They furthermore can electronically report those results back to their accounting departments where invoices can be generated.

The goal of any investment is to receive a timely payback. Return on investment tells utilities what they are getting out of the capital they are employing. The use of yardsticks tied to shareholder value and customer service are therefore vital and critical to attracting capital. It's also necessary to keep the business humming along and to mitigate the chance of a company imposing austerity programs.

"The success of any system depends on correctly identifying what needs to be measured," says Brad Kamph, president of Interliance. "Companies need unique success metrics if they want to effect radical change and depart from business-as-usual."

Decision Models

Increasing productivity can come at a cost and lead to system breakdowns. But new technologies will generally improve overall performance. Utility services, in fact, are destined to get more involved and will require advanced metering with demand response programs that can better supervise and control the flow of electrons to relieve congestion -- an underlying premise behind the intelligent utility.

Oracle, for example, says that the key to better results is meter data management. It's about providing more information to all parties so as to more efficiently generate and use power. Oracle says that 91 percent of utility managers believe that the country must adopt such smart grid technologies to improve power flow management and to allow customers to monitor their energy use.

"Utilities believe the smart grid is critical to meeting impending energy needs and are taking first steps," says Guerry Waters, vice president for Oracle Utilities. But they will need the time, the resources and the flexibility to respond, adds Warren Causey, vice president of Sierra Energy Group, a division of Energy Central.

Advanced software furthermore permits utilities to read fine data in such a way to detect outages before they might even occur or to isolate them and prevent broader blackouts. Smart meters will send signals to outage management systems that simultaneously notify customer care departments, informing users how long an outage will last. Field crews can thus respond with accuracy and expediency.

AT&T and SmartSynch, meanwhile, are combining their skill sets to allow consumers to examine their energy use and cut back when electricity supplies are tight. It's an Internet-based model that gives residential customers a better understanding of their consumption patterns so that they can reduce their costs. In doing so, AT&T says that such intelligent utility tools will also improve reliability and increase conservation by limiting power-line losses and allowing utilities to remotely automate services.

"Utilities throughout the U.S. face tremendous challenges to increase renewable energy sources and efficiency, as well as manage new applications, which place new complexities on an already complex system," says Chris Hill, vice president for AT&T Business Solutions.

Regulatory and environmental pressures are causing utilities to fine tune their business processes and the methods by which they measure results. Utilities can adapt by implementing technologies. Any evaluation must look at the most critical factors affecting an enterprise in an effort to make those processes more efficient and more reliable. Industry leaders know that the market will judge them based on the quality of their decisions and their ultimate performance.