by Pam Boschee, Managing Editor
Sometimes, it takes a friend to tell you something you may not want to hear. And today I’m going to be the friend who mustered up the courage to be straightforward with you.
In the course of this job, I speak with many people in the industry on the phone and at conferences. One of the most oft-repeated comments I hear is, “Utilities need to change their way of thinking.”
It’s not just vendors trying to sell something to you saying it. And it’s not only FERC chairman Pat Wood. Sometimes, it even bubbles up from within your own ranks; it’s not limited to outsiders.
My next comments aren’t fair, but they’re made to simplify my point. I’m resorting to sweeping generalizations and stating that utilities are slow to embrace change, slow to consider new strategies and slow to move forward with new technologies.
I don’t claim this as a keen observation on my part and I don’t pretend to be spouting a hot news item. In fact, it would speak better of you, I think, if it were a recently noted characteristic-there might be more forgiveness due to the economy and the crazy zigzagging of regulation and deregulation.
On the contrary, your foot-dragging has been going on for some time-and you’ve left some sloppy tracks.
One of the best examples of this is the current state of power delivery infrastructure throughout much of this country. Critical equipment in substation sites and rights-of-way is more than 40 years old. Performance/reliabiliy measurements, such as SAIFI and SAIDI, are degrading.
Gregory Welch, director for Utility Business Consulting, ABB, Inc., provided that nugget of information at the IEEE/PES Conference in Atlanta in late October. He added that many T&D utilities are using engineering methods that worked well in the ’70s, but may not be up to the task presented by today’s substation loading and line loading requirements. Engineering planning functions at most utilities can’t identify precisely what the problems are or what the best remedies might be in terms of efficiency and economy.
In his paper, Welch wrote: “Many managers, planners, engineers and operators still tend to think in terms of the culture and goals that were appropriate for a purely regulated, vertically integrated industry. New goals may have been articulated, but for various reasons a change in thinking, in priorities, and in methods has not followed.”
Welch’s words apply to the corporate suits, too. Take a look at Don Diaz’s article, “2001 year in review: Wall Street’s fiscal checkup of energy’s profits, losses,” on page 15 of this issue.
The energy sector ended the year without a member in the S&P 500’s top 20 best performing stocks. And of all the index’s 87 industry groups, not one energy-related group finished the year with positive returns. Three of the groups-oil well equipment and services, oil and gas drilling, and the natural gas group were among the worst performers of the year.
Remaining entrenched in old ways of thinking will not move your company forward; in fact, it won’t even keep your company alive in today’s political and business climates.
Just ask Enron CEO Ken Lay. It seems that Enron somewhere along the line should have changed its way of thinking about a few business matters. Now, someone else will change it for them.
The largest U.S. pension fund, the California Public Employees Retirement System, had called for a change in thinking when Dynegy was considerig the acquisition of Enron. According to Reuters, they said there should be no place for Lay or any other current Enron directors on the new Dynegy board. Change the thinkers, and you’ll change the way of thinking.
I once worked with a brain surgeon (in a previous career, many years ago) who was very unconvinced (to say it mildly) that psychological therapy truly benefited anyone. True to his curmudgeon self, he bluntly declared, “The only cognitive restructuring that works is with the scalpel.”
He’s right. It may not be a scalpel, but you’ve got to find the tools that effect cognitive restructuring in this industry. Don’t dawdle-look how fast a giant like Enron dropped to the mat.