NO MIRAGE: Utilities Find FERC Relief in OASIS
By Manoj Desai and Kenneth Vormwald
“The US Federal Energy Regulatory Commission (FERC) announced recently the addition of a Phase 1B requirement to OASIS, the real-time information network being established to operate in the wholesale electricity market.”
You could be reading this news in tomorrow`s papers, but relax, it isn`t true … yet. It could be, though, just as Phase IA came as a surprise to many. Will there be a Phase 1B? Can anyone predict what lies beyond Phase II?
“Opening up an industry and giving everyone involved an equal opportunity is not an easy task,” said Ray Falcon, Florida Power and Light`s (FPL`s) systems applications manager. Falcon works in the trenches, where well-intended federal regulations have their impact. He was one of the first to recognize the complexities of constructing OASIS (Open Access Same-Time Information System) from scratch. “Developing and maintaining OASIS needs full-time attention,” he said.
Florida utilities in general were among the first to recognize that a complete OASIS service, rather than just a software package was needed to help them transition into the new marketplace. At these utilities` urging, Siemens and IBM, along with a network service provider, developed such a service, which is now being utilized by the Florida OASIS Association (FOA).
In May 1998, a sixth Florida utility, Orlando Utility Commission, joined FOA, which now represents well over $3 billion in transmission assets. For the other five members–Tampa Electric Co., Jacksonville Electric Authority, FPL, Florida Power Corp. and City of Tallahassee–the transition to the new service was accomplished seamlessly in January 1998. According to Falcon, involvement with the service has saved his company about one half million dollars.
Survival of the Smartest
Keeping pace with changing government mandates has become a part of doing business for utilities. Market principles and consumer demand for low-priced power have driven these regulations, which are, in effect, part of a logical and inevitable progression for an evolving industry.
Given that the marketplace is here to stay, the last two years have seen utilities shifting gears and competing not only with each other for customer loyalty, but with independent power producers and independent power marketers like ENRON. With a commodity that is traditionally unbrandable and ubiquitously reliable, the only way to stand out from all the competition, to secure loyalty, has been through attention to pricing issues and by adding value to services and products.
Few disagree that a key part of the strategy in adding value is to master information technology in the way that American Airlines executives did when their industry underwent deregulation two decades ago: they invested $200 million in Sabre, an automated reservation system. Sabre`s database now processes 44 percent of U.S. travel agent bookings and provides travel agents, as well as competitors, with a one-stop shop for travel reservation needs. Sabre was a precursor of OASIS, being a real-time information-processing and communications system. It has grown into a core competency for American Airlines, doing $1.5 billion in business with operating margins of 24 percent in 1994, many times those of the airline itself.
The deregulation of the telecommunications market offers another parallel, with long distance telephone companies taking advantage of new information technology to grow their business. For electric utilities, the rewards of a similar strategy will not be just the continuing supply of intelligent power to discerning and loyal customers, but the utilization of utility assets to move into other markets, such as home video-on-demand.
Testing the Waters
Many believe network computing is the way to manage resources and differentiate companies in the marketplace. Network computing is defined as interconnected networks of user-friendly computer applications that can be accessed as easily as a telephone, and yet provide the means for voice, data and multimedia interchanges. If it is the way to manage resources and differentiate companies in the marketplace, then how does a utility put in place such a network and then manage it? More specifically, how does it implement OASIS?
A 365 day-a-year, 24 hour-a-day operation has a lot of requirements. It must maintain high reliability and availability and dependable hardware and software, plus back-up for unplanned outages. In addition, a systems management team that can establish and run the network smoothly, keeping planned outages to a minimum as well as keeping systems up to date with government mandates, is also a requirement.
Electric utilities come from an information background built on relationships established between control operators who used phone, fax and stubby pencils to negotiate short-term transmission purchases and industry newspapers for long-term request for proposals. The system worked, but moving into the fast-paced trading of Internet-based, real-time information on market supply and prices and excess generating capacity, is not an easy leap.
Some smaller, individual utilities have gone it alone and set up their own OASIS nodes, only to find themselves facing 30-day ultimatums from FERC for falling short of the requirements.
Some utilities have banded together and created regional nodes under the NERC umbrella, and then run into performance problems with extended outages, or the system slowing to a crawl when transmission providers want to upload information at the same time. This has prompted some member utilities to consider setting up their own nodes.
However, both regional and individual nodes suffer from the same problem. “A lot of utilities bought systems with an initial set of hardware and software and outgrew them within the first month,” explained Falcon. “We saw how that might happen, and from the start looked to someone else to provide the service.”
Heading for Port in a Storm
The real problem, obviously, is that transmission providers are trying to undertake an area of expertise that falls outside their core competency. Some software and hardware products are available, but unless a complete service solution is provided, utilities are left to face the stormy waters of the marketplace in the same sinking information systems boat that they are already in. A service solution is needed not only to establish and manage the network, but also to keep it updated to reflect changing FERC requirement and variances in business volumes.
A Natural Alliance
IBM realized that utilities were having trouble budgeting for compliance and determining a course of action for implementation. Combined with the need for a highly available, continuous operating system, the utilities` needs were caught dead center in IBM`s business opportunity radar. IBM`s core competency was the perfect prescription: the company has grown into the world`s largest provider of technology services, with one of the world`s largest data networks, boasting 120,000 employees and links to 164 countries. One of its nine main hubs is Geoplex in Boulder, Colo., a state-of-the-art facility handling in excess of 300 complicated information systems for banks, investment houses, transportation companies, government agencies, etc.
Siemens Power Transmission and Distribution, meanwhile, was asked by one of its utility customers to provide a system, including an OASIS node that would help it transition to the new marketplace. Siemens did so, and then marketed the system to other utilities and independent system operators. However, it was apparent that the right model for OASIS was more than just a software package. Siemens` core competency is power systems, power engineering and software manufacturing. Therefore, at the suggestion of the Florida group, Siemens contacted a network service provider to implement the OASIS service for Florida. Together they created a turnkey solution for the Florida utilities. Later as they saw the need for a strong partner to provide this type of service, Siemens contacted IBM and created a solution for all their customers–the ENX system. A year after the initial implementation of the Florida OASIS system, Siemens, in order to enhance the service, approach-ed the Florida OASIS Association (FOA) with a proposal to move the OASIS system to the ENX service.
A Real OASIS
One of the systems that IBM now runs out of its Geoplex facility is ENX OASIS. IBM provides all the hardware for the network, linking back-end network terminals at utility facilities with the nearest point of presence, which for IBM is in any major city. Information is backed up by IBM`s Disaster Recovery Plan, so that if anything were to happen to the Boulder site, the data would be available immediately at the Gaithersburg, Md., site. A 1-800 line reaches a help desk that is manned 24 hours a day every day of the year with one-on-one assistance from technicians knowledgeable in OASIS. IBM also executes audits and reports as required by FERC. In addition, it provides overall management of the system to ensure its performance remains FERC compliant.
The software for the system is provided by Siemens and is not only FERC compliant for Phase I requirements, but is designed to evolve into an enhanced system that meets Phase IA and beyond requirements. The OASIS database is based on the ORACLE Relational Data Base Management System and the ORACLE Web Server; making the system robust yet flexible enough to process and handle data, as well as transition smoothly to Phase II requirements.
Security is maintained by employing up to three firewalls that limit database updating to providers and secondary providers or resellers with excess capacity.
Transmission customers access OASIS either through the home page on the Internet or directly through the web server. There they see up-to-the-hour available transmission capacity (ATC), past hourly schedule information and services available from the provider. Requests for transmission capacity, which the web server coordinates with the OASIS database, can also be posted. It then alerts the transmission operator to the new request and returns his or her response to the customer. With Phase IA release of OASIS, provider and customer now can negotiate in this fashion until an agreement is reached on pricing. The web server automatically reduces the ATC as capacity is sold. Many other functions are automated, such as audits and date and time stamping, in order to minimize operator keystrokes and time spent on each transaction.
The Bottom Line
The whole purpose of ENX is to take the aggravation of FERC compliance, present and future, off the grid for utilities in exchange for a planned monthly fee. Once signed up, transmission providers no longer have to involve themselves with how to comply with the changing phases of FERC and the continuing expenses of upgrading equipment and software. There is no continuing outlay for network staff or the need to manage the system, including a help desk. In addition, there are no budgetary uncertainties because no one knows what upgrading to the next phase will cost. It is difficult to estimate savings in dollar terms for transmission providers by climbing on board with ENX. But $300,000 per annum is a minimum cost estimate for running one`s own OASIS, assuming a bare minimum of three full time personnel to run a network. Add to that $100,000 to $200,000 for software license and hardware infrastructure for each of the first three or more years as the different phases play out, and the total bill can get out of hand pretty quick.
“Let us do the OASISing for you!”
According to Falcon, the service has done more than save FPL money. “ENX has meant that I don`t personally receive three-to-four help desk calls a day, at all times of the day, weekends included. Instead of worrying about the expense of maintaining the system and its performance, and implementing the FERC`s changes, we leave all that to the service provider,” he said. “It has freed us up to concentrate on what we know how to do–manage the transmission system.”
According to Florida Power Corp.`s Chuck Harper, Florida OASIS Association`s chairman, the future looks bright. “Information technology plays an important role in our industry, and will continue to do so as we move down the road to deregulation.”
Outside the Florida peninsula, Pacific Gas & Electric (PG&E), the country`s largest electric utility, signed up with ENX in January 1997. “We considered the costs of running our own OASIS in the early days and then called in vendors,” said Winnie Yan, PG&E`s senior transmission policy analyst in San Francisco. “We have been pleased with the way ENX has worked in handling our transmission requests.”
OASIS–More than a Mirage
What increased competition means to transmission providers, like everyone else, is that they have to focus on their core business, where they make their money. If selling excess capacity doesn`t add value to the business model, then the smartest thing to do is let someone else do all the worrying. n
Manoj Desai has been with IBM for 14 years during which time he has held positions as semiconductor diagnostics engineer/scientist, systems engineer, and client manager. He is currently IBM`s Utility & Energy Services` ENX OASIS solution manager.
Ken Vormwald joined Siemens Power Systems Control in 1977 as an application development engineer. He has held management positions in power system analysis development, EMS project delivery and marketing. He is currently managing the Energy Market Solutions business segment.
IBM provides 24 hour-a-day, seven-day-a-week technical support, monitoring the Florida OASIS from its war room in the Geoplex Center, Boulder, Colo.