Michael T. Burr,
Raise the issue of reliability at a utility industry party, and you`re likely to go home with a black eye. The subject is very close to the industry`s collective heart, as reader response to the August 1999 Commentary, “It`s reliability stupid!”, clearly demonstrates (See “Letters” below).
Historically, American utilities have seen reliability as a defining characteristic-a rallying cry and a source of great pride. As several readers have pointed out in their calls and letters, however, the utility market is changing in ways that do not necessarily favor high reliability standards. Specifically, these readers tell us, deregulation has caused utilities to take their eye off reliability, and to focus instead on more financially rewarding business models.
Certainly many utilities have weighed the drive for profitability against the need for incremental increases in an already highly reliable system. Many utilities have faced tough questions about their level of spending on unregulated business ventures, while infrastructure spending remains stagnant. While the connection between the two on the balance sheet is difficult to prove, the point is an important one. The priorities of top-tier executives are inevitably reflected in the performance of the rest of the company.
It`s no accident the industry`s self-regulating organization is called the North American Electric Reliability Council (NERC), not the Cheap-Power Council, the Value-Added Services Board, or the Utility Shareholders Get Rich Committee. NERC`s mission, however, is likely to evolve along with changes in the way electric consumers are choosing and using energy services.
Utility customers are less satisfied than ever with power quality and reliability, even though quality levels have not deteriorated. Why? Because their business processes depend more on high-quality, reliable power than ever before.
Semiconductors have become ubiquitous in modern industry and commerce. We`re dependent on computer-automated systems, from servo motors on assembly lines to enterprise management systems.
If you`ve ever had a power spike transform your computer`s motherboard into a smoking lump of silicon, or had a power outage bring your office to a halt, you know quality power supply is indispensable in today`s economy.
Every utility faces a choice in how it will respond to consumers` demands for uninterruptible, well-conditioned power. One option-which might typify the old-school utility mentality-is to whine about engineering constraints, blame regulators for being motivated by politics instead of practicality, and chastise consumers for demanding something the utility system was not designed to deliver.
Another option-which typifies the leader mentality-is to seize the opportunity this problem presents. Considering the value of power quality to the overall economy, businesses that can deliver it will profit handsomely. But this profit won`t be handed to those companies as if it were an entitlement. It will be hard fought in competitive markets, where creativity, innovation and perseverance reign supreme.
The U.S. utility industry has historically led the world in capacity, efficiency and yes, reliability of electricity supply. Market mechanisms and new consumer needs are opening up new leadership opportunities for those who are forward thinking enough to recognize them.