Technologies for a Deregulating Industry

By Lawrence (Larry) J. Kuhl and Michael Rigney

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Electric utilities are facing unprecedented change associated with industry deregulation. This change has led to new forms of competition. To generate additional revenue sources, utility companies are under pressure to divest themselves of certain assets, diversify into other businesses, form strategic alliances and merge with other utilities. Each path poses unique challenges.

Electric generation deregulation is impacting the remaining regulated portions of the electric utilities industry, and this re-regulation will impact how these business entities earn their rate-of-return. State Public Utility Commissions are re-focusing their attention on energy delivery and customer service. PUC’s are tying profitability to performance metrics and service standards. To complicate matters further, fiscal constraints are pressuring organizations to do more with fewer resources. Consequently, utilities are looking at new ways to increase overall organizational performance.

To remain competitive and maximize their potential to achieve performance incentives and avoid performance penalties, utilities are looking for ways to improve customer service and enhance service reliability. At the same time, customer needs and expectations are changing and the bar is continually being raised. Utilities have recognized that their current business processes are not sufficiently keeping pace with customer needs and expectations. These challenges are forcing utilities to investigate the adequacy of current business processes and the technologies used to support more efficient ways of doing business.

Some key deregulation issues include retaining customers, improving customer service, achieving internal and performance based regulation incentive goals, and avoiding PUC penalties. To address these challenges, utilities need tools to track performance against key metrics. These performance indicators are key information for decision support and need to be disseminated to all employees in a timely fashion. Furthermore, utilities need to open up multiple communication channels with their customers.

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The figure above illustrates the relationship between people who need utility-based information and the information they need. At the bottom of the triangle on the left are information sources. Typically, a utility has an abundance of these sources, including legacy systems that drive operations support systems such as GIS, CIS and DMS systems. Moving up the information pyramid, numerous reports and views are made of the data. These reports are typically subsets of the underlying database or summaries that have been through additional analysis.

The people who need the information are represented as an inverted triangle on the right in the diagram. The relationship between the two triangles is horizontal in nature. Relatively few people need a large amount of information from a particular source to perform their job functions. Utility-based jobs that would fall into the lower part of the triangle include distribution engineers, dispatchers and customer service representatives. For example, engineers need information on existing facilities, historical performance, customer linkage and network connectivity. With this information they can perform detailed circuit and cost analysis.

At the other end of the spectrum, a relatively large number of people need a small amount of specific information to perform their job functions well. Quite often this specific information is presented in a summary report containing information from disparate systems that is integrated and presented in an intuitive format to support business process decision-making. For example, a utility executive needs a summarized report of C&I customers that have had more than two outages in the last 12 months, all overlaid onto the utilities distribution system. This would enable the manager to quickly see which key accounts have experienced recent problems and provide a basis for further investigation.

Since each person needs different types of information, the challenge for utilities is to integrate the isolated silos of information and present it in a useful way. Historically, the information needed to generate a desired view or report was obtained from the people with direct access to the systems, rather than from the people using the reports. Other times the reports were generated by specific, often homegrown, applications that performed unique data integration tasks. There are, of course, other people that want and need access to information. Also included at the top of this inverted triangle would be customers, partners, investors and suppliers. For example, customers will want access to energy usage information.

Clearly the Internet is a mature technology that is impacting business and organizational performance. Internet savvy customers want more than just static information on their utility’s Web site; they want to interact via the Web using a personalized interface. However, a recent Gartner Group survey found that while 88 percent of U.S. utilities are presently offering, researching or testing electronic bill payment systems, only 34 percent, 23 percent and 8 percent are actively involved in customer information, energy auditing/metering or interactive voice response systems respectively. An effective Internet strategy would use all three methods for reaching out to customers-broadcast of information, interaction and transaction.

Traditionally, the monthly bill was the main point of contact between energy providers and customers. In today’s competitive market, the traditional utility needs to evaluate its customer care strategy and develop as many customer contact channels as possible. Both the Internet and telephone are powerful customer support/care tools. A seamless combination of the two significantly increases their potential to increase customer care and support. Customers today are expecting the same level of personalized service at each customer contact point. Therefore, information presented in a multi-channeled format will need to be consistent, personalized, intelligent and timely, enabling all customer contact with the utility to be efficient and effective.

One method for this dissemination of information within the enterprise is the corporate intranet. Just as Internet-savvy utility customers want interactive Internet sites, electric utility employees need interactive corporate intranets to improve their job performance. An intranet is a powerful tool, enabling access to published corporate-wide information from anywhere in the organization. However, company intranets currently lack 1) the dynamic aspects needed to be timely, 2) an easy way for the employees to publish information, and 3) a notification process when the intranet is updated with new information.

One approach for getting the information to the right people at the right time via a utility company intranet is putting a Web-interface on business information management tools, such as ERP, CRM, OMS or other mainframe applications. Doing so will enable more people within the utility to obtain the information they need to perform their job responsibilities better, but it is only a start.

Often, employees need information from a combination of data sources simultaneously-an integrated view of both structured and unstructured data. In fact, a seamlessly integrated view of all systems would be ideal. The focus of data warehouses is structured data, or the data that resides in well-formed databases and legacy systems. These systems cannot easily integrate large amounts of unstructured data residing within the utility, such as graphic designs, video files, product manuals, word processing documents, e-mails and Web documents. Another limitation of data warehouses is that they are static in nature, and it must be decided in advance what data is to be loaded and what queries are anticipated.

An emerging technology known as the enterprise information portal (EIP) promises to overcome the limitations of both the corporate intranet and the different utility management tools. The EIP is the logical evolution of both the corporate intranet and the data warehouse. It enables the corporate intranet to be more interactive and dynamic. The utility-based EIP has two important benefits. First, it gathers and organizes large amounts of utility industry and operations data scattered across the enterprise and beyond; second it presents this data to the utility information users in an easy-to-use, personalized and customized browser-based interface. Users of utility data are not just internal employees, but also customers, partners, suppliers and PUC representatives. Each type of user needs access to a particular slice of information. The EIP has the potential to present the necessary information to the appropriate user, indicate that new important information exists, and allow the user to publish important information that others might need.

Extensible Markup Language (XML) is the enabling technology for an EIP. XML is an intercommunication language tool that permits different applications, databases and other stores of information to communicate, both within and outside an enterprise. This communication is in the form of exchanges of both data and metadata. The metadata-or information about the structure of the data-is incorporated into any XML document, which defines both the structure and content of the document. XML’s key benefit is that it increases compatibility and exchange of information between disparate systems and databases, enabling greater accessibility of enterprise data. But like other enabling technologies, an XML-based EIP developed, customized and deployed for an electric utility is doomed to fail like its predecessors, the corporate Intranet and data warehouse technology, if it’s not in line with corporate-wide strategic and tactical goals. A successful EIP implementation requires substantial initial analysis and organizational work to properly understand how, where and why the corporate information is being produced, gathered, handled, integrated and used.

A good example illustrating how an EIP solution can help is in managing performance based regulation or key business indicators. To optimize a utility company’s performance, management must know how well the enterprise is performing against key business metrics at all levels in the organization. Using this performance information and more detailed analysis information, decisions can be made concerning where management should focus its efforts to improve performance and where to target limited resources. Intelligent use of geospatial information can make this job easier by providing a comprehensive geospatial representation of the performance metric information. This enables everyone (not just management) to focus on what the company has determined to be “key” to the company’s success and to quickly focus on areas that need attention.

The utility world is an information-driven world, but unlimited access to information, in itself, is not knowledge. Ultimately, the utility-based EIP must present information in a way that increases knowledge. Seamlessly integrating the numerous information systems that an electric utility uses and presenting this integrated information to the user-employees, suppliers or customers-enables the intelligent use of the information. This integrated information then enables deployment of other systems, such as multi-channel customer interaction systems, performance-based management systems, and corporate-wide information systems that allow for the presentation of information in a way that increases knowledge, productivity and rate-of-return.

Larry Kuhl is director of marketing & business development for Coherent Networks Inc. (CNI), which provides software solutions and services to the energy and telecommunications industries. Prior to joining CNI, he worked in various management and engineering positions at electric utility companies for 19 years.

Mike Rigney is a product development manager for Coherent Networks Inc. (CNI). He is currently spearheading web-based application development for the power utility and telecommunications markets that quickly and accurately deliver graphic displays of key corporate data across the enterprise.

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