Telecom Company is Major Player in California Deregulation

Telecom Company is Major Player in California Deregulation

By Teresa Hansen, Managing Editor

The start-up of California`s Independent System Operator (ISO) and Power Exchange (PX) represents a new era in the electric utility industry–competition. By now, most people in the industry are familiar with the ISO and PX and know they facilitate control of California`s electric utility exchange and its competitive electricity-trading environment. However, many may not be familiar with the high tech tools that were put into service in order for the elaborate operating and trading system to function properly (see sidebar).

Undoubtedly, one of the most important tools is the communications infrastructure. This infrastructure provides internal and external voice and data communications for both the ISO and PX, and is the only system that touches all other providers` systems.

On Feb. 20, 1997, MCI was awarded a $180 million contract to design, build and manage this important network. Besides building the network, MCI was also responsible for providing network management systems and local area networks at the ISO`s and PX`s main and back-up operation centers in Folsom and Alhambra, Calif. In addition, the telecommunications company constructed and operates a network operations center in Fremont, Calif., which is backed up by its network operations center in Cary, N.C. These centers monitor the entire ISO and PX network and undertake problem identification, vendor dispatching and problem resolution. The centers provide assistance to users as they connect to the network. In addition, network performance reporting and network optimization is handled from the network operations centers. The ISO and PX have contracted with MCI to perform these services through 2003.

Network Technology

The ISO and PX communications infrastructure transmits information over 4,650 miles of statewide, private MCI networks. The network uses a private OC-12 asynchronous transfer mode (ATM) backbone service, providing built-in redundancy, scalability, flexibility, management and security. It is capable of transferring information at a rate of 622 mega bits per second, making it a very robust network. In addition, the wide area network has 11 access points of presence (POPS) for metering what goes in and out of the system, and for access to the PX trading floor. It also has four backbone POPS (see figure).

Currently, the ISO issues its generation orders to the power plants through dispatch operators working at the three California investor-owned utilities. However, beginning in January 1999, the ISO will have direct control over the power plants through the automated generation control (AGC) system. At that time, each generator will be connected to one of the 11 POPS. The AGC system will use TCP/IP technology, meaning signals from many of the utilities` analog RTUs currently in operation must be converted to digital. According to Fred Lee, California ISO`s telecommunication services director, this will require the development of some new technology. Spokespersons for both the ISO and MCI, said the changeover should begin later this year.


According to Randy Cade, MCI`s Western Electric Power Exchange (WEPEX) program and operations director, designing and building the network was a tremendous challenge. Because no one knew where the users were going to be located, the network had to be large enough to handle customers as they came on-line, no matter where they were located. The network had to be capable of maintaining a one-to-one ratio for every user. In other words, no matter where the users are located, each must have a dedicated pathway into the network. To ensure this type of availability and the necessary reliability (99.9 percent), the network was built to accommodate thousands of users, Cade said. Even though there are currently only about 500 users connected to the network, many more are expected to connect as competition takes hold.

Cade said the biggest challenge was designing and implementing this large system in only nine months (even though the ISO`s start-up was delayed, the communications network was completed and ready to use on Jan. 1, 1998). “Normally a project like this would take at least two years,” he said. However, the ISO and PX didn`t have two years, so the network was put on the fast track. “Some of the technology was leading-edge, but most of it was off-the-shelf,” Cade said. “The biggest problem was that it had never been configured and installed like this before.”

Another challenge that MCI faced was designing a network that could accommodate the tremendous amount of analog lines currently being used by utilities, while still offering the necessary scalability. Since many users are not utilities and use more recent digital technology, the network had to be able to accommodate analog and digital at the same time. It also had to be built so it could adapt as utilities switch from analog to digital.

New Opportunities

In order to keep the communications network up and running smoothly, MCI has hired almost 100 people to support it. “We garnered the best of the best within the MCI organization and brought them together,” Rosen said.

While MCI`s primary objective is to manage the network and support new connections, it also sees new opportunities to grow its utility business by offering services that will help utilities flourish in the new competitive electricity industry. “MCI brought competition to the telecom market and that expertise can be used in the electric utility industry,” Rosen said. MCI is prepared to provide support to utilities, energy service providers, energy marketers, metering companies and most any other company that has the need to connect directly with the network or is competing in the new competitive market.

The company is already providing on premise circuit and equipment management to several companies that are connected to the ISO and PX. “Our services are already being used and extremely well received by utilities in California, Washington and Oregon,” said Rosen. MCI is positioned to offer similar services in other deregulated markets around the country, he said.

Besides the obvious network management services, MCI is positioning itself to assist utilities in other areas. “Our mission as we see it is to help utilities with speed to market, while helping them bring new products to bear, expand geographically, improve sales force efficiency and improve call center performance, a particularly strong suite for MCI,” said Rosen.

“MCI`s experience and expertise in the telecom industry coupled with the experience gained from WEPEX and our engineering expertise, makes a dynamite package for utilities in the deregulated environment,” Cade added.

If you would like to see more articles on this topic, circle R.S. 103.

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