Xcel Energy Launches ‘Utility Innovations’ Program

By Timothy P. Adams, assistant associate editor

I recently had the opportunity to travel to Denver and attend the ribbon-cutting ceremony for a pioneering visitor center and program initiative that has been undertaken by Xcel Energy. This initiative, rightly named Utility Innovations, is challenging utilities and the industry, as a whole, to look at new ways of leveraging the power of partnership and collaboration to drive innovation in order to successfully meet key industry challenges, as well as exceed industry standards in the areas of utility operations, energy delivery and customer service.

As Ray Gogel, Xcel’s vice president and chief information officer, said, “When you look at Xcel Energy, everything we do has, at its root, innovation. This is how we go to market.”

By practicing what he preaches, Gogel and Xcel Energy did just that in January 2004, by creating a Strategic Advisory Board (SAB) that consisted of some of the top thought leaders and senior executives from some of the premier technology providers in North America. The members that agreed to participate in this unique endeavor were IBM, Indus, Itron, Mercury Interactive and SPL Worldgroup.

The role of the SAB was simple: bring industry leaders together and create an environment of honesty, openness and trust-a place where projects and ideas could be brainstormed without obstruction and where closely held information could be shared without the fear of sharing too much.

On any other day, the members of the SAB could be considered substantial business competitors, however, as Philip Mezey, Itron’s senior vice president of software solutions, stated, “Not enough credit is given to Ray Gogel for his exceptional leadership role throughout the entire process, for bringing both this initiative and these competitive vendors together. With his direction, everyone was able to throw brand names and allegiances aside in a very collegial manner, which allowed us to be very productive within a relatively short timeframe.”

Mezey went on to say, “Through Ray’s belief in the free-market economy, his notion of third-generation partnerships and his trust in “˜coopetition,’ he knew each partner could bring value to the table.”


IBM Global Services’ Mike McCracken addresses reporters and executives as he explains processes and methodology in Xcel Energy’s Utility Innovations Visitor Center.
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Once established, the SAB convened several times to generate a number of projects that would create value for the industry, as well as for the partners involved. In addition, they set their sights on processes that would better develop seamless product integration amongst the partners. Because of the honest, open and trustworthy environment created, they were also able to clearly define each partner’s role within the initiative:

“-IBM would provide deep industry expertise, broad-base technology and software solutions, as well as project management and systems integration.

“-Indus would provide its Indus Asset Suite, the company’s work management and supply chain system, and also Indus Service Suite, which provides resource optimization, scheduling and mobility solutions.

“-Itron would provide meters and meter reading automation in Xcel Energy South, as well as provide software applications in meter data management, billing and asset management areas.

“-Mercury would provide IT Governance Center software, which monitors IT demand and optimizes related spending to improve business performance and drive competitive advantage.

“-SPL Workgroup would provide outage management (OMS) and distribution management (DMS) systems that leverage existing technology for improved outage response and restoration time, operational efficiency and safety precautions for utility workers and the public.

Hitting the Ground Running

One of the reasons Xcel Energy wanted to create the Utility Innovations program was because of the company’s strong desire to make a difference in today’s marketplace. Xcel wanted to look beyond the traditional, and somewhat slow-paced avenues of change that shape the industry.

As Richard Kelly, president and CEO of Xcel Energy, pointed out, “We’re looking for ways to be the best utility, and to deliver the best service to our customers. We want to be the best there is, and we want our customers to recognize that.”

He also added, “When people look at Xcel Energy, they see that our strategy focuses on the customer and on our core businesses. Many people refer to this as back-to-the-basics. However, Xcel Energy doesn’t have any intention of going back to anything, but rather we are looking forward all of the time.”

Innovation is the driving force behind Xcel Energy and the Utility Innovations program. By having such an innovative partnership with open lines of communication and trust, it created opportunities to look outside the box to solve current industry challenges, which enabled Xcel Energy and its partners to define their main objectives within the initial phase of the program:

“-Using technology to automatically monitor the condition of grid components;

“-Improve outage detection and verification;

“-Improve mobile communication with field crews;

“-Improve deployment of crews to smooth workflow and expedite service restoration;

“-Improve communication with customers; and

“-Reduce the possibility of energy theft.

Putting Innovation to the Test

Taking a step forward into the unknown isn’t something most people, let alone companies, are willing to do in today’s marketplace. Most prefer the refuge of what they consider a safe bet. This definitely was not the case with the Utility Innovations program. Not only were competitive vendors brought together to sit at the same table and share ideas, they also had to invest time, effort, products and money-approximately $13 million in all-into the program. They also had to accept the fact some of the initiatives simply would not be successful. In accepting these criteria, each partner demonstrated the confidence and the willingness to succeed, not only within their own objectives, but also within the scope of the program.

With their confidence in hand and their sleeves rolled up, the partners’ ideas were soon turned into real projects and put to the test in the real world.

The primary initiatives were:

“- Operations management: Integrating the communication and knowledge shared between meter and outage management system to reduce the number of outages, respond more quickly when outages occur and communicate more effectively to customers during the outage.

“- Asset management: Gaining a greater understanding about the condition and loading of assets on a real-time basis, thereby utilizing asset capacity more fully.

“- Workforce optimization: Providing better service to customers, builders and developers, and lowering cost structure by optimizing construction resources in a real-time, wireless environment.

“- Dashboards: Providing management the ability to react more quickly and with better information through the real-time presentation of information.

To test these initiatives in the real world, a pilot program was launched in July 2004 at Xcel Energy’s Arvada Service Center in northwest Denver. Arvada was chosen because it displayed an array of the everyday challenges utilities face, such as its hilly terrain, numerous trees, and its mix of single-family homes, apartments and mobile homes.

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The pilot program included 5,500 customer accounts, 600 distribution transformers and portions of 17 feeders from three substations. To test asset optimization, 40 new automatic data collectors were installed to consolidate existing AMR installations, and meters were continuously scanned every five minutes to provide data on outage detection, verification and communication. To test workflow optimization, field crews used new wireless devices to instantly record design information for real-time collaboration in the field.

Getting the Results

From November 2004 to April 2005, an in-depth analysis of the data collected during the project was conducted. Business cases were then constructed for each project and the results of the analysis were presented, as well as an implementation plan-as appropriate.

Although not all of the data is calculated at this time, Xcel Energy and its partners are encouraged by the pilot program’s initial results and are looking forward to sharing the results with the industry and the public as they become available.

Even though the numbers hadn’t been figured at the time of this writing, some of the pilot program’s benefits have already been realized and have resulted in moving projects toward the next level of research and implementation.

“One result we’ve seen already is in what we call a “˜mobile fixed network,’ which allows real-time meter reading, some data management and a few other things of that nature,” said Corey Hessen, Utility Innovations executive director. “We discovered that the technology worked great. It did a lot of the things we wanted it to do, but we also found that it wasn’t robust enough to control it all from our end.”

The mobile fixed network operates on radio frequency from repeaters on light poles to the actual meters. However, when a moving truck or any other large obstacle would block the line-of-sight from the repeater to the house, no information could be transmitted, which might lead one to believe that there was an outage or that the meter was not working properly. Instead of scrapping the idea altogether, the technology was re-evaluated, and it was found that it could better serve another area within the organization. Rather than having the mobile fixed network take real-time meter reads every five minutes, it was realized that it would be sufficient to have it take meter reads every five hours instead; thus, this technology could be utilized in areas of high turnover, which would assist in theft detection and lost revenue recovery.

Another program initiative that has come to fruition is the opening of the Utility Innovations Visitor Center located in downtown Denver. The Utility Innovations Visitor Center is a place where industry leaders and personnel, as well as the public, can visit to view illustrations and the different dimensions being explored by the Utility Innovations program.

“The validation point for the future of Utility Innovations is that many of our customers, some of the world’s largest utilities, have a desire to come to the Utility Innovations Visitor Center and be part of this,” said Gregory Dukat, Indus’ president and CEO. “That’s very exciting for the vision and what Xcel is creating.”

Moving Forward

Utility Innovations, even in the midst of calculating results of the initial phase of the pilot program, has already begun working toward a second phase, thus, once again, demonstrating that pausing is not an option if they are to continue creating and implementing innovation.

Currently, there are nine other projects slated for the remainder of 2005 and spilling over into 2006, while Corey Hessen remains at the helm as the executive director of the program.


Executives from the partnering companies in Xcel Energy’s Utility Innovations program officially open the Visitor’s Center in Denver, Colo.
Click here to enlarge image

“We embrace the idea of having new partners become part of the process,” Hessen said. “We don’t want to have a country club mentality about it, so we are continuing to look at bringing in new ideas and leadership to the program.”

Two of those projects currently under development that clearly define the program’s goals are:

“- Designer-developer-builder portal: An automated process that will allow and provide a portal for the designers, builders and other project-oriented personnel to access subdivision development site data more quickly. It is currently projected that this initiative could possibly reduce a 180-day process by as much as 50 percent.

“- Renewable energy source location: In an effort to meet the outlined goals of Amendment 37, which allows Colorado’s citizens to vote on renewable energy funding and development, an automated model will combine geophysical data with load and customer information about energy power and usage, and will pinpoint optimal locations for renewable energy sources within the service territory.

With this next wave of projects getting under way, the continuation of such progress is a credit to those partnered in the program. As a whole, they have not only shown the creativity and the commitment to succeed, but also the desire to improve and better develop ways in which to partner, as well as looking outside the box at the processes and technologies needed to benefit the industry, the environment and the customer. 

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