WE SAT DOWN WITH ELECTRIC UTILITY CHIEF INFORMATION officers gathered in Florida for Knowledge2011 to discuss the issues of most importance to their companies in 2012. Their comments, edited for style and length, follow.
What is the biggest challenge facing the electric utility industry?
HATRIDGE Certainly, an aging workforce is a business issue with us. The big challenge of that is not only that we have a lot of pending retirements in the next few years, but we've operated based on the Socratic method in the past, where knowledge was passed on from individual to individual, and we've not been particularly good at preparing formal documentation on all of our business processes. So that's the area that we're really focused on the most across our organization, developing more formal documentation of our knowledge and putting it into electronic format. We're also making sure it's in a format that can be passed on to others, and we're starting the process of transitioning that knowledge to new individuals. As a government agency, we have civil service rules that restrict our ability to prefill positions before the retirements occur. That presents some additional challenges for us with the whole concept of succession planning, which is extremely difficult to do in a government organization because of the rules.
HENDERSON I certainly agree that the aging workforce is an issue for us, as well. A third of our employees are eligible to retire in the next five years, and so that's a concern about how we prepare for that. We're doing some succession planning there. Security is also a big issue. Keeping our system and our customer data secure is very important to us. In addition, our industry has many external agencies concerned about security. The North American Electric Reliability Corp., the Federal Energy Regulatory Commission, the U.S. Department of Homeland Security and the state public utility commissions are all placing security demands on utilities. I think staying a step ahead of all those security requirements is a worry to our whole industry.
BARRIOS I would agree with both of these. Another issue of ours is the changing consumer expectation. One of our corporate initiatives is shaving the peak for a 20-by-2020 reduction. But figuring out how to get members to adopt a load management program or demand management, energy management, and what the mechanics of that system are going to look like, is a challenge. With some of this technology, it's a commitment-a decade-long commitment for the life of that equipment, so we feel that we really have to make the right decision and a prudent investment.
HOSKINS Those are all valid points. I think for us in Ohio, a lot of it has to do with competition from deregulation. It's been around for years, but it's just now really heating up, and so we see a lot of switching going on with customers. We also see a lot of confusion being created with customers, as well, and from an IT perspective, that translates into much more of a need to be dynamic around the projects. And there were always some dynamics involved, but now it seems like we're having to revisit that planning more often and do a little bit of a reset or readjust it in a new direction. So some of that's not entirely new, but the frequency and the dynamics of it are greater than we've seen in the past.
SCHMITZ Everything everybody's said-except maybe for competition-is something that's on our minds. We came out of pretty much a lost summer with the floods in the Missouri River Valley, and it created a big impact on our customer-owners. A lot of cost and our energy went into protecting more than $3 billion in assets. Consequently, a lot of the things we planned to do just didn't get done. So going through our portfolio and trying to figure out what's not going to get done versus what is, is challenging. And then there is the EPA, and the cross-state pollution rules that are coming our way. We are in one of the states that got pulled into that really late in the game. Our major problem is the timing. We're getting six months to do the same things other utilities have had many years to prepare for. That makes it extremely expensive and significant. Our customers aren't used to the rate increases that are coming their way due to some of the U.S. Environmental Protection Agency and flood issues, and that's a big communication opportunity that our team is spending a lot of time on.
How are information technology and operations technology converging at your company?
HENDERSON We went through a reorganization/transformation in IT this past year. As a part of that exercise we interviewed all of our officers and a large group of senior managers, and we asked what their expectations were for IT. The message came through loud and clear that they want IT to be a business partner, that they want IT to be an ally in helping them bring the technology to the table to help solve the business problems and help them assess the technologies, keep them from making mistakes, but be a partner with them. And so, as a result, we've developed a group in IT called "business partners," and we put our business analysts there. We've got consultants dedicated to each line of business, and that's been very well received. In order to execute on our strategic plan, there's usually an IT component there somewhere, so it's important that we be aligned in the business and be partnering with them to make sure that we're working on the right things that give the most value.
HOSKINS I think continuing to strive to get that seat at the table and to be out in front of those things during the discovery phase of the strategy is critically important. We've done something similar, and we call ours "business relationship managers," but they are our link to the business. They are essentially our eyes and ears as to what's going on and making sure that we continue to stay involved in those things, and that's been somewhat effective for us as well.
BARRIOS I think as systems continue to get more integrated, it does become a requirement. We're very integrated, so we have a group that specializes in OT, and a group that specializes IT, but there's no project where they're not both involved. You can't do it without both sides. It's very hard to introduce any new process that's not going to affect the entire system.
SCHMITZ I think we've seen that, as well, where the IT/OT organizations that typically wouldn't have had to work together, the NERC critical infrastructure program has brought us to the table together, and it's been a really good relationship. And I see that continuing. Smart grid, for me, is where I see the convergence really happening with IT/OT, and I don't know exactly what that looks like. I'm not necessarily in a hurry to push that. It'll happen. What I'm in a hurry to do, really, is to keep the open relationship.
Executive Manager, IT
Bluebonnet Electric Cooperative
Vice President and CIO
Nashville Electric Service
Vice President, Information Technology & CIO
Portland General Electric
DPL (parent company of Dayton Power & Light)
Division Manager, Information Technology Division
Omaha Public Power District