Utility R&D: The Cutting Edge of Competition

Fortnightly Magazine - August 1995
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As electric utilities move ever closer to all-out competition, senior executives are streamlining their organizations, reducing spending, and developing strategic plans to ensure their company's future success. Organizations that cannot substantiate their contribution to the company's financial bottom line risk major budget cuts. A utility's research and development (R&D) organization is a prime candidate since its contributions are generally viewed as long term and difficult to quantify.Yet R&D is a vital resource for companies that compete in an open market. The large R&D budgets of semiconductor, computer, and other electronic companies attest to their management's belief that survival depends on keeping a technological edge over their competitors. However, R&D must be planned and managed properly in order to maximize return on the investment.

Consolidated Edison (Con Ed) has been a constant supporter of R&D organizations in New York State, and a member of the Electric Power Research Institute (EPRI) since the research consortium was formed in 1973. In 1985, the company began conducting value analyses to determine the level of technology transfer between EPRI and its members. In later studies, Con Ed attempted to verify that the company was deriving sufficient value to justify its continued involvement with EPRI. (The company has adopted the same procedures to evaluate its own internal programs as well as those managed by the Gas Research Institute (GRI)).

The original value analyses involved identifying actual applications of EPRI technology and estimating the value they realized. The process required the review

of hundreds of commercial-grade hardware, software, and

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