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Utility R&D: The Cutting Edge of Competition

Fortnightly Magazine - August 1995

locating system. This system will use strategically placed sensors with highly accurate electronic clocks to localize the fault. If successful, the new system could reduce the time required to locate a fault from hours to minutes and reduce the application of high-voltage pulses.

The Bell Labs prototype, now in use at Con Ed, is estimated to reduce the time to locate faults by 3,000 to 4,000 maintenance crew hours per year. If successful, the newer technology could triple this savings.

A Proactive Future

The value of consortium R&D will become increasingly difficult to prove to electric utility executives who are experiencing increased competition from neighboring utilities and others new suppliers of electricity. Although collaborative research does leverage what a single company gains from its modest monetary contribution, consortium members must learn to cooperate in developing needed technology while protecting their own vested interests. New consortium guidelines must be established to ensure that the benefits exceed the potential liabilities. Different kinds of alliances may need to be formed between noncompetitors.

For Con Ed, proactive participation in consortium R&D as conducted by EPRI, GRI, Eseerco,

NYSERDA, and others has been a cost-effective way to develop needed technology. Through alliances with these organizations, the company has been able to leverage limited R&D dollars and maximize its financial returns. Value analyses have conclusively demonstrated that the company has received favorable and growing returns from its R&D investments. However, as competition increases there will be greater challenges for utility R&D personnel to develop and deliver beneficial technology more rapidly. The above examples illustrate how R&D personnel can contribute to their utility's competitive position by increasing the value of existing assets, building customer loyalty, and reducing system O&M costs. t

Dr. Robert Bell is vice president of R&D at Consolidated Edison. Wayne H. Seden is a consultant to the utility.

If You Don't Evaluate, How Do You Know it Works?Value analysis is a vital part of the total R&D management process-a report card of how well the individual R&D programs are producing for the company, as measured by the affected business units. Business unit personnel may be unaware of R&D results in their areas of interest, or maybe the results simply don't match up to real needs. Value analyses point out where these disconnects take place.

For planning and budgeting purposes, a company needs to evaluate programs based on their: 1) importance to business (unit) strategy, 2) prospects for producing future benefits, 3) externality benefits, and 4) unique capability (i.e., only available option), 5) asset value enhancement potential, and 6) past performance.

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