As this snapshot look at the seven utility mergers announced since January 1995 demonstrates, traditional patterns are no longer being followed. A number of the announced transactions did not fit...
Information Technology: It's Not Just Business Anymore
Computer systems must move beyond insular needs (billing and work orders)
to marketing opportunities. But few regulators really understand.
Everywhere we see the march of technology, especially computer and information technology. Pagers hang on nearly every belt or bag, PDAs have replaced notebooks and portfolios, computers sit on more home desks, and every major magazine and almost every daily paper has sections dedicated to news about the Internet.
Virtually every office desk holds a computer, offices are connected by networks, and networks connect offices around the globe. Our auto repair specialists must have computers for the complicated components in our cars. Card catalogs have been replaced by CD-ROM systems. Even the grocery store scans purchases, debits customers' bank accounts, and automates inventory, stock ordering, and accounts.
To the casual observer, the computer and information revolution has missed the electric power industry. Outside our homes and businesses, a mechanical meter, just like the ones that have been there for decades, turns quietly, registering incomprehensible information that must be physically read and translated into a bill that reliably arrives every month.
What we see as individual customers, however, disguises a revolution. The electric utility industry, too, is caught in the technological whirlwind, as are the other utility sectors, from natural gas to telecommunications. Utility managers are now offered a host of new information technologies that will allow more efficient operations, better data collection and retrieval, and better decisions.
The range of options, the nature of the technologies, and the decisions about when and how to acquire them for maximum benefits are complex. These complex decisions are difficult enough in times of monopoly service provision, but exponentially more complex when competition lies on the near horizon, where functional or actual unbundling, delamination, and disaggregation of the traditional utility business is now openly discussed across the country. The reliable certainty of the franchise service territory and the allowed rate of return are at serious risk of being replaced with a mere chance to compete.
Unfortunately, information technology is one aspect of the electric utility business few, if any, regulators really understand. No computer has a 40-year expected life. Information technology systems mean increased efficiency, but often have high front-end costs and short depreciation lives. And information technologies are not just tools for doing today's business better, they are tools for competing.
Utilities historically have used information technologies for a number of internal purposes. Customer information systems ensure that the "reliability" of billing parallels the "reliability" of the service delivery system. Automated mapping/ facilities management systems manage a utility's physical facilities to ensure engineering efficiency and cost containment. However, information technologies were seldom used by executives or regulators to support decisionmaking (em to help marketing staffs target market segments for special promotional campaigns, to help management evaluate the potential threat of a competitor, or to help regulators evaluate alternative transmission siting corridors or graphically view the facilities and interconnection issues related to a proposed merger.
Today, utilities use related types of spatial information technologies to improve work order management, outage recovery, resource planning and optimization, power flow