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Envision the Utility of Tomorrow

How will the industry change in the future?
Fortnightly Magazine - June 2004

utilities of the future will share three characteristics:

Talent: Employees will be seen as the key to success. Clear objectives, open communications, and focused incentives will combine with enabling technology to unleash the energy and full productivity of the workforce, to quickly translate insight into action. Given the aging of the utilities workforce, getting this right becomes increasingly important.

Technology: Through pervasive use of technology to improve operations, satisfy customers, and outperform competitors, the utility of the future will seize opportunities to create environments of flexibility, speed, and mobility.

Innovation: An open-minded culture receptive to innovative new business models will be requisite. If a new approach can help achieve sustained results, it is adopted on its own merit, even if it was "not invented here." Successful utilities will have defined management practices that set them apart from the industry in how they manage their assets, their businesses, and their people. They will look for innovative strategic moves, and create their own growth opportunities. But to do so, they will need to break out of conventional thinking and accept the discomfort of change and risk.

One particular challenge will be managing both regulated and unregulated sides of the business-what Jim Rogers, chairman, president, and CEO of Cinergy calls "managing on the fault line." On the regulated side, utilities traditionally have taken a long-term view, but now they will also need a bias for the short-term.

The Future Wires Business: Controlling Connectivity

In the unregulated arena, utilities could soon find themselves with one foot in the rough-and-tumble communications industry, battling with other purveyors of information for the market to supply voice, images, and data to homes over existing power lines.

The capital investment already has been made-a direct line into nearly every home in the country. Since Internet signals travel at a higher frequency than electricity, they can share the same power lines. Modems plug into electrical wall outlets.

Today, only a few hundred consumers pay for high-speed Internet access over power lines. It's available commercially in only three cities (Cincinnati, Allentown, Pa., and Manassas, Va.) But while electric utilities across the country are testing the service, thousands of homeowners are still waiting to be connected.

Part of the push is coming from the Federal Communications Commission, which sees power lines as a way to bring new communications technology to people in rural areas. Broadband access over power lines is an alternative to high-speed access from telephone, cable, and satellite companies, and could reduce costs to consumers.

Telematics: Building the Sentient Utility Machine

Telematics and automated meter reading (AMR) are two components of a larger trend that will contribute to the utility of the future. First, telematics is silent commerce, or the use of microprocessors, sensors, radio frequency identification, and other computerized instruments that allow objects and machines to take advantage of new advances in wireless sensing to communicate with one another without human intervention.

Such equipment will be able to diagnose its own problems, guide an engineer through troubleshooting, and keep complete maintenance history records. For utilities, which rely on complex networks of