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The CIO Forum: The Changing Face of Energy I.T.

Budgets are expected to increase, even as new IT challenges present themselves.

Fortnightly Magazine - January 2006

finitely constrained. We function as a not-for-profit business. The budget we have for the size of business we run is relatively small. I’m not saying it’s inadequate; I’m saying it’s finite. We have to be able to do a lot with a little.

At the same time we have to implement a couple of strategic projects. We need to replace our billing and settlement system with something that’s more state of the art, and we need to replace our market information system, which includes the user interface. So we’re going to be working on some pretty large projects over the next couple of years, and at the same time trying to improve our execution on how we deal with things, and the quality of what we put out to the marketplace.

Fortnightly: What percentage of NY-ISO’s budget goes toward technology spending?

KF: We run about a $7 billion a year business, and my IT budget is in the $40 million to $45 million range. That’s about two-thirds of 1 percent. For a technology-based company, that’s certainly not a lot of money.

It’s a sensitive subject, because we are not-for-profit. We basically work as an exchange, where we bring buyers and sellers of electricity together. So it’s a very large market. At the same time, we have a lot of pressure from our customers to keep our costs down, because they pay our bills.

When I go to get a budget approved, for example, I need to get it approved through management at the NY-ISO, then through a budget steering committee made up of our customers, and then through our board. So you really have to be able to show return on investment, and where we’re adding value to the customer.

I don’t necessarily feel like I don’t have an adequate budget. I just feel like I’m expected to do a lot with what I have.

Fortnightly: How does the regulatory community affect your role as CIO?

KF: We have to answer to FERC [the Federal Energy Regulatory Commission] primarily. We have some relationship with the public service commission in New York, but predominantly it’s FERC. I don’t know that it necessarily affects what I do here, but it does, I think, impact all of the ISOs/RTOs (regional transmission organizations), because there’s a lot of emphasis coming from FERC to share technology across the ISOs/RTOs to be able to mitigate some of the costs.

We do have a CIO committee that’s made of the CIOs or senior-most IT managers from each of the ISOs/RTOs in North America. What we’re looking at trying to do is find the technology that’s shareable. We all run different markets, so you can’t have everything the same, but you can have infrastructure elements, or something like Web standards, that we could implement. That’s what we’re trying to work on as a group.

Fortnightly: How far along is that? When do you expect to come up with those solutions?

KF: We actually have project plans. Effectively, we don’t have the same target dates, because it’s difficult to control where