The time-honored discounted cash flow method for determining appropriate utility returns falls short when interest rates are low. Inadequate ROEs ultimately increase cost of capital and wipe away...
CIOs Under Pressure
IT officers are getting more efficient, but guess what keeps them up at night?
we spend our IT money. I don’t think it’s all that different from a CIO position, except that we’re a relatively small company from an employee standpoint. We only have 250 employees. We don’t have the layers of management that would give you the CIO position. We don’t need any more “C”-level employees.
Fortnightly: How does ITC’s acquisition of Michigan Electric Transmission Co. (METC) affect your role and workload at the company?
DesRosiers: My workload is up significantly. The same is true for all IT staff—and the whole company, for that matter. In IT, we had to work on integration on several fronts. The basic network and desktop integration was relatively simple, and we had a good amount of time to plan. So we wrapped those up shortly after closing. The business systems—financial and supply chain—take longer. We have just finished integrating them. The biggest integration issue was the transmission management system (TMS).
We essentially added all of the METC stations to the existing ITC databases and models. This nearly doubled the number of data and control points in the field, which has a major impact on your databases and your network applications. You also need to ensure the accuracy of all of the thousands of displays that the operators look at in the system.
We are within a couple weeks of having things completely integrated, which is a pretty amazing feat considering that due to the timing of the acquisition, we weren’t able to really get started until September last year. To put things in perspective, a typical EMS (we call it a TMS because we are transmission only) installation would take two to three years.
Fortnightly: What IT issues affect your transco that might not affect investor-owned utilities?
DesRosiers: I think it is more interesting to talk about the types of issues that don’t affect us. On the IT side, because we are a Midwest Independent System Operator (MISO) member, and because transmission is our only business, it means we don’t need a billing system. Billing systems can be a nightmare. The fact that we don’t have one allows us to focus on our TMS.
The complexity of maintaining a real-time SCADA system with 200-plus geographically dispersed locations cannot be overstated, particularly when you consider that this system has been in flux since the day we took control of it in 2004, when we needed to put our own monitoring and control equipment in the field. The METC acquisition means that the system will continue to be in flux. Other utilities might do a database change on their EMS once a month, whereas we make them 2 or 3 times a week. What makes this possible is a dedicated staff, a ton of coordination, and the rigorous procedures that they have developed to cover all the contingencies.
Fortnightly: What are some of the specific challenges in your Michigan service territory?
DesRosiers: Michigan has unique operational features. We are a peninsula; 6,000 MW of energy within our service territory is provided by independent power producers, and Michigan has an active retail