Conditions are ideal for utility financing—but not forever. Although interest rates remain low, policy changes weigh on capital structures.
Transforming the SysOp
Strategic pain points require an artful approach.
Utilities are at the threshold of some of the most significant changes they have faced in their history, rivaling the passage of PUHCA in 1935. This change emanates primarily from a handful of key business drivers associated with major technological improvements ( i.e., AMI, smart grid), the need for increased customer focus, increased regulatory mandates, and a changing workforce.
In particular, these changes are greatly impacting one of a utility’s critical functions, system operations. The system operator has primary responsibility and authority for the reliable operation of the electric transmission and distribution system, and is responsible for the entire flow of energy, from the generator(s) to the customers, literally keeping the lights on. The system operator must master a complex range of demands and critical interactions, and must be capable of making split-second decisions. The skills employed by today’s system operator emphasize a physical understanding of the power grid, often focused on a narrowly prescribed area or specific jurisdiction.
Given the business drivers, the time to develop and implement a strategic plan to address these changes is fast approaching. The complexities surrounding system operations often keep this area relatively distinct from the rest of a utility’s organization. As a result, key changes within system operations frequently are driven out of regulatory necessity. Increasingly, however, utility executive managers are realizing the strategic importance of a more proactive approach. “People issues must be an executive agenda,” says Martin Huang, vice president of operations at BC Transmission Corp. in Canada. “Leadership, sponsorship, and vision regarding the people agenda are key in changing business environments. Technology can enable us, but without people, we cannot transform.”
The best way to effect that transformation will be to take a strategic talent management approach, which will allow a utility to handle competency alignments and learning and knowledge management, as well as recruiting and retention to manage workforce change.
Several key drivers are affecting utilities’ system-operations function today, including technology changes; an increased focus on customer service; a changing workforce and; changing regulatory requirements. These drivers, however, can become significant pain points for utilities that don’t make changes to address them in the near future.
With the exception of the energy management system (EMS) for transmission operations, system operations has been for the most part behind the technology curve ( e.g., the preponderance of paper wall maps in distribution control/switching centers). However, automation and the advent of new applications is allowing for new work approaches in distribution operations. Since the 2003 blackout, there is an increased emphasis on automation in both transmission and distribution. Almost all utilities have made significant increases in their budgets for investments in automation. New applications with increased automation capabilities have enabled groundbreaking