Glasgow, Ky. power chief takes Fortnightly to task.
"The great obstacle of man is the illusion of knowledge," says Daniel Boorstin, distinguished American historian and Librarian of Congress emeritus.
It is what we think we know that keeps us from making progress toward discovering new certainties. The electric utilities of today have a lot in common with the sailors who accompanied Christopher Columbus. They stand on the shores of a new continent gazing into the unexplored wilderness of competition, paralyzed by fear due to their "illusion of knowledge."
When Columbus sailed off on the morning of Aug. 3, 1492, he was discarding the conclusions of the orthodox Christian authorities. After four trips to the New World he died believing he had been exploring the East Coast of Asia. It turns out his main discovery was the discovery of ignorance (em European man's ignorance of the world. The Glasgow Electric Plant Board and several other municipal utilities have embarked on similar voyages of discovery. Old dogma is difficult to overcome, but if all electric utilities pay attention to the main discoveries of these voyages, they can cast off the ignorant ramblings of modern economic and business authorities and discover a new product, infotricity.
Infotricity is the term we have given to the product we have been offering at the EPB. It is a combination of electric power, cable television, telephony and high speed LAN and Internet services. It is a mixture of electrons and bits. It is a complicated and unexpected set of interrelations. It has unimagined consequences and possibilities. It is another New World.
The modern day "authorities" have written and said much about the New World we have discovered in Glasgow. The Cable Telecommunications Association (CATA) has even created a site on the Internet dedicated to spreading its particularly slanted misinformation about us. Even magazines and periodicals that our industry trusts implicitly like Public Utilities Fortnightly have published articles spreading the illusion (See "Munis Find Cable TV a Costly Business," by Len Grzanka, Sept. 15, 1998, Public Utilities Fortnightly, p. 34).
When the EPB decided to construct a broadband network and offer entertainment and telecommunications services, we did not plan on immediate revenue gains from these new products. Instead, we planned on rediscovering our initial mission of providing and simplifying technology for our customers. We looked out upon a landscape where the possibilities of services from new telecommunications technologies and the realities of the actual services being offered were not even in the same field of view. Similarly, we saw that the rates being charged when these services were offered were outrageously high. We set out upon a voyage to discover ways to rectify these images and we have learned much.
One of our early discoveries was that our existing lineman, accountants, engineers and other employees were plenty smart enough to design, construct, operate and maintain a broadband network capable of delivering a flow of bits every bit as robust as the network they already were operating to supply a flow of electrons. I know several engineers will correct me and say that we actually provide a flow of "holes" where electrons were, but I hope they will allow me this more convenient description.
In operation, we find that the information flowing back to our operations center relative to the performance of the broadband network actually helps us find trouble and potential trouble on our power network. We have been able to use this information and the newfound communications capabilities with our substations and other devices on our network to dramatically increase the reliability of our electric power product.
When we started offering cable television service on our new broadband network, we really started making discoveries. We found that our customers gave us a new level of respect for our efforts to bring them something they could get from no one else; truly competitive, cost-based, rates for cable service and an opportunity to choose from multiple providers. We discovered that people really like programming featuring local events like government meetings, school activities, local sporting events, local talk shows. They even love to see District Small Claims Court on television! We would have never guessed it before our voyage, but we discovered that becoming a conduit for bringing these local events into the homes of our customers makes us more welcome in the homes of our customers and cherished in their hearts. Finally, we found that there is no more reliable method of getting information about our services into the minds of our customers than utilizing the "commercial insertion" opportunities afforded to distributors of cable programming by nearly all of the major services like CNN, Discovery Channel, TNT and others.
Our discoveries in the provision of high speed computer networking may be the most exciting of all. We provide a flow of bits for everyone. If you are one of our electric customers and you are about to buy your very first home computer, we will provide expert advice to you on which machine to buy. When it arrives, we set it up and teach our customers how to access information on the Internet through our network.
On the other end of the spectrum, if you are a business or industry that needs a high bandwidth bit pipe to another location in the community or to other locations via the Internet, we can provide you with a dedicated fiber circuit to meet your needs. Once our bit service is established to one of our customers, we have a constant interactive relationship with them. We can e-mail them to inform them of our power system status. We can explain the reasons for outages and give them advice on helping us prevent them. They can e-mail us to report that the street light in front of their house is out or to request additional information on their power or cable television charges. We can establish our homepage as their homepage, again reinforcing our position as the "well of knowledge" for our community. The same customers that find it convenient to have an electric utility that can furnish them anything from a flow of electrons for a 60 amp single-phase connection to a dedicated substation for a 15-megawatt connection, find it similarly convenient to purchase their flow of bits in the same manner and from the same entity.
No dissertation on the virtues of the Glasgow project and others similar to it would be complete without exploring financial results. Even King Ferdinand and Queen Isabella expected Columbus to return with some spoils to prove that he had indeed found the New World.
We never envisioned our cable television service as a stand-alone money maker. Rather, we saw it as an important structure in our vision of the infotricity utility. (See Table 1.) We are quite pleased that we have finally crossed over into positive net income for the fiscal year just ended. The people of Glasgow were quite willing to make a long-term investment in broadband infrastructure that they believed would bring them exponentially more benefits than the costs of the early losses. Indeed, they were correct in their vision. The amount of money retained in the local economy since the competition created by our project lowered the cost of cable television service. (See Table 2.)
Shopping centers don't apply the rules of cost-benefit analysis before they make a decision to build a parking lot beside their building. Neither do they measure the profit and loss of those parking lots. If they did, none of us would find a place to park. We, like they, should evaluate the impact of these new services in the light of the impact on the whole of the operation. Electric utilities also must see the value of becoming infotricity utilities before they decide to embark on a voyage like ours. However, our transition to an infotricity utility has been good for our energy sales business (See Table 3).
The New World we discovered is a world with dew still on it, so rich with possibilities that we can hardly imagine what will happen next. We can see infotricity making the deregulation of our industry a reality. When we are all infotricity utilities, it will be easy for a generation utility to post prices on the Web. So posted, it will be simple for our customers to shop for the best deal, make the deal, have their usage monitored by the vending utility and get billed for it via e-mail. With the bit pipe extended to the home, it will be a natural next step to extend the pipe throughout the home; it will go everywhere that electron pipes go. Appliances will all report their usage of energy to the utility on the ubiquitous network. We will then create power rates for discreet devices. We can run "specials" on clothes drying energy after 10 p.m. or special dish-washing energy sales on the weekend. The days of one electric meter for the whole house will be gone.
These are but a few of the many things we have discovered in the New World of infotricity.
How does an electric utility decide if it is to sail off to the land of infotricity? The answer lies in each particular utility's philosophy on risk, altruism, and patience. If the Glasgow project is comparable to the voyage of Columbus, then the decisions of other utilities are similar to the European countries decisions on colonization. In those days the English settlements called themselves plantations and Francis Bacon's essay "Of Plantations" (1625) is illustrative of the decisions each electric utility must make.
"Planting of countries," he wrote, "is like planting of woods. For you must make account to lose almost twenty years' profit, and expect your recompense in the end. For the principal thing that hath been the destruction of most plantations hath been the base and hasty drawing of profit in the first years. It is true, speedy profit is not to be neglected, as far as it may stand with the good of the plantation, but no farther."
A plantation then, was a place of risk and of calculation. It is the same today in the electric utility business.
William J. "Billy" Ray is superintendent of the Glasgow (Ky.) Electric Plant Board. For more than 10 years he has been a vocal proponent of turning electric utilities into "technology utilities."
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