AEP's Bruce Renz speaks his mind on talent, business directions, collaborative research, connectivity and technology. In an era when many utilities have decided to abandon their past in a headlong rush to meet a chaotic future, American Electric Power (AEP) has selected a decidedly different route. With a legacy of introducing major technologies that dates back to 1918, AEP is leveraging its past to secure its future. As vice president of energy delivery support, Bruce Renz is uniquely qualified to provide his perspectives on AEP's past accomplishments and future goals. After investing 35 years of his life at AEP, Renz is looking to leverage the company's history as a technology leader to propel the utility into the future. He also lays out traits he believes are necessary for those individuals who wish to play a vital part in shaping the future of our industry.
On Business Strategy As customers become ever more sophisticated, they demand increasingly sophisticated service. Renz believes that a bare bones, average performance model will not be allowed by industry regulators. Instead, utilities must embrace a model that strikes the right balance between cost and quality. "It is likely," states Renz, "that as regulators move toward performance-based ratemaking we will see disincentives for poor performance and hopefully incentives for good performance as well."
Utilities are under tremendous pressure to perform, causing many vertically integrated companies to rethink their business structures. There is major movement for utilities to unbundle into separate generation, distribution, transmission and retail companies. Although we will likely see this trend accelerate, it is difficult to determine where the lines will be drawn-particularly between a distribution company and a retail company. Renz believes that some functions, including custom power and meter reading, could go either way or, for that matter, both ways.
While California opened metering to competition, other states are convinced that metering should remain an integral part of the established distribution company. Renz can see arguments on both sides of the ledger. On the one hand, economy of scale, standardization and safety could be best provided by the wires company, which has already achieved a good deal of sophistication. On the other hand, the meter could become a competitive offering as part of the enhanced value chain. "It is likely," says Renz, "that we will see the answer played out through experiment."
On Collaborative Research Renz sees a trend at some utilities to retract from active involvement in research as they focus on cutting costs in their core business. AEP realized that major issues, especially environmental issues, have become too big for any one utility to tackle alone. Five years ago, AEP decided to join the Electric Power Research Institute (EPRI), an international research organization headquartered in Palo Alto, California, U.S. AEP recognized that it could justify its membership dues only by committing major management talent to participate in all advisory groups. This commitment starts at the top with AEP CEO Linn Draper also serving as chairman of EPRI. AEP strives to directly influence where EPRI invests money and then works closely with the organization on critical projects.
A prime example is the development of the world's first unified power flow controller (UPFC), recently installed in Inez, Kentucky. Fundamentally, the UPFC is a device that, among other functions, provides instantaneous voltage control-enabling the regulation of voltage throughout an area to a very tight and precise band. The UPFC is essentially built out of high-speed solid state switches, which in turn are controlled by microprocessors. The unit is integrated into a total area control system through AEP's private wide area network. In less than a cycle the UPFC can respond to voltage deviations, thus providing both steady state and instantaneous voltage regulation. The device also allows AEP to modulate the flow of power on its transmission lines. AEP developed the concept and built the project jointly with Westinghouse, Siemens and EPRI.
AEP also sees the EPRI development of a standard utility communication architecture (UCA) as a benefit to all members. UCA allows different vendor's electronic devices to communicate with one another across a common platform. Previously, each vendor had developed its own proprietary approach. Instead of being stuck with patchwork solutions between suppliers, EPRI put together a strong coalition of utilities that recruited suppliers to support UCA. One of AEP's principal engineers, John Burger, recently received an award from EPRI for taking a leadership position in this initiative.
Overall, Renz is very satisfied with AEP's participation in EPRI, stating, "We're leveraging our investment many times over because our dues are a small percentage of the $400 [million] to $500 million EPRI works with every year."
On Connectivity Renz has a leadership role at AEP in assuring that information technology and telecommunications are deployed cost effectively. Renz states that teams must be crafted carefully if application tools are to perform as desired. By putting application software developers together with operations people, Renz believes that work tools can be developed quickly that work out of the gate. It takes management commitment to impress upon all affected parties that the company is committed to an action.
"Once it is evident that a system provides value," states Renz, "even people who are not terribly computer literate quickly see the benefit and soon won't be willing to work any other way."
Renz notes that utilities are somewhat less concerned with replacing or reconstructing systems that were put in place in past years. Instead they are focused on stitching together existing software systems to create a synergistic, integrated information system that can tap into existing legacy systems. AEP has tied together facilities management systems with customer information systems, trouble-reporting systems, crew dispatch systems and graphical interfaces. This integrated product allows AEP to analyze problems as they occur on the power grid and to address them quickly and efficiently while informing customers about when their concerns will be resolved.
On Talent As we move forward in business today, many companies realize that they need employees with more varied skill sets than in the past. In the past, work might have been interesting and challenging, but one-dimensional. Today's business climate requires that individuals be able to deal with financial, marketing, regulatory, legal, environmental and social considerations while maintaining technical skills. Renz believes that too many companies look at their employees as an expense to be reduced or eliminated. He says that the companies that invest in developing well-rounded employees will be the ones that reap large dividends. Renz believes in investing in individuals in his personal life as well. When asked to list a hobby, Renz glowingly related how much enjoyment he receives in playing with his young granddaughters. Renz has also invested in keeping his own skills up-to-date. With masters' degrees in engineering and management, Renz is also a certified professional engineer in the seven states AEP serves. Ren z also maintains intimate involvement in industry engineering organizations and sits on university advisory boards.
On History and Technology AEP's tradition of firsts comes from a willingness to embrace technology-a competency that has made the company highly successful. Renz predicts that in today's dynamic business environment technology will gain in importance. At the same time, Renz does not see technology as a silver bullet; instead, he sees it as a necessary but not sufficient ingredient for future success.
Looking back to 1998, Renz acknowledges that there's a lot of pride throughout AEP with the successful deployment of the UPFC. He believes it is important to tackle major projects like the UPFC if a company hopes to attract, retain and motivate the type of people who can carry out the company's vision.
In fact, AEP's history of innovations was a major factor that drew Renz to invest his career with the company. Renz realized that "an engineer had a good chance to advance in this company." He joined the company as an engineer in 1963 at the end of an era dominated by Phil Sporn, who had worked his way up through the engineering ranks to become president of AEP. Sporn was the consummate engineer who positioned AEP as an industry leader for decades.
Renz had the opportunity to meet and talk to Sporn, who was then in his late 70s or early 80s, still very energetic and still working. Sporn shared his enthusiasm for technology and belief in man's ability to invent the future. He had a great belief in technology, was a good businessman and was very concerned about societal and environmental issues. Sporn proudly considered AEP's service corporation a "center of discontent." He expected discontented people to constantly seek superior ways to provide service.
Throughout his career, Sporn worked to leave a legacy. Now, more than 40 years down the road, Sporn's initiatives are still having an impact in a company that has a history of taking technical risks. Following in the tradition set by Sporn and others, Renz is now leaving footprints to provide a path for others to follow.
American Electric Power is one of the largest suppliers of electricity to homes and businesses in the United States. AEP provides electricity to nearly 3 million people in parts of Ohio, Michigan, Indiana, Kentucky, West Virginia, Virginia and Tennessee. AEP has 22,000 circuit miles (35,406 circuit km) of transmission lines and 119,000 miles (191,512 km) of overhead and underground distribution lines. Its 37 coal and hydro plants and one nuclear plant are capable of generating 23.8 million kW of electricity. In 1998, AEP sold more than 130 billion kWh of electricity in the United States and had revenues of US$6.3 billion and net income of US$536 million. AEP was founded in December 1906 and was based in New York City until 1980 when the corporate offices were moved to Columbus, Ohio.
AEP is one of the largest coal-burning utilities in the United States. At present, coal is under serious attack, which is certainly going to cause AEP a good deal of difficulty. As a company, AEP wants to be environmentally good citizens, but Renz believes that moderation in all things is a virtue. Renz believes that a balanced fuel mix is appropriate, even vital to our national security, and one has to question any program that has the goal of strangling our inherent natural resource.
Nonetheless, it is an area of serious concern and a situation that Renz sees as a major threat and a challenge. AEP would like the time to develop a sensible strategy and the technologies that will enable the country to use coal effectively. AEP believes that it's really in the national interest to put together a cooperative effort between industry and government to come up with reasonable solutions in a realistic time frame.
- Research and development - T&D operations improvement - Information technology application development - Telecommunications, metering and customer support
- Bachelor in electrical engineering, New Jersey Institute of Technology - Master's in electrical engineering, Brooklyn Polytechnic Institute - Master's in industrial management, Massachusetts Institute of Technology (Sloan Fellow) Societies: - IEEE Fellow - Registered professional engineer in seven states - Vice president of the U. S. National Committee of CIGRE. - Chairman of the IEEE Power Engineering Society's Industry Advisory Council - Chairman of the EPRI Power Delivery Group Council - Chairman of AEIC committee on Electric System Reliability