The editorial staff of Transmission & Distribution World along with ITRON convened a panel of industry experts to discuss the issues facing the power delivery industry and to share their perspectives on topics including operational excellence, the evolution of the smart grid and the value of a portal to the home. The text that follows is an edited version of this discussion.

Rick Bush: Today, we will be talking about market forces pressuring delivery companies to embrace technology as they attempt to become more operationally excellent. Don't we really need a long-range plan to address utility needs while reducing risk?

John Baker: Our general manager, Juan Garza, is adamant we take longer-term vision of the utility industry. As a city utility, Austin Energy is a vertically integrated utility that is regulated, even though the rest of the state of Texas is in competition. We were contemplating putting some really high-dollar assets in the ground in the way of generation and decided to look at strategic long-range planning. We sought all the stakeholders' perspectives on how we should reposition the organization for success in the future. We don't have all the answers yet, but we are off to a good start. We've discovered that until you really get involved in that longer-range vision, you don't appreciate how the short term can keep you from seeing the big picture.

Rick Bush: John, could you share a few details on your strategic plan?

John Baker: We determined that our overriding need was to have a risk-management strategy. If we see significant uncertainty, we will hold off making a decision (unless we're losing a significant opportunity or creating another threat) until the information becomes more defined around that particular question. And sometimes that may mean we need to make an intermediate investment before we make a leap into a broad-scale deployment.

Rick Bush: Any other comments on corporate vision?

Hawk Asgeirsson: Bob Buckler is the president and COO of energy distribution, and he's quite a visionary. He saw a need for distribution automation systems in the early 1990s. Buckler also started PlugPower, a fuel cell venture. In addition, he started DTE Energy Technologies, a high-technology company that provides distributed generation products and services to residential, commercial, industrial and utility customers. And he's an engineer.

Chris Hickman: We spend a lot of money in this industry trying to figure out what makes us unique. The bottom line is we're a delivery services industry, whether its molecules of gas in a pipe or electrons over a piece of wire. It's delivery, so the question is how do you deliver your product in the most effective manner possible? And where do we head in the long term? Let's look at processes. I predict that plug-and-play architecture will fundamentally change how we choose to integrate as an industry.

Craig Parmeley: At KCP&L, we've put together a cross-section of employees throughout the company to draw out a map of the energy company of the future. We've used this input to create a vision of where our utility needs to be in five years. Our CEO, Mike Chesser, has spearheaded this initiative where we engage all the stakeholders in our region of the country to help us reshape the utility.

Rick Bush: What keeps things progressing?

Craig Parmeley: Management doesn't see its duty as providing answers but instead focuses on providing direction. The answers come from employees. That's the key to get people energized. A lot of people are really excited about the direction we are taking at KCP&L. It's hold onto your seat belt time. We are on a roller coaster that is gaining speed.

Philip Mezey: Mike Chesser is good at articulating a vision. He's been around a number of different places, including ITRON, and really enjoys change. He's also worked for years within utilities.

Robert Neilson: The thing that Mike Chesser does so well is getting everyone in a room talking. It's very simple, but it's very unique and very powerful.

On Operational Excellence

Rick Bush: Vision is critical but what about execution? We now have really powerful tools to help us operate other businesses.

Chris Hickman: To strategically plan beyond the two- to five-year horizon, we must take a leap of faith. We must assume that major issues will be resolved and plan around a more visionary mindset. This enables us to abandon shackles that are holding us back today.

Jack Gomm: Our business is really about working toward operational excellence. As we look to drive down costs and become more efficient, we can't take our eyes off quality and customer service. Certainly, we've been able to work with ITRON for many years and look to their expertise to see if we can stretch our thinking to advance operationally.

Robert Neilson: As our industry focuses on operational excellence, we find that Jack's utility faces issues that are somewhat different than another utility might face. Still, we can leverage similar technology with a different implementation to solve different sets of problems.

Philip Mezey: We're astounded by the regional variations utilities face. Theft might be a concern at one utility, where another utility is focusing on unforecasted air-conditioning load. Yet another utility is focusing on reliability while they try to balance supply and demand. In other utilities, labor issues might drive an agenda.

Jack Gomm: Of course, there are different priorities, but below the surface of the iceberg, we all face the same issues.

Philip Mezey: The list is the same. But one utility might have a robust network, while another has a highly stressed network due to economic conditions.

Chris Hickman: At PNM, our goal is to run our business efficiently. Our strategic plan is based on operational excellence, service excellence and market excellence. We must execute the business plan and make sure our customers enjoy doing business with us.

Malcolm Unsworth: It's in everyone's best interest to continually reduce costs and improve efficiency, right? In manufacturing, we are just not able to increase prices. So we constantly focus on efficiency. Steps that include outsourcing, improving work processes on the shop floor and reducing work force.

Rick Bush: How do we work together as an industry to address issues?

Jack Gomm: As we focus on operational excellence, we use benchmarking, looking for ways to improve in terms of cost and efficiency. We are not necessarily trying to hit a home run, but to get a few bunt singles here and there and incrementally improve.

Philip Mezey: But Jack, has that led to an under-investment in capital? Too often, benchmarking is about wringing expense out of the process.

Jack Gomm: Not really. As a matter of fact, it's a way to make some of these improvements. The only way we see a utility can improve in T&D operations or in customer service is to invest in technology. It's trying to find the right technology and applications to help us improve.

On Regulators

Rick Bush: But there must be a limit to how far a utility can stretch its technology dollars without some rate relief. Surely regulators must see that we can't freeze rates indefinitely.

Robert Neilson: At the end of the day, either the ratepayer or the shareholders will pay for innovations. Commissions show a real interest in innovation until you sit down and say, “We will be able to get recovery for this, right?” That's when it all stops.

Chris Hickman: At PNM, we haven't had any price increases since 1988, but we have had price reductions. We now have a fundamental understanding that the costs have pretty much been driven out of this business. PNM's electric rates adjusted for inflation have gone down 46% since 1988. That's not a sustainable model. There's going to have to be reinvestment in aging infrastructure.

On an Intelligent Grid

Rick Bush: Maybe we can use technology to get more out of our infrastructure. I'm hearing a lot about us developing a more intelligent grid. Can we leverage technology to deliver a higher reliability product?

Hawk Asgeirsson: Yes, the smart grid. There is merit to the idea. We all know that individuals farthest from the substation are the ones who really get hit hard, so we've got to develop the technology to increase reliability to the last customers. As an industry, we are now starting to make progress in this area.

Rick Bush: Craig, maybe you can mention what your utility is doing to address rural circuits.

Craig Parmeley: We've had an intelligent system in the metro area utilizing the Cellnet automated meter reading system. We've also installed distribution automation in the metro areas. But we've had a difficult time getting over that hurdle for the rural areas of our territory. We have been working with Telemetric to communicate with remotely located devices, including capacitor controls.

Jack Gomm: The ability to get real-time information from the customer helps us address capacitor control, feeder switching and on-the-fly reconfiguration of the distribution network. We see a lot of potential as we work to get all these pieces to work together.

Craig Parmeley: The other challenge, too, Jack, is to develop a system where the operators can efficiently run.

Jack Gomm: Ideally, Craig, we want operators to monitor the system while activities are performed automatically.

Hawk Asgeirsson: I've learned that operators don't want to operate, they really want to respond to trouble, so the more automation, the better off you are.

Rick Bush: Russ, you meet a lot of customers. Have you noticed a trend toward this concept of an intelligent grid?

Russ Vanos: There's a lot of buzz, but I think as you travel from site to site, the definitions vary greatly. There's a big difference between buzz and action.

Rick Bush: Don't we already have a lot of tools needed to create an intelligent grid?

Russ Vanos: Jack said it well. People intuitively feel we can link these verticals together, connect the dots. FPL is one of the few utilities that have actually done something, but it's hard. It takes a real visionary and it takes guts.

Jack Gomm: Customer expectations for reliability continue to drive this. With an intelligent network, we can improve reliability and certainly help our customers.

Rick Bush: What do we need to move forward with a smart grid?

Chris Hickman: We need standard protocols, and we need more communication bandwidth. We also need to deliver the right communication tools to the site. We are already facing data overload. Our ability to interpret the data to make sound decisions has actually decreased.

Philip Mezey: One of the problems with a broad term, like the intelligent grid, is that standards bodies are pretty slow and can paralyze progress. We'll just have to deal with existing systems in order to try to solve this problem now. The name of the game really is an ability to integrate information from a wide variety of sources. We're finding, though, that it's hard for utilities to justify investment in information gathering because it doesn't fit into a particular business line. It is also hard for customers to buy analytics. There are real challenges in trying to understand who the buyer is and how you go about packaging those analytics in a way that makes them procurable.

Robert Neilson: We find that someone at or near the top must weave a picture together so that all the different stakeholders can see what they can gain for supporting the initiative.

Randi Neilson: To tag onto Rob's comment, in organizations where people are siloed, we literally have conversations with individuals who can't comprehend how distributed generation and customer care load data are related. But if you look at the people in this room, I see individuals with diverse backgrounds that can see the bigger picture.

Expanding Beyond AMR

Rick Bush: Of course, AMR enables utilities to closely track a customer's energy usage, but don't we need to do more?

Chris Hickman: I believe the utility needs to provide a portal to the home that is able to deliver price signals to the customer while characterizing usage back to the utility. This device could also provide the ability to record an outage. We could also provide tamper-detection intelligence and basic power-quality information. I don't see this portal as simple as the device people characterize as AMR today. I think it's going to be very different.

Jack Gomm: Chris, I agree with you. We are talking devices that can address power quality and can provide remote connect-disconnect services. I have a problem with the name AMR because it stands for automated meter reading. Our T&D folks say, “Oh, that's that metering thing,” and really don't understand all the capabilities available for use on the delivery side of the house.

Kevin McDonald: Just an observation. We are hearing about the development of intelligent appliances. If appliance vendors are going to embed chip sets and want to communicate with these devices via power line carrier, there is work to be done to assure that the various communication technologies connect.

Jack Gomm: I agree there are tremendous benefits across the whole utility spectrum of businesses. Let's look at how far cell phones have come in just a few years. It used to be just the phone, now they're taking pictures, they're Internet enabled and telecom companies are giving them away. We need to see the same potential for portal devices to communicate at many different levels.

Rick Bush: I'd like to thank you each and everyone of you for participating in our roundtable today. The trails being blazed by the utilities represented here will provide direction for our T&D business. We look forward to covering technology and innovation at your utilities in the years to come.

Roundtable Participants

Hawk Asgeirsson, manager, distributed resource planning, Detroit Edison, has extensive experience in all aspects of distribution planning. At present, he is responsible for integrating distributed resources into T&D at Detroit Edison including 18 installed distributed generation projects since 2002.

John Baker, chief strategy officer, Austin Energy, has 30 years of experience in the industry. He has broad experience, having worked in an industrial utility and with two public utilities. His experience includes stints in T&D, customer care and marketing.

Jack Gomm, director, customer billing, Florida Power & Light, began his career in distribution engineering. During his 30-year career, he has gained experience in most aspects of the business, including customer service and external affairs.

Chris Hickman, executive director, engineering and technology, Public Service New Mexico, has had management roles in engineering and operating. He has also led team efforts to develop transmission asset management tools and substation design tools.

Kevin McDonald, metering principal, metering services, Georgia Power Co., has extensive experience in metering, having spent the majority of his career in metering. At present, he is involved in several committee and project teams focusing on meter engineering and data management.

Philip Mezey, senior vice president, software solutions, ITRON, joined ITRON from Silicone Energy when that company was acquired. He has extensive experience in product development.

Craig Parmeley, manager, distribution engineering, Kansas City Power & Light, began his career in distribution engineering. His experience includes a stint working closely with KCP&L's largest customers.

Randi Neilson, vice president, marketing, ITRON, has 12 years experience at ITRON and is currently responsible for strategic marketing, marketing communications, market intelligence, regulatory support, corporate strategic alliance partners and customer relationship management.

Robert Neilson, president and COO, ITRON, has been with ITRON for the past 22 years. His early efforts focused on marketing, strategy, business development and deployment efforts.

Malcolm Unsworth, senior vice president, hardware solutions, ITRON, has 25 years of experience in the metering business. Prior to his stint at ITRON, he was the president of Schlumberger Electricity Metering, where he was responsible for water, electricity and gas products in North America.

Russ Vanos, vice president, hardware solutions, ITRON, joined ITRON when the company was a startup 24 years ago. His early efforts were focused on meter reading and product testing.

Editor's note: Mr. Hickman has since left the employ of PNM.

Kevin McDonald on the Business Case for AMR

When Georgia Power first looked at the business case for AMR in the mid-1990s, the numbers weren't quite there. At that time, the technology looked promising when applied in urban areas, but the payback started falling off as we looked into less densely populated areas.

We ran another business case for AMR back in 2002 and got a surprise. We looked at plugging in multiple applications into the ITRON Enterprise Edition meter data management system and discovered it made sense for a large segment of our customers where optimal technology densities could be reached. For some regions, you'd have to defend why you didn't go with AMR. Today, we are working to gather the low-hanging fruit. Our project team for the enterprise edition project has members that address interval data accounts, mass market billing, outage events and distribution functionality.

ITRON is in the process of giving us some of those tools. Enterprise Edition will be key to providing this value equation, because it's going to cache the data in a way that the enterprise can get access to it and improve it.

If, as an industry, we could come up with a credible story on justifying AMR based on using the AMR data for asset optimization, power outage notification and outage response, we could justify a more robust system. The industry needs to document the value of these data applications if we are to build a compelling story for AMR.