I always like a road trip, so with a little extra money left in my 2002 travel budget, I decided to hit the road in mid-December and pay a visit to a not-so-far-away Midwest utility.

After nearly eight hours on the road, I pulled into Decatur, Illinois, at around three o'clock in the afternoon. I arrived well before my scheduled dinner meeting, so I had a some time to kill. Since I had my golf clubs in the trunk (always), I found a city-run indoor golf facility with a driving range, sand traps, sloped putting greens and even a virtual golf course.

While hitting balls, I struck up a conversation with the director, Rick Anderson. When I told him I was in town visiting Illinois Power (IP), he shared with me the details of the IP-sponsored program “First Tee.” He pulled out a set of plastic golf clubs and associated Velcro-covered balls and targets to demonstrate how the program works. Through a scoring system based on where the ball sticks, he simultaneously teaches kids golf fundamentals and basic life skills. The program makes learning fun and keeps kids coming back.

Later, as I was driving to dinner, a thought kept running through my mind: I haven't been in town two hours, and I've already run into an Illinois Power fan. I took this as sign that the trip would go well.

Parent Dynegy is Hands Off

When I started on my road trip, I thought I'd find dispirited and demoralized employees. After all, parent company Dynegy is in a fight for survival that traces back to early 2002 when its trading business collapsed. With a debt-laden parent, I expected to at least hear rumors that Illinois Power would be put on the block, but this was not the case. It is true that IP recently announced it would sell off its transmission assets, but this decision was not due to pressure from Dynegy. Instead, Larry Altenbaumer, IP president and CEO, informed me that his company, disappointed in the direction and speed of RTO formation, had entered into talks to exit the transmission business several years earlier.

Dynegy has confidence in the IP management team and provides them with little corporate interference as long IP hits its financial targets. Employees do not see Dynegy as the Darth Vader some in the mainstream press have made it out to be. In fact, Dynegy supports many community initiatives including First Tee, while encouraging IP to prudently invest in infrastructure.

Although I've met IP employees at various events over the years, this company didn't really get on my radar screen until I met Ellen Krohne, vice president of business development, at a T&D World-hosted outsourcing conference. Krohne described to me how IP was open to both insourcing and outsourcing, depending on the business situation. She invited me to check things out for myself, arranging for me to meet people in supply chain, warehousing, work management, customer information systems and operations dispatch.

My first encounter was with Mike Sanders, who directs supply chain and warehousing. Sanders does not think like any utility person I have ever met. Sanders came from Wal-Mart, where the supply-chain process might be that company's biggest strategic asset. Sanders is a whirling dervish who seems to tackle everything simultaneously and has everyone going everywhere. Truckers load their own trucks right in the warehouse, while software tracks every movement of every item via bar code. In fact, Sanders' operation is so efficient that the local electric distributor closed a warehouse across the street and now pays IP to handle its materials. Sanders has all kinds of partnering agreements going on with trucking companies, transformer suppliers and cable vendors. Look for an article from Sanders in a future issue.

I was also impressed with the level of detail at which IP tackled its business processes. I met with trouble call personnel, call center operators, EMS technicians and dispatchers. I was struck by the level of integration between the information technology (IT) tools of the various work groups. The systems work without users worrying much about what's behind them, so I talked with the vice president of IT, Greg Mason, to find out why. Mason admitted that he was a business person first and an IT guy second. Mason focuses on what his internal customers need to do their jobs. Mason has staff assigned to work on location where the IT tools are used. I also found it interesting that Mason's group is not shy about developing its own software if commercial products aren't providing the functionality their customers need.

The culture that has emerged at IP impressed me as well. There is an air of cooperation and expectancy I found throughout the company. I didn't get a single whiff of the usual “I'll treat him hospitably, but I really don't need this right now” scent that emanates from the chronically overworked.

So why has IP had more luck adapting its culture and its business processes than most utilities? After all, 15 or so years earlier, IP appeared to be no different than most technically driven, engineering focused utilities.

As Altenbaumer puts it, “We ran into a series of challenges, ultimately experiencing the corporate trauma of building and operating a nuclear plant. We quickly found that technical competence wasn't sufficient. We also had to be successful dealing with regulators and legislators. In fact, the quality of our relationships with these and other parties was key to the passage in 1997 of favorable legislation that led to a new regulatory compact in Illinois.”

IP has not abandoned technology, but it now focuses technology to address business concerns. About 18 months ago, the company went through a modest organizational restructuring. The redesign team investigated the energy delivery business, looking at performance across a number of scales including reliability, customer satisfaction, safety and financial performance.

“The ultimate driver that I think will become the common denominator for all delivery companies is performance,” says Altenbaumer. “As we went through the various analyses, we found that the enabler of performance across all these dimensions is really process and technology. Back when nuclear plant issues predominated, in almost a defensive mode, our energy delivery people, perhaps through foresight or perhaps by luck, made investments in process and technology that have allowed us to reduce our costs and improve service levels.”

Next Steps

Altenbaumer sees the days numbered when mid-sized utilities can afford to develop many of their own process and technology solutions. Instead, he expects to see utilities working together to develop “franchise-type” partnerships, whether with other utilities or with commercial vendors. IP tested the waters to see if other utilities were interested in obtaining access to their internal services. IP found that utilities had a high level of interest, but also a relatively high concern about letting someone else do the work “we have always done.” Altenbaumer expects this will be a difficult hurdle to overcome but predicts that economic pressures ultimately will force utilities to move in this direction.

Altenbaumer would be the first to acknowledge that IP has not fully arrived. Employees continue to review processes and look for ways to enhance performance and value. This company provides an environment where ideas are cherished and initiatives encouraged. We will continue to track the metamorphosis of Illinois Power.