Widespread market changes and proposed federal mandates are putting new burdens on IT managers at US power companies to deliver real-time financial and operational data to corporate executives, as well as to customers, regulators and key business partners.
But many IT departments face obstacles in meeting such demands. The challenges include high costs, tight deadlines and organisational inertia, according to CIOs and analysts at Meta Group 's 2003 Energy Information Strategies conference here this week.
For instance, the Federal Energy Regulatory Commission has proposed a mandate called the Standard Market Design in an effort to create a more competitive national wholesale market for electricity. The FERC proposal, which was issued in July 2002 and modified in April, is being considered by Congress as part of a sweeping energy bill.
But one of the problems with the proposed rules is that the business executives who helped craft them didn't go far enough in communicating with their IT departments "to understand what the IT ramifications are," said Dennis Fishback, CIO at Calpine , a San Jose-based company that operates power plants and offers a mix of power-generation services.
Mark Griffin, chief operating officer at Midwest Independent System Operator in Carmel, Ind., said the ISO expects to invest between US$120 million and $130 million over the next few years on new technologies and professional services to help "refit" existing systems to meet the market restructuring requirements.
ISOs administer the wholesale electricity markets in individual states or regions of the US The tab for New York Independent System Operator to modify its applications is expected to reach about $100 million, said Kenneth Fell, CIO at the not-for-profit company in Guilderland, New York
The FERC proposal, which would require companies to settle energy transactions more quickly, is expected to force power generators and distributors to expand their investments in collaborative technologies such as enterprise application integration (EAI) software, Web services and Internet portals, said Terry Ray, an analyst at Meta Group.
The mandate also would drive further investments in analytical software and data warehouses to help energy companies "sense and respond" faster to changing market conditions, said Rick Nicholson, director of Meta Group's energy consulting practice.
But the difficulty of complying with evolving market requirements extends beyond technical challenges. IT managers at the conference pointed out that they often have to be the instigators of real-time data delivery projects and couch them in business terms to convince senior management of their importance.
Gene Zimon said that before he became CIO at Boston-based electric and gas utility NStar two years ago, EAI "was sold as a technology effort, and it didn't fly." Zimon has since emphasized the business case for EAI investments, including the ability for senior executives to view daily performance information through a Web portal that NStar's IT team is developing.