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3/25/2010
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Bob Evans
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Global CIO: Oracle Smart Grid Study Reveals Deep Cost Concerns

While the smart grid industry's bubbling over with hype and hope, it lacks the insights on which broader business-technology strategies can be built.

Along with IBM, Cisco, and many other big tech companies, Oracle's understandably eager to be a pioneer in this potentially huge market. But an Oracle survey of 150 C-level executives from North American utility companies reveals significant concern about and confusion over what the whole thing will cost, how consumers will react, and how to recoup investments.

Oracle's Utilities business unit commissioned the research study to gain greater insight into how much (if any) progress utilities have made in their smart-grid efforts, and into the primary concerns those executives have with regard to customer expectations, regulatory issues, and above all, costs.

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The study, while not exhaustive in scale or detail, is vitally important in offering some grounding on a subject that has certainly cranked up the hype machines without anyone having much of a clue about technology standards, quantifiable performance, rate structures, timetables, and more.

The federal government is attempting to catalyze some action here with a promise to invest $3.4 billion in various efforts aimed at turning smart grid from theory into reality.

Since the expectations afor Oracle, unlike those for the federal government, do not include operating permanently in the red, Oracle's take on the concerns of the utility executives naturally centered on Oracle solutions, specifically information-architecture strategies. But let's take a closer look at the customer-side problems for which Oracle is claiming it has some solutions.

Only 21% of respondents from large utilities (100,000 or more customers) said they're "leading the charge with system-wide deployment"; 49% are in some type of trials or pilots; 17% are doing internal research or cost/benefit analyses; and 13% said they're not taking any steps toward smart grid.

When asked, "Is there anything your organization needs to understand better before moving forward with smart grid," the utility-executive respondents listed these three high-urgency issues:

1) What will smart grid cost?

2) How will we recover our investments?

3) How will consumers react?

Another survey question revealed more detail on those and related subjects, as the utility executives were asked to "select the two most-troublesome issues that keep you up at night":

--Consumer reactions to rate increases: 43%

--Environmental-mandate costs: 38%

--Getting rate increases to recoup infrastructure investments: 30%

--Changing customer expectations: 24%

--Rate caps and "regulatory disallowances": 21%

In a concluding section called "Our Take," here are some excerpts from Oracle's recommendations:

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