FirstEnergy Looks To Tech To Prevent Future Blackouts, But Plans IT Staff Cuts

FirstEnergy Corp., the beleaguered utility that's being eyed as a possible source of last week's blackout, is in the midst of a major IT restructuring project designed improve information flows within the company and prevent power outages, according to sources familiar with the utility's operations. The projects include the rollout of an enterprisewide intranet and an SAP implementation that will simplify the distribution of 1,500 daily operational reports.

Yet even as it beefs up its computing infrastructure, sources say FirstEnergy is set to lay off more than 100 IT workers in the coming weeks, a move that could delay its efforts to extend the intranet to field workers, customers, and business partners. FirstEnergy employs about 1,000 IT staffers.

The Akron, Ohio, utility, also admitted Wednesday that a virus infected its computers in late January and disabled a data system at its shuttered Davis-Besse nuclear plant. The Slammer worm was discovered in the company's main computer system and then at the plant along Lake Erie, a plant spokesman told The Associated Press.

FirstEnergy, whose representatives were not available to comment on the restructuring or the layoffs, appears to be making big strides toward building a more collaborative, real-time business environment that should, in theory, lead to more-reliable operations. The company is months into the construction of its FirstPlace enterprise intranet. The network will act as an aggregation point for data derived from hundreds of off-the-shelf, homegrown, and legacy applications from across the company. One goal is to give managers a more-complete picture of plant and transmission-line performance information that could help them take steps to prevent system failures.

FirstEnergy IT leaders are bringing operating units into the portal one at a time, using procedures inspired by a Japanese military tactic known as the Kaizen blitz. A Kaizen blitz calls for an offensive force to concentrate all of its power on enemy weak spots to break through resistance points. Under the program, IT staffers are given a maximum of 35 days to bring a business unit into the intranet. FirstEnergy is using applications from Plumtree Software Inc. to construct FirstPlace.

Among the first "weak spots" identified by IT leaders at FirstEnergy was the company's coal-fueled generating plants. Earlier this year, FirstEnergy targeted those operations after it became apparent that information gaps were jeopardizing reliability. "They had three or four different software packages, but they didn't have a whole lot of information about equipment that they could gather to prevent an outage," says a source familiar with the operation. Among the applications now feeding data through FirstPlace for use by managers at the fossil plants are CSI Technology's RBMWare, which monitors floor vibrations and equipment performance, and numerous internally developed programs.

To further improve system reliability, FirstEnergy may extend FirstPlace access to linemen, who could input data about downed lines into the portal using mobile-computing devices. Supervisors could then scrutinize the information immediately to gauge the potential for trouble. Such a system could have proved handy last week. Shortly after 3 p.m. on Aug. 14, about an hour before lights went dark in the Northeast, three of FirstEnergy's 345-kilovolt transmission lines tripped off.

FirstEnergy is also in the midst of an SAP deployment that will see SAP BW act as a conduit for more than 1,500 standard reports that will be fed into FirstPlace. The portal will give employees a uniform way to access reports generated by numerous business applications in use at the company, including software from Crystal Decisions and Brio Software Inc.

Ultimately, FirstPlace could be used to provide electronic links between FirstEnergy and its partners along the electrical grid, leading to faster response times in crisis situations. In many cases, managers at the various companies along the grid still use telephones to communicate during emergencies, industry experts say. However, limited IT resources at FirstEnergy, which will likely be further constrained by the staff reductions, mean it could be months or years before the company can create such a collaborative environment. "There a lot of internal pain points that need to be dealt with first," says the source.

Once known as Ohio Edison, FirstEnergy in 2001 became one of the largest utility holding companies in the country with its $4.5 billion purchase of GPU Inc. The move allowed it to expand operations into Pennsylvania and New Jersey. FirstEnergy now serves about 4.3 million customers, maintains 13,000 megawatts of generating capacity, and owns 14,700 miles of transmission lines. But some analysts maintain that before last week's blackout, management had downplayed the speed at which the utility needs to make structural changes to improve operations, despite a litany of recent problems. "They've not been good at predicting the time frame it takes to resolve these issues once they come up," says Paul Fremont, an analyst at Jeffries & Co.

FirstEnergy's setbacks include the temporary mothballing of the nuclear power plant, Fourth of July brownouts along the New Jersey coast traced to a subsidiary, the failure of an alarm system during last week's blackout, and an admission Monday that it will have to restate its 2002 earnings.