The Power Of IT

Technology to improve power companies' operations could help avert another blackout--but questions remain about the industry's commitment to IT
FirstEnergy just finished deploying SAP's business-intelligence software to give employees access to more than 1,500 standard reports via the portal. The company may eventually extend FirstPlace access to line workers, who could input data about downed lines into the portal using mobile computers so that supervisors could gauge the potential for trouble.

Despite FirstEnergy's efforts, it's unclear how committed it is to improving its computing infrastructure. The company is set to lay off as many as 230 IT workers--about 20% of its IT staff--in the coming weeks. It has already laid off some IT personnel who had been discussing plans to extend the portal to partners and customers, says a source familiar with the operation. A FirstEnergy spokesman would only confirm the details of its technology efforts to date and upcoming layoff plans. He says there are no plans to extend use of the portal to other parties.

But in today's deregulated energy markets, some kind of real-time information exchange may be what's needed to help companies differentiate a routine spike from what could be the beginnings of an electrical tsunami. Independent system operators like the Midwest Independent Transmission System Operator Inc., which oversees FirstEnergy's area of operations in the Midwest, maintain some coordinating mechanisms. But they're not always enough. For instance, Midwest Independent Transmission maintains a database of performance information that's available to its members, but participation and information submission is voluntary, doesn't happen in real time, and there's no automated way to push data out to members.

PJM, which serves Pennsylvania, New Jersey, and Maryland, is doing a better job. Its portal uses Web services to let transmission and generation companies submit outage information and perform instantaneous reserve checks. It's hard to draw a direct link between PJM's technology and its performance during the blackout, but it was one of the few grids in the Northeast mostly unaffected by the outage. ITC's Cyrulewski says he'd like to see Midwest Independent Transmission adopt some of the Web-based communications tools that PJM offers its members. "It's something we'll push for," he says.

Clearly, there's more work to be done at FirstEnergy. Once known as Ohio Edison, FirstEnergy in 2001 became one of the largest U.S. utility holding companies with its $4.5 billion purchase of GPU Inc., which let it expand operations into Pennsylvania and New Jersey. But some analysts say that, before the Aug. 14 blackout, FirstEnergy's management team had downplayed the speed at which the company needs to make structural changes to improve operations, despite a litany of recent problems, such as July 4 blackouts along the Jersey shore.

"They've not been good at predicting the time frame it takes to resolve these issues once they come up," says analyst Paul Fremont at investment bank Jeffries & Co. With the country charged up about the blackout, now may be the time for FirstEnergy to reinforce--not cut--its IT resources.

-- with Rick Whiting and Larry Greenemeier

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Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Terry White, Associate Chief Analyst, Omdia
Richard Pallardy, Freelance Writer
Cynthia Harvey, Freelance Journalist, InformationWeek
Pam Baker, Contributing Writer