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TransActions - November
1999 (Vol 599)
If the transition to the year 2000 occurs tonight, the electric utility industry would operate reliably with the resources that are Y2k Ready now. That is the bottom line in the North American Electric Reliability Council’s (NERC) final quarterly report to the U.S. department of Energy on the industry’s Y2k readiness. "More that 99% of all the critical elements of the U.S. and Canadian electricity supply systems are ready for Y2k," said Michehl R. Gent, President of NERC. "If New Year’s Day 2000 was tomorrow, we believe the lights would remain on in North America." "North America’s electric grids are in excellent shape for the transition to 2000," he said. Y2k remediation and testing are complete at all but a handful of facilities that have late 1999 scheduled maintenance outages or are awaiting delivery of hardware or software from vendors. The report includes a list of 251 entities that meet NERC’s Y2k Ready or Y2k Ready With Limited Exceptions criteria. Most of these organizations operate the high voltage transmission lines or provide electricity to the grids and submit monthly reports to NERC of the progress of their Y2k remediation programs. NERC’s findings in this report mirror those published in its earlier reports: The Y2k errors found produce nuisance errors, such as incorrect date displays. Fewer than 3% of mission-critical components were found to have any Y2k-related problems. In most cases, Y2k was found not to affect functions related to keeping power generators and delivery facilities in service and electricity flowing to customers. As part of contingency planning for Y2k, electric utilities will have extra personnel on hand over the holiday weekend to handle any unexpected events. The report has discussion of contingency plans reviewed by NERC and the ten Regional Reliability Councils. These contingency plans provide further assurance that electric utilities will be able to operate reliably into the Year 2000. NOTE: The proceeding article is reprinted from the North American Electric Reliability Council (NERC) bulletin of August 3, 1999. For additional information contact Jim McGaughy at GDS Associates, Inc. (770 425-8100) or visit the NERC web site at http://www.nerc.com. REEVALUATING THE ENVIRONMENT BUSINESS: The changes in the electric utility business due to restructuring and increasingly complex environmental requirements have many distribution companies reevaluating business processes including environmental management. A well designed system for environmental management will help ensure that all obligations will be met and that negative consequences will be avoided. The more that environmental management is made a routine business practice, the better the organization’s performance. The typical distribution company, whether an investor-owned utility, municipal organization or electric cooperative, has many environmental aspects to its operations and can easily have several hundred environmental tasks to complete each year. Most are required by EPA, OSHA, or state regulation. As the utility industry evolves, key personnel move, and regulations become more complex, these utility organizations have the need to integrate environmental management into their business operations. Once the domain of the environmental specialist, the environmental business is now part of the responsibilities of managers in various parts of the organization. From procurement and materials management to fleet management, from the line department to real estate services, each of these managers and their employees deal with environmental matters on a daily basis. More Expected from Operating Department Managers The environmental aspects of distribution companies range from the handling of materials such as pentachlorophenol treated wood wastes, PCB’s, oils, sulfur hexafluoride gas in circuit breakers and other materials to training of staff, reporting requirements, and real estate related site contamination. In addition, there are plans (e.g. Spill Prevention, Clean Up and Counter Measure Plan) to be prepared and exercised. In the larger integrated utility organizations, the environmental departments have staff who, historically, have performed these environmental activities. Today, however, these environmental departments are breaking up, reducing in size, or even being eliminated due to mergers, acquisitions and the demands to perform all work more efficiently (the "do more with less" theory). In smaller organizations, the role of the environmental manager or environmental specialist has also changed or has been eliminated. Whatever the reason, non-environmental staff are now being asked to pick up some or all of these activities. These operating staff need clear instruction on how to meet environmental obligations. An Environmental Management System Will Survive the Changes A well-developed Environmental Management System (EMS) is a necessity today and will be more important as new regulations evolve (such as regulations implemented if the Kyoto Climate Change protocols are ratified). Just as we all rely on a well-developed accounting system to help us manage our business activities, so must we rely on an EMS to guide our operations. An EMS provides a framework for the managers and staff to guide their daily work in conformance with environmental requirements. The EMS includes:
Environmental Issues Affecting Utilities GDS is actively tracking environmental and climate change issues that affect utilities and is working on several projects that will benefit the environment:
The utility industry is changing, and during restructuring the environmental expertise at many organizations has moved to gencos, transferred within the company or has been eliminated. The well-prepared utility organization has an Environmental Management System which includes the company’s policies down to the environmental procedures manual spelling out, in detail, how environmental responsibilities are to be met, by whom, and when. As the restructuring of the industry and particular utility occurs, this EMS will guide the environmental activities of the organization even when major staffing changes are necessary. By treating environmental management as a business process, and developing a comprehensive Environmental Management System, a distribution company can manage its environmental business with fewer staff resources while maintaining or improving its environmental performance. James Wazlaw, the prime author for this article, has twenty-five years experience in environmental management for utility organizations ranging from the siting of new facilities to operations of existing systems. He has worked throughout the U.S. and in Europe and currently serves as Director of Environmental Services with CNEX, a utility management consulting firm. Mr. Wazlaw is currently a subcontractor to GDS and is working with GDS on an energy efficiency market research project for several gas utilities in Massachusetts. For more information, contact Dick Spellman at 770-425-8100 or e-mail: info@gdsassociates.com. SMART RESEARCH = SMART MARKETING Getting To Know You … Better Understanding consumer wants and needs is a key to the success for most businesses. The question arising in today’s environment is "What is the best method for obtaining consumer information and opinions". Continuing advancements in technology change the way most businesses and individuals work and communicate. In particular, advances in computing capability and specialized electronic equipment now provide the means of conducting various types of research more efficiently. As a result, many projects that once took weeks or months to complete now take considerably less time, translating to higher productivity and reductions in associated costs. Customer research is one area in which technological advancements have reduced time and manpower requirements. GDS has teamed with a local marketing research and consulting firm to conduct customer research in the retail shopping industry. The project is designed to provide commercial real estate developers with detailed information on market definitions and trade areas, customer behavior and spending characteristics, and local area demographics. While the data is being used immediately by commercial developers and corporate planners for leasing and budgeting purposes, the information is also being used to develop national and regional benchmarking databases. Currently the customer information is collected using a hand-held electronic device that allows participating customers to respond to a series of questions that appear on a liquid quartz screen. An electronic file is created and continues to grow as customers enter their responses to each question. Once an appropriate customer sample has been achieved, the electronic file is transferred electronically to a centralized processing site to be tabulated and analyzed. The following graph is an example of summary information that is currently provided to clients.
The processed data is currently stored at a central computer. A web-based data center is now being considered as demand for customer information is growing. Commercial developers and leasing managers will be able to access a web site to obtain such information as customer characteristics and preferences, average expenditure per store and merchandise category, frequency of customer visits, and frequency of store visits. All of this information will be available at an aggregate level as well as by region, age group, gender, income level and ethnicity. A Cut Above Phone Calls or Mail This project is just one example how firms are making use of new technology to obtain information. While customer research in the utility industry has traditionally been conducted via telephone or mail surveys, some firms are taking advantage of recent technological advancements. There are firms today that provide electronic customer surveying services. Data is collected from customers via the Internet. This mode of operation allows researchers to quickly tabulate data and process meaningful information. Customer research in the electric industry will increase significantly as the industry continues to deregulate. If the telephone and natural gas industries are any indication of what the future holds with respect to marketing in a deregulated electric market, energy providers will "advertise, advertise, and advertise some more" once customers are provided a choice in selecting an energy provider. The problem, however, is that marketing and advertising are not one in the same. While advertising is certainly an important ingredient in an open market, advertising alone is not the answer. Many energy providers will fail in the market because they will not conduct the proper research to analyze the market and to determine what factors drive customers to select a certain product or service. Is it price alone that will be the deciding factor in expanding an energy provider’s market share, or does the type of power (renewable vs. fossil fuel) or the availability of bundled services carry some weight in the final decision? The key is to conduct the proper research to identify current consumer behavior and to determine the best ways to continually satisfy existing and potential customers. For more information, contact John Hutts at 770-425-8100 or e-mail: info@gdsassociates.com.
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