Intranet Enables More Competitive Energy Bids

BOSTON (06/05/2000) - In the electric-utility world, deregulation has forced business and technology managers to innovate and find ways to compete as they never have before, observers say. In this environment, information technology managers such as Brad Black at Duke Energy North America in Charlotte, North Carolina, are like kids with new toys in a sandbox.

Duke built its own Real Time Performance Cost Monitoring System a year ago to provide quick information for bids on power to the wholesale energy market.

Black and his team set up a Java-based thin-client system, keeping intelligence on servers and allowing access from a variety of devices located anywhere on the company's intranet. Devices used to monitor information from plants or offices could be PCs, laptops, smart phones - or even toys.

"We couldn't wait until we installed a Sega Dreamcast as one of the Web browsers, and it works great. We got probably the 10th one that Sega made, we wanted it so much," says Black, manager of technical projects. "It was easier to set up the Dreamcast than the Qualcomm PDQ phone."

Black specifically chose Sega of America Inc.'s Dreamcast browser to show that any device, even a toy, could be used to access the pricing, cost and power-supply data from any of 10 plants nationwide and, soon, dozens of others.

Allowing flexibility with end-user devices will matter, as Duke partners with a variety of companies to produce and sell power.

Black and Murray Nixon, the project's business manager, say the $200,000 monitoring system has already paid for itself. But Black says it's impossible to measure how much of a business advantage the tool will give $17 billion Duke, as it adds plants nationally and globally during the coming years.

The system shows bidders, plant managers and corporate asset managers a snapshot of the production capability of all plants throughout each day. It separates out the production needed for existing clients, allowing bidders and others to see what capacity is left for bidding on the open market. Armed with this data, bidders can set a price for wholesale energy in markets controlled by energy aggregators, shipping power to an area where demand is high from an area where production capacity is available.

"In the past, we really didn't have a feel for what power was available and if it was the cheapest power," Nixon says.

Experts say the big utilities will use such systems to try to sell into high-demand markets. One such market was the Northeast U.S., which faced a hot spell in early May at the same time many power plants in that area were down for maintenance.

During that heat wave, power was selling in the Northeast for $6,000 per megawatt hour, compared with only $300 per megawatt hour in the Midwest on the same day, Black says. "Clearly, many utilities want to be ... at the high end for the profits," he says.

Black and Nixon believe their monitoring system has resulted in lower energy costs in homes and businesses, but they can't quantify by how much.

The Duke innovation shows that the traditionally conservative utility industry is moving more aggressively, prompted by competition, analysts say. "Their project shows that the interesting developments don't involve the electricity commodity but the information that one can glean from it," says Ethan Cohen, an analyst at Aberdeen Group Inc. in Boston.

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