Not entirely a voice crying in the wilderness
I was having another luncheon with a senior executive friend from a different utility vendor this past week -- it seems like I spend a lot of time lunching with vendors, but that's a good thing. You have to keep learning.
As most readers probably are aware, I'm old enough to remember when utilities developed most of their own software and hardware. That era ended in the 1980s and 1990s and today vendors are responsible for most of the technological advances available to utilities. There's nothing wrong with that, times do gradually change.
Utilities have been cutting technical and other staffs for a couple of decades now and no longer are incubators for technology. With increasing governmental regulation and demands being put on them, they had to cut somewhere to avoid large rate increases for the general public. Today they operate about as "lean" as they ever have in history. As a result, vendors now have to do most of the R&D and then bring the new products to utilities. Venture capitalists provide most of the funding for the R&D, hoping for a return if and when the start-up vendor companies bring a product to market that meets a need -- or a tax break if they don't. The process is called capitalism, a dirty word in some political and media circles these days.
My vendor friend -- actually I was the luncheon guest this time -- represents a company that offers a system to enable certain elements of "smart grid", both in terms of advanced metering infrastructure and distribution automation (which, as a respondent to one of my earlier columns correctly pointed out this week, probably is the most important part of smart grid over the long term). My friend's system already has been serving multiple utilities for several years and has years of development and testing behind it. It's a solid, established system.
The interesting thing about this week's conversation was that this vendor executive was agreeing with my column of two weeks ago where I predicted an ebbing of the "smart grid hype wave". Shaking his head, he said, "It's just gotten outrageous. We're pleased with where we are. We've been able to raise money and we're well into the contract negotiation phase with several large utilities. It just takes a long time to get these things done."
He is exactly correct. Utilities by their nature are conservative and slow-moving and that is a good thing. They have limited funds and are responsible for seeing that those funds, held in trust for the general public with state regulators looking over their shoulders, are spent wisely and well. It's called patience and personal and corporate responsibility, another not-so-widespread concept in some media and political circles today. Most responsible vendors will tell you that getting to the contract negotiation phase with a utility can take from one to several years and that's after the R&D. Utilities don't just charge off spending money on the latest whiz-bang idea that may or may not represent a wise long-term investment of limited resources.
In thinking this through after lunch, it occurred to me that utilities are vestiges of a more responsible, more reasonable society that has been replaced by an instant-gratification, 24-hour-a-day hype one. Many people, especially the commercial media and politicians who really seem to allow their whole reality to revolve around two- or four-year terms of office, seem to have no concept of past or future, only "right now". As a historian by college training and experience with the U.S. Army Center of Military History (during my part-time military career as an Army Reservist), I always find it disconcerting that so many people today seem to have no concept of the past. I can get disoriented just trying to talk with someone who has no idea where they came from or where they are going -- and I run into more and more of them every day. Change is fine, it just isn't particularly wise to do it on a daily or hourly basis!
The U.S. utility industry has been around for more than 100 years and represents the culmination of more than 100 years of scientific and technological advancement. It provides ubiquitous electricity at relatively low cost. It does that by buying responsibly and avoiding major costly mistakes -- it conducts pilots of any new technology to see if it really does work economically (what a novel idea in today's world). It has been doing that (conducting pilots) for generations. If it changes that culture in response to today's hype and political pressure, it is doomed and no longer will be able to keep the lights on. My luncheon friend noted, and I agreed, that even some utility CEOs have adopted some of the hype around renewable energy and global warming. We agreed that even they are being forced to seek cover in today's over-hyped environment.
There was one other thing my luncheon guest said that both greatly amused and encouraged me. He said he mentioned my column of two weeks ago to a more hype-oriented vendor representative. The response was, "Yeah, but Warren is just in the pocket of big utilities." I was amused because if that were true, I wouldn't still be working so hard at 64. It encouraged me because it lets me know that I truly do understand and represent the interests of the industry I serve -- not the media/political hype factory with no concept of the past or the future that is making so much noise these days and threatening to drive electric rates out the roof and the industry and the whole country into bankruptcy.
My luncheon friend was not the only one who found my column two weeks ago about smart grid hype refreshing. I've received dozens of additional thank-yous from members of the GridWise Alliance, utilities, college professors and many others. Thanks to all, it's nice to be reminded that I'm not a lonely voice crying in the wilderness and am not the only one concerned about where the smart grid/global warming/renewable energy runaway train seems to be headed. There is much good in all this, especially smart grid (or an even more intelligent utility), but more realistic long-term planning (the kind utilities do) and less hype (which we seem to get from the general media and many politicians) is what is needed most.