EELECTRICLECTRIC PPERSPECTIVESERSPECTIVES NOVEMBER/DECEMBER 2011 Special Section: Solar Progress AEP’s Mike Morris: Navigating a Transition Computing in the Cloud What's Your Next Move? The next stage of industry consolidation For more information: is now unfolding. Today's mergers face Tom Flaherty steeper challenges compared to those in Senior Partner prior years—transaction scale, economic Dallas uncertainty, regulatory hurdles, and 214-746-6553 integration complexity all require greater [email protected] foresight and execution skill today. Todd Jirovec Achieving merger success requires Partner that managements diligently prepare for Dallas the scrutiny that Wall Street, regulators, 214-746-6525 competitors, and customers apply. Draw- [email protected] ing on a deep understanding of how to make transactions successful, Booz & Company assists many of the world's leading power and gas Calendar-based routing. Optimized schedules. Much happier holidays. See ROI before year-end. Telogis Route is web-based, so it’s up and running in minutes to give you unmatched flexibility. Accommodate multiple factors like daily, weekly and monthly routes. Tight time windows. Customer preferences and availability. And of course, holiday traffic. Reschedule and reroute in seconds, matching qualified drivers to jobs. Keep your holidays humming with Telogis Route. To see it in action, visit www.telogis.com/EEI or call 866-TELOGIS (866-835-6447) Because when drivers go straight to destinations, results go straight to your bottom line. © 2011 Telogis. All rights reserved. EELECTRICLECTRIC PPERSPECTIVESERSPECTIVES THE MAGAZINE FOR MANAGEMENT IN AMERICA’S SHAREHOLDER-OWNED Features ELECTRIC COMPANIES NOVEMBER / DECEMBER 2011 • VOLUME 36, NUMBER 6 22 Solar Progress Still a small part of the portfolio, solar power saw triple-digit growth in each of the last two years—with the steepest increase coming in utility-owned solar projects. BY ROBERT GIBSON 22 38 Navigating a Transition The industry’s most recent Distinguished Leadership Award-winner 38 applies lessons of the past to the electric utility agenda of the future. BY MICHAEL G. MORRIS 48 Computing in the Cloud As utilities handle the data deluge and the information technology demands of the smart grid, does the cloud fi t their needs? BY DAVID BERNSTEIN 48 ELECTRIC EELECTRICLECTRIC PERSPECTIVES Jane S. Nunnelee PPERSPECTIVESERSPECTIVES Editor & Publisher, 1981-2001 THE MAGAZINE FOR MANAGEMENT IN AMERICA’S STAFF SHAREHOLDER-OWNED ELECTRIC COMPANIES Eric R. Blume Editor & Publisher [email protected] Bruce Cannon Associate Editor [email protected] William Bickel Art Director/Production Manager [email protected] LaVonne M. Rose Departments Subscription Coordinator [email protected] NOVEMBER / DECEMBER 2011 • VOLUME 36, NUMBER 6 EDITORIAL BOARD Edward Comer Vice President, General Counsel, and Corporate Secretary 6 58 Lynn LeMaster Senior Vice President, Policy, Powering Change Financial and Chief of Staff Changing business models. The EEI Index produced a positive Richard McMahon Vice President, Finance 1.8-percent return during the third and Energy Supply quarter—more Jim Owen Executive Director, Member Relations than enough and Meeting Services 8 to dramatically David Owens Executive Vice President, EE at Work outperform the Business Operations broad market. Quin Shea Wire intelligence. Vice President, Environment Brian Wolff Senior Vice President, External Affairs CIRCULATION 10 64 LaVonne M. Rose 202/508-5584 News & Trends Economics [email protected] Subscriptions: $100 per year. Top environmental concerns… Recent data suggest that growth in capccapturing carbon…set-top the residential electricity sector is REPRINTS Diana Sholl eenergyn hogs…cloud slowing down again, at least in cer- Reprint Management Services 717/399-1900, ext. 162 ccomputing…utility guide tain regions, and tto electric vehicles…real- may even be ADVERTISING SALES declining. William Mambert ttimei Electric Perspectives enenergyerg 600 Cameron Street Alexandria, VA 22314 management… 703/751-9864 72 [email protected] Another Perspective smart grid Are you on the same channel? workforce Mailing label corrections: send old trends…DOE’s label and correct title and address to quadrennial Subscription Coordinator, Electric Perspectives at EEI. Allow 12 weeks. technology Postmaster: send address changes review…and to Subscription Coordinator, Electric Perspectives, EEI, 701 Pennsylvania more. Avenue, N.W., Washington, DC 20004-2696. Periodicals postage paid at Washington, DC, and additional mailing office. Electric Perspectives (ISSN 0364-474X) is published bimonthly by Edison Electric Institute, Inc. 701 Pennsylvania Avenue, N.W., Washington, DC 20004-2696. www.eei.org The title is a registered trademark of Edison Electric Institute. Statements of fact and opinion are the responsibility of the author(s) alone and do not imply an opinion on the part of EEI, its employees, or members. Each advertiser and advertising agency On the cover: Sempra Generation’s 48-MW Copper Mountain Solar 1 in Boulder City, NV, uses 775,000 assumes full liability for all contents photovoltaic panels spread across 380 acres to convert sunlight into electricity. Utility-owned solar grew of advertisements printed. Copyright © 2011 by 300 percent between 2009 and 2010, and utilities have announced plans to build more than 800 MW by Edison Electric Institute, Inc. of solar in the next few years. (Photo: First Solar) EEI Publication No. 43-11-06. WWW.EEI.ORG/EP Reliable Quanta Services’ roots in the power industry run deep. For generations, Quanta has been the force behind the development of the power grid. As consumption of electricity rises, so does the demand for transmission and distribution contractors. Reliability is at stake. Quanta designs, installs, maintains and repairs electric power infrastructure. The branches of our network are far reaching and ready to mobilize. With more than 14,000 employees working in all 50 states and Canada, Quanta’s growth has made the company the foremost utility contractor with the largest non-utility workforce in the country. The nation’s premier utilities rely on Quanta’s expertise to deliver the manpower, resources and technology necessary to meet growing demand, integrate new generation sources and deliver the power and reliability consumers deserve. www.quantaservices.com 713.629.7600 NYSE-PWR powering change VALUE AND THE MODERNIZED CUSTOMER ur industry’s job has been the same for decades—delivering reliable, affordable elec- tricity. But the world in which it performs that job continues to change dramatically. In particular, grid modernization—advanced metering, infrastructure, and call cen- O ter technologies—will change how we serve customers. Utilities can push out more information about their customers’ electricity service—information about outage response/res- toration times, energy usage, and price alerts—and use multiple modes of communication to do so. Edison Electric Institute’s latest research fi nds that more than two-thirds of consumers nation- wide want us to move ahead with smart grid and smart meter technology. And one in four wants us to do so quickly. But this is not a rapid transformation—it is an evolution that involves utility relationships, customer perceptions, and regulatory shifts. Indeed, the research fi nds great interest in moving ahead with “the smart grid,” but it also fi nds that less than half of the public has even heard the term. And of those who say they have heard about it, only about one in ten say they have a fairly complete understanding of the smart grid. Regulators, crucial in creating a supportive platform for the deployment of smart technology, are another essential part of the evolution. Cost recovery of new technology investments, prudency determination, data access, privacy, and cyber security are critical. Not surprisingly, in this economy, some regula- tors have been leery of expensive new equipment and redesigned rate systems. Promoting the modernized grid and its benefi ts involves signifi cant industry outreach, which is occurring at many levels. The Utility Relationship For the modernized grid to deliver all the value it promises, customers will need to change their attitude about the role that electricity plays in their lives, and the relationship they have with their utility. This will not be easy—those attitudes have developed over a good number of decades. Many customers are happy with their basic electric service. Others want more: information about electricity use and options; information delivered anytime, anywhere, not just printed on a monthly bill; more choice and control; and energy-related services. And, in fact, changes have begun to occur. Many customers already are putting in rooftop solar, purchasing microturbines, plugging in electric cars, and installing energy management systems. Already, many customers are looking to enhance their basic relationship with their utility. And how they view power has changed or is on its way to doing so. Electric utilities are ideally suited to lead this transformation. After all, customers judge electric- ity’s value by their experiences—with reliability, customer service, personal comfort, affordability, outage restoration, and environmental impact. By providing value in those areas, utilities have cre- ated strong connections across all customer classes. Electric companies themselves are changing—they’re considering their business models and rethinking and repositioning themselves for the changes ahead. They also are building