No one has any sympathy for monopolies. But on the eve of Ontario’s deregulation of its energy sector, we can take a brief moment to admire one.
Ever since Ontario Hydro began preparing for this moment, we knew there was a significant IT story here. In some respects, you could argue that
technology spurred deregulation as much as any debate over competition. As former Ontario Hydro president Allan Kupcis told Technology in Government five years ago, the transition from billion-dollar power plants to jet engines connecting gas pipelines and power grids paved the way for this week’s changeover.
Since we began covering this transition, a cliche has emerged. The 90-year monopoly on power had left utilities like Ontario Hydro resting on their laurels. The coming of deregulation would give them the sharp kick in the pants (we all tacitly agreed) they needed. With competition, they would have to learn to do business in the real world.
In truth, Ontario Hydro had a pretty good record of IT management, and if you look at its efforts to prepare for the May 1 open market, there might be some valuable lessons for the new entrants who will be encroaching on its turf. Consider the following as best practices:
Centralize: Hydro realized early on it was in the services business and implemented Boole and Babbage’s integrated IT system to create a sort of command centre. This allowed the operations manager — who could have to deal with up to 50,000 alarms on a bad day — to automatically filter, sort and prioritize threats by business impact before they were forwarded to the command centre. Total savings (Ontario Hydro’s estimate): $1 million.
Know what you’ve got to work with: Many enterprise companies recognize the need for asset management; Ontario Hydro did something about it. Ending the ridiculous practice of sending out technicians to keep tabs on the retail group’s assets, it implemented a Microsoft-based solution that worked through an intranet. This was a custom-built solution, which makes sense given the size and complexity of the organization involved.
Don’t make promises you can’t keep: When the threat of the Year 2000 bug was creating worldwide panic, The North American Electric Reliability Council tried to calm the public with a survey that predicted little likelihood power would be disrupted at the turn of the millenium. Ontario Hydro participated in the survey and said it was ahead of the industry in being prepared, but it didn’t offer any guarantees. Having no control over the 200 municipal utilities and prone to system problems that could have spilled onto the electric grid, officials wisely left room for error.
Know when to outsource: Ontario Power Generation (a former part of Ontario Hydro) saw that it was losing economies of scale in IT as it was servicing a smaller set of plants. It didn’t give up the reigns right away, forming a joint venture with Cap Gemini Ernst & Young. After a period of evaluation, it recently sold off its stake to CGE&Y. Letting go of IT is easier when it’s done gradually.
It will probably be years before we can draw conclusions on the success or failure of deregulation in terms of improved service to consumers. With Ontario Hydro part of the history books, on the other hand, we can see a company that showed foresight and kept customers in mind throughout its IT planning process. Whatever else you can say about this monopoly, the lights were on, and someone was home.