Enterprise Operation Systems (EOS)
Essential for survival in the dereguated marketplace
David Alston & Mark Watts
EPIC LLC
2330 Glendale Blvd
Sacramento, CA 95825
Telephone: (916) 569 3499
Fax: (916) 921 6620
E-mail: mark.watts@epicllc.com and
david.alston@epicllc.com
Introduction
As many of you will be aware, governments around the world appear to have come to the conclusion that
the cost of services provided by utilities to the public can be significantly reduced if a more competitive
(utility) market can be created. Ultimately they envisage a market that allows the individual customer the
right to purchase services from any provider they choose. Governments have used strategies such as deregulation,
commercialisation, re-regulation, privatisation, as a means of creating a more competitive
market. Call it what you will, the fundamental agent of change being utilised is re-structuring.
Whatever particular variant of re-structuring your organisation is going through, to be successful in the restructured
market, Utilities must meet the challenge to improve services to customers and to reduce the
cost of providing those services whilst at the same time increasing Return On Investment (ROI) to
stakeholders. (A relatively simple objective, a decidedly more complex effort is required to achieve it.)
The difficulties facing Utilities in meeting this challenge are many and varied. The challenge appears a
paradox in itself; to improve service and reduce costs at the same time seems to be almost mutually
exclusive.
The problem is further exacerbated when Government, driven by a political agenda, fixes prices, demands
increased and more complex reporting mechanisms and still expects service to improve. Government has
created new, or strengthened existing regulatory bodies, as a means of overseeing and measuring the
(hopefully) desirable outcomes of re-structuring. Consistent with the objective to improve service at a
reduced cost, these bodies (agencies) have imposed a broader, more complex, reporting regime on utilities.
These reports are about measuring the utilities' performance in the area of customer service, not its
financial performance. Reports such as:
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SAIFI - System Average Interruption Frequency Index
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SAIDI - System Average Interruption Duration Index
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CAIDI - Customer Average Interruption Duration Index
have become the "lingua franca" of the utility market.
It is interesting to note that often we think only of "Regulatory Bodies" as originating only from
Government. However, perhaps "Regulatory Bodies" should not be viewed from so narrow a perspective. It
is arguable that for any Utility other "Regulatory Bodies" include the Stock Exchange, stakeholders/owners
and ultimately, customers. Public Utilities are also subjected to more commercial scrutiny as privatization
options are investigated and its primary stakeholder, the state, looks for an increased Return On (its)
Investment (ROI).
Whether a Utility welcomes a change of ownership or not, the best strategy for any Utility (IOU or Public)
is to be able to prove that they perform as well, or out perform, similar utilities, whether they be IOU or
Public. This strategy enables the Utility to argue that it should remain under the same ownership if it
chooses, whilst at the same time ensuring the best sales price is realized and that operational and structural
changes are minimized, should a change of ownership eventuate.
All of these "Regulatory Bodies" are creating unprecedented demand on utilities for information. This
information is often more complex than that ever required before and is intentionally designed to be used as
a means of measuring one utility's performance against another's. The information required can be of a
technical, financial or service nature, or a combination of all three. The significance of this information to a
utility should not be underestimated. This sort of information will be an integral part of the process that:
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values the utility,
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increases or reduces its customer base,
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decides its future ownership (public or private)
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renews, or withdraws, its licence to operate.
In fact, the ability of a utility to provide the requested information, in a timely manner (as requested by the
regulator) is often a performance indicator in itself.
In many countries, in particular the U.K., another factor that has increased the information output
requirement of a utility is the public. Legislation that allows the public unprecedented access to the utilities'
performance and operational data, has placed further strain on the reporting capabilities of utilities.
