Progress has been made, but much work remains along the path to ERO completion.
FERC demonstrated strong leadership in meeting the aggressive timeline set by Congress for establishing the regulatory basis on which the Electric Reliability Organization will be created. But next summer’s peak-demand season is fast approaching. And much more work remains ahead for the industry to finish the job.
Utilities must embrace supply chains that include planning, inventory optimization, and logistics.
The procurement and supply-chain functions of today’s utility are the Rodney Dangerfield of the utility cost-cutting paradigm: They don’t get any respect. Supply chains in most industries extend beyond sourcing and e-procurement to include planning, inventory optimization, and logistics. When linked together with technology, this creates an “integrated supply chain” that provides visibility from customer to utility to vendors/strategic alliances, generating great value for the company.
Why have utilities lost millions of dollars on weather-normalization plans? Blame deprecated NOAA calculations.
NOAA’s measure of heating degree-days between a normal 30-year period and a given test year is consequently too high by 77 degrees when compared with the more accurate hourly estimates for the 30-year period and for the test year. In this case, a hypothetical Northwest utility would see a revenue shortfall of between $2 million and $5 million.