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So far, the outlook
this year does not bode well for manufacturers, integrators or
users of advances technology in the T&D automation sector.
In spite of a relatively strong economy in North America,
economic stability in Western Europe and the Middle East, and
some level of resurgence in several Asian, African and Latin
American countries, it is a mixed bag of results so far for
the automation industry.
Lets look into the
two main reasons for this year's dilemma. The energy utility
communities are facing several unique obstacles. In many
countries, the two most important obstacles are:
1) Getting
information and automation systems, equipment and field
devices ready and compliant for the Year 2000 changeover.
2) The uncertain
prospects facing many T&D organizations with regard to
deregulation legislation in North America and in more than 35
other countries. In these areas, governments and utilities are
still wrestling with exactly how, and when, the electric power
industry will be "reregulated."
Let's take a closer
look at the first issue, Year 2000 compliance, which by this
time next year, may be an issue whose time has come and gone.
That will be the case if enough hard work has been done by all
the "links" in the production, transmission and delivery of
power. This significant work efforts needs to be completed not
only by utilities but also by their suppliers and their
customers. Without a smooth, ongoing flow of electricity, not
much else will be accomplished after the clock strikes
midnight next January 1.
On one hand, we need
to undertake and complete the Y2K work now since there is no
possibility of revising the completion schedule or slipping
the project by a few weeks. What this implies for today,
however, is that other projects are, and will remain for a few
- or several - more months, "on hold." There simply are not
enough resources in most of the world's utilities, which have
undergone several rounds of cost cutting and staff reductions
in this decade, to manage multiple information technology
projects. Thousands of the most talented IT people in the
industry are on special Y2K project teams, leaving precious
little reserve for any other activities.
Regarding the
uncertainty of deregulation, the passage of time (and
legislation) eventually will take care of this issue, as
governments and legislatures finally confront the issues head
on and arrive at decisions that will continue to reshape the
T&D communities of the electric power industry around to
world. In the meantime, for many of the states in the United
States as well as for some of the provinces of Canada and
other countries, it is a matter of time. In many areas where
industry deregulation legislation has been passed,
deregulation has not yet been enacted. Hundreds of major
utilities, both private and public, are still wrestling with
the issues (and with legislators) surrounding the
restructuring needs and limits, and the principles of fairness
in the future marketplace of their organizations.
The effect of this
interim period is that utilities are holding tight to the
purse strings. Most do not yet know who will own, operate or
maintain T&D assets in the new era. Some utilities with a
clearer vision of where they are headed are attempting to
forge ahead with some bold innovative technology programs. For
most, the will to keep pilot automation programs alive is more
than enough challenge when confronting a new breed of
management team that is looking to cut costs - and in the case
of investor-owned utilities, looking good in the quarterly
reports - rather than being in tune with the infrastructure
needs of the transmission and distribution operations of this
companies. Of course, the publicly owned power companies and
utilities have their own version of this in-fighting caused by
an ongoing period of tight public funding.
The accompanying
chart shows the damaging impact of these two obstacles to what
otherwise should have been a very good year for T&D
automation investments. On the up side, the "very good year"
we are looking for could well be the year 2000, beginning with
an upsurge in demand and orders for all types and forms of
advanceds T&D-related automation technology and
information systems. I expect further strong growth as the
year 2000 goes on.
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