A calculator, logbooks and piles of quickly outdated spreadsheets and reports from multiple systems: Most environmental coordinators have used these or similar tools, along with a telephone and e-mail over the last few decades to fulfill environmental reporting requirements. However, tough legislation – along with savvy investors and consumers – demand an approach that is more systemic and formal.
Today, utility companies the world over are being pushed from every angle to reduce greenhouse gas and other emissions. And, the coming years promise to be even more challenging. Every utility executive should be considering options – and selecting an approach – that is both fiscally and socially responsible to guarantee that utilities meet growing power demands while fulfilling societal pressure to reduce emissions and environmental impact.
American Electric Power (AEP), with about 5.1 million customers in 11 states and more than 38,000 megawatts of generation capacity in the United States, is one such utility taking a leadership role in using information technology (IT) to improve its greenhouse gas reporting and environmental compliance management. This article will introduce you to AEP’s compliance reporting strategy and how other utilities can use IT to boost their own reporting capabilities.
Today’s Environmental Climate
Utilities face a dynamic regulatory landscape and the need to answer customers’ and shareholders’ increasingly sophisticated environmental concerns. According to research by the HSBC Climate Partnership released in November 2008, 43 percent of the 1,000 people from 12 countries surveyed chose climate change ahead of the global economy when asked about their current concerns, despite the turmoil in the financial markets taking place at the time. Investors and shareholders are also expressing concern in shareholder meetings and through involvement in sustainable investments funds.
A number of countries around the world have adopted programs to reduce greenhouse gas emissions, and the United States Congress has discussed a national program for several years. Statistics show that power generation in the United States is a significant contributor to U.S. emissions. The U.S. Department of Energy’s Energy Information Agency (EIA)reports that electric power generation is the biggest source of energy-related greenhouse gas emissions with 39.8 percent of the United States’ total energy-related emissions in 2006.
As utilities manage the already rigorous process to track, reduce and report emissions such as sulfur dioxide, nitrogen oxides, mercury – and ultimately brace to add carbon dioxide – IT systems can help. Today’s IT-based solutions can more comprehensively account for carbon emissions, which is critical as more companies consider setting greenhouse gas reduction targets. AEP already set targets through its participation in the Chicago Climate Exchange. The company is also implementing an IT system that AEP’s executives believe will help them streamline recordkeeping and track progress toward reduction goals.
Determine Where You Are; Set Your Destination
Many utilities openly state their general sustainability intentions. But AEP takes its commitment even more seriously by setting and announcing specific emission reduction targets and timelines. In 2003, AEP announced its commitment to reduce or offset a cumulative 46 million metric tons of carbon dioxide by 2010 from a 1998 – 2001 baseline. By the end of 2007, the company had already reduced or offset 43 million metric tons of CO2. Part of that reduction includes substantially reducing leakage of sulfur hexafluoride, a potent greenhouse gas, from transformers. And AEP has planned power plant efficiency improvements to reduce greenhouse gas by more than 400,000 tons per year by 2010.
AEP soon will be able to measure its achievements toward these goals and meet compliance reporting requirements with a high degree of ease and accuracy with an environmental information management system that puts reports and data into the hands of each employee who needs them. Its workers will use the system to better manage greenhouse gas reporting and Clean Air Act and Clean Water Act permit and compliance. With accurate and accessible emissions data and analysis, companies can set reasonable targets. When employees understand the big picture, they can meet reporting and permit requirements and hopefully also have the information they need to take steps toward meeting the company’s greenhouse gas management goals.
In addition to required compliance reporting and other outside pressures, AEP also completed a major merger in 2000, which meant combining IT systems and operating procedures. The company – and the entire industry – faces changing and more complex regulatory agency reporting requirements as well as complex data in growing amounts from multiple sources and outdated processes for accessing compliance-related information.
Much of AEP’s compliance data and reporting processes reside in the brains of plant staff and on computer hard drives, with varying processes and technology in place to capture it. Executives know that valuable data and knowledge is at risk of being lost as workers retire in the coming years. How can new staff and the rest of the company manage increasingly complex compliance requirements without valuable historical knowledge? The new AEP compliance system will help address these and other reporting challenges.
Track and Report Your Path
Once a utility determines its emissions goals and knows where they are today, IT tools can track progress and keep workers on the right path. IT systems provide consistent and automated reporting using up-to-the minute requirements and documented compliance processes for water, air and other required reporting – all securely accessible to any worker who needs the information.
As an example, AEP launched a new project in 2007 called M.E.S.H. – Managing Environment, Safety and Health. With the goal to standardize the company’s compliance management approach, AEP also added an IT component called iMESH. The project includes efforts to enhance the company’s environmental compliance measurement and reporting.
A significant part of AEP’s iMESH initiative is the use of the software plus services (S+S) computing model with an Enviance-powered compliance solution and hosted software that runs from the web. “Software plus services” loosely defined means that software applications that run on a local computer or server are used in combination with an Internet-based service like Enviance.
Enviance provides Internet-based, on-demand systems that help companies manage and automate environmental, health and safety compliance activities and greenhouse gas tracking and emissions reduction. The system handles AEP’s Clean Air Act Title V and greenhouse gas reporting and National Pollutant Discharge Elimination System (NPDES)compliance management. It also collects valuable data on things like plant maintenance and emissions monitoring equipment calibration and will work in combination with AEP’s locally run software applications such as Microsoft Excel and SharePoint, creating an effective S+S environment.
The greatest values of the S+S model are that it provides flexibility with regards to data and systems architecture and is also easy to deploy, maintain and use. AEP plans to use the Enviance software to help the company more effectively manage the myriad of federal, state and local emissions regulations. AEP is in the process of validating the historical emissions, improving data links and configuring inventory sources for power plants in 11 states with the goal of ultimately allowing AEP to rely solely on this software for greenhouse gas reporting as well.
The S+S model requires little IT infrastructure and support and will allow for quick deployment across AEP’s many operational jurisdictions. S+S also creates a flexible online/offline work environment for users and allows easy but secure access via desktop, laptop or mobile computing devices through the corporate local-area network. For example, an environmental compliance professional could gather the information needed and create reports for all plants from their laptop in their home office via the Internet within the secure company firewall.
Unique software and IT architectures available today enable valuable real-time reporting against live data. Integration technologies such as the Microsoft .NET Framework enable systems, databases and other data sources to be easily connected so that workers use live data to analyze, track progress, explore options and make faster, more accurate decisions.
Compliance workers collaborate to make even more informed decisions faster if companies take full advantage of software applications they might already have such as Microsoft Office Communications Server. This and other applications in the Microsoft Unified Communications and Collaboration platform help utility workers collaborate securely in real-time with each other within company firewalls, across borders and with partners and vendors, governments and research organizations, and customers.
AEP is on track to have all of its plants and facilities on the same compliance system by 2010. As a result of the company’s IT use and refreshed business processes, emissions tracking and reporting is becoming more streamlined and efficient. The system implementation process also allowed the company to fine-tune and document its compliance reporting processes so that as employees change roles, new staff has easy access to the procedures.
AEP is on its way to reaching its compliance goals and, with the help of IT, the company knows where it stands today, where it’s headed and the status of its progress.
A Look Ahead
We can all count on rapid regulatory and accountability activity in the area of climate change. Knowing that, utilities can use information from multiple sources and solution providers, and then, combine it with business intelligence and analytics to be better prepared for tomorrow. Notably, this approach turns required compliance tasks into activities that add strategic business value.
To be better prepared for future reporting and compliance requirements, AEP will add an internal data hub that will complement the compliance reporting and S+S delivery model the company currently uses. The project will begin by AEP and its partners consolidating 38 databases into a single Microsoft SQL Server database to improve the system’s efficiency, and then they begin data hub construction.
Take Your Own First Steps
After considering the tremendous efficiency, productivity, accountability improvements and potential return on investment that today’s IT capabilities bring to sustainability strategies, some utilities may want to prepare their own IT business case. Although there are some challenges in preparing for this step, there are none that should inhibit utilities from beginning the journey and realizing the benefits.
• Secure leadership support: Before beginning, utilities should first secure leadership commitment to data transparency. This requires a philosophical shift in leaders’ abilities to trust employees and open up information flow to those who need it. Support should come once they fully comprehend the value of workers understanding the big picture, and then have the ability to drill down to their oversight areas to make progress toward the company’s overall goals.
• Determine the business architecture: Consider the overall company goals; the compliance-related processes that will be affected and how those processes can be enhanced and improved. Set specific goals such as reducing compliance report preparation time from two weeks to one day and operational goals regarding specific emission reduction amounts and timeframes. Gaining agreement on a set of business rules is critical. Conduct a facilitated session among the major stakeholders to gain understanding and agreement upon those conditions required for optimal performance.
• Review business processes: Since systems mirror current business processes, utilities should review various compliance processes that are in practice at all locations and standardize them to achieve consistency companywide.
• Synchronize regulation interpretation: Utilities may also find that engineers and environmental compliance personnel may interpret regulations in varying ways. Companies should agree on a standard interpretation of regulations so that reporting and compliance efforts are also consistent.
• Determine IT architecture: Consider security needs, mobility requirements, offline operations, broadband requirements and other aspects of the company IT infrastructure needed to deliver the compliance tools and applications to users.
Conclusion
While utility companies tend to be conservative, many such as AEP are rapidly changing – especially in the area of IT adoption. Compliance experts within these forward-thinking companies will find that the right IT foundation and systems can serve as a guide toward enabling new business models that will address complex reporting and compliance requirements, operational efficiencies and environmental concerns in a fiscally responsible way.
About the Authors
Lawrence Goldenhersh founded Enviance in 1999 to improve the quality of compliance management by leveraging the Internet’s revolutionary power. As president and CEO, Goldenhersh is responsible for the company’s strategic and operational management.
Ray King drives industry solution strategy as solutions director of Microsoft’s energy industry team. His primary responsibility is guiding the industry to thrive in today’s market-driven environment. King brings more than 25 years of business and technology experience in the energy space and holds a Bachelor of Science in industrial engineering.
John McManus is vice president, Environmental Services, with oversight of environmental support for all AEP generation and energy delivery facilities. Environmental Services provides day-to-day compliance support for AEP’s various business units and is responsible for the development of information systems to help manage AEP’s environmental compliance obligations. McManus is currently a member of U.S. EPA’s Clean Air Act Advisory Committee.
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