"The ISO (California Independent System Operator) is an e-marketplace already. The prices we're experiencing don't have anything to do with technology," says Lorene Tabbutt, vice president of technology at Cal-ISO, the nonprofit government agency that manages 75 percent of the California power grid. "All of the electricity that's used in our control area is bid into our e-marketplace. When suppliers weren't bidding into the system, we had to resort to using the phone. Technology can't help you if you don't have generation." In other words: If you don't have any bids, you can't use the exchange, so you do whatever you can to get power.

Cal-ISO operates two online exchanges, a private Internet-based network and a real-time automated dispatching system. Bids from suppliers come into both systems on a day-ahead or hour-ahead basis. The ISO's forecast for the day is posted on the network and scheduling coordinators bid into the network. Realtime bids go into the automated dispatching system.

Eventually, Cal-ISO will implement a new IT infrastructure that "will be [an] Internet based, open modular environment," says Tabbutt. "Once we know the market-related rules that will come out of the laws and regulations of the Federal Energy Regulatory Commission, California Public Utilities Commission, and the state legislature, we can move relatively quickly to get the new system in place."

Energy Crisis Origins

Some of the main issues leading to the crisis include the failure of the state's 1996 deregulation plan, which broke the utilities' monopoly but gave the generators carte blanche to charge runaway prices for wholesale power; the near-bankruptcy of two major California utilities(Pacific Gas and Electric and Southern California Edison) caused by soaring wholesale prices that far exceeded the fixed rates they are allowed to charge consumers; and the lack of new generation to meet the growing demand of the California market; new power plants that are currently being built won't be online until 2003.

As of this writing, Cal-ISO, the nonprofit government agency that manages 75 percent of the California power grid, has declared 23 stage three power alerts. The agency declares a stage three alert when supply is at or below 1.5 percent and may order rolling blackouts to protect the grid.

Can Technology Help?

"The California market also suffers from micro-level problems," stated Tom Yoder, an energy economics and technology consultant. "And it is at this micro-level --the supply and demand decisions of energy retailers and users --in which the appropriate use of intelligent technology could really help. Optimizing at the micro-level requires intelligent decision technology as well as transaction technology to implement decisions in real time.

"The energy retailer has complex problems to solve regarding their supply portfolio and their demand portfolio, so optimizing is by no means easy. Decision-making is dynamic, with supply decisions affecting demand decisions and vice versa," said Yoder. "Technologically, we have the capability to execute the transactions that are required for optimal use of resources, but we need smarter systems to instruct the transactions."

But we're not there yet. According to Yoder, "The retail industry is working on smart optimization models that take into account all supply and customer demand factors, but to my knowledge no one has yet implemented such a model. Most of the work to date in the retail energy industry has been on development of transaction systems as opposed to smart decision systems."

Energy Technology Today

Online exchanges, forecasting and simulation applications, energy management and usage software, and online utilities are some of the technologies available for utilities, energy marketers, traders, and users. TrueQuote.com is a privately held online energy exchange that puts buyers and sellers together. Energy producers and traders participate on this real-time mini-to-mini exchange. Participants remain anonymous until the transaction is confirmed.

"People can find the best prices on a mini-to-mini," says Lee Ann Zoller, marketing director of TrueQuote.com Traders can either transact directly online or if they are more comfortable dealing with a broker, they can go through a broker directly connected with the exchange. Zoller says that TrueQuote was "one of the first to be doing a broker-assisted energy e-marketplace." Enform Technology and Microsoft developed the exchange's platform.

Power Software

Henwood Energy Services Inc. software provides business solutions for the power industry in the areas of generation operations, risk analytics, and market analytics. Power generators use Henwood's Prosym software to make generation dispatch decisions and create simulations to forecast the results of fuel budgeting, maintenance, and plant modifications.

RiskSym gives the power industry players the functionality to analyze and manage their risk position. Henwood's Electric Market Simulation System (EMSST) provides hourly and multi-year analysis of the power markets, which lets generators, wholesale traders, investors, and retail suppliers forecast energy production, revenues, consumption, and so on. Henwood did forecast higher wholesale prices for California last year but "we didn't forecast prices going to the stratosphere," says Matt Harris, power market analysis director at Henwood.

Harris believes that Henwood's technology could have prevented the energy crisis if a scenario analysis had been done early enough. "It could have raised a red flag earlier because you would have been able to show that it was a tight market. But it wasn't known how tight it would grow. Load grew much faster than expected," says Harris.

Thermostat Police

If you have a large commercial or industrial business, energy is a significant amount of your operating costs. Applications such as Silicon Energy Corp.'s Enterprise Energy Management (EEM) suite can help companies monitor energy loads and predict usage. "Weather readings and rates are factored into the management tools, says Michelle Schofield, vice president of corporate communications for Silicon Energy. "For example, you can adjust something in the building to accommodate extra usage for heat." The EEM suite includes thermostat alarms so you can see who changed the thermostat setting. "You can get immediate energy reduction if you can reduce usage at the right times," says Scholfield.

Lights Off

However, until more generation comes online in California, reducing usage is one of the main solutions. California may be home to Silicon Valley, but all the technology in the world can't help you if you don't have enough power to keep the lights on.

Chuleenan Svetvilas

Unwrapping the Numbers

Holiday 2000 Internet sales results portend much for the 2001 season

Now that the 2000 holiday shopping season is officially part of Christmas past, e-tailers are taking the time to look at the numbers and see who made their online sites a success and who will be following in the footsteps of Pets.com Buried beneath these numbers are new trends in e-commerce and clues as to who will succeed in online retail - if anyone.