Meettheboss TV Talks with Karl Popham Austin Energy

Friday, 28 May 2010 08:36

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According to Austin Energy interim CIO Karl Popham, the goal of Austin, Texas, is to be the most livable city in the United States and Popham says Austin Energy wants “to be a major part of that goal. We just released our generation plan [which says] by 2020, 35 percent of our power will come from renewable energy.  Right now we’re at about six percent, but even with that six percent, we’ve had the largest sales in renewable energy of any utility in the United States for eight years in a row now, and that’s mostly from wind farms in West Texas.”

Popham also points out that Austin Energy has the second lowest rates in Texas “and the lowest actual bills in Texas.  Part of that is because we’ve had some creative ways of how we look at generation of energy and energy conservation, but also we haven’t had a base rate increase in 17 years now.” He says AE plans to do a review and to see if the utility’s rates are in line with the industry and the overall cost of service “to make sure we continue to be competitive and profitable in the future.”

Prior to joining AustinEnergy five years ago to manage the utility’s technology portfolio and project management office, Popham ran Hewlett Packard’s e-center business, was a director with Ernst and Young, and worked for Lehman Brothers’ London office. Before beginning his private sector career, Popham was with the Army Corps of Engineers while serving in the military. He became interim CIO when his predecessor opted to leave AE.

“Part of my background which really helped is being there in charge of the overall portfolio of projects and the project management office. I was really in tune to the transformational work of Austin Energy ‘cause that’s how you transform organizations.” A realist, Popham says rate hikes may be inevitable. “The fact we’ve been able to toe the line on the base rates for such a long time shows our resolve on the affordability matrix to make sure we’re really competitive.  But really, price hikes are just the way of the world as other prices and commodity prices that go into the cost of service go up. Being a community owned utility, we’re not beholden to stockholders.  We’re beholden to our community, so our profits go back into the community, into the coffers and it helps keep services high and our taxes low.”

Austin Energy, which has annual revenues of $1.3 billion, provides energy to 43,000 businesses and one million customers.  Being so large means that security issues are always a top priority, Popham says. “You know, we’re stewards of information of our customers, and that needs to be protected.  But there’s also security around the network and the infrastructure, and that’s just not an Austin Energy question, it’s an industry-wide question,” he says, with the advance of the smart grid.

“When you look at traditional utility models, it’s very closed networks,” Popham explains. He compares the smart grid with the Internet which “came along and opened up all these great functionalities and features for personal computing. Now, the most secure thing to do would be to unplug every computer from the Internet and you could be much more secure.  Smart grid is facing a similar revolution. Some folks might say, ‘Well, why can’t we just go back to the old way?’  Well, the genie is already out of the bottle, and just like the Internet’s out of the bottle, I would say smart grid is out of the bottle with the function and features that will ultimately drive what utilities of the future look like.  But it’s just a cost of doing business and we understand that, and you just need to be prudent in your investments.”

Popham says like it or not, “our industry is changing and changing rapidly, not unlike computing, which not that long ago was mainframe and centralized and you had dumb terminals.  So if a company like IBM, for example, would have thought the only way they could deliver a computing service and the only way that people wanted to do computing was through the mainframe model is, you know, where would they be today?  And the same thing with telephony; if AT&T thought the only way that people wanted to do voice communications is through centralized landlines, where would AT&T be today? The energy and utility industry is facing the same type of evolution – or really – revolution in its core business and infrastructure.  Fundamentally, power is getting generated in smaller and more distributed type of ways, whether it’s solar panel rooftops; whether it’s smaller wind; whether it’s plug-in hybrid vehicles.”

Popham says the smart grid is just one way to look at that change and embrace that change to remain competitive. “I would even say relevant into the utility of the future.  It’s gonna be completely different, and utilities that don’t get it and just put their head in the sand and think, ‘No, this is the way it’s been for 100 plus years, so that’s the way it’ll be for another 100 years,’ I think will miss the boat.  And so Austin Energy is just trying to be very proactive to ensure we remain competitive and relevant.”