Dan Farber: Pat thanks for joining me.
Pat Lawicki: Thank you, I'm delighted to be here.
Dan Farber: Now you've been at PG&E in 2005, it's a company that's undergoing some transition as you're putting in new systems. What is the scope of your responsibilities and what is PG&E?
Pat Lawicki: First of all, PG&E is one of the largest utilities in really the country. We have 50 million customers, 20 thousand employees. Within IT specifically, we have 1200 employees that do all aspects of IT development deployment, maintenance, support.
Dan Farber: Now you're in charge of a large IT organization, so what do you do on a day to day basis?
Pat Lawicki: Well it's really fascinating; of course we have to keep the basics right which is keeping the systems up and running. But we're undergoing a major transformation within PG&E over all and really within the utilities sector overall. So what we're trying to do is virtually leapfrog going from a lot of legacy platforms right now to state-of-the-art technology.
Dan Farber: Well give me some idea of where you're starting from and then we can talk about where you're heading.
Pat Lawicki: We're actually in almost the 3rd year now of really what's a 5 year program to go through and replace our legacy systems. So we're going along and we've made a lot of good progress so far, we had over 400 legacy systems, we're in the process of replacing about 200 of those right now.
Dan Farber: What are some of the other transformations you're undergoing right now?
Pat Lawicki: Our other large program is our smart meter program. What that will virtually do is change the way that we do billing, and change the way that we provide customer service overall.
Dan Farber: How does that specifically work? A smart meter, does that mean you don't have to send the meter reader out anymore?
Pat Lawicki: That's exactly right, and that's how the business case started. So what it will be, today on a regular basis the meter reader will go to your home, they'll take a meter read through a handheld device, they bring it back to the office we process it then give you a bill. Well what do you see? It's about a 30 day lag right? You look at your bill and you say "oh gee, that bill is really high, I wonder what happened? Maybe I'll make some adjustments in my behavior based on that." What the smart reader program will allow us to do is really to get reads on almost a 10 minute increment. Providing that data to the customer would be really valuable, what it'll allow you to do is change your behavior on a more real-time basis.
Dan Farber: Now as a customer, I could go online and check my usage, could I set alerts for when I'm getting it too high and it would send me an email?
Pat Lawicki: That's where we'd like to get to, so the initial step is we've got to replace almost 10 million meters, so we're in the process right now of replacing those, we've got 200 thousand meters by the end of 2007 going to 1.6 million by the end of 2008. Eventually, as we move the program along that's what we'd like you to do, is be able to get online, determine what your usage is, take a look at it, and make adjustments in a more real-time basis than you can today.
Dan Farber: Now I've always had this question related to utility industries which is, you're going to help your customers save more money, use less electricity, how is that good for your business?
Pat Lawicki: What it is, is that there's really a de-coupling of how our rate making process is here in California, we're not necessarily incented to have you use more power, and it's really the right thing to do from a social responsibility perspective too is to conserve energy. If you look at how many more devices are in need of electricity right now, the consumption is naturally increasing, our idea is to keep it low and to keep it at a steady consumption pace. The other thing is there are huge investments, power plants, transmission lines, those are huge capital projects that take 30 40 years, before they're paid back. So really overall you can see that it's a win-win both for our customers and for us as a business.
Dan Farber: You're talking about transmission lines, and you have 123 thousand miles of transmission lines as well as connectors between those transition lines, how do you deal with the maintenance from an IT perspective?
Pat Lawicki: That's another program that we're in the process of working on which is something called the intelligent grid. Much like your network in the data center or our networks are in IT, we want to instill the same sort of things within that transmission section where it calls home if it has a problem, we do more on demand maintenance. One of the new technologies that we're starting to look at is transformers specifically. If they have a problem and a service truck is driving through, being able to communicate to that service rep to say "come and fix me" or "I have a problem" or "I'm out" or rerouting automatically, and a lot of that we've learned through the IT industry with how we do networking and how we have more uptime from a networking perspective that we can translate and transfer to something like an intelligent grid within the power structure.
Dan Farber: Now is this involving more RF technology, like RFID putting sensors on all those devices and having them phone home.
Pat Lawicki: Yes, and you can also see what it would do. So if we go back to the smart meter concept, so while the smart meter business case was based on you being able to control and look at the demand for your energy and your consumption. What it also provides an opportunity to do is to determine weather power is flowing to your home or not on a more real-time basis. Today it's fascinating that most people don't realize that we don't know you're out of power unless you call or maybe there's a car pole accident where there's an emergency, and an emergency agency contacts us and says that there's been an accident and we have an outage here. In the future, we'll know almost immediately that power is not flowing to your house and we'll also know which of your neighbors are also impacted by that car pole accident. We'll know what it is by the RFID tag is, both on the transformer and the pole, we'll know what type of equipment it is, we'll know what all our crew is, I know the skill sets now through our HR system of the skill sets of our crew so we have the right people to actually fix it, we can have the material show up, the crew show up, we can fix the damage and you may not even know you had a power outage because you may have been out of the home
Dan Farber: Now when do you expect this vision made a reality?
Pat Lawicki: That's what we're working on. And as I said we're probably 2 years into what's a 3 to 5 year vision for us to get there.
Dan Farber: Now you got to PG&E in 2005, and when you got there, there were as you said 400 legacy applications, and it seems to me that now you're undergoing this transformation. What are some of the cultural challenges in getting the staff around, "we're going to start over, we have a new architecture, the game is changing"?
Pat Lawicki: Well we initially created a vision, a business vision which of course is core to having a really good solid IT vision and IT platform. So creating that business vision of where we're going to go and knowing that the business had the tenacity that it would take to really look at a long term view and long term vision. But when I got there, IT was distributed all over. We had IT in all different pieces and parts of the business, literally as people described sometimes servers under desks that little departments were running, and it really was effective and worked for the time. But with the major vision that we had, where we had to take the organization really had to take a step back. So the first thing I had to do was centralize it all, and start this plan, consolidation, centralization, integration and start to move on that. Move all the servers into the data center consolidate the IT staff; get them prepared for what was going to be this major delivery and replacement of virtually every system that we had.
Dan Farber: And you're spending billions of dollars to get there.
Pat Lawicki: Yes we are.
Dan Farber: Now you mention data centers. So you have 3 data centers, you're consolidating, a few numbers: 1.5% of US electricity supply is from data centers. Data center power consumption doubled from 2001 to 2006, so what is PG&E doing around its own data centers and then working with customers to make their data centers more efficient?
Pat Lawicki: So again the first thing we did was we looked at the vision, we looked at what we needed to do from an IT architecture perspective and a platform perspective. What we realized was that we had major increase in our computing capacity that was necessary.
As I described, the smart meter reads that were maybe once a month reads, I was going to have now 10 minute data on every single customer that we have, so now you can see the massive increase. And how we're going to process your bill? What if we do offer time of rate rates, instead of once a month rates? So where you're paying differently for when you use your power, much like your cell phone. Weekends and evenings might be a lower price than primetime or middle of the day. You can just imagine the computing capacity for that program alone, what we had to do. We took a step back and said, server consolidation was very necessary and an upgrade within our data center itself. We challenged ourselves and said "we want to increase that computer platform without using one additional watt of power", one additional ounce of power basically. And the way that we did that is we worked with not only the high tech companies on bringing in the most energy efficient servers, products, through things like virtualization that we could. But we also worked with facilities because racking and stacking and how you put them in the center is equally as important as the efficiency of that equipment itself.
Dan Farber: Now what kind of green initiatives do you have for PG&E itself and as well as for your customers?
Pat Lawicki: We're unique obviously here in California, we work and we're right in the high-tech sector as you know, and what's important is that we're offering rebates for server consolidation, for virtualization, rebates so that even PCs themselves will power down when they're not in use. So we have rebates around all those types of programs for our customers to take advantage of.
Dan Farber: And are you investing in alternative energy sources for your own consumption as well as for your customers?
Pat Lawicki: All the time. We're constantly looking at new technologies. Just this week we're going to roll out a billboard, first in the United States, that's solar powered that will also put energy on the grid, it will not only provide energy for the billboard itself but it will put energy on the grid. We're looking at tidal power; we're looking for more effective ways to use wind power.
Dan Farber: How do you measure the effectiveness of what you're doing? How do you know that the investments that you're making, the vendors that you're choosing are giving you the ultimate result that returns shareholder value?
Pat Lawicki: What we look at is there are several aspects and it's always hard to say. Our vision is to be the leading utility in the United States. And how do we measure that? Well some of the way we do that is you look at some of the most recent customer survey data that shows that we are moving from where we were, really a first quartile company, into the first quartile in many aspects. You look at it form a technology perspective; we were the top innovator according to information week in the energy and utility sector. So those are the things that you start to see now, people very interested in what we are doing as a company.
Dan Farber: Now you're in the middle of your 5 year plan, what do you see as your biggest challenges finishing up in the next few years?
Pat Lawicki: Some of our challenges have been and one of the things we did again when we were able to take a step back, in order to be innovative and really adoptive as a company we have a culture change within our company that has to evolve over time. The company hasn't had huge major investments in technology until recently and we need to do those rapidly. So we took a step back and said, "What type of culture do we need to develop? And how do we help our line people who maybe haven't used computers in their trucks, who haven't used handheld devices, how do we train them? Do they have keyboarding skills?" So from a cultural perspective in just making the organization be ready for change, ready for innovation, adopting that technology that was some of the investments we started to make early on that we're starting to see the payback now and we continue to look for ways to really look ahead and say "how do we support our employees as they go through these changes?"
Dan Farber: Pat thanks so much for speaking with me.
Pat Lawicki: Ok, Thank you.
Dan Farber: I've been speaking with Pat Lawicki who is the CIO of PG&E. For CIO sessions I'm Dan Farber, thanks for watching.
