We are pleased to see that the National Association of Regulatory Utility Commissioners (NARUC) is encouraging state regulators to see cloud computing solutions for utilities as a way to improve service and customer experience, as well as modernizing the utility grid for the latest technology.
Necessary for Improvement
For utilities to fully realize the benefits of the modern grid, for instance, the smart gas and electric grid, cloud computing is absolutely necessary for a transition. The amount of data power that is provided is necessary.
It also provides the data management necessary to realize improvements in customer service. Ameren Illinois recently appealed to the Illinois Commerce Commission about the regulatory treatment of cloud-based solutions to express their benefits.
Cloud-hosted software eliminates the need for on-premise hardware, software with regular licensing and updating, and an extensive IT team to keep it running. It can cost millions to build and manage such an on-premise system.
Because Cloud-hosting eliminates the need to keep hardware running, software licensing, upgrades, and maintaining a competent IT team to keep the system running, even smaller utilities are able to reap the benefits of cloud-hosting and working with the most advanced, top-of-the-line software available.
Cloud-hosted software is often approached with the possibility of security problems. The fact is, though, that security problems already exist today in utilities. Utilities with on-premise software and in-house IT teams must update and test their own software on a regular basis. If those updates lag behind for any reason – perhaps delays in paying for licensing, the most knowledgeable IT employees have left since the system was built, or they are simply too busy to see through a lengthy system update, the outdated software which the utility depends on can risk being outdated to the degree that known security vulnerabilities can develop into compromising hacks or dangerous bugs.
On the other hand, “software-as-a-service” models host the data offsite and provide the IT teams and infrastructure to ensure that systems always stay updated, and those updates are rolled out as soon as they are reasonably available.
The security concerns are also alleviated by th fact that Cloud-Based software is already reaping huge benefits in the banking sector, healthcare industry, telecommunications business, and auto insurance, according to the Resolution (see: page 5)
Financial vs. Utility IT
While most utility IT teams will agree that cloud-based systems are the necessary future to reap long-term benefits and ensure the highest level of security, there is still push-back from many finance departments.
Utilities choosing on-premise equipment, software, and IT teams are able to rate-base the equipment, recover the cost, and consider the rest of it profit earned. Investing in on-premise equipment and software makes this possible.
Finance departments fear that by moving to cloud-based SaaS systems, this investment will turn into a non-rate based operating expense and there are fears that utility prices will increase as a result.
The overall intent of the NARUC encouraging state regulators to consider ways for SaaS to be rate based to alleviate these concerns.
The Future Is Here
At TST, we are pleased to see that the NARUC is supportive of cloud-based software as the most viable solution for the advancement of technology in the Utility sector. We firmly believe that SaaS will be the standard for the future of utilities for achieving their social, economic, environmental, and customer service goals. The improvements of cloud-based solutions are already seen across so many critical areas of business and government. Furthering the advancement of SaaS in the utility space means progress and advancement