A retrospective conversation with Paul Murphy, former President and CEO, Ontario’s Independent Electricity System Operator.
After more than 35 years in the industry, Paul Murphy retired from his position as President and Chief Executive Officer of Ontario’s Independent Electricity System Operator at the end of April.
Throughout his career, Paul worked in the planning and operations of Ontario’s electrical system and the development of competitive markets. He led the IESO through the opening of the market as well as the recovery from the 2003 blackout. He was a well- known advocate on reliability and cyber security issues throughout North America. And over the last five years, he chaired the Ontario Smart Grid Forum, a role he’ll continue post-retirement.
IPPSO FACTO recently caught up with Paul to ask him to share his perspectives on the issues of the day – and how they changed over the course of his career – including cybersecurity, new recruits, smart grids, and his retirement goal.
After more than 35 years in our sector, how do you compare the challenges we face today as compared to the challenges we faced two or three decades ago?
Paul Murphy: In decades past, Ontario’s industry was dealing with high growth through a centrally planned system centered around a growing nuclear generation fleet. Environmental concerns were present but not to the extent they are now. The threats to the system were largely from natural events or equipment performance. Today the province is dealing with a transformation of its industrial sector resulting in modest if any growth, a growing recognition of the perils of climate change, the development of distributed renewable resources with highly variable output, and potential threats that can originate from anywhere in the world, all while having to rejuvenate its baseload nuclear generation. In many respects, the system of yesteryear is being challenged to accommodate resources, demands and threats that it was not designed for. It isn’t that the challenges of the past were easy to deal with, but today’s are definitely different and are often interconnected in very complex ways.
You were with the IESO since the beginning, as COO during market opening and then finally as President. What do you think the legacy of the wholesale market will be? Why are markets important for efficient system operations?
PM: A fundamental shift underpinned the design of the market. One of the primary objectives was to put the obligations and rewards of operating and investment choices into the hands of asset owners – people who are in a good position to run disciplined risk/reward analyses and make decisions that systematically balance their commercial interests and their individual tolerance for risk. This was done within a transparent public framework of rules that applied to all and whose objective was to drive network efficiency and reliability. In this the market has been very successful. In fact it is quite remarkable that the market has stood up so well in the face of the many policy changes over the last decade. A lasting characteristic of the market will be as an enabler of efficient and reliable operation from a constantly changing variety of resources. Another key characteristic of the market is the degree of transparency it provides into the operation of the system and the production of a common price that continually signals the short term value of operating decisions both for supply and demand.
The Blackout was, probably for most in our industry, the most significant event in our professional careers. What did you learn from that experience?
PM: I learned the real value of a commitment to preparation and practice for events that rarely happen. Being clear about objectives is important, but even more important is developing competence in people by giving them the training, the tools and the freedom to deal with the unexpected, because real events will always turn out differently than simulated. Another lesson was the importance of good public and political communication during events of this magnitude. In a crisis, elected representatives will certainly become involved and the public needs to know what to expect; ensuring both are well informed is critical. The commitment and dedication of employees from companies throughout the industry was amazing during the blackout. Not that this wasn’t expected, but to experience it first hand was very satisfying.
You entered the sector through the Ontario Hydro system, which brought in engineers fresh from university and mentored them through various divisions throughout the company. Today’s hires are very different. How do you see the workforce in our industry changing? What’s your advice to the new recruits?
PM: There is much more diversity in the workforce today in the sense that new employees are often a mix of recent graduates and people with years of experience, and not always experience in the electricity industry. While the opportunity for new grads to have brief exposure to a wide variety of fields has diminished, the diverse backgrounds of today’s hires bring a great strength. Still, I would always encourage all new recruits to ask lots of questions and listen well. More experienced employees have a wealth of knowledge and are usually proud to share it. New recruits should take hold of their own personal and career development at an early stage and take advantage of the resources that most companies offer for training and mentoring. It is never too early to look for new and different opportunities within your company; don’t be afraid to step outside your comfort zone.
You have done a lot to raise our province’s profile throughout the North American electricity sector, particularly on issues such as reliability standards and cybersecurity. Why has this been important to you?
PM: Ontario’s electricity industry has always had a strong commitment to state-of-the-art reliability practices, perhaps stemming from our experience with the Northeast blackout of 1965. Ontario was the first jurisdiction in North America to have legislatively-backed mandatory compliance with NERC reliability standards introduced with the market in 2002. Voluntary reliability compliance was not going to be sufficient as the industry deregulated. This was evident in the 2003 blackout investigation, which uncovered many poor reliability practices. In fact, the foremost finding of the investigation was the need for mandatory and enforceable reliability standards throughout North America. Ontario has much good experience to share with others to achieve this. And as part of an interconnected grid, Ontario’s security depends on the actions of others.
One of the newer threats to reliability is cyber attacks. As more and more of our monitoring, communication, and control systems become digital, and as the connections between the electricity systems and communications systems expand, the exposure to cyber penetration is increasing. Sophisticated actors have already demonstrated their ability to cause damage to control systems in other industries. Cyber resilience and response is not as familiar to those in our industry as more traditional threats are. The industry and politicians at both the Provincial and Federal level need to become much more educated about the nature and consequences of these threats. Cyber attack is one of the least understood and potentially most damaging threats facing the industry today.
You became a champion for smart grids by founding and chairing the Ontario Smart Grid Forum. What kind of impact do you think the Forum has had on the development of smart grids in Ontario?
PM: Ontario had a great head start with mandatory installation of smart meters and time of use prices. But Forum members recognized a much greater potential of extending intelligent monitoring and control throughout the distribution systems and into people’s homes. To reap these benefits, a coordinated policy and regulatory framework was required. The Forum’s work provided policy makers with the material they needed to embed smart grids into Ontario policy through the Green Energy and Green Economy Act. The Forum also helped develop the principles to guide the work of the Ontario Energy Board as they established their regulatory approach. Together with its Corporate Partners Committee, the Forum has helped crystalize where further effort is required in areas such as demand response and storage.
Technology has totally revolutionized our business. Some people have described the IESO as an IT company, because it depends on a myriad of IT systems to manage the grid. How has technology changed the way you worked?
PM: Information Technology is an incredible enabler of opportunities to do things faster, better, and with less effort. There are many examples of this within the IESO, such as automated five minute dispatch and on-line determination of safe power transfer limits; but every sector, whether transmission, distribution or generation, has made extensive use of IT to improve their business.
When I started my career, informal communication within the office was through handwritten memos with multiple carbon copies put in the mail with an expected response within a few days. Formal correspondence was handwritten and submitted to a typing pool. A study to simulate a fault on a line meant typing instructions on many cards to feed into a computer to get an answer the next day! Huge reams of computer printouts were used to record hourly readings of power flows on the system. Today we take for granted that all of these things can be done almost instantaneously. The speed and accessibility to information today makes collaborating with peers and experts a simple matter. It also allows people to be connected electronically to their work 24 hours per day. While this is an advantage when needed in an emergency, it’s not without its downsides.
What will you miss about your time with the IESO and the former Ontario Hydro?
PM: Working with talented and committed people to resolve issues on electricity infrastructure that is critically important to people’s lives and the prosperity of the province is very rewarding. The challenges were varied, the opportunities were many and the outcomes mattered not just for today but often well into the future.
What are you looking forward to with your newfound freedom?
PM: Getting my golf score below 100!