MIDWESTERN POWER SERVICES

(Current Trends in System Development)

Midwestern Power Services (MPS) provides natural gas and electricity to customers in four
Midwestern states. Like most power utilities, MPS has seen significant changes in federal and
state regulations in the last several years. Federal deregulation opened the floodgates of change,
but there was little guidance from the federal government on how that would shape the
industry’s future. State legislatures also significantly changed their laws and regulations. The
industry went through tremendous upheaval, with significant problems created by power
shortages at several California power companies. Today, regulations such as the Sarbanes-Oxley
Act are changing the landscape again. These new regulations seriously affect all areas of business,
including accounting, record keeping, power purchases, distribution agreements, and customer
consumption and billing.
New and proposed regulations seek to increase controls and expand competition for electricity
and natural gas. The final form these regulations will take is unknown, and the exact details will
probably vary from state to state.
MPS needed to rapidly prepare its systems for these new regulations. Three systems are most
directly affected: one for purchasing wholesale natural gas, one for purchasing wholesale
electricity, and one for billing customers for combined gas and electric services. The billing system
isn’t currently structured to separate supply and distribution charges, and it has no direct ties to
the natural gas and electricity purchasing systems. MPS’s general ledger accounting system is
also affected because it is used to account for MPS’s own electricity-generating operations.
MPS plans to restructure its accounting, purchasing, and billing systems in the following ways:

 Customer billing statements will clearly distinguish between charges for the supply and
distribution of gas and electricity. The wholesale suppliers of each power commodity will
determine prices for supply. Revenues will be allocated to appropriate companies—for
example, distribution charges to MPS and supply charges to wholesale providers.
 MPS will create a new payment system for wholesale suppliers to capture per-customer
revenues and generate payments from MPS to wholesale suppliers. Daily payments will
be made electronically based on actual payments by customers.
 MPS will restructure its own electricity-generating operations into a separate profit
center—similar to other wholesale power providers. Revenues from customers who
choose MPS as their electricity supplier will be matched to generation costs.
MPS’s current systems were developed internally many years ago. The general ledger accounting
and natural gas purchasing systems are mainframe-based. They were developed in the mid-
1990s, and incremental changes have been made ever since. All the programs are written in
Visual Basic; DB2 (a relational DBMS) is used for data storage and management. There are
approximately 50,000 lines of Visual Basic code.
The billing system was rewritten from the ground up in the mid-1990s and has been slightly
modified since that time. The system runs on a cluster of servers that use the UNIX operating
system. The latest version of Oracle (a relational DBMS) is used for data storage and
management. Most of the programs are written in C++, although some are written in C and others
use Oracle Forms. There are approximately 80,000 lines of C and C++ code.
MPS has a network that is used primarily to support terminal-to-host communications, Internet
access, and printer and file sharing for personal computers. The billing system relies on the
network for communication among servers in the cluster. The servers that support the
accounting and purchasing systems are connected to the network, although that connection is
primarily used to back up data files and software to a remote location.
MPS is currently in the early stages of planning the system upgrades. It hasn’t yet committed to
specific technologies or development approaches. It also hasn’t yet decided whether to upgrade
individual systems or replace them entirely. The target date for completing all system
modifications is three years from now, but the company is actively seeking ways to shorten that
schedule.
Assignments
1. What would you recommend as an approach to upgrading the three listed applications—
a single total project or three individual projects? Explain your decision.
2. Describe the pros and cons of the UP approach versus XP and Scrum development
approaches to upgrading the existing systems or developing new ones. Do the pros and
cons change if the systems are replaced instead of upgraded? Do the pros and cons vary
by the system? If so, should different development approaches be used for each system?
3. Assume that MPS has had very little experience with developing projects by using
adaptive techniques. Do you think it would be viable for them to attempt an adaptive
approach for these three systems? What would be your recommendation for each?
Which method would you recommend and why?
4. Assuming MPS decided to use one of the three methodologies discussed in the chapter,
make a list of potential problems and the steps they should take to avoid those problems.
List any activities they should consider to ensure success.
5. Assuming that MPS decided to develop and deploy each system individually, what would
you recommend for a development approach? Would you recommend any SAAS
solutions? Would you recommend using MS Visual Studio and IIS or a Unix environment
by using some open-source applications? Explain your decision.