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Security at the power source.

POWER COMPANIES must battle the usual crime problems--burglaries, tool thefts, and assaults on employees. In addition, utility companies, such as Alabama Power Company in Birmingham, face unique problems. They must protect against meter tampering, wire bypasses that prevent the meter from functioning, and other schemes. Internal problems run the gamut as well. Just about every crime has been attempted by employees. This is not an indictment of utility employees or hiring processes in that industry; problems occur in any large company.

At Alabama Power, corporate security has several missions:

* Protect corporate assets, including property and personnel at headquarters and in the field

* Develop preventive programs wherever a service or property is subjected to criminal activity, internal or external

* Act as liaison to the criminal justice structure at the state, federal, and local levels

* Assist in the company's emergency restoration efforts

* Provide security education programs for all employees

* Represent the utility in all criminal matters in which the company is a party at interest, including investigative assistance where appropriate

To accomplish these objectives, security management must have full access to all employees of the company and all company property and records. Further, security must have periodic private access to the audit committee of the company's board of directors.

These were among the primary concerns when I joined Alabama Power in 1973. At that time, the company had no formal security operation, even though it had more than $5 billion in assets and 6,000 employees. Currently, security oversees 8,000 employees and 1 million customers in a service area covering fifty-five of Alabama's sixty-seven counties. To accomplish its task, the department has fifteen investigators. A proprietary force of 150 officers protects company assets. A budget of $1.5 million, or about $1.10 per customer, foots the bill.

Setting priorities in the early days was a challenge. The company had a two-unit nuclear plant under construction 200 miles away from corporate headquarters. Scattered over the service area were six fossil-fired generating plants and thirteen hydroelectric dams.

Most of the generating plants were protected by small groups of uniformed security officers. None of the guard force had been trained. The average educational level of the group was eighth grade. I could have simply chosen to contract out for guard services. I chose, instead, to retain the proprietary force and improve their lot. Security officer training had to be a top priority. When training programs were created and scheduled, 20 percent of the individuals retired or resigned, but the remaining force took more pride in the job.

Security awareness training for all employees was another priority. If the company informed workers about security precautions with regard to their own homes and outside activities, the theory was that they would better understand security issues and would be more likely to abide by security procedures at work. The strategy for security awareness has worked well.

EMPLOYEES have been supportive of security efforts, even when controversial. The drug testing program is a good example. Drug use is never likely to enhance productivity, but for utility employees working with deadly electrical voltage, it can be life threatening. For that reason, the security department pioneered drug testing in 1981, including site searches and urine sampling. Despite initial opposition from the union and even apprehension from management, which was concerned about using dogs to search for drugs, the program is now well received. The deterrent effect is evident. When the searches first began, drugs were found with every round. In the last three years, the dogs have found no illegal substances on company property.

Fortunately, senior management gave unqualified support to most initiatives. Full access to all property and employees was granted to security, and it was able to cross over departmental lines at any level.

Senior management's empowerment of security placed a heavy responsibility on the department. Security had to recognize the sensitivities of officers and other department heads when conducting investigations on their turf. Security had to deal with the suspicion that it would usurp others' authority or demoralize their employees. The hallmark of these efforts was to proceed with conservative programs.

Initially, the department assumed a dual responsibility: to prosecute on behalf of the company and to serve as primary liaison with all criminal justice system agencies in the state. The support of law enforcement efforts at all levels resulted in excellent relationships that have endured for many years.

Security did not thrust its problems toward the police but worked toward solutions where possible. The authorities in turn supported the security department's efforts when needed.

The department's administrative needs have not been unique to security, although security's role heightens the significance of such responsibilities as human resource management. Selection of personnel to work in the corporate security function is extremely important. The exposure to liability is much higher than in other company positions. Investigators must often work alone and make decisions without the benefit of counsel. A high standard of personal and professional conduct is essential.

Many of the investigators at Alabama Power have had a brief career in law enforcement. Others have backgrounds in banking, marketing, and accounting. The most important talent the security department looks for, however, is good oral and written communications skills. The department believes it is easier to teach investigative techniques to a new hire than to teach a former law enforcement person the differences between private and public security operations.

ALTHOUGH the security department started with a heavy demand for investigative services, the ultimate objective was to allocate a portion of total resources to preventive management. The balance shifted over the years to today's environment of doing much more preventive than investigative work. Operating personnel now see the department contributing to their productivity and efficiency.

During all investigations, whether internal or external, the department looks for ways to prevent an incident from recurring. The following examples illustrate the challenges faced and the corrective actions taken.

Work stoppage. Only one work stoppage has occurred in the past twenty years. Violence was expected after the negotiating parties reached an impasse. Security deployed company personnel at remote microwave sites and other critical facilities. The company also housed working employees on the site. This reduced picket line confrontations typical of shift changes.

Bribes. Allegations of payoffs and kickbacks frequently surface during major construction projects when the company is dealing with many contractors and subcontractors. Alabama Power has had its share of these problems. One of the more serious incidents occurred with a major contractor responsible for asbestos removal. The contractor was given too much freedom to conduct operations without prior approvals from the utility. The firm set up nonexistent businesses, sent fraudulent invoices, and caused materials purchased for Alabama Power to be used on an unrelated project for another company's facility.

Security's investigation began after a disgruntled worker tipped the department off. The resulting investigation brought a recovery of $1.3 million, and of course, contract cancellation. Internally, no employees were culpable, but better controls and oversight procedures were put in place.

Vandalism. Vandalism and sabotage are difficult to separate unless motives are apparent. Utilities are targets of a large share of the vandalism in every community, probably due to the wide exposure of their facilities.

During hunting season, for example, gun owners often damage power line insulators. Other serious acts of vandalism include the theft of aluminum cross-braces from power line transmission towers. The tower may not collapse initially but will fail during a windy storm. The department has prosecuted a few cases where the perpetrators caused the tower to collapse. By crushing the bolt ends that hold the braces, security now protects the towers from this type of loss.

Coal schemes. Alabama Power generates 65 percent of its power at coal-fired steam generating plants. Having more than a million customers, the company spends about $800 million annually to purchase coal. Much of this coal is delivered by trucks, with the balance delivered by river barges or railroad. Payment for coal is based on the BTU content and other factors, which are determined at delivery.

The security department has encountered a number of schemes whereby coal suppliers attempt to shortchange the company at the scales. If the coal is loaded in layers, poor quality coal or even dirt can be hidden under good coal. The department has been fortunate enough to prove the fraud in several cases.

Tool theft. Tool thefts have affected the company for years, particularly at major construction projects. Marking tools has been fairly effective, but exercising the department's right to conduct searches has been a more effective deterrent. The department aggressively prosecutes cases of theft as well. When individuals employed at construction sites are identified with theft or other serious offenses, they are barred from working at any company work sites for extended periods of time. Some workers have been permanently barred.

Metal theft. A problem for utilities that is occurring nationwide is the theft of copper. As the market for copper rises, so do the incidents of copper theft. The department has formed task forces with other utilities and railroad companies to bring a coordinated effort to bear on copper thieves.

The most effective method to curtail this problem, however, is to cultivate the support of scrap metal dealers. Many of the large scrap metal dealers bid on utility scrap. These dealers have been asked to cooperate in curtailing the sale of illegally obtained metals, and this has been helpful. They realize that with one telephone call they can be removed from the company's bid list.

Service fraud. The theft of electric service is probably the most common crime committed against electric utilities. Although in some areas kids shooting out street lights may be as troublesome, it is not as significant to the bottom line. The cost of pilfering at Alabama Power is estimated to be as high as $3 million annually.

Theft of service is highest in urban areas. Often the location is an apartment complex with underground service and group meters, which precludes cutting power off at the pole.

Alabama Power inspectors attempt to identify trouble spots and take corrective action. Security views company meters as the utility's cash registers. They are the only way the company can know what to charge a customer. Inspectors look for signs of tampering--broken or missing meter seals, missing meters, or meters that have been inverted. The missing seal is sometimes evidence that a meter was inverted.

Meters plug into a socket similar to an electrical appliance hookup. People interested in stealing electricity will break the seal, remove the meter, turn it upside down, and plug it back in. The change makes some meters read backwards. In other cases, when the meter has been removed because a property is vacant, people will take any utensil that can serve as a metal conductor and insert it in the socket where the meter would ordinarily go. The electricity will flow into the house and it will not be metered at all. This procedure is one of the most common practices.

Some meters have a gear shift that allows them to register forward even when inverted. While a wholesale replacement of older meters is not considered worthwhile, security calls for a modified meter when evidence suggests tampering has taken place. In addition, various locking devices make it more difficult to remove the meters, but these do not fully deter determined thieves. Some individuals will even climb utility poles to reconnect power, despite the great risk involved.

If the inspectors' efforts are insufficient, repeated thefts will be referred to corporate security for possible prosecution. Part of the department's dilemma is the cost-effectiveness of this strategy. Alabama Power has prosecuted many offenders who stole power valued at less than $30, yet the resources used in such an action are valued at more than $500. The company's image is another concern, although security cannot ignore repeated theft.

The utility is careful not to accuse individuals of stealing when meter tampering is detected, because security may not know whether the users made the illegal alterations. State law does, however, permit the company to take action against the person in control of the home.

The organization is selective about the cases it takes to court. Management is mindful of the fact that the business will be viewed as a big monopoly against the small consumer, who is possibly a poor individual in need of a basic necessity. For that reason, electricity is never discontinued by the company during extreme weather conditions, even when it is being stolen.

In deciding which cases merit prosecution, security checks to see whether the perpetrator has a history of criminal behavior. Prosecutions will be pursued as a deterrent to neighbors.

Identifying the actual dollar amount of loss in each case is difficult. Security cannot determine how much electricity has passed through a meter that has been vandalized. State laws regarding theft of service require, however, that the company bringing charges be able to prove to the satisfaction of a court the amount of theft incurred. One approach is the reasonable person test. Security can demonstrate that the user's electrical bill, given the home's electrical equipment, is not reasonable. Someone with four tons of air conditioning should not, for instance, have a $22 electric bill for a month.

The company can also pursue prosecution under the state's criminal tampering law if it has witnesses or an admission from the accused. The criminal tampering statute does not require that the utility prove an amount of loss.

The success rate on prosecution is almost 100 percent. While the company has prosecuted more than 2,000 cases, these efforts can have only limited impact. The answer lies in developing a better metering system. Remote electronic metering may become a viable solution in the future.

PERHAPS the most striking change to security and the office in general since the establishment of the security department in 1973 is the advent of new technologies. Computers and other innovations can streamline many workplace functions.

The department has eliminated some clerical positions by giving each field investigator an office automation workstation. Investigators are strategically deployed around the state where they are needed. These company sleuths can now use computers, networked to headquarters, to electronically prepare reports and send them in. In the past, it was necessary to have clerical support out in the field. The department now has a clerical pool at headquarters that serves the needs of all investigators. The change has reduced the total number of support staff required statewide.

That is just one of the benefits of networking. Another is electronic mail, which can be used to quickly send out crime alerts where an incident has taken place in one area and security believes it will repeat itself in other regions. It is also used to keep managers informed during times of imminent crisis. For example, during the Persian Gulf situation, the department would learn of potential reprisal attacks against public utilities. Security disseminated that information to company managers to ensure that everyone received the same message.

Memoranda, status reports, internal and external communications are readily available through networked systems. Of course, the right information must go into reports, and it must be properly catalogued or indexed for optimum benefits. When the department was created in 1973, administrative case files were developed similar to those used by federal law enforcement agencies. The system ensures quick retrieval of data and information. When an incident occurs, the names of all witnesses, suspects, or subjects of the investigation are indexed. Locations, stolen property, and other relevant information is also catalogued. Initially prepared manually, all information is now computerized.

If an investigator gets a report about a minor theft, for instance, it will not be appropriate for him to spend department resources investigating that incident, but he will document the loss. In a few months, if headquarters gets another report of a similar theft at a related location, then the department has some indication that an investigation might be appropriate.

The database enables security to assemble historical data, analyze trends and costs, and forecast staffing requirements. With special subcodes, the department can also demonstrate to each officer of the company how his or her operations are affected by theft and vandalism.

Security-specific technology is rapidly enhancing the ability of managers to reduce risk exposure and detect efforts to compromise security measures. It is critical for security managers to look at every new device that comes on the market. While Alabama Power is budget conscious, it looks at the end result and determines if a new technology is cost-effective.

Total expense must be compared to direct and indirect savings. As an example, the department is currently testing a slow-scan CCTV system at a facility located 100 miles from the monitoring center. For years the department has had proprietary security officers at the facility at an annual cost of about $120,000, including fringe benefits. If the pilot study demonstrates that the department can do without officers at the location, the $75,000 cost of the new system will be a good investment. The project has the potential of eliminating 58 security officer positions, at a savings of $1,750,000 annually.

In another application, the department upgraded technical equipment in the security control center at corporate headquarters. A system that had been used to monitor twenty-five company burglar alarms needed to be replaced. The new equipment had a 15,000 alarm capacity. The department choose to use the available capacity as a central monitoring station and extend to the company's 8,000 employees home coverage for burglary and fire protection systems. Annual monitoring fees and profit on equipment sold to employees has already generated more than $100,000 in new income for the company. Offering alarm monitoring to employees also builds a closer bond between corporate security and personnel.

Reaction from local burglar alarm companies has been mixed. The department is using local alarm companies for installation work, but it is also hoping to compete in the public marketplace.

Security managers today must wear many hats beyond that of the typical investigator: a marketing hat to plan security initiatives within the company; an accounting hat to combat the cliche that security does not contribute to company profits; and a supervisory hat to motivate a security team.

In recent years, security personnel have been expected to become better managers of the business. The specialty knowledge of security is fine, but being a good sleuth is no longer sufficient. It is becoming increasingly important to develop business plans, forecast staffing requirements, set five-year goals, develop and conform to a budget, and document staff productivity. When security managers bring these disciplines together, they will find not only that corporate executives are impressed but also that their primary asset protection role is enhanced.

David B. Hinman, CPP, is the director of corporate security for Alabama Power Company in Birmingham. He is a member of ASIS.
COPYRIGHT 1993 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Utility Security; security measures at power production facilities
Author:Hinman, David B.
Publication:Security Management
Article Type:Cover Story
Date:Jun 1, 1993
Words:3157
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