# Oral-History:Harold Scherer

## About Harold N. Scherer, Jr.

Harold N. Scherer, Jr. was born in 1929 in Plainfield, New Jersey. After choosing to study at Yale, he decided to pursue an electrical engineering degree. He spent the rest of his career working in engineering and management positions at several electric utility companies, including Public Service Electric in New Jersey, American Electric, and Commonwealth Electric in Massachusetts. His career occurred at a time when the technological, economic and regulatory structure of the utility industry was changing, and he participated in many policy- or regulatory-related groups.

Scherer discusses his training and early career as a power engineer, and reflects upon the state of engineering education. He discusses the strategies that the companies he worked for used to deal with a rapidly changing economic and regulatory environment, particularly in the case of nuclear power. He also outlines the relationships between utilities and industry consortia such as ERPI, profession groups such as IEEE and CIGRE, and electrical equipment manufacturers.

Harold N. Scherer, Jr.: An Interview Conducted by William Aspray, IEEE History Center, February 1st 1994

Interview # 187 for the IEEE History Center, The Institute of Electrical and Electronics Engineers, Inc.

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It is recommended that this oral history be cited as follows:

Harold N. Scherer, Jr., an oral history conducted in 1994 by William Aspray, IEEE History Center, Piscataway, NJ, USA.

## Interview

Interview: Harold N. Scherer, Jr.

Interviewer: William Aspray

Date: February 1st 1994

### Background and Education

Aspray:

Could we begin by having you tell me something about your early education and early life, what your parents did?

Scherer:

I was born in Plainfield, New Jersey, back in 1929. My father was an accountant in New York. Ultimately he ran his own accounting firm. Basically I lived most of my life in the New York metropolitan area. My mother graduated from Smith College and I had an uneventful childhood. I graduated from Plainfield High School in Plainfield, New Jersey, and went to Yale University. I spent four years at Yale. I graduated with a Bachelor of Engineering degree in electrical engineering. Actually they called it a BE degree. I went to work for Public Service Electric and Gas Company, New Jersey, in 1951 upon graduating from Yale.

Aspray:

I have a couple of questions.

Scherer:

Sure.

Aspray:

Were you a good student along the way?

Scherer:

Yes, I was. I was probably in the top rung of the high school class. I was tenth out of four hundred and fifty, something like that. I was Tau Beta Pi at Yale, and when I started with Public Service I started at night taking a masters degree in business administration at Rutgers Graduate School of Business in Newark, New Jersey. I worked in Newark for Public Service. I was a Beta Gamma Sigma in graduate school.

Aspray:

When you were growing up, did you have interests that would have indicated your engineering interests? Ham radio, or construction projects, or things like that?

Scherer:

Actually, I really probably started out thinking I would be a chemical engineer. Probably largely because I was given a chemistry set as a young boy. When I went to high school I was very interested in mathematics and science. It just naturally appealed to me, and Plainfield high school at that time had a number of accelerated programs in mathematics and science, English, and that sort of thing. I had some teachers that just inspired me too, and as a result, when I went to Yale, my thought was either to major in electrical engineering or chemical engineering. I had more of a view of working in the engineering instead of the pure chemistry end, for example, so it appealed to me to do things and build things, and apply basic science to engineering, and so forth. I went to Yale, and during the first year at that time you didn't have to make a choice of major. In my first year, as a matter of fact, I still could have pursued liberal arts training, although you took some electives, math in particular.

I sort of zeroed in, for not very good reasons, I guess, on electrical engineering. One of the reasons was that in my senior year in high school I went to a father and son dinner for a local club in the YMCA. The fellow sitting across from me was in the club, and his father was Donald Luce. Luce was then General Manager of the Public Service Electric and Gas Company. He eventually became their CEO. My mother and his wife were childhood friends, and he said, "Well, get a year or so under your belt in college, come around, and I'll give you a summer job." That sort of piqued my interest, and I went to work for Public Service Electric and Gas Company for two summers while I was at college, once in a substation and once in a generating station, in Seawaren, NJ and that probably had some bearing on why I chose electrical instead of chemical.

Aspray:

I see.

Scherer:

I had some interest, or tie there. That's how I started in the utility business.

Aspray:

How did you choose Yale?

Scherer:

I had always wanted to go to Yale. At that time, when you took your SAT, you had to have a first, second, and third choice, and you had to say what the choices were. The bottom line was that a competitive college — if you put it down as second choice, they never got to you. So in any event, my mother had been to Smith, and she always thought highly of Yale. I had always heard of the Ivy League. I was interested in MIT, was interested in RPI, and in Lehigh at the time, and Lehigh accepted me early. RPI accepted me early. Yale didn't make their decision until the end of May, or so. It had been my first choice.

Aspray:

I see.

Scherer:

I had just heard a lot about the Ivy League from the time I was knee-high.

Aspray:

All right.

Scherer:

I was very happy with the choice because I got quite a bit of blending of more than pure engineering and science, and had the opportunity to audit courses. I audited courses in the history of art, one of them taught by a very dramatic fellow named Vincent Sculley, who became a rather well known architectural historian. He just wrote a new book, that I just read. Yale gave me a blend of more than just the pure technical training I probably would have had more of that at MIT or RPI. I thought that made a very good background.

Aspray:

What year did you graduate from Yale?

Scherer:

I graduated from Yale in 1951.

### Public Service Electric & Gas Co. (NJ)

Aspray:

And how was the job market when you got out?

Scherer:

The job market was very good at that time. The Korean War was in progress I had fifteen or twenty job offers, I guess.

Aspray:

I see.

Scherer:

I probably ended up with Public Service because they offered a very nice training program, a good salary, and I had worked for them for two summers.

Aspray:

Did you know what you wanted to do at the time?

Scherer:

Well, I knew I wanted to be in electrical engineering. I thought at some juncture I might like to be President of Public Service Electric and Gas Company. I ended up as President of a utility, but not of Public Service. By the time I graduated from college, even when I was working there, I was interested. I had spent some real-life time in power plants, and in electric utilities, and electric utilities were headed toward a large growth phase. I had one debate when I first went to Public Service: after about a year they wanted to send some people to the Oak Ridge School of Reactor Technology, and they asked me if I would like to do that. I spent a week, I think, pondering whether I wanted to stay in electrical engineering, or whether I wanted to branch out into this new nuclear field, and go to Oak Ridge for a year. I decided to stay in electrical engineering, and I'm still happy that I did.

Aspray:

Did you ever consider the other side of the fence: communications-side electronics?

Scherer:

No, I never did. Although, an interesting thing in my career must have happened in 1948 or 1949. A professor at Yale had a little sub-contract to work on this new gadget that had been invented at Bell Labs called the transistor.

Aspray:

Right.

Scherer:

It has been almost unbelievable, during the time since the late 1940s. There we were just really trying to think up the applications that were going to succeed the vacuum tube. The transistor had not emerged at that period of time, but from the time I was in school to now, it's just absolutely unbelievable what has happened. First the transistor, of course, then the integrated circuits, and last of all the computer.

Aspray:

Scherer:

Well, I started out, as I said, with Public Service in New Jersey. I was on a two-year training program, and when I finished the training program they asked where I wanted to work. I said I didn't want to work in a power plant. I wanted to work in engineering, and I went to work in substation engineering in the general office in Newark, in the engineering and design of substations. That was starting in 1953, two years after I’d started. I'd worked all through the company. I spent nine months in a power plant, then went to distribution headquarters and sat at a customer complaint desk. It was a broad view of the company for two years.

Aspray:

Was that intentional as part of the two-year training program?

Scherer:

Yes. They called it at that time the “cadet engineer training program.” People would die these days if they were called cadet engineers.

Aspray:

Right.

Scherer:

Most of the management of the company had come through that program over the years.

Aspray:

But not every engineer who joined the company would go through that program? Is that correct?

Scherer:

You went through that program basically if you were hired out of college. They hired from college for that program. A man who had been hired later in his career might not go through the program; it was hinged on immediate college graduates, for whatever reason.

Aspray:

Okay. And was there technical training in this, or was it hands- on?

Scherer:

It was both. For example, at the power plant I crawled in and out of boilers, in and out of turbine generators, and so forth. But I also worked in the mechanical engineering department in Newark, which did the engineering and design of the power plant. Likewise, on the electrical side I spent about nine months in a distribution department, but also worked in the electric engineering department on the engineering of the electric system. I went out on line trucks. It was not a big piece of the action, but in fact I did it.

Aspray:

Right.

Scherer:

So it was a blend. It probably was too long; I was getting a little bit fidgety there at the end. On the other side of the coin, it gave me a real background that I otherwise probably would have never had. The first technical problem I had with Public Service was straightforward. There was with a greenhouse, which grew orchids in Bound Brook, New Jersey. A big business chore in orchids was to have them all bloom for Easter and Mother's Day. They used electric lights to force the bloom, and he was having a problem, about half of his flowers would bloom a week late. If you miss Mother's Day by a week, you're in trouble.

Aspray:

It does matter, right.

Scherer:

It was a simple technical problem. They didn't have enough wire capacity. They had a voltage drop from one end of the greenhouse to the other, and the orchards were not getting the same light down the far end. I was out on the training program with a power engineer, a commercial representative, the first practical real-world problem.

Aspray:

I see.

Scherer:

Voltage = I R.

Aspray:

Then after your two-year period you went into another group?

### Junior Chamber of Commerce

Scherer:

Yes. In the engineering of substations, in what they called the “electric distribution department” at the time. I spent from 1953 until 1961 in that job, although I had a little interim. I got active in the Junior Chamber of Commerce, and I became President of the Plainfield, New Jersey chapter. In 1960-1961 I was State President of the New Jersey Junior Chamber of Commerce. Public Service, in essence, sponsored me in that job, and I found it fascinating. I was out two hundred and twenty nights in one year to make speeches all over the state. I had a sort of one year interruption, so to speak. I was still doing some engineering work, but the time demands running this were something. But the company supported it.

Aspray:

You must have liked being in the public sphere, and you must have liked the business side of things as well as the technical side of things?

Scherer:

Yeah, I liked both. As a matter of fact, after that, in 1963, I was elected to the City Council in Plainfield, New Jersey. I spent three years on the City Council and became Majority Leader. I ultimately moved to Watchung, New Jersey and formed a group to overthrow a rather stodgy school board, and became a member of the Watchung Hills regional high school board.

Aspray:

I see.

### American Electric Power & 765kV System

Scherer:

So I've been a lot of those things during my life. In 1961 Public Service transferred me out to their field distribution headquarters in Irvington, New Jersey. I did a variety of things, not so much engineering, although I did end up doing some distribution planning for them. I was following substation crews, that sort of thing. I remember one Saturday I was out in front of Newark Airport trying to figure out why the streetlights weren't burning, and I said, "What the hell am I doing this for?" So I put out resumes, and I answered a blind ad in the New York Times for a large electric utility headquartered in New York City. I could figure out what it was. It was American Electric Power. I was interviewed by their Chief Engineer in Cranford, where we happened to live, and they hired me on in substation engineering in American Electric Power in February, 1963, which was a fascinating time. Two years later I was Section Manager in charge of all substation engineering for AEP, and a year later we embarked on our 765kV system. I wrote the original requisitions, the approval mechanism for that system, and handled the substation engineering for the 765 from basically when we announced it in 1966, up to about 1968 when I was made Assistant Chief Electrical Engineer. The Chief Electrical Engineer at that time was named Arthur Hauspurg. Art was the chief, and I became his assistant, and learned that one year can have a lot to do with your life. He was offered a job as a vice-president of the Consolidated Edison Company in New York. Ultimately he became the CEO of Consolidated Edison. I guess I was thirty-nine years old when I became Chief Electrical Engineer of American Electric Power.

Aspray:

A pretty distinguished position in a big company at that age.

Scherer:

One of the biggest in the company. I decided of course that if Art Hauspurg had stayed I would have stayed an assistant for quite a while, unless I moved someplace else. As a result of that I energized the first 765kV line, which was the highest voltage in the world at that time. The highest had been 735kV. The Canadians beat us by about two years to 735, but 765 was a smidgen higher. I was then basically in charge of all electrical engineering for American Electric Power. There was a big emphasis on 765kV transmission. We ultimately built 2,200 miles of it. We built a magnificent transmission system, which is the backbone of the central part of the United States today. It ties Chicago to Detroit, to North Carolina, to TVA, to Pennsylvania. It was tied basically in the heartland, we used to say, AEP operates in seven states: Virginia, a piece of Tennessee, West Virginia, a piece of Kentucky, Ohio, Indiana, and Michigan. Besides that we were also embarking on building the largest power plants, a 1300MW series of generating plants. That was part of my electrical engineering responsibility, or at least my direction, obviously. We had a staff by this time, of about three hundred people, a hundred of which were in Canton, Ohio, and the other two hundred were in New York City, at 2 Broadway.

Aspray:

Why in New York City?

Scherer:

Well, that was always the big question. Actually, really what happened was that American Electric Power was put together in Wall Street in the 1920s as the old American Gas and Electric System. They acquired many small companies, and reasonably large companies, and built the system. At one juncture, up until 1947, they also owned the Atlantic City Electric Company and Scranton Electric Company. But then, under the Public Utility Holding Company Act of 1935 the federal government bounced that, in the fear of monopoly. They were forced to divest themselves of any properties that did not make geographical or electrical sense. It was a fascinating time of great expansion, great engineering opportunities, the largest electrical generators going at the time. They are pretty much still the largest, except for a few nuclear plants. The largest fossils going. There are some nuclears that are 1500MW around the world. The 765kV system was the highest voltage, and we built on a long succession. The CEO of American Electric Power, through the 1950s, was a fellow named Philip Sporn, who was probably one of the giants of the industry, and of IEEE. Even as CEO he was presenting prize class papers at meetings such as this, you know. He had built a tradition of "inventing the future," taking chances. He had the first super-critical boilers in operation, the first 345kV in the United States, the first 765kV.

In 1969 when we were just energizing the 75th system, we entered on a joint project with ASEA of Sweden to develop the technology for 1500kV transmission. That ultimately resulted in a test station we built in South Bend, Indiana in the mid-1970s, and we developed the technology for 1500kV, which I was heavily involved in for many years.

### Donald C. Cook Nuclear Plant

Scherer:

We also started, about at the same time, construction of the Donald C. Cook nuclear plant, and my direction included the electrical engineering for a major nuclear plant, which has been a very successful plant. It did not get into the huge delays and cost overruns that many of the others did. It's on Lake Michigan, south of Benton Harbor. Actually it became a rather difficult travail with the Nuclear Regulatory Commission, particularly after Three-Mile Island. They insisted on high-level management involvement, so we had an off-site safety review committee, and I was Chairman of the Audit Sub-committee for Nuclear Safety, basically, doing auditing, quality assurance and that type of thing. If you assume we ever worked only an eight-hour day, it averaged out to fifteen percent of an eight-hour day of my time for almost ten years, until I left AEP, as a matter of fact.

It was sort of interesting, because it was a 2,200MW plant, a pressurized water reactor. We also, at about the same time, built a 2,600MW fossil plant, the Gavin plant, named after James Gavin the general who parachuted into Normandy on D-Day. He was a member of the board of directors of AEP. Probably if I spent one quarter of one percent of my time on Gavin it was a lot. Nuclear was a tremendous amount of time, particularly in quality assurance, which, of course, was the thing I oversaw. But even from the AEP Chairman on down it was a major involvement, so while it was very successful technically, very successful operations-wise, and came in with a good cost structure, it was a tremendous drain on the organization, even though it was a large engineering organization, to make sure we kept it on. Particularly with all of the changes from 1978 on to the mid-1980s. Waves of new ways of looking at things, and in fact many good changes. Anyway, that was a big piece of my career.

### Microwave Network

Scherer:

We also had a fledgling microwave network that we brought first to fruition by 1964. We opened a control center in Canton, Ohio, and we had our own private communications system to tie to the major operating company centers to bring information in. We set up satellite centers with the main control center in Canton. We also did our system accounting in Canton, and if your bill was read in Roanoke, Virginia (this microwave system was initially an analog microwave system). Initially, the bill information would be entered on punch cards in Roanoke. It would be fed to Canton, where the bills would be calculated. The information was sent back and the bill printed out in Roanoke, but all the accounting information would be assembled on a system-wide basis in Canton. This network had two things about it at that time. One was accounting information, and the other was system operation. There were ties to each of the power plants for control and dispatch, and we made a substantial upgrade of that system in 1971 to 1972. We added substantial data acquisition facilities and developed the state estimation programs.

This largely hinged on work from a professor at MIT, Fred Schweppe. AEP had an exchange program with MIT, and we had at least three professors, who came and spent a year's sabbatical working with us. One was Herb Woodson, who was former President of the Power Engineering Society and Dean of Engineering at the University of Texas. Gerry Wilson, who became Dean of Engineering at MIT. Then there was Fred Schweppe, who was a brilliant engineer. He was also involved in hydrogen bomb testing. He developed the basic theory and background of state estimation, which we then applied to the system and developed the basic thinking that went into the computer programs. They could, in fact, get rid of bad data and substitute by knowing what happened at the other end, and give you an up-to-date version of what the system conditions actually were.

Then we followed on that about twelve years later. We moved from New York City to Columbus, Ohio, and built a new control center which was state-of-the-art. Every control center is state-of-the-art until the next one is built. We built that in Columbus, our headquarters. We did all of the communications systems again. I was heavily involved in both those aspects, the control center, and the communications. I had a division for communications. It was still analog microwave, but now we had our own voice communication as well as the accounting, and data for all sorts of system reasons as well as system operations. It steps up a level, from whatever there was before. In around 1987, we started the work to look at overlaying that system with fiber optics, which is underway at the moment. It's been a few years since I've been with AEP, but they must have five or six hundred miles of fiber now installed in the ground wire on transmission lines.

Aspray:

Right.

Scherer:

It was a time of great excitement and great activity in all aspects of the business. I found it fascinating.

### Role of EPRI

Aspray:

I wonder if you could take a few minutes to reflect more generally about the relationship between the different kinds of players in the power industry?

Scherer:

It's sort of interesting in a way. There probably were throughout the 1950s and 1960s, to the early 1970s, perhaps half a dozen power companies with their own engineering staffs, which did advanced engineering work. Not very many. American Electric Power was one of them, very definitely astride the technology, and wanting to push the technology forward. In 1972, I guess, or 1971, what was then the Electric Research Council put together a Goals Task Force, of which I happened to be a member. It laid the foundation for what became the Electric Power Research Institute, which I think was formed in about 1972. By 1973 EPRI had taken over many of the research functions from the companies that still did their own work. EPRI is still doing it. It was ironic that AEP did not join EPRI. The reason was that the then chairman felt that they were not going to emphasize coal enough, and it turns out they put oodles of money into generation with coal! But — so we didn't join, and we did our own thing. We sort of talked with them a bit, and every time a new chairman or president came into EPRI they would come down and give us the pitch. I was an in-house advocate.

A fellow by the name of Pete White took over the company in 1975 when Cook retired. A year or two afterwards we had another big discussion with EPRI, and for whatever reason he decided not to go ahead. Part of it was about the fifteen million dollars a year in dues, which, ultimately though, the commissions would allow you to put into your rate of return. I think almost without exception the public utility commissions across the country have supported the concept that utilities should be affiliated with the EPRI. Then before I left AEP, when I went to take a job in Massachusetts, we had convinced the chairman that we should join EPRI. If we needed a better widget to hang on the side of a boiler, we had people who could do that, and we could finance that. If you wanted to be effective in the Clean Air Act, or global warming, or re-establishing a nuclear option, no one company, no matter how large, could do it. It needs a concerted industry approach. We built the consensus in our Legal Department, Customer Department, Regulatory Department, Engineering Department, and Coal Department — our coal company, actually. AEP had one of the largest coal companies in the country, just for its own use. We convinced them that we should join. It's taken about three or four years to get the first check, but it looks as if it is sure that AEP will join. I think it is the right thing to do, for those reasons.

Aspray:

Has EPRI been effective at the work it has done?

Scherer:

I think so. I mean they've got their plusses and minuses. Basically they're a contracting organization. They manage contractors. They put out requests for proposals in a given area. People on their own staff, which I think is in the order of six hundred people at the moment, are managing research contracts rather than doing the research. Which is okay. They've got some very good people. They've had some weak spots along the line. One of their problems is, at least from my view, that as a result of this wide membership, everybody has to have an opportunity to have some say. Some of the smaller utilities will put people on these advisory boards, and I know some of the EPRI staff members are saying, "Well, they are not like AEP because we know you have got some people who understand this technology. We know we're not getting the right advice from our advisory board." That's part of the problem, but they've found ways to overcome most of that. Dick Bazhizer is the President of EPRI, and he has been an effective leader of EPRI. I had no trouble at all in recommending that AEP join. Hopefully, they will get their first check. It's hard to get that first check, particularly when it's for multi-millions.

### Dealings with GE & Westinghouse

Aspray:

What about the relationship between AEP and big electrical manufacturers? The Westinghouses and GEs?

Scherer:

Well, for many years it had been extremely close. Then it became very adversarial and legal, and now it has come back a bit. What happened was that Philip Sporn had many personal contacts with the high level people in GE and Westinghouse at the time. Every new design circuit breaker that GE turned out from, say, 1935 probably to 1960, started out in use in the American Electric Power system. Their turbine generators were the same. A couple of Westinghouse, out mostly GE. Boilers were the same way. It wasn't the same world, with competitive bidding, and whatever. The feeling was that you could negotiate these things if you had the kind of people that, in fact, knew the technology well. I found that was pretty much true. There were some winners and losers in everything; you're not always right. In the mid-1960s, GE and Westinghouse came to a pricing policy on turbine generators that in essence said you were going to get a price that would be determined a couple of years hence. They'd write you a contract with certain escalation indices, but the base would be a year or two from the time that you signed the contract. So in essence we were giving them a blank check. Our then Chairman, Donald Cook, refused to sign such a contract, and we went to Brown Boveri, Switzerland to buy our equipment. We bought a lot of foreign equipment, which gave me the opportunity to have a long look at the European manufacturers and international organizations, of which I have been a big part.

We went to Brown Boveri, and things got from bad to worse with GE. There were some personal things back and forth. We ended up filing suit against GE and Westinghouse, an anti-trust suit on the basis of price fixing. The argument was that if GE had a price book, then Westinghouse had an identical price book. We'd get a major equipment quote, for say, twenty-five million two hundred thousand dollars and two cents, and then get the exact same bid from the other company. They didn't communicate with themselves in hotel rooms, which they were doing in the late 1950s in price fixing. They did it publicly. GE would announce a five percent price increase in turbine generators, which would mean everything in its book would get multiplied by five percent. Sooner or later Westinghouse would give a five percent price increase. At least, in my view, they sort of had it split that GE would get sixty percent of the turbine business and Westinghouse would get forty. Of course, bringing Brown Boveri into the act did not help that situation from the manufacturers' point of view. The anti-trust suit went on for quite some time, and the final settlement came in the mid-1970s. Certainly with the large turbine generator business with General Electric it sort-of poisoned the relationships for many years. Everything was at arms-length transactions.

Ultimately what happened was that the Justice Department entered the case. GE and Westinghouse settled with the Justice Department to do away with price books and other things. Once again, they didn't admit they were doing anything wrong, but said that they wouldn't do it anymore. Our civil suit then, was in essence, basically won for us, and we worked out all the details. They pretty much paid all our legal costs and all the things that went into it, settled a whole bunch of outstanding issues. In about the mid-1970s we were back, with it squared away.

We had a lot of trouble with Westinghouse on a particular design of machine. They built their first large water-cooled generator for AEP, Mitchell unit number one, and in a few months’ operation it had water leaks, and failed. We had to partially rewind it. A big expense. We rewound it and it promptly failed again, and they refused to make a new machine. A number of other companies with similar machines were involved in this over the years. It clearly was a design problem, and we ended up in another big suit, which we finally settled. They agreed to build a new generator, which then failed on the test floor. Ironically, when it all got finished, probably in the early 1980s, I think Westinghouse had a fine generator and nobody was buying generators any more. But in any event, the relationships were, shall we say, testy, but we were very careful to not argue that the problem with the turbine generator people was a problem with the transformer people, or the breaker people, or whatever.

Unfortunately, General Electric went out of the circuit breaker business pretty much by the 1970s. They refused to develop the 765kV breakers for the 765 system without us paying all the development expense. In the meantime, we could buy those circuit breakers from Cogewel, which is the French General Electric Company, and their marketing subsidiary here. We ended up buying over three hundred circuit breakers from them. We wrote them a contract for one, plus options. That turned out to be over three hundred 765, 345, and 138kV circuit breakers. We were heavily into the European market as a result. We knew there was a lot of good technology over there, and we took it wherever we could get good prices, and get good things done. We didn't necessarily buy bottom-dollar. We bought according to value and low cost. We had a lot of involvement in European manufacturers; as I said, there were Brown Boveri, ASEA, the French General Electric Company, and a number of others. This was, I think, very good, and it opened up those markets to the United States, much to the distress of the US manufacturers, and to some of our utility friends who would not buy offshore. However, we felt that we were stretching our technology. We had to go where the technology was. Sometimes it was here, sometimes it was there. So, in fact we did buy a lot of equipment, turbine generators, transformers, reactors, and circuit breakers, in particular, from European manufacturers. Of course, we had this joint research program with ASEA, the Swedish manufacturer. ASEA and Brown Boveri merged, and became ASEA-Brown Boveri, or ABB.

### Government Action & Nuclear Power

Aspray:

Can you make some remarks about the role of the government, please?

Scherer:

Well, in the 1950s and 1960s, government was not a major player. The Public Utility Company Holding Act certainly was, and that changed the structure of AEP and many other companies, but up until about 1970 the major problem you had with the commissions in your states was to arrange the date of the press conference when we reduced our rates again. That all came to the end, in roughly 1970, for a number of reasons. First, the economies of scale were starting to play out. We built bigger and bigger machines, higher and higher voltages, at a lower unit cost to turn out power, and we could reduce rates. So that became difficult. Secondly, the National Environmental Policy Act of 1969 was passed, and we started to have more discussions on the impact on the environment. Third, and probably the most significant, at least in the early years, was inflation, and the fact that the price of oil went up. The Arab oil boycott. It wasn't really remarked on very much in the press at the time, but our friendly local coal companies pretty much followed the Arabs. When the price of oil doubled, the price of coal doubled. And doubled again. Always with a decent time lag. They didn't do it quite so dramatically. Fundamentally the price of energy went up, whereupon there was a lot of customer concern and resistance, and the utility commissions all of a sudden then found that they had people coming down and complaining.

Suddenly the companies were looking for rate increases. We are a very capital-intensive business. We were allowed to earn on a rate base, and it was now getting to be much more difficult. At least in my view, in the 1970s to the beginning of the 1980s, the various state commissions weren't equipped to handle this either. They had to staff for it, and there were a lot of difficulties, arguments. Sometimes they were wrong, sometimes the companies were wrong, but the whole atmosphere in state commission regulation changed. Then, in the whole environmental area, of course, which grew out of the 1969 act, we got into the siting of transmission lines, which got you into government hearings. We got into the clean air acts, the clean water acts, and one by one government became a bigger and bigger player. This in fact made significant differences in how systems and plants, and so forth, were developed not adversely, in my view. Once again, there were a lot of growing pains. Huge mistakes on the parts of some of the regulators, huge mistakes on the parts of some of the companies, but I would say that as we went through the 1970s and 1980s it changed overnight in terms of government involvement in our business. Of course, we'd always had the IRS and these kinds of people to deal with, but it became quite a different cup of tea, and made some important differences.

And changes in the regulatory front continue of course; now integrated resource planning is the big game. It isn't really that complicated. In essence it says that you've got to look at the supply side and the demand side together in some sort of concerted and realistic way. Companies probably hadn't really looked too much at the demand side. The emphasis has always been on building more capacity, to be able to serve the load which was growing at six or seven percent a year. As a result of inflation, the turndowns in the economy, and the fact that the six or seven percent growth doesn't go on forever, a number of companies got into big difficulties. A nuclear plant without government regulation, would probably take five or six years to build. The large power plant, the fossil plant we could build in four. Well, now you're really looking at almost ten in each case, and therefore you're predicting your needs ten years out. And when the loads started to fall off because the prices went up, and it turns out it was —

Aspray:

It wasn't elastic?

Scherer:

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It did make a difference. Plants were delayed, pushed back, and, of course, if you had a lot of money invested, the carrying charges on the money were there, and you had huge cost overruns in many, many cases. Particularly in a lot of nuclear plants which also got delayed. If you were under construction after Three-Mile Island it was very difficult in the nuclear business, because the requirements kept changing. You couldn't get up on line, with big dollars going in to it. We had an example of that when, in 1968, AEP applied to the Securities Exchange Commission to acquire the Columbus and Southern Ohio Electric Company, and under the Public Utilities Holding Company Act we had to get the SEC approval. Two of the companies in Ohio, Dayton Power and Light and Cincinnati Gas and Electric opposed that mightily before the SEC. The bottom line was that it took us ten years to get the approval. We got it in 1978. Along the way, our former chairman said if we ever got it we would move to Columbus, Ohio and build a big new building, whereupon he got a lot of political support. As a result we took over Columbus and Southern in 1980, and I moved to Columbus in the beginning of 1981.

We acquired the Zimmer nuclear plant that Cincinnati Gas and Electric was managing at the time. We had a twenty-five percent share in it, through our Columbus company, and it was pretty well done until they started to run into the new quality assurance requirements of the NRC, and I think probably they didn't react quickly enough to that in construction. But even so, there would have been a difficulty. For example, if you had new requirements on welding, and the documentation of X-rays of welds, and you didn't meet those requirements, and that piece of pipe was buried under five feet of concrete, your option was to dig through five feet of concrete. Now, this is a sort of extreme example, but the bottom line was that we were clearly going to have to make some major changes to the plant. It wasn't entirely obvious, since in the early 1980s the game was still changing as to what to do. Local opposition was developing, so AEP proposed to convert the Zimmer nuclear plant, an 800MW nuclear to a 1300MW fossil plant. It turns out the steam conditions for their low pressure turbine were just right so that our 1300MW high pressure and intermediate pressure turbines could exit the steam into the existing low pressure turbine.

Because the nuclear has a much bigger heat rejection, the whole back end with the cooling tower, was built big enough for a 1300MW fossil. And, in fact, the year after I left, they went on line at the Zimmer plant, under budget, ahead of schedule, and have been very successful ever since as a coal-fired plant. They probably scrapped about half of the nuclear plant, or maybe a bit more. The problem was that the Zimmer nuclear plant in 1981 was just as good as any other nuclear plant built up to, say, 1978. The change also affected Seabrook; it affected all kinds of people. They didn't meet the new rules, and back fitting to meet them was very difficult, expensive. In our case, as I recall, we had about a billion and eight into the Zimmer plant, the three partners which were Cincinnati, Dayton, and Columbus and Southern. For roughly another billion and eight we could convert it to coal or finish it as nuclear. This said to me, "Can we finish it as a nuclear? Finish it, fix it up?" For the nuclear we had no assurance that we could put the plant on-line. We still had to go through operating license hearings against all sorts of opposition. In the fossil plant all the permits were head end. The water permits, the air permits, and so forth. In fact, we got all the permits before we started major construction. Therefore we had little risk.

Aspray:

Right.

Scherer:

That’s been one of the problems until a recent revision of the National Energy Policy Act of 1992, I guess. No private company could take the risk on nuclear any more. You could put all this money in, a couple of billion dollars, and find out that you couldn't put it on line. You had to get some assurance. It seems to me the assurance has to be that you have a set of standardized designs, the NRC approves the design, you have to prove you built it according to the design and did it properly, but then you can put it on line. Until you can do that, no private company can afford to build a nuclear plant. Some of that is improved now, or relaxed. It remains to be seen what will happen — I don't think there’s a big consensus.

The nuclear waste issue is still open. It's not open technically, but it's still open politically, for sure. The point is that the government made a big difference. If 1976 was the year one went on line, no trouble. In 1982, no dice. They could be identical designs. Government is obviously now a very big piece of anything the utility industry does. We are much closer into planning now, because of these big cost overruns, resulting from long term load projections not turning out to be correct. For better or for worse, state commissions are into it, some very poorly, some doing quite well. So it's uneven, practically all major utilities have a government affairs department, a regulatory department, all sorts of positions that didn't exist in the 1950s and 1960s. AEP, for example, has a Washington office to deal with all the problems with Congress and the regulatory agencies. Practically everybody has a regulatory attorney in Washington to deal with the Federal Energy Regulatory Commission. The “beltway bandits.” So the world is different. It doesn't mean it is worse or better, but it is different.

### CIGRE and IEEE

Aspray:

What about other players, for example the standards organizations, or CIGRE or IEEE. What role did they play?

Scherer:

Well, for example, I am quite familiar with IEEE and CIGRE. I was President of the Power Engineering Society for two years, within IEEE. I am presently President of the US National Committee of CIGRE, a member of the international executive board, administrative council, and I have been involved with CIGRE since 1976, when I was presenting papers at a biannual meeting in Paris. They have somewhat different roles. They're both technical, and in some ways you would say that they overlap, but CIGRE is a true international organization. There are fifteen study committees in different technical fields: substations systems planning. Each study committee has a limit of only one person per country.

Aspray:

Right.

Scherer:

It is a functioning organization, in business since the 1920s, meeting biannually with a major meeting in Paris every two years, which twenty-three, twenty-four hundred delegates attend. It has regional meetings it is expanding into now. It's a true international organization. It also is the seedbed for a lot of the IEC standards. While it's not a standard-developing group, it is a group whose people are the same people working on the standards, and it provides a lot of the technical basis for that. I found it very effective and very useful.

The Power Engineering Society of IEEE is a much bigger organization, twenty-five thousand members, and I think, probably thirty-five percent outside the United States. But from a real operational point of view, up until recently, it's been a North American organization. The members of the committees are from North America. The Power Engineering Society has a large international membership. I think overall IEEE has projected, maybe by the year 2000, that half of the membership will be offshore. In my term as President, I guess I was the instigator, or culprit, or whatever you want to say. We're going to hold a summer Power Meeting in 1997 in Berlin. We felt that we needed to start to break out and serve this membership with some sort of activity, not just specialized conferences, which we have done over the years. I think that is the first step. Ultimately we are going to have to provide something different for non-North American members. Basically what they get now is access to the papers, the Transactions, and of course they can come to these meetings, and in fact many have come and presented papers, but that isn't easy. It's travel; it's quite a way.

But IEEE/PES has now made a conscious effort to add a representative from each of the regions around the world to the executive board. We have fellows right now from Germany, from Mexico, and we're looking for the Pacific Rim, to start integrating. Meanwhile, CIGRE is an active international organization in business, so I see them working in parallel, with CIGRE being more effective as an international organization, and IEEE being more effective, obviously, as a major player in North America in particular and probably a little bit more intellectually based. As a working engineer, before I got into management of engineering, I found IEEE to be very useful and helpful, the papers and so forth. As I became more of an engineering manager, over a wider spectrum, I found CIGRE to be more useful. The papers seemed to be more what I needed for broad views since I had my finger in a lot of different engineering pies. It's a spectrum, obviously; it's not black and white. The real difference in CIGRE is its influence and international standing, and the fact that it is truly an international organization. Its work is done on a true international basis with it's major committees. If you look at the Power Engineering Society’s Switchgear Committee, its Transformers Committee, Substations, basically they're all North American. There may be a few corresponding members, a few exceptions to the rule. It's significant these days, because with ABB and some of these other consolidations, a lot of major equipment technology, in fact, is not in the United States, but in Europe, Japan, and elsewhere.

Aspray:

Right.

### Decline of American Power Manufacturing

Scherer:

One of the fellows from S&C Electric was telling me, just today, that from their point of view in switching equipment, CIGRE was the place to be because that's where the international effort was going, that's where the technology was at the moment. Now, that's not true in all aspects of engineering. I was involved in a National Academy of Engineering competitiveness study a few years back. W.S. White was the Chairman of AEP, was the lead author. He put a lot of time into it. The fellow worked for me wrote the base paper. I had a hand in that, and presented it out in California, pointing out where we were losing ground. We were losing ground to other countries in almost all power utility technology. A lot of it was through these mergers, with Siemens and ABB in particular. CIGRE is where that action is. It's unfortunate, but that's way the things are going. Brown Boveri and ASEA said they were in the power business, and that "The power business gets better and it gets worse, but we're in it for the long term." I think US manufacturers took the view that, "We're in the business that we make money in,” a very short term view, “and if we don't make it this year or next year we change managers, or we change whatever.” The fellows in the European countries never said that. They built transformers, they built circuit breakers. That was their business, and it's cyclical. It goes up and down, so they had some hard times and some good times. And they stayed with it.

Aspray:

Though some companies haven't done so well. AEG is an example.

Scherer:

Right. Some of them have better management than others.

Aspray:

Yes.

Scherer:

ASEA basically provided the management input into Brown Boveri. Brown Boveri, at least in my view, was a competent, careful engineering organization, but they weren't doing as well financially. ASEA was also competent, but flashier, so to speak, and much more nimble business-wise. Of course, the Chairman of ABB, Percy Barnevik is from ASEA, and you see an awful lot of Swedish names in most of the positions. So the world is changed, and in many of the areas, the manufacturing influence is not in the US. However, in some of the areas it is. For example gas turbines. General Electric is running as a major player in gas turbines. There isn't a lot of steam turbine business going around these days. In circuit breakers, though, the players are abroad. In transformers, they're both abroad and here, but ABB took over the Westinghouse group, so they have major input here, but that they co-ordinate their technology internationally. They do it all internationally these days. If you can test it cheaper in Brazil, you do it there. If you’ve got the proper people to design this widget, you do it wherever they happen to be, and you try to co-ordinate it and make sure you don't do the same thing in two different places. A fascinating world, but it's a global world, and there's no question about it all. The catchword's "global economy," definitely in an equipment sense.

Aspray:

Are there other players that we haven't talked about in the power industry?

### State of Engineering Education

Scherer:

Well, we have the educational players, of course, which is one of the things I am involved in at the moment. The colleges have provided the people, who in essence have been trained, and are the source of where the brains have come from.

Aspray:

Are they doing a good job?

Scherer:

Yes and no. The problem is that power engineering got to be thought of in most minds as an 1888 technology with Thomas Edison, and Steinmetz.

Aspray:

Yes.

Scherer:

The industry itself didn't do a very good job at explaining how we were weaving all the new technologies in. The new control centers and the technology applications of computers are probably in the forefront of American business, and we need to utilize them. But in any event, the old power options started to wither on the vine, which doesn't bother me all that much because we don't necessarily, need power options. We need well-trained electrical engineers. They have to have computer skills. They have to be conversant with statistics, be it in epidemiology, or whatever. They need a whole different set of skills. My feeling is that the colleges need to turn out good basic well-educated engineers over a broad spectrum, and not worry about too much detail in any particular specialty. In AEP we never had any trouble getting top-flight people, because they knew what we were working on. We could project that. It's hard to get top-flight people to sit in some local office just designing an extension to a 12kV line to feed a new development. They may be very good people, more interested in ultimate management, or whatever, but in top-flight engineering that's not a challenge.

Aspray:

Sure.

Scherer:

Presently in the Power Engineering Education Foundation we're offering a combination of scholarships and forgivable loans. We introduced one of the recipients today. For somebody who is willing to take a Ph.D. in engineering and teach in the field at the university level, for every year he or she teaches we forgive one year of the loan. So, for example, if someone had awards for four years, which is basically $100,000, we give half back in scholarship. He or she could have the$50,000 loan forgiven by working for four or five years as a college professor.

Aspray:

It's a nice deal.

Scherer:

We have five students in that program at the moment. My job is to help raise the money to keep it going. I don't believe we need "power engineers," but we need high-quality electrical engineers, and we need high-quality computer scientists, we need combinations of the two. We don't have to call them power engineering majors. There's some specific things you have to know as a power engineer, depending on where you are. You have to be able to deal with stability, transients, or whatever. Then again, it depends where you're working. We can give them a lot of that training in the industry. General Electric Company has had a power systems engineering course, which is really at a graduate level, for years. There's also Power Technologies, Inc. Many of the universities have courses you can send people to, so if it's a particular specialty we can train them ourselves. I like to make sure of their math, that they know their basics, that they are computer literate, that sort of thing. I think the schools have done well in that respect, even though half the industry will moan about how terrible it is that you can’t get a guy with a power engineering option any more. I don't think I’ve heard of many new undergraduate power engineering options in quite a while. One school that has done very well is Rensselaer Polytechnic Institute. Actually, I was on its advisory board for a while. At the master's degree level they have a good program in power engineering, and those graduates can move right into sophisticated engineering in electric utilities. But once again, it doesn’t have to be utilities doing that kind of work. It could be a consulting firm. RPI has a good program. Excellent graduates. They're very selective in who they pick to start with. And there are others around too, that's for sure.

### Managing Engineers

Aspray:

Do you want to make some comments about engineering management? What are the kinds of problems as a senior manager you have to face? The most difficult challenges, the kind of things you do.

Scherer:

Well, probably the most significant challenge is to pick the engineering managers who you are going to have working for you. We could interview engineers to hire and people would say, "You know, you shouldn't only hire the top ten percent in the class. We need some work-a-day people too."

I said, "I make enough mistakes in interviewing the top ten percent that we have enough work-a-days." It's difficult in that respect, but if you have them working for you, you get obviously a much better feel for people. The real key is to find people who, in any particular specialty, whatever it happens to be, are both technically competent and good managers. There are some that are one or the other and some that are both. If you get both you are really ahead of the game. My philosophy generally was to shift the organization around to the talents of the people. I didn't worry too much about keeping the boxes or the titles filled in a particular way. If I had a brilliant engineer who couldn't manage his way out of a paper box, I wanted to find a place where I could recognize him, pay him, give him a challenge, and not ever have to manage. I remember one fellow who was a brilliant engineer, worked with him for years, he had an international reputation, and he came in one day and said, "Hal, I'm a staff engineer. I'm making a good salary but I'm not recognized here as a fellow section manager, a division manager."

"Well," I said, "I'll tell you what I dealt with yesterday." I said, "It turned out we had a fellow selling marijuana, in New York, down in the electrical generation section. We had another fellow who had medical problems after some adventures with a woman, which got to be a big thing. We had another fellow who was cheating us on expense accounts. I had to deal with that yesterday." I said, "Do you want to deal with that kind of thing?"

He said, "Well, when you're managing large groups of people, that's what you get into."

I said, "Look what you're doing." And he went away happy, the point being that here was a brilliant individual who was in exactly the right job. The problem that we've had over the years is that it always seems as if the glory went to the managers. In AEP I think they are maybe backsliding a bit these days, although they have got a new CEO and he may turn it around. We had a pretty decent parallel path by which they could get recognized, and I was concerned about finding more ways of recognizing people. So that they're IBM fellows, or things like that.

Aspray:

I see.

Scherer:

It's not the position, money, or whatever. It's recognition. We did reasonably well, I think, on that, which was one of the strengths we had in AEP. We had some really top-flight people who were not managers, and they didn't really want to be managers either. They wanted to do what they were doing. That, I think, was probably the major challenge as a manager. I always felt that what we called the section managers, which would be from ten to twenty-five people, needed to be technically competent and recognized by the people who worked for them as technically competent and close to the technology. At the next step up you start to get into more management. Some of the statistics say once they change your title to supervisor you use fifteen percent of your time just being a supervisor. All of a sudden you're on new distribution lists, going to different meetings, getting different this or that, and that's fifteen percent less time you have to work. But in any event, in my career I have always tried to stay very close to the technology, and I worked hard to stay in.

Obviously, I couldn't be involved in detail in all these things. It took a lot of time, a lot of effort, to stay up with that sort of thing, and I think that is the key in engineering management. You have to be respected by the people that work for you as competent in the technology. They recognized that the senior vice president hasn't got all of the details somebody else who is working with him would. But they need to know that you are technically competent to provide that kind of leadership in a technical organization. With utility organizations that don't do advanced technology work, it's not quite the same thing. There you've got to be more the good manager, a people person. All those things are necessary in any organization.

Aspray:

Sure.

Scherer:

We had at one time, I think, about nine Ph.D.s on our staff, and we had work at a level important for them to do. Through 1950s and 1960s, money was not a problem. Utilities were earning well, everything was expanding. Then a number of engineers had to learn to start to build and design by a budget. Not that we didn't always look at economics very carefully, but I remember that with one of the 765kV lines we built, my construction mate was telling me, "They're slowing me down this year. I could build this thing cheaper if we just went ahead and built it."

I said, "The problem is that we won't have enough capital to put in this year. We have to slow the construction. I know that it would be more effective to build it all in one piece, one go." It was difficult to get many of the engineers to understand that the world had changed, and that when you have limits on your financing capability, even in your home, you can't buy everything you want. And we had to build by a budget. Not that we didn't always look at the economics, but this now was maybe uneconomic. If you don't have the money in the checking account you can't buy the new car, even if it might be cheaper to buy it this year than fix the old one over the next four years. You know what you want to do, but if you don't have the money in the checking account you can't do it.

Aspray:

Right.

Scherer:

So that was probably one of the major changes, the 1970 landmark change with economies of scale, inflation, and energy prices going up. That takes different skills in engineers too. They have to understand some of that a little better. They always understood present worth economics, and their present values, that sort of thing. But now they had to understand that other considerations may mean you are not doing a thing in the optimal way, but you have no choice. That was a challenge to get people turned around to do that and to adjust your staff. We adjusted the staff downward quite a bit. We moved from New York to Columbus with about sixty percent of the people, choosing not to move. We offered to have them all move, but it was fortunate in some respects, because the economy slowed down, the system capacity was there and we didn't need that many people, so we didn't build it back up. I kept the staffing at a lower level, which turned out to be a smart thing to do. We had a big restructuring, and looked at all of AEP in 1987 and 1988. It made almost no difference in electrical engineering because I had already done it a few years before. But, in any event, those are the kind of challenges you face as a manager.

### Commonwealth Electric Company

Scherer:

Aspray:

It's still painful.

Scherer:

Painful, sure.

Aspray:

What made it attractive to you to make this move?

Scherer:

### Retirement and Service

Aspray:

What are you doing now?

Scherer:

Right now I'm theoretically retired. My wife says the difference is that I go upstairs to work in the office instead of getting in the car. I'm President of the US National Committee of CIGRE, which keeps me quite active with a couple of trips to Europe, or around the world each year. It includes running a substantial meeting here at this conference. I'm President of the EEI Power Engineering Education Foundation, which basically is fund-raising. Beyond that, I'm doing a variety of consulting work. We teamed on an RPI proposal for EEI for a course on system operations and planning geared for contracting people, legal people, or whatever. Then don't really know how these power systems work. A team has prepared a Middle-East proposal. I've done some work for the Electrical Power Research Institute, and on the Engineering Review Board of the Bonneville Power Administration. I've done some work on Ford Power Technologies, Inc. I’ve got a variety of things going, and things in the hopper. I’ve signed up for what I guess is like of counsel in a legal firm, with a couple of management consulting firms, and so far I've had to buy a new computer to keep ahead of this.

Aspray:

Right.

Scherer:

It's been interesting, and I plan to keep on being active in all kinds of things.

Aspray:

Are there other things you want to talk about?

Scherer:

Well, I guess that's pretty much the story of my career. I've always felt that people should be involved in both their communities their professions. I've tried to do both. I have held public office. I was on the city council in Plainfield, New Jersey, a city of fifty thousand people. That's like a full-time job at night, but it also gives you a totally different perspective on communities, how they work. It also gives you the perspective of how a few people can make a big difference if they're willing to take the effort. If two or three people come down to a city council meeting and stand up at the rail to talk about a problem or present a complaint, so few people ever come, they get attention beyond proportion. If a group, for example, wants to analyze the city budget and spend some time at it, they can make a big impact. They don't have to be very many people. It's always impressed me that you can make a big difference, if you're willing to put in the time and go do it. Likewise, in my profession, I've always been involved in IEEE, and involved in CIGRE now. I think professional organizations are vital to maintaining one’s knowledge of where the action is. It isn't all going on in your backyard. It’s not all going on in the United States either. You can be much more effective if you participate. You get a lot out of it too. I encouraged all the people who worked for me to participate in IEEE and in any engineering society, whatever society it was. It is not only good for them, but it's good for the companies, it's good for the organization, and it does share knowledge. It doesn't have to be reinvented. That's sort of my general comment. I like to be active and people should be active. Not enough of them are.

Aspray:

Well, very good. Thank you.