The electric utility industry has been mired in a period of transition, with executives wondering whether their world would be regulated or deregulated. For the most part, utility forays into merchant generation, retail marketing, energy services, telecom and the like have produced miserable results. Similarly, merger attempts have foundered as merging utilities struggled with conflicting cultures and diverse operating practices.
Today, investors are rewarding utilities that decided to stay close to their regulated roots. At the same time, Wall Street is punishing the stock of utilities with under-performing for-profit subsidiaries. Similarly, bond-rating companies now take a dim view of mergers, due to the poor track record of merged companies in the electric utility industry. Now, merger announcements cause bond-rating companies to evaluate the pursuing company for possible downgrade, because merged companies are often inept in reducing expenses to cover purchase premiums.
So, where does that leave us as an industry? Utility executives have decided to sell off unregulated assets. They are using the cash to buy down debt and invest in infrastructure. Investors are newly enamored with “old style” utilities, because of their historically high dividends and steady sales growth of electricity, even if the growth doesn't reach double-digit levels.
The basic business of T&D has not changed. All utilities must plan, design, engineer, construct, operate and maintain their networks. However, utilities are under extreme pressure to perform these functions efficiently and cost effectively. Utilities are scrambling to put together the tools, processes and training required to meet and exceed customer expectations.
T&D World convened an executive-level conference “Reclaiming the Distribution Business Unit,” held in Orlando, Oct. 4-6, 2004, to address key issues facing power delivery. In the following pages, you will read where these executives are taking their utilities as they respond to pressures from customers, special interest groups, Wall Street and state regulators.
Building a Utility Team
Utilities are realizing that success will come only with an empowered and energized workforce. No executive can have sufficient vision and sufficient presence to drive his or her utility to success. In one of the greatest ongoing empowerment initiatives in the United States, Mike Chesser, CEO of Great Plains Energy, describes how his team is developing a more inclusive planning process (involving employees, customers, the public, regulators, elected officials and suppliers) to build a vision for the future and instill processes to meet that future. Chesser believes a “winning culture” is key. With an engaged and committed team, the other pieces will fall into place.
Putting Processes Into Place
Historically, utilities focused on functions only to find that handoffs between functions were adding considerable costs without providing value. In an effort to go “back to the future,” utilities are revisiting their processes and providing individuals who perform the work to have more say in how work is handled. Utilities are now developing strategies to balance customer loyalty, workplace excellence and process quality against the need for profitable growth.
Building a Customer Focus
Leading utilities in the United States are working to develop a company mind-set to meet customer needs. Too many utilities believe that if they hit reliability targets, then they've met their customers' needs. Innovative utilities have a more holistic look, considering image, price and value, power quality and reliability, customer service, and billing and payment as key indicators of customer satisfaction.
Keeping the Lights On
First and foremost, running a T&D utility is about keeping the lights on. Increasingly, this requires creativity and innovation. Utilities increasingly leverage technology as they look to increase ratings in reliability surveys.
When storms hit, the dynamic at a utility changes. Getting the lights back on requires much planning and upfront work. Utilities now look to manage every aspect of outage recovery, from managing public perceptions to connecting with other emergency responders to working the storm plan. Today, utilities also realize their success depends on the quality of their partner relationships. Tomorrow's power-delivery organization must develop successful partnerships requiring both parties to act on the premise that “vendor alliances are about value, not price,” a statement that is easy to say, but a concept that is often difficult to maintain.
Let's Not Blow This Chance
As our executives look to reclaim the regulated transmission and distribution business, it is critical that we improve the “shopping experience” to our customers, deliver what we say we will deliver, and hold down costs. Today, we have the opportunity to rebuild our T&D businesses. Let's get it right. Otherwise, we will find ourselves right back where we were, chasing ever-higher and riskier returns in the deregulated marketplace — and we already know where that strategy leads.
Building an Empowered Utility Culture to Meet the Future
Mike Chesser, CEO of Great Plains Energy, believes a winning culture will be the key enabler to executing the strategic intent.
Great Plains Energy (GPE) is anticipating a utility business future with significant change. GPE is positioning itself for these challenges starting with the following foundations: a top-tier fleet of regulated power plants; a reliable and efficient delivery system; an industry-leading competitive retail supplier; high customer-satisfaction levels and solid financial performance. However, even with these solid foundations, GPE cannot effectively face the future with the culture of yesterday.
Distribution systems must change. Better technology applications will be implemented to better respond to customer needs. Existing one-way radial systems will be transformed into two-way networked systems. Ultimately, customers will serve as both consumers and suppliers of electricity through distributed generation and various demand-response programs.
At GPE, a team-based approach to development of strategic intent was organized to analyze the industry environment and various business segment opportunities. These teams involved more than just a few executives and managers. Every employee was involved in a series of seven seminars that included community leaders, regulators and industry experts. The structure of the seminars promoted different views. Cultural issues were as prominent as technical and business topics.
The strategic intent that came from the seminars is to put GPE ahead of marketplace issues by increasing competition, increasing regulation and changing technologies. This approach focuses on the customer as the prime driver of the business strategy, as opposed to past strategies centered on infrastructure and delivery with customers at the endpoint.
The strategic intent is stated, “To demonstrate leadership in supplying and delivering electricity and energy solutions to meet the needs of GPE customers.” To achieve the objectives from the seven strategic intent seminars, a strong corporate culture must be built. A “winning culture” will be the key enabler for executing the strategic intent. Five key aspects of the engaged workforce include inspired leadership, disciplined performance management, engaged employees, accountability and loyalty.
Execution of this plan will enable GPE to:
Deliver affordable, reliable electricity.
Create economic and environmental vitality.
Generate strong financial returns.
Allow personal and professional employee growth.
GPE has set out to reinvent what a regulated utility can be and is at the start of a great journey.
Listen to the Customer
During one of the seminars, an intervener presented a petition with more than 2000 signatures against the proposed location of a new coal-fired plant. In the ensuing dialog, the reduced emissions signature of the new technology was explained, leading to the realization that the new plant would be far better than existing plants. The intervener asked if existing plants could use the newer technology. KCP&L has plans to update equipment on existing plants, and realized that with the new plant and retrofitting existing plants the net emissions would decrease. The dialog allowed KCP&L to realize that the entire win-win story could turn the intervener into an advocate.
Five Key Aspects of an Engaged Workforce
- Inspired leadership
Individuals at all levels guide with a passionate style that encourages others to succeed.
- Disciplined performance management
Employees give their best effort, understand what needs to be done to accomplish a goal and regularly deliver “Tier I” performance.
- Engaged employees
Employees at Great Plains Energy takes pride in their work, know their contributions are vital to the company and strive for a healthy work-life balance.
Each employee adopts high standards for safety and performance, accepts responsibility for results, and lives our core values of integrity and excellence.
Employees and Great Plains Energy commit to an environment of mutual trust and respect that encourages employee growth and strengthens relationships with customers, community and shareholders.
Putting the Focus Back on Reliability
Seth Hulkhower, COO of LIPA, details customer service with a reliability focus at a tactical level.
In 1998, the state of New York replaced the former Long Island Lighting Co. with the Long Island Power Authority (LIPA). The then governor's instruction was simply, “Keep the lights on.” During the intervening years, LIPA has learned five things about improving reliability.
First, it is crucial to know how to manage these outsourcing agreements. The contracts must be well structured and provide appropriate incentives to offer the best ratepayer scenario. Managing the service agreements with LIPA's organizational structure is accomplished by determining how many functions need to be selectively unbundled to get the lowest combined ratepayer cost and highest reliability.
Next, a utility must know what satisfies its customer. A J.D. Power Associates/Navigant Consulting residential customer survey in 2000 revealed the following satisfaction components:
|Price & Value||26%|
|PQ & Reliability||20%|
|Billing & Payment||9%|
It is important to realize that a significant focus on reliability alone ignores other major influencers of customer perception. LIPA provides an extensive menu of programs to improve customer satisfaction. Some of the T&D reliability efforts include targeting the worst-performing circuits, and actively handling vegetation management and storm response programs.
Third, know what is failing and why. Perform root-cause analyses to understand what is driving outages (splices, lightning and trees). Also, include a cost analysis to ensure your remediation programs produce the most bang for the buck. The final part of this process is to internally benchmark against reliability indices to gauge progress.
Utilities must know how to manage storm response performance. Continuous planning and optimization of storm response is necessary. Persistent drills with various civil emergency management organizations hone the utility response. Drills also heighten public perception that readiness is a core value. Storm-specific tree trimming and removal programs are a critical part of this reliability process.
Finally, you must know what you are getting for your budget dollars. LIPA follows a rigorous prioritization model to screen all capital expenditures. This is done for both capital and O&M projects. Using a continuous process-improvement cycle, budget dollars are spent for real benefit. For example, spending to achieve a first quartile ranking in a desired reliability index will be quite a bit more substantial than the spending level required to maintain that reliability level.
Building a Business Platform That Works
Eddie Padilla, senior vice president of customer delivery service at PNM, believes high performance comes from a culture of continuous improvement through process quality.
Public Service of New Mexico (PNM) focuses on process improvement and empowerment of employees to make improvement happen. Since 1999, PNM has been exceeding customer expectations with superb operational performance.
There have been many barriers and traps along the path PNM has taken to implement and revamp its processes. It has been hard to move from a traditional command and control environment to an open, cooperative work place that is focused on improvement. PNM believes the path to excellence can only be accomplished by a continuously improving its culture, which means discarding bureaucracy and organizational silos.
PNM has developed a framework for value creation, where it maps high-level objectives with key performance and support metrics.
Ultimately, all employees tie into the high-level objectives, which for 2005 are:
- Customer loyalty
- Workplace excellence
- Environmental sustainability
- Shareholder value
- Community leadership.
To make high performance possible, PNM fosters a culture of continuous improvement through process quality. Employees are engaged in process design and implementation. The corporate supporting infrastructure ties resource allocation to balanced and prioritized initiatives.
The elevation of process quality leads to an emphasis on performance metrics on each of the high-level objectives. PNM is looking for quantifiable measures and results to show customers improvement.
Another example of customer focus is the consideration of environmental sustainability to the 2005 high-level objectives. This is a newly articulated focus item for PNM, which minimizes operational and supplier waste. Customer and community response to this effort has been very positive.
First and foremost, PNM now checks with its customers to measure how it is performing. In addition, processes are reviewed to streamline functions and deliver value more efficiently. PNM discovered in some early process examination cases how many people actually touched a single piece of paper before the desired function was realized. By documenting the process, PNM realized it is as important to figure out what not to do as it is to figure out what to do. PNM's new mantra: If anything is not adding value, stop doing it. The reward has been better-designed processes that drive success.
Tightening Your Belt Without Cutting Off Your Circulation
Charlie Cole, senior vice president of customer operations at We Energies, believes utilities must focus investments impacting customer satisfaction and employee safety.
We Energies goals are to improve customer satisfaction measures, strengthen safety performance and maintain high reliability levels. However, balancing the collective need of the power infrastructure is a challenge. The need to invest US$2.5 billion in generation affects both how and what we can do in transmission and distribution. A sharp priority is placed on those areas that yield the greatest impact: reliability, customer satisfaction and employee safety.
Obviously, reliability improvements affect customer satisfaction. We Energies' efforts to improve reliability are two-pronged: to implement a cable-testing program and to improve the reliability duration indices.
We Energies has had underground distribution cable in service for 40 years, which now totals 18,000 circuit miles. System-voltage upgrades take care of some cable replacements, but random outages of older cables increase replacement costs because they are done on an emergency basis.
Proactive systematic use of partial discharge testing (PDT) has been successful in identifying cables, terminations and splices that are weak and in need of replacement. Using PDT on new installations also has improved the workmanship quality and has identified possible defects that could lead to premature failures. This cable testing improves reliability and customer satisfaction by providing timely maintenance of impending outage situations.
Previously, We Energies used SAIDI (System Average Interruption Duration Index) for reliability measurement. In national benchmarking surveys, top quartile results had been realized in both SAIDI and SAIFI (System Average Interruption Frequency Index), but in CAIDI (Customer Average Interruption Duration Index), We Energies was ranked third or as low as forth. By focusing on the customer index, the duration of the minutes the average customer experiences can be examined. Seeing what the customer sees is more important than what the utility sees from a system perspective.
To address this index required a combined focus of both people and process improvement. New troubleshooter positions were filled from line crews. Now in addition to clear and make-safe work, troubleshooters can perform some repairs. Rescheduling crew start times and implementing an automated callout system have also improved crew response times. CAIDI minutes are on target for 100 this year, down from a three-year average of 129. Major storm CAIDI is down almost 90.
Engaging the workforce in the “what, why and how” of the new goals was the first step in improving reliability. Everyone was focused on restoring power as quickly as possible. Pay incentives were linked to performance. Constant communication highlighted by weekly conference calls kept this priority in front of the entire workforce.
“We Care Calls” were used to better communicate with customers after outages. This program was expanded to follow-up on service installations. The concerted effort to reach out to customers and demonstrate that We Energies cares has had a direct impact on satisfaction surveys.
In addition to the people and process improvements, there are new technology implementations. New faulted-circuit indicators and mobile data systems are being used to speed outage location. We Energies participates in a consortium called “The Distribution Vision 2010” (DV2010), which combines advanced communication, technology and distribution automation to enable major improvements in distribution system reliability. DV2010 already is delivering on these goals at We Energies.
Finally, safety performance is monitored and accountability established. The goal is to be in the top quartile of safety performance by 2007. An important aspect of this program is an effort to develop a best-in-industry line worker program. This program includes the application of ergonomics and appropriate tools to preserve, protect and extend linemen careers.
Take a Close Look at Your Business Case
Miles Davis, vice president of business systems and services at OG&E, believes customers do not care about all of the activities that happen inside a company. They just care about the value delivered to them.
Enormous process change is underway at Oklahoma Gas & Electric (OG&E). The utility realized that after years of restructuring, the company had taken traditional process change as far as it could. The executives at OG&E came to the conclusion that incremental change would not provide any significant impact. The utility decided to make a fundamental change in how they undertook work. Mike Davis, vice president of business systems and services at OG&E, reports that OG&E started with a corporate vision as a regional utility to be recognized for strong financial performance and operational excellence. That vision was then translated into a mission that would become the focal point for everything we did and how we scored on how well we did. OG&E was committed to building a utility based on safe, competitive, customer-focused processes that provide significant growth that would allow the utility to remain independent.
Simply stated, good performance requires good process. With a big emphasis on process management, nothing can be left to chance.
The formal definition of a process is a complete end-to-end set of activities that together create value for a customer. It is the challenge of process definition and execution to insure everything that happens to affect delivery is optimized.
We started with the customer. From a customer perspective, there are six processes: serve new customers, restore customer power, install and maintain lights, maintain system integrity, expand and upgrade system, and maintain customer accounts.
Each of these processes has been fully analyzed from a functional organization perspective and then redesigned with appropriate task compression for process implementation.
For example, the existing process of restoring customer power had a complicated process block diagram with 19 boxes and 26 interactions mapping the work flow. OG&E is working to the situation to reduce the process down to 15 boxes and 19 interactions.
The utility developed a balanced scorecard strategy map that has four primary components: employees, processes, customers and financials. This strategy map is used to analyze the cause-and-effect relationships on the four scorecard components. These then map into corporatewide measures of success.
The three components involved in executing the strategy are people, processes and technology. Utilities are generally comfortable with technology implementation, and OG&E believes its people are top of class. The part of the triangle that has become the utility's focus is the process piece. This approach has had a dramatic impact on corporate culture and organization.
There are many metrics that measure performance in any given process. In most cases, data needs to be turned into relevant information. OG&E is tying employee performance to process outcomes. This requires a connection from the mission to the strategy (with appropriate performance measures) to process (with a performance measure) to “Front Line Measures”. This companywide incentive plan is called “TeamShare.”
Finally, it takes more than just a plan to insure that your business case is successfully executed. There can be no success without a clear vision of purpose and well-executed processes. Ultimately, every employee must know what is expected and how he will be measured and rewarded.
OG&E is learning the powerful impact when employees take ownership of the business case.
Building a Distribution Business that Delivers
Bill Herdegen, vice president of power delivery for KCP&L, shares why vendor alliances are about value, not price.
Kansas City Power & Light (KCP&L) used to have “relationships” with a lot of suppliers. Whichever supplier was the low price bidder for the specific procurement got a “relationship.” Because the utility-vendor relationship was based on price, KCP&L assumed all risk and efficiency concerns didn't really work into the equation. In the old utility environment, because return on investment and rates were adjustable, the process worked well enough. Then, things changed in the 1980s and 1990s. Stakeholder expectations changed and so did regulation. Utilities started appraising various parts of the business model to see where reinvention could impact bottom line. As a result, KCPL launched a comprehensive initiative to improve supply-chain efficiency based on utility-vendor partnerships, which proved to be productive.
The supply-chain efforts led to a greater appreciation of the value of suppliers and their services. Beyond the goods and hardware they provide, a great amount of benefit can be gained by engaging their service to handle the end-to-end supply-chain process. By forming alliances with major vendor partners, the risks, costs and rewards involved in the procurement process can be shared. Everyone is then motivated to seek efficiencies and cost reductions. There is an overall commitment to mutual benefit. For instance, the discounts caused by prompt payment accrue to the alliance, not just one party.
Vendor alliances greatly simplify corporate life. Instead of dealing with literally hundreds of vendors annually, the number can be reduced an order of magnitude, sometimes even to a single digit. When necessary, vendor employees can be located at your site and blend seamlessly with company employees.
The annual meetings with vendor partners are focused on how the alliances can jointly improve the value proposition of the procurement processes. The meetings are based on mutual benefit and not on how much the products are going to cost next year. Improvement is sought in each component of the entire supply-chain process. Alliance implementation focuses on relationships based on earned trust, cross-functional team involvement, information sharing and open communications. Trust and accountability are the keys to these relationships.
Presently, seven supplier partners provide 85% of KCP&L's procurement.
Mike Hervey, executive director of T&D at LIPA, discusses the utility's outage-management recovery process.
What is outage recovery? Conceptually, it's simply getting the lights back on. However, in practice. it is a little more complicated. At the Long Island Power Authority (LIPA), the recovery process includes:
Getting the lights back on.
Developing relationships and agreements ahead of time.
Managing public perception during events.
Addressing government and emergency responder needs.
Providing accurate outage information to customers.
Although these process steps are important, the underlying drills and practices to be well prepared cannot be over emphasized. LIPA has hurricane drills, heat storm management scenario drills and blackout drills. In each of these activities, the public response organizations and LIPA are engaged to best emulate a recovery situation. Each response is as thorough as possible, and the press is involved to add a degree of accountability. Thus, public perceptions are managed well in advance of the actual outage events. This process prepares LIPA from a tactical standpoint, and also establishes stakeholder relationships and expectations.
Once engaged in an outage event, the drill practice makes response almost automatic. The drills and the prior relationship building facilitate the needed communications during the event. Frequent and accurate communications are a vital part of outage management. It is important to not speculate on damage impact without solid information or to communicate overly optimistic restoration times. However, it is important to be proactive in all communication channels available, including emergency responders, the media and the business community.
Even though effective communication is a top priority, it doesn't supersede the importance of the fieldwork in outage recovery. Outage recovery is almost like a battle in a military sense. You cannot go into battle unprepared, untrained or undrilled. However, first contact with the “enemy” usually presents enough surprises that the initial battle plan is made obsolete. Nevertheless, it is the planning, training and drilling that will allow your forces to successfully adapt and succeed in rapid power restoration.
Utility Innovation — Myth or Reality
Chris Hickman, executive director of engineering and technology at PNM, explains why a utility's workforce is the key to innovation.
Business success is all about process, people and technology. However, underneath it all, the company must have patience and perseverance, and be dedicated to the vision of “making it better.”
Technology is not an end-all magic bullet. Within the utility environment, we rarely develop technology, but we do challenge our workforce to be creative and innovative by applying the right technology to the right problem.
At PNM, there are a few things of which we are most proud:
Since 1985, PNM rates have decreased 45% (inflation adjusted).
Customers have the second-lowest annual electric bills in the nation.
PNM was rated No. 1 in EEI's 2001 reliability survey.
PNM has been in the Top 10 of this survey for the last five years.
PNM's customer service and call center was rated No. 1, the best utility provider, in 2003
These results are due to cultivating, reinforcing and rewarding a culture of creativity and innovation.
And, in classic management speak, PNM has been doing more with less. From 1992 to 2000, investor-owned utility operations and maintenance spending has increased by about 45%. During the same period, employment has dropped almost 60%. These are not sustainable numbers, but regardless of management pressures, PNM must maintain a strong focus on its culture.
Around the utility workplace, almost everyone has some experience with the modus operandi embodied in the familiar statement, “Son, I've never heard of anyone getting fired for doing it the same way!” The utility industry is almost a cartoon of stodginess, command-and-control and being almost good enough. Many times, at the final phase of a project the innocent are executed. These are exaggerations. Right? It does not have to be that way.
Utilities must have a clear vision and corporate framework. The workforce needs to know where it is going and why. Innovation and creativity with no bounds is as bad as has having none.
On the motivational end of the process: Are successes celebrated? Are individuals, teams and corporate contributors rewarded in a meaningful way? Does the culture promote or oppress high achievers who seek change?
The bottom line is that people are any organization's greatest asset. Does that truth permeate your company? Remember, good people don't seek good jobs; they seek good work environments, cultures and companies.
PNM is making real progress and results have been encouraging. It's also encouraging to hear about similar efforts at participating Distribution Alliance utilities (KCP&L, OG&E, We Energies and others). At these utilities, a line in the sand has been drawn and each utility is standing firm, dedicated to providing a winning culture for its employees. These efforts will translate to business successes.
Technology Trends in Americal
- Technology “creation” rates are increasing exponentially.
- Technology adoption rates are declining in the United States because of data, information and technology overload.
- Technology “fear” is at an all-time high, resulting in a culture that encourages us to “do nothing.”
- We need to change to a culture of “application.”
Call Center Innovations Key to Customer Experience
Nancy Moore, vice president of customer care, believes we need committed, enthusiastic individuals if we are to positively impact the customer experience.
Call centers are the lifeblood of a utility and often the first contact between customers and the local utility. With the advent of customer satisfaction surveys, utility executives increasingly focus on the impact of their call center operations on the customer experience. In the past, utilities consolidated call centers, often negatively impacting morale. Yet, with proper focus and attention to the individuals working the centers, utilities are looking to making their call centers showcase operations with operators looking forward to going to work.
Nancy Moore, vice president of customer care at Kansas City Power & Light (KCP&L), shares a little history of how this utility turned its call center around.
|% Calls Answered in 60 sec||50||85|
|% Calls Abandoned||13.0||1.2|
|Avg. Wait Time (sec)||147||41|
|Avg. Handle Time (sec)||350||219|
The KCP&L Call Care Center started in 2002 with rather poor-performance metrics and low morale to match. KCP&L recognized that the call center representatives showed little urgency or accountability. There was also little motivation or recognition for top performers. In 2002, KCP&L brought a renewed executive focus on the Call Care Center, focusing on employees, training and results. This focus had a dramatic impact on the Call Care Center. This frontline customer impact was recognized and a new management team was charged with reinvention.
KCP&L established a team environment, emphasizing training. Feedback became routine with personal growth plans implemented. Accountability, productivity and accuracy became the watchwords. Implementation of some new technology helped. What really turned the Call Care Center around was the execution of employee-team generated processes. Prior performance was negatively impacted by insufficient process, training, employee feedback and employee recognition.
The results in the table speak for themselves. What is silent behind the numbers is the power of clear goals and the empowerment to reach them.
Distribution Grid of the Future
Power distribution systems were built to meet the needs of a simpler era. Now we are have the demands of a digital economy and more sophisticated customers. But, the same old distribution system exists. The challenge is to get a smarter system by expanding what exists.
Past technology and applications are reaching the limits of reliability. Customers expect greater reliability, yet the typical utility waits for customers to call before it knows about an outage situation. This reactive posture is dictated by insufficient available information on system status and fault location. In 2001, We Energies determined to foster a collaboration of key stakeholders to address these and other, distribution issues.
Initial DV2010 initiative concentrated on the statistic that 83% of customer reliability comes from the distribution primary voltage system. Bob Huber, senior manager of R&D engineering at We Energies, led the DV2010 effort to improve reliability, with the goal to reduce sustained outages, momentary outages and power-quality disturbances. The initiative involved taking intelligent line partitioning devices and installing them on radial feeders to bridge a path between substations.
Each section of the bridging feeder is called a Premium Operating Districts (POD). The group of customers in a POD is served between two or more automated interrupting devices with sufficient capacity from either supply direction. What results is a virtual primary distribution network that greatly improves reliability versus the radial feeder.
Selective deployment of this DV2010 developed technology provides the utility and customer with cost-effective reliability improvement options.
Vendor partner developed technologies make possible the required dual directional recloser and supporting communications to implement this system. A wide-area controller is in development that will support a three-station bridging scheme.
The birth of DV2010 in 2001 brought together:
- AEP EmTech, LLC
- Aliant Energy Corp.
- OG&E Electric Services
- Public Service Electric and Gas
- Wisconsin Energy Corp.
The following vendor partners also have participated in DV2010:
- NovaTech, LLC
- SPL Worldgroup
- Cooper Power Systems.
The consortium objectives are to define universal needs and support cooperative development with necessary R&D funding. A DV2010 current roadmap of desired technologies includes advanced outage restoration, dynamic system optimization, adaptive protection systems and super conducting distribution cables.
Overall, DV2010 projects move electric distribution systems from their existing reactive status to the proactive systems of the future. The collaboration at the application level is providing distribution solutions and innovation that will become standard in the next decade.
Vegetation Management in the Cross Hairs
Mark Schuler, director, resource management of KCP&L, believes that trimming more trees is not the answer. Instead, he thinks trimming the right trees is the key.
Vegetation management (VM) budgets used to be a funding source to be cut during lean times. Usually, the repercussions of VM deferrals would not be felt until the next vice president's tenure. Thus, the VM budget could be “redirected” to where the money was “really needed.” The Northeast Blackout in August 2003 and the subsequent FERC order in April 2004 have changed this perspective.
Now VM practices, standards, inspection schedules and findings must be reported to the appropriate authorities. Likewise, any factors causing VM delays must be described. This is in addition to existing regulator expectations that reliability indices be maintained or improved.
The path to VM is not a simple one. Utilities get much help and advice that influence VM activities. When 50 utilities were asked how much significant influence the following list exerted on VM, the responses were:
|State Department of Transportation||69%|
|Local Tree Ordinances||58%|
|Other Local Ordinances||46%|
|Federal Agencies (USFS/BLM)||44%|
|NESC Rule 218||42%|
|Other State Laws||38%|
|Urban Wildland Code||18%|
|Uniform Fire Code||16%|
|Other Local Fire Codes||12%|
So, while utilities have an obligation to manage vegetation, they must also be prudent and manage stakeholder interests.
KCP&L previously sole sourced VM. Contracts were based on cost per tree incentives. Quite a few trees were trimmed, but they weren't always the right trees and there wasn't much connection to reliability efforts.
Today, the VM industry seems to be consolidating, but there are still a number of organizations in play. The utility is presented with positives and negatives in this situation. The constant is that the contract basis of the past, per tree incentives, offers considerable room for improvement.
As in other process designs, a program is needed that proactively sets forth a strategy and then follows with metrics, expectations and accountabilities. At a minimum, past VM experience should help define solutions. Additionally, working alliances with other regional utilities should be formed to leverage experience and procurement power.
The heart of KCP&L's VM strategy is to implement a highly prescriptive approach to work selection. Trimming more trees is not the answer. Trimming the right tree is key. Thus, work assignments based on understanding tree-related interruption risk is fundamental. Implementation of this strategy has improved tree-related reliability and reduced overall VM costs. As a result, total outage minutes for customers has been reduced by two-thirds.
Mid-size Utility Consortium
This article is a compilation of material presented at the “Reclaiming the Distribution Business Unit” conference hosted by T&D World in Orlando, Florida, U.S., October 4-6, 2004. The majority of the utilities participating in this event have banded together to form a virtual utility consortium to jointly address issues common to power delivery. Topics addressed included vegetation management, standardized substation design, call center innovations and joint purchasing. Participating utilities realize that by teaming together to address common problems, utilities gain scale and the ability to tackle multiple initiatives simultaneously. At the same time, utilities maintain the flexibility inherent in being mid-sized. If your utility would like more information on this consortium, provide contact information and comments to firstname.lastname@example.org.