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Electricity Restructuring Around the World

The electricity industry has now entered the second decade since deregulation began. Although this revolutionary culture change is not yet established

The electricity industry has now entered the second decade since deregulation began. Although this revolutionary culture change is not yet established globally, several business strategies have emerged. Management teams continue to review and upgrade the management of the core business activities and streamline operations in an effort to satisfy the financial interests of stakeholders. Delivering reliable power is critical to customers and, therefore, has utilities adopting strategies for continual investment in T&D systems and incorporating new technologies to optimize system performance and maximum workforce use.

To present the business strategies and views of utility management teams, Transmission & Distribution World spotlights the business perspectives and strategies of some of the world's major power-delivery utilities.

Committed to Providing Affordable, Reliable Power

The Tennessee Valley Authority (TVA; Knoxville, Tennessee, U.S.) is a corporation owned by the U.S. government. Its transmission line system is 17,000 miles (27,389 km) with 800 metering and switching substations, and serves parts of seven U.S. states. With the electrical load in the Tennessee Valley growing about 3% annually and customer expectations for reliability increasing, TVA continues to invest in its robust transmission system.

TVA's Transmission/Power Supply Group has strong in-house engineering and construction functions organized along product lines (transmission lines, substations and telecommunications). However, when the design engineering or construction work load in a product line exceeds in-house staffing levels, TVA contracts the work to firms with standing alliance contracts. These contracts are awarded through a competitive bidding process, and continuity of use from one task to the next minimizes cost and reduces cycle time.

As the electric utility business in the United States faces deregulation, TVA is preparing for competition. In response to the move to larger regional transmission control, TVA is leading the formation of the Public Power Regional Transmission Grid, which comprises TVA and other public power transmission providers. Further, TVA has executed coordination agreements with Southern Company, Entergy, PJM and the Midwest ISO. Consistent with its charter, TVA is taking a measured and flexible approach to industry restructuring.

In the fiscal year 2003, TVA invested US$200 million on the transmission system, and it plans for similar investments over the next few years. Much of this investment is prompted by sustained system load growth, requiring new customer delivery points and additions to the bulk transmission system. TVA is building 100 to 140 miles (161 to 225 km) of new transmission line each year and is commissioning at least one new 500-kV substation annually. Dramatic and continuous improvements in customer reliability have been possible through improvements in all operations and maintenance, and capital investment. This includes replacing aging equipment and installing lightning protection and additional breakers and switches to long lines with customer taps.

TVA makes prudent use of new technologies and is involved in several new technology development efforts. TVA was the first transmission provider in the United States to install a commercial STATCOM to maintain system voltage and is currently installing a new SuperVAR dynamic synchronous condenser. This new technology uses a high-temperature superconductor-rotating machine to generate or absorb reactive power and balance system voltage.

TVA's investment program for the next three years includes a major project that will increase the control visibility of its transmission system, improve the accuracy of metering and optimize the use of the system.

KEPCO's T&D Achievements

In the mid 1990s, in line with global trends, Korea began restructuring its electric power-supply industry, which the government previously monopolized. In the first phase of deregulation in 2001, the generation sector was split into six subsidiaries; the distribution sector will be subject to separation in the near future.

This restructuring and social environmental change requires more efficient business management, and efforts continue to be made to establish effective management of the power T&D systems. As a result, there is more out-sourcing of activities and partnerships to deal with ordinary tasks. External outsourcing is used for regular overhead line maintenance activities, including weak insulator detection, insulator washing, line patrol and inspection.

Before restructuring, investment and operation costs for the T&D facilities were recovered via the electrical energy tariff system. However, when power generation and energy sales are separated, revenues will be secured by use-of-system charges for the T&D lines. Measures are in place to ensure a fair use-of-system tariff, but customers with demands exceeding 50 MW will be able to purchase electrical energy on the open market.

Korea's electricity demand increases by 6% per year, 40% of the demand being concentrated in the metropolitan areas. Generation plants are located in the coastal areas remote from metropolitan areas, hence, KEPCO's need for a bulk power transmission system. The commissioning of a 765-kV transmission line, 178 km (111 miles) long in operation since 2002 and the upgrading of an existing transmission 155 km (96 miles) line to 765 kV from 345 kV in 2004 provide a short-term solution. This 765-kV double-circuit line, the first in the world, reduces the width of the transmission line corridor required. To reduce transmission congestion in metropolitan areas, FACTS are currently being studied, and an 80 MVA UPFC installed as a pilot system in Gangjin, Jeollanam-do is now in operation.

KEPCO has a supervisory control and data scquisition system (SCADA) in operation on the transmission system at all voltages 154 kV and above. The distribution automation system (DAS) installed will be replaced in the future by substation automation systems employing digital protection relays. Long-term, KEPCO plans to develop a digital automatic substation system — an investment that will minimize manpower requirements.

With a projected growth rate in demand, KEPCO requires continuous infrastructure investment as the transmission line system and substation facilities are expected to increase 33% and 66%, respectively, by 2015. Currently, KEPCO anticipates an investment of some US$2.5 billion on T&D system facilities in 2004.

KEPCO is also entering the overseas T&D business. In 2002, the Myanmar power network analysis project, a study associated with the improvement of the Philippine distribution sector, was successfully completed. In November 2003, KEPCO was awarded a consulting services contract for the Libyan Power Network.

TEPCO Develops New Technologies

Japan's deregulation of the electric power industry recognizes the important role that the existing vertically integrated utilities will continue to play in ensuring a stable supply of electrical energy for the country.

Fairness and transparency are two key elements in transmission operation that is now subject to deregulation. In terms of system operation, fairness and transparency will be secured by disclosure of the internal rules on the information firewall. A new neutral organization will be established that will observe transmission rules and audit nondiscriminatory transmission access by the transmission rules.

TEPCO continues to promote IT developments. The following are two examples of the beneficial developments:

  • Reduction of maintenance cost by consolidation of facility information and process control system.

  • Reduction of logistics cost in distribution equipment by supply chain management and information sharing with manufacturers.

Although TEPCO's capital investment in T&D has decreased compared to a decade ago, as a result of streamlining efforts and a fall in demand growth rate, TEPCO has invested to maintain power system reliability.

TEPCO's major projects involving HVAC and HVDC technologies include transmission lines designed for 1000-kV operation. Since the mid-1970s, TEPCO has made efforts to expand the 500-kV network, but it is difficult to secure multiple power transmission routes in Japan. Additionally, solutions were required to resolve the short-circuit capacity problems on the 500-kV transmission systems. These problems prompted the design and construction of transmission lines for 1000-kV operation.

TEPCO completed construction of the 1000-kV transmission route linking the nuclear power station on the Sea of Japan to the metropolitan region (north-south route) and the other route linking power sources on the Pacific Ocean (east-west route) by 1999. The 1000-kV double-circuit transmission technology developed by TEPCO is the first in the world. These transmission lines are now operational at 500 kV, and they will be upgraded to 1000 kV in the mid-2010s. Other major accomplishments include:

  • 500-kV underground cables to Tokyo City Center

    A 500-kV underground cable has been in operation since November 2000 between Shin-Keiyo Substation located on the inner 500-kV ring and the new Shin-Toyosu Substation located near Tokyo City Center. Shin-Toyosu Substation is the first underground 500-kV substation to be built in Japan.

  • HVDC links between the 50-Hz and 60-Hz systems

    TEPCO has two back-to-back frequency converter stations: the Shin-Shinano F.C. 600-MW station and the Sakuma F.C. 300-MW station that convert between 50-Hz and 60-Hz systems. A third back-to-back facility, the Higashi-Shimizu Frequency 300-MW Converter station will be put into service in 2004.

TEPCO uses outsourcing and partnering by establishing cooperative relations with affiliated companies, and some of TEPCO's T&D maintenance work is outsourced to these companies.

Hydro-Québec: A World Class Transmission Provider

Hydro-Québec TransÉnergie, a division of Hydro-Québec, markets knowledge and technology in the area of high-voltage transmission. Furthermore, as the only regional transmission organization in Québec, TransÉnergie aims to improve the availability and capacity of its facilities.

In 2004-2008, Hydro-Québec TransÉnergie will ensure capacity is available when customers need it and provide services adapted to their needs. By investing CDN$650 million (US$500 million), the division plans to maintain the reliability and increase the reactive power of its system, taking into account the unique geographic and climatic constraints.

Hydro-Québec TransÉnergie has benefited from many advantages on a global market where relatively few companies have transmission expertise. The division is active as an investor and supplier of products and services in Peru, Australia, the United States and Chile.

Over the term of the Strategic Plan 2004-2008, Hydro-Québec TransÉnergie will capitalize on its assets, in Australia and the United States in particular, and will continue to expand its portfolio of assets, mainly in the Southern Cone (South America). It will invest primarily in companies in which it can play a leading role, and thus benefit from the value created by its activities. International projects include a number of investments and holdings, notably the Transelec system in Chile, the TransMantaro line in Peru, and the DirectLink and MurrayLink interconnectors in Australia. All these facilities are in service.

In 2002, the division's international operations represented more that CDN$2 billion (US$1.54 billion) in assets, and the revenue generated by its foreign operations totalled CDN$250 million (US$192 million).

T&D at Taipower Co.

The electricity industry in Taiwan has been reviewed and changes have been made to the Electricity Act, but the T&D business at Taipower Co. will continue to operate as a vertically integrated utility. The financial aspects will change, as separate accountability will be introduced for each business sector, to avoid cross-subsidies.

On the island of Taiwan in 2002, the Taipower Co. transmission system included 20 EHV substations (36,000 MVA), 45 primary substations (26,900 MVA), 84 primary distribution substations (16,420 MVA) and 324 secondary substations (22,504 MVA). The annual increase in system demand is expected to average 4.1% per year for the next five years, and the power system development program to satisfy this load growth will be in accordance with Taipower's Sixth Transmission & Substation Project Program. This development program started in July 2001, with a scheduled completion date of December 2009. When complete, this program will have increased transformer capacity by 71,431 MVA and transmission line system by some 4185-circuit km (2600 miles).

Some major construction projects completed in 2002 include six EHV, 18 primary and 16 secondary substations, 95 circuit-km (59 miles) of 345-kV transmission lines, 298 circuit-km (185 miles) of 161-kV transmission lines, and 137 circuit-km (85 miles) of 69-kV transmission lines.

Taipower employs local contractors for most project work, but specialist and international contractors were employed on 345-kV underground cable, 161-kV fluid-filled cable and three EHV substation contracts. The Taiwan EHV transmission system is the traditional HVAC systems, an in-house study concluding that there were no feasible projects to employ HVDC and FACTS technologies.

To satisfy the impact and challenges now faced following revision of the Electricity Act, Taipower Co. has planned to consistently elevate operational performance, increase competitiveness and satisfy the transmission and re-engineering targets established to create a bright and prosperous future for the company.

Utilities are finding unique solutions as they respond to increased business pressures brought about by global competition. Transmission & Distribution World will continue to keep our readers abreast of major business changes as we track these events around the world.


The author wishes to acknowledge the contributions for this article received from W. David Hall, vice president of electric system projects in Tennessee Valley Authority's Transmission/Power Supply Group; Tay-Ho Jung, Korea Electric Power Co.; Akio Nakamura, director, member of the board, Engineering Department of Tokyo Electric Power Company; Yves Filion, deputy CEO, Hydro-Québec; and Anthony Y.T. Chen, Taipower Co., Taiwan.

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