This webcast features perspectives from operational technology (OT), information technology (IT) as well as the general industry outlook, to provide attendees insight into the challenges utilities are facing today as well as a holistic view into smart grid strategies to more...
Grid threats increase daily - from foreign foes, terrorists, criminals and hackers. Utilities are tasked with guarding against a rising tide of potentially disruptive intrusions into their power grid and electronic networks. What will it take to keep the power more...
This webcast will feature Patricia Armbruster, Principal Process Management Facilitator in Distribution Operations at DTE Energy, who will share her experience and insights into improving outage response with smart grid technology. more...
Energizing Utility IT Resource Capacity Management. Your Service Delivery Assurance! Let Your ROI Soar as You Optimize Your Virtualized and Cloud Environments Through a Proven Business and Service Aligned Process. more...
As a preview for Utility Analytics Week's data scientist panel session, H. Christine Richards will speak with one of the panel participants to unlock the secrets of the mysterious data scientist and the role they play in utility analytics. more...
Monday Jun 24, 2013
- Tuesday Jun 25, 2013 -
Philadelphia, Pennsylvania - USA
Data Informed´s Marketing Analytics and Customer Engagement provides marketing, sales, and customer support managers with the information they need to create an effective data-driven customer strategy. more...
Managing the Migration to IP/Ethernet to Facilitate the Smart Grid 2-5 July 2013 – Le Plaza Brussels, Belgium 2-Day Conference: Wednesday 3rd & Thursday 4th July 2013 Pre-Conference Fundamentals of IP/Ethernet Workshop: Tuesday 2nd July 2013 Post-Conference Security Seminar: Friday more...
Tuesday Jul 9, 2013
- Thursday Jul 11, 2013 -
Washington, District of Columbia - USA
The National Town Meeting on Demand Response and Smart Grid™ is the premier event in the US focused on the business and policy aspects of demand response and its enabling technologies and applications. It is unique in that it devotes more...
Tuesday Jul 16, 2013
- Thursday Jul 18, 2013 -
Atlanta, Illinois - United States
Business Continuity & Organizational Resilience for Utilities Embarking on a Holistic Approach to Business Resiliency and Disaster Recovery Through Utmost Contingency Planning and Execution 17-18 Jul 2013 Atlanta, GA - Venue to be Confirmed, United States of America more...
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When I served on NERC’s Blue Ribbon Panel on Electric Reliability, the engineers patiently explained to me why they needed all those rules. I insisted that the engineers should consider the cost of those rules to consumers, and that they should seek more efficient means to serve the customer. One system operator said, “You want me to push the system to the point of collapse.” No, I just wanted him to try harder. Somehow, commerce and customers seemed incidental to his functions. Remember the librarian who wanted to keep all the books neatly lined up on the shelves?
No Financial Shortage
Capital spending on transmission has not kept up with growing demand for years. Now, it appears that distribution spending will fall off. That’s odd, nowadays, because investors disillusioned by disasters in risky ventures now seek low risk/low return investments. I calculate that the industry needs to spend $10 billion per year more than presently planned in order to replace old facilities as well as keep up with demand. Sounds like a big number? Putting that new plant on line would add approximately 1 percent per year to the average end user’s electric bill. Raising the money needed to maintain reliability would strain neither the financial markets nor the consumer’s pocket book.
What is Reliability?
NERC defines reliability in terms of adequacy (ability to serve customer requirements at all times, despite scheduled and unscheduled outages) and operating reliability (ability to survive sudden disturbances). The engineers don’t ask (in the case of reliability) whether customers would accept a different level of reliability at a different price for service or whether the network is the most economic provider of the reliable service. Certainly, the network operator needs the tools and authority to deal with sudden disturbances, but I do not believe that the operator has a duty to assure service, no matter what the cost, to customers who do not believe that the service is worth the cost. Consumers make decisions about value of service and of reliability all the time. Why do we conflate individual consumer decisions with engineering survival requirements?
We Don’t Know What We Need
Remember stranded costs? Utilities built expensive facilities, then discovered that the consumers did not want the expensive electricity produced by them. Less reliable service comes about, at times, because of the inability of the network to handle a surge in demand caused by the fact that so many customers want the same service at the same time. With a different pattern of pricing or with incentives, that pattern of demand might change. The network then has to price its product, and let customers decide what they want. Reliability would become a commercial decision for the customer, rather than an engineering decision for the network. Without that customer input, the network operator may put a higher value network reliability than the customer. Firms that price their products higher than customers want to pay eventually run into trouble.
Substitute Operating Savvy for Capital
In the United States, running the utility more efficiently (as opposed to investing more money) rarely leads to a long-term increase in profits. That tradition has carried into the new organization of the system operator, to an extreme. We don’t want the operator to make any profit. We neither reward the operator for running the network in a way that reduces costs to consumers nor penalizes the operator for inefficiency or inability to maintain reliability. As a result, we have no way of knowing whether the system operator could change the way it operates in order to enhance reliability. Pretend you are the CEO of a manufacturer. The shop manager comes in to request the purchase of a new machine. You know that the existing machinery runs only 75 percent of the time. Would you buy the new machine? Or, would you tell the shop manager to fix the old equipment first, rearrange the production schedule, and if all that costs less than a new machine, he gets a bonus?
With minimal cooperation from regulators, the electricity industry could easily raise the money to replace old infrastructure and put in necessary new equipment. Consumers would barely notice the price increases needed to pay for the equipment. They might even reap offsetting benefits from more competitive markets and improved reliability.
That conclusion, however, ignores the real questions: what level of reliability do customers want, what level do they deem worth paying for, and how does the electric industry or the customers achieve that desired level at the lowest cost to the customer? Can consumers make those decisions? They do everyday. When a family goes on a car trip, it doesn’t bring along an extra car in case the first one breaks down. That’s a reliability judgment, too.
For information on purchasing reprints of this article, contact sales. Copyright 2013 CyberTech, Inc.
Mr. Hyman raises an excellent point in this article, but I would slightly modify his shop analogy to reflect the realities of the power business.
Assume instead that the machine operates at the average capacity factor of a powerplant in the US: approximately 45%. Also imagine that the payback period on a new machine is many years or even decades. Would you buy another one, or would you have the foreman and the sales manager come up with a strategy to prioritize customer deliveries, charge a premium for faster delivery and eliminate production bottlenecks.
Competitive retailers and large energy consumers are beginning to understand what is possible and what isn't. Political leaders, grid operators and utilities need to be more creative and experiment with new approaches that make significantly better use of available assets and mitigate the need for expensive new infrastructure, particularly transmission, that's hard to site in the face of intense public opposition.
Frederick (Fred) Plett 7.1.03
The world of transmission lines is a whole lot different than pork bellies or computers. The transmission system is a highly complex machine where shortages cannot be tolerated - the system is subject to sudden and cascading, if not catastrophic loss, due to thermal, voltage or transient stability limits. In a shortage of pork bellies, the consumer can substitute. In a shortage of transmission capacity, there is no substitution, and drastic and politically potent consequences result, with economic and safety results. Remember the Northeast blackout of 1965? That gave rise to NERC. The level of reliability consumers want is 100% with transmission, as evidenced by the severe reactions when there are failures. The Western transmission collapse just a few years ago resulted in a lot of scrutiny and economic penalties as well. My sympathies are with the engineer as long as the rules are based on sound engineering. This is taking into account the customer and commerce, experience as shown.
Frederick (Fred) Plett 7.1.03
I should have added that technology can add reliability with less capital than before. EPRI has worked hard at new techniques such as FACTs devices, more sophisticated software and dynamic rating to stretch resources and dollars, yet still provide for reliability.
J Martin 8.23.07
Above one can read: ...One system operator said,“You want me to push the system to the point of collapse.” No, I just wanted him to try harder. ... 08.14.03