At the Heart of the Volatile Transformers Market

By Kathleen Davis, associate editor

In a follow-up to our January issue article on escalating transformer costs, we solicited yet another opinion on the subject–this time from ABB’s Rich Bocim. Bocim is vice president of commercial operations for ABB’s transformers business unit in North America.

UAE: In your opinion, what’s the current status of the electric transformer market?

RB: On the transmission side, the transformer market is extremely strong and is expected to remain so for the next few years. However, the residential slowdown has had a negative impact on the small distribution transformer market when compared to the robust market of 2006. The larger distribution transformer market has continued its strength due to the impact of the industrial and commercial markets and the growth of wind power in North America.

UAE: What are the reasons that power transformer prices have skyrocketed?

RB: The increases in price have been driven by the significant rise in the cost of commodities used in transformer manufacturing and also by the strong demand for transformers from all market segments.

UAE: When did this start?

RB: The fourth quarter of 2005.

UAE: How directly do material costs–steel, copper, etc.–impact transformer prices?

RB: The increased costs of manufacturing are reflected directly in the price of the transformers.

UAE: Given other factors for the price increases–like a tightening supply and increasing demand–how will the market fare in the next few years? Will we see increasing prices continue? Are we over the “hump”? Are transformers on the road to becoming more affordable?

RB: We believe that the commodity prices will remain at or near where they are today for the foreseeable future.

UAE: What’s the solution to this transformer price problem, or is there one?

RB: The market for transformers and the commodities used to manufacture them will continue to respond to supply and demand forces in the market place.

TIDBIT:

Bermuda Electric Light Company (BELCO) has selected Cayenta Utilities for a new customer information and billing solution. BELCO is Bermuda’s sole supplier of electricity, operating a generating plant as well as transmission and distribution systems throughout the island for its 36,000 customers.

Toronto Hydro-Electric System Passes Milestone Meter Number

Toronto Hydro-Electric System Limited (Toronto Hydro) has installed more than 345,000 EnergyAxis System smart meters throughout its service area. Toronto Hydro selected Elster’s EnergyAxis System to meet the requirements of the Ontario Smart Metering Initiative.

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Toronto Hydro is now extracting and collecting hourly interval residential data from the system daily. They are installing and reading interval data from thousands of additional Elster smart meters each week as part of their smart meter expansion plan.

With advanced metering infrastructure (AMI), reading hourly interval data from all residential customers is just one of the things the system provides. Another feature is the ability to retrieve voltage data from all endpoints. Toronto Hydro’s success in reading its present volume of interval meters daily makes this deployment in Ontario, Canada, the largest true two-way AMI system in the world bringing back hourly interval data daily from all points, according to Elster.

Toronto Hydro is committed to meeting the goals set by the Government of Ontario’s Smart Metering Initiative, which is designed to help meet electricity demand challenges in the province. The government has established a target for the installation of smart electricity meters for all of the more than 4.5 million Ontario electricity consumers by December 31, 2010.

Landis+Gyr Receives Approval from Measurement Canada

Landis+Gyr Inc. received a 10-year initial re-verification approval from Measurement Canada (MC) for resealing on its already approved S4e and FOCUS electricity meters.

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“Previously we had approval for six-year re-verification, now that it has been increased to 10 years, this will allow utilities to save money over a period of time because they won’t have to reseal as often,” said Steve Schamber, director of product management, Landis+Gyr. “We’ve proven to Measurement Canada that our manufacturing operations and our attention to quality are of the highest standards, which then is reflected back in the cost-savings for the utility,” he added.

Landis+Gyr’s S4e commercial & industrial meter and the FOCUS residential meter are both solid-state meter platforms that offer flexibility for modular AMR communications. The S4e offers accuracy and reliability and has the only endpoint solution available with 480A K-base option. The FOCUS meter provides the utility industry with a reliable, economical, quality solid-state residential meter platform and, with its unique single circuit board design, allows for easy integration of AMR for better overall endpoint performance.

In addition to seal accreditation, Landis+Gyr has also earned Measurement Canada approval of many of its AMR/AMI endpoints and several of its manufacturing processes.

REMINDER

POWERGRID Europe

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June 3-5, 2008 in Milan, Italy. Find out more at www.powergrid-europe.com.

EYE ON EUROPE:

France sells shares in EDF: The French State divested 45 million shares–representing 2.5 percent of the capital–of Electricitàƒ© de France (EDF) in a sale reserved to institutional investors, implemented through an accelerated bookbuilding placement. This transaction raised around 3.7 billion euros and, as announced by President Sarkozy, was intended to finance an investment program in the country’s universities.

The EDF Group is a leading player in the European energy industry, present in all areas of the electricity value chain, from generation to trading, and increasingly active in gas distribution in Europe. A leader in the French electricity market, the Group also has solid positions in the United Kingdom, Germany and Italy.

Shearman & Sterling represented the French State and was the sole advisor in the transaction.

Union for the Co-ordination of Transmission of Electricity (UCTE) holds elections: A new UCTE Bureau has been elected for the term 2008-2009. The high participation of UCTE members in this voting procedure (86 percent) provides the new bureau with a broad support for its future action.

This UCTE body will comprise:

  • Mr. Jose Penedos, REN (PT) as UCTE President, re-elected after a first term 2006-2007;
  • Mrs. Malgorzata Klawe, PSE-Operator (PL) as UCTE Vice-President, re-elected after a first term 2006-2007;
  • Mr. Hans-Peter Aebi, swissgrid (CH) as Chairman of the Steering Committee, newly elected and succeeding Mr. Gerard Maas (NL);
  • Mr. Marcel Bial as Secretary General.

In this 2-year period UCTE will face additional challenges concerning fundamental issues for the transmission system operators (TSO) community in the years to come. Especially the 3rd Energy Legislative Package released in September 2007 by the European Commission called the TSO community to review the modalities of their co-operation at European level towards a new “European Network of Transmission System Operators for Electricity.”

KCP&L, ECS Sign Contract for Demand Response Partnership

Energy Curtailment Specialists (ECS), a private demand response provider headquartered in Buffalo, N.Y., and Kansas City Power & Light (KCP&L) have entered into a contract whereby ECS will provide a full range of demand response (DR) services to KCP&L’s commercial customers in Missouri and Kansas.

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KCP&L utilizes DR programs to help manage summer peak electric demand. These DR programs are a key component of KCP&L’s Comprehensive Energy Plan, the company’s long-term roadmap for providing sustainable, environmentally responsible energy to the Kansas City region. (Editor’s note: For more information, see the article on KCP&L’s plan in UAE’s September 2007 issue, page 58.)

Jason Jones, manager of DR programs at KCP&L, said the company chose ECS over other potential DR service providers because of their strong work ethic.

“ECS’s approach is to get down in the trenches with customers to understand their business and in turn help them understand and control their energy use,” Jones said. “The company’s expertise and overwhelming success in other markets is exactly what we are looking for in a demand response provider.”

ECS will help enroll commercial customers in KCP&L’s MPower program, a DR program that provides participants a substantial credit on their electric bill when they agree in advance to reduce electric use during times of peak demand. DR services benefit program participants, utilities and the community by reducing peak electric demand, thereby delaying the need to build additional peaking power plants. By partnering with ECS, KCP&L anticipates reducing peak electric demand by 30 megawatts over one year, equal to the peak demand of 10,000 homes.

S&C Winner of Chicago Innovation Award

S&C Electric Company was named one of 10 winners in 2007’s Chicago Innovation Awards Competition, for the company’s TripSaver dropout recloser. The winners–chosen from 249 nominees from four states–were judged on their success in satisfying unmet needs in the marketplace. They were honored at a ceremony held at the Goodman Theatre in downtown Chicago last fall.

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TripSaver protects overhead lateral circuits on electrical distribution systems. Used in lieu of a more commonly applied fuse cutout, it improves system reliability by eliminating the permanent outage which results when the cutout responds to a temporary fault.

Kuczmarski & Associates and the Chicago Sun-Times established the Chicago Innovation Awards in 2002 as an annual program to honor significant innovations introduced by Chicago-area companies.

TIDBIT:

The Municipal Electric Utility of St. Charles, Ill., has chosen Open Systems International to supply a new comprehensive SCADA system. St. Charles is a municipal distribution utility near Chicago, Illinois, with a peak load of 130 MW. The main motivation for this project has been the overall automation initiative at the utility and substation expansion.

Prysmian to Supply Cable for Beijing 2008 Olympic Village

Prysmian Cables & Systems has won two tenders organized by China State Grid, comprising four projects. Prysmian will supply high voltage energy cables for new key power transmission links in China, in areas such as Beijing (2008 Olympic Village), Shanghai city, Fujian province, Hubei. The total value of these contracts is approximately 25 million euro.

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The total orders awarded to Prysmian include 136 km of 220-kV cables and related accessories. In the two tenders, the quantity secured by Prysmian ranked No.1 among all suppliers. The projects are:

  • Shanghai PSB HV Power Transmission Project, from Shanghai city to Chong Ming and to Jiangsu. This project was jointly invested by Ministry of Communications, National Development and Reform Commission, State Grid, Shanghai Municipal Government and Jiangsu Municipal government, and contracted by State Grid and Shanghai PSB, and all the bridges will be constructed by Ministry of Transportation. The total demand of 220-kV cables for this project is approximately 400 km (the longest power link with 220-kV cables in China). The project is expected to be finished by 2009 and will be managed and operated by Shanghai Municipal Government. The tender won by Prysmian includes approximately 57 km of 220-kV cables and related accessories.
  • Beijing PSB Olympic Village to Bajia 220-kV power transmission project is part of the 2008 Beijing Olympic project. Prymsian will supply 20 km of 220-kV cables and related accessories.
  • The national key project Fujian Province Fuzhou to Fengban 220-kV I,II project is the one of the most important in Fujian. Prysmian will supply 19 km of 220-kV cables and related accessories.
  • Hubei PSB Qingshan to Beiyangqiao 220-kV power transmission project. Prysmian has won a tender for the supply of 40 km of 220-kV cables and related accessories. This is the biggest single project of this kind ever won by Prysmian in China. The purpose of this project is also to serve the state-owned giant enterprise Wuhan Iron and Steel Corp, therefore of extremely high importance.

Lexington Electric Begins AMI System Deployment

Lexington Electric, a public electric utility operated by the City of Lexington, Tenn., has begun deploying the TS2 advanced metering solution from Cellnet+Hunt.

Lexington Electric will fully deploy the TS2 system to 22,000 meters over the next two years. According to Jeff Graves, engineering manager, the utility anticipates a full return on investment in seven years based on reduced meter reading costs alone.

“We justified the system simply on replacing contract meter reading. We haven’t begun factoring in costs savings from the other benefits of the system,” Graves said.

Lexington is planning to use the remote disconnect capabilities of the system immediately, and in the future will consider outage management and offering time-of-use pricing to its customer base.

A power line carrier (PLC)-based communication technology, TS2 is a full two-way advanced metering system that offers demand response capabilities, such as load control and time-based pricing, as well as distribution system monitoring and load profile capabilities.

The utility selected TS2 based on the functionality provided by the proven two-way communication system. “We sat down with a neighboring utility that had TS2 and really evaluated the system (before selecting it),” Graves said.

Lexington Electric is located in southwest Tennessee and provides electric service to portions of five counties.

AEP, Allegheny PATH Project to Establish FERC Transmission Rate

American Electric Power (AEP) announced that Potomac-Appalachian Transmission Highline LLC, its transmission joint venture with Allegheny Energy, has filed with the Federal Energy Regulatory Commission (FERC) to establish a transmission rate to recover costs for the approximately 290-mile extra-high-voltage transmission line that the companies propose to build from West Virginia into Maryland.

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The companies are seeking a transmission cost-of-service formula rate, effective March 1, 2008, that will provide for annual updates to the amounts that PJM Interconnection (PJM), an independent regional transmission operator, will charge utilities to recover the project’s costs. The proposed rate includes recovery of a return on construction work in progress for the project and a return on equity of 14.3 percent, which includes an incentive award, consistent with federal policy to encourage significant transmission infrastructure and technology improvements. AEP and Allegheny each separately received FERC approval for incentive rate treatments for individually proposed transmission projects that ultimately became the joint Potomac-Appalachian Transmission Highline (PATH) project.

The PATH project includes approximately 244 miles of 765-kV transmission from AEP’s Amos substation near St. Albans, W.Va., to Allegheny’s Bedington substation, northeast of Martinsburg, W.Va. Another 46 miles of twin-circuit 500-kV transmission will be constructed from Bedington to a new substation to be built near Kemptown, southeast of Frederick, Md. The total project is estimated to cost approximately $1.8 billion. PJM identified June 2012 as the date by which the PATH project needs to be operational.

“The PATH project addresses significant reliability concerns in the region, including overloads that will occur on more than 13 existing transmission lines in Maryland, West Virginia, Virginia and Pennsylvania, as soon as 2012 if PATH is not built,” said Michael G. Morris, AEP chairman, president and CEO. “Establishing FERC rates for the project will provide the timely cost recovery necessary to obtain financing and allow us to move forward and bring the project on line in time to help prevent overloads on these lines.”

Once approved by FERC, the PATH project’s costs will be allocated to all electric utilities who serve retail customers in the PJM region.

AEP and Allegheny plan to begin work on the routing study and environmental assessment for the PATH project in January 2008. The companies anticipate seeking regulatory approvals for the project from the utility commissions in both West Virginia and Maryland in the fourth quarter of 2008, following completion of the routing study.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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