Eye on Europe: EU Releases Energy Policy Plan

By Kathleen Davis, associate editor

In January, the European Union’s (EU) Energy Commission released its latest findings on emissions and markets within the Union. While the plan, labeled by the EU “Energy Policy for Europe,” focused heavily on the emissions and gas areas, there were extensive details on electric grids and markets in the proposal.

Markets, especially, have become a matter of contention between member countries as they jostle for favorable positions, leaving gaps that the EU has concerns about.

The commission is hoping that the proposed plan will “boost the EU’s energy security and competitiveness.”

Commission President Jose Manuel Barroso remarked, “Today marks a step change for the European Union. Energy policy was a core area at the start of the European project. We must now return it to center stage.

“A common European response is necessary to deliver sustainable, secure and competitive energy,” he added.

The new findings reflect a desire to give choice to the average EU consumer, according to the council-with no preference given to commercial over residential. Additionally, the commission is hoping this new strategy will push investment in transmission infrastructure that has been sorely lacking. Their plan is relatively simple: Make it all one, big open market-a single market for the entire EU.

“The single market is good not just for competitiveness, but also sustainability and security,” the report stated.

The commission also called for a more distinct separation between generation and distribution to further the goal of a robust internal market, as well as stronger independent regulatory control. (According to reports by the BBC, this particular point strikes a sour chord in France and Germany where that separation is “very controversial.”)

Ultimately, the EU target is a minimum 10 percent interconnection level between EU members as quickly as possible-a number that was agreed upon at the Barcelona European Council in 2002 and still hasn’t been achieved.

The report delves deep into details, laying out 314 gas and power infrastructure projects “whose completion should be facilitated or speeded up,” which includes 42 high priority projects. Twenty out of the 32 projects in Europe that are power-related are already delayed. Twelve of those 20 face a one- or two-year delay, while eight are looking at delays of three or more years.

The report laments that “progress on the development of networks is insufficient. Significant obstacles remain.”

Some of those obstacles include: the inability to guarantee to a company the right to sell power in any member state on level terms with existing companies within the nation; a lack of adequate regulation within member states to develop an equal playing field; an underinvestment in infrastructure and framework; spotty coordination between member states; insufficient unbundling; and no incentives for network operators to open the markets.

The cash flow into those desired cross-border grids is quite low in EU countries, according to the report. They estimate an annual input of 200 million euros-approximately 5 percent of what the EU, Norway, Switzerland and Turkey invest in their individual grids a year.

“The figures do not even match the needs of an effective infrastructure in line with the objectives of the Energy Policy of Europe,” the report contended. “The EU will need to invest, before 2013, at least 30 billion euros in infrastructure . . . if it wants to address fully the priorities outlined in the . . . guidelines.” (That 30 billion includes both gas and power infrastructures. Six billion euros a year is the EU’s estimate for needed electric transmission structure investment.)

The commission listed five action items to push the development of electric markets in the EU.

  • Identify the most important projects and where the problems are. (Those are listed in detail in the January report.)
  • Appoint European coordinators to oversee the three most important developing electric connections in the EU, namely: the power link between Germany, Poland and Lithuania; the connection of offshore wind power in Northern Europe; and the connection between France and Spain.
  • Coordinate planning at regional levels, strengthening the framework for operators in charge of networks.
  • Streamline the authorization process.
  • Examine whether the commission should increase EU funding.

“If the EU continues on its present infrastructure course, none of the Energy Policy of Europe objectives will be met,” the report concluded. “It will not be able to integrate the required increased production of electricity from renewable sources. It will also continue paying higher costs as a result of congestion and of maintaining inefficient capacity in each of the insufficiently interconnected energy areas.”

But, the Energy Policy’s recommendations aren’t a “done deal” just because they were released to the press and public at large. The representatives of each EU country must approve the issue before those recommendations are put into practice. Given the schedule, it’s most likely to come up for general debate in March.

Power Grid Europe Conference on Track

By Kathleen Davis, associate editor

In mid-December, the advisory committee for PennWell’s newest conference, PowerGrid Europe, met in Seville, Spain to discuss the upcoming 2007 summer program.

Representatives from vendors and utilities attended, including: Juan Marti Rodriguez of Iberdrola Distribucion, David Alviria of Red Electrica, Clemens Hoga of Siemens, Eric Lambert from EDF and Thales Papazoglou, the director at the Electric Power Systems Laboratory of TEIC. Members from Areva T&D, ABB, EDP Distribuicao-along with an additional advisor from Red Electrica-all participated in absentia.

PowerGrid Europe is slated to be the conference and exhibition where European utility professionals can come together and learn more about the challenges facing the transmission and distribution industry. The conference will educate on a technological, “hands-on” level, providing practical, useful information that each utility representative can put into use when he returns home.

Co-located with the most successful power generation event in Europe, POWER-GEN Europe, PowerGrid Europe will feature in-depth discussions on interconnections and blackouts, AMR and power quality, IEC 61850, asset management, trends and innovations and how to connect wind and distributed generation to the grid.

The “kick-off” sessions will examine two of the major issues facing Europe today: interconnections and blackouts and IEC 61850.

The first interconnections and blackouts session looks at lessons from the Thailand power grid, dynamic security assessment, stability monitoring in Bosnia & Herzegovina, real-time transmission networks & markets, and gives a glimpse at the interconnections in Europe and Turkey. Papers will be delivered by experts at the Electricity Generating Authority of Thailand, Areva T&D and the Universität Stuttgart.

Our IEC 61850 session will give you the nuts and bolts, ins and outs on this standard. The participants will look at network architecture in integrated substations as well as the linking of those substations to control centers and the challenges and opportunities such links present to utilities. Papers will be delivered by experts at Siemens, Garrettcom Europe, UTInnovation, Iberinco, and ABB.

Come join us for PowerGrid Europe: June 26-28, 2007, Feria de Madrid, Madrid, Spain. Registration, attendee and exhibitor information can be found online at www.powergrideurope.com.

GE Industrial to Acquire Microwave Data Systems

GE Industrial, a unit of General Electric, will acquire the assets of Rochester, NY-based Microwave Data Systems (MDS), a subsidiary of Moseley Associates and a world leader in industrial, wireless, and networking solutions. The acquisition offers complementary technology to GE’s Multilin business, part of GE Consumer & Industrial. It will create growth opportunities for Multilin in its current markets and in the $1.3 billion global industrial wireless market segment, which is expected to grow 15 percent in 2007. The transaction is subject to customary government approvals and is expected to close in January 2007.

MDS employs approximately 275 people who design and manufacture networked high-speed, microwave radios for wireless communications solutions in use in oil and gas, utility, traffic monitoring, public safety, lottery and other industrial applications.

“MDS is a highly technical and innovation-based enterprise with a stream of new products planned for launch in “˜07 and beyond. This is exactly the type of business we want in our portfolio,” said Larry Sollecito, general manager, GE Multilin. “Combining MDS’ technology and products with that of Multilin not only gives us more and better solutions for our current customers but also opens up new markets for us to serve. The potential for growth is tremendous.”

Upon closure, the new business will be a wholly-owned GE subsidiary called GE MDS, LLC.

Correction:

Triangle Microworks was inadvertently omitted from the “Exhibitors Featured in this Issue” section of UAE’s January 2007 issue. In that section, short descriptions of companies who both exhibited at DistribuTECH 2007 and advertised in the Janury 2007 issue were provided. Triangle Microworks’ description is as follows:

Triangle MicroWorks provides communication protocol software libraries, protocol & conformance testing software, protocol gateways, OPC drivers, and contract engineering services for industry-standard communication protocols such as DNP3, IEC 60870-5 and Modbus.

Fort Mojave Tribal Utility to Install 3M’s High-Capacity ACCR Conductor

Aha Macav Power Services, a utility owned and operated by the Fort Mojave Tribe in the Southwest, will become the first Native American utility to deploy 3M brand Aluminum Conductor Composite Reinforced (ACCR), a heat-sag-resistant overhead conductor that can carry more than twice the power of conventional lines of the same diameter.

Under an agreement with the Western Area Power Administration (Western), Aha Macav will install a new four-mile 3M ACCR line linking a new substation in Arizona to a switchyard in Needles, Calif., a city on the western bank of the Colorado River.

The new line will substantially boost power capacity and reliability for Needles and the surrounding area, which have been plagued by frequent electricity outages in recent years, often during periods of extreme high temperature.

“This is one of the most important and exciting projects we’ve seen here in many years,” said Robert Walker, utility manager for the city of Needles. “It will end our power constraint and open up a world of possibility in terms of economic development.”

William Cyr, general manager of Aha Macav Power Services, said the project “provides a great benefit, both to our residents on the Fort Mojave Indian reservation and our neighbors in Needles. 3M ACCR represents a substantial technological advance in power transmission reliability that will contribute to economic growth and reduce the danger of power failures that pose a threat to health and safety.”

The Fort Mojave Tribe, whose reservation encompasses portions of eastern California, southern Nevada and western Arizona, is one of only a handful of tribes served by its own utility. Installation of the 3M ACCR is scheduled for next September.

Seven major U.S. utilities are already using or installing 3M ACCR, including Arizona Public Service in Phoenix, and Western, which is employing it to upgrade the reliability of the 80-mile Topock-Davis-Lake Mead line that parallels the Colorado River along Arizona’s western border with California and extends to Boulder Dam. The Aha Macav ACCR line will be linked to Western’s Topock-Davis-Lake Mead ACCR line.

3M ACCR was developed with the support of the U.S. Department of Energy, which tested the conductor at its Oak Ridge National Laboratory (ORNL) in Tennessee, with early contributions by the Defense Advanced Research Projects Agency.

Chavez Eyes Utility Nationalization, AES Potentially Impacted

By Kathleen Davis, associate editor

In January, Venezuelan President Hugo Chavez gave a televised speech announcing his plans to nationalize electric and telecommunications companies in the country. Aligning himself with the sentiments of Cuban leader Fidel Castro, Chavez promised to take significant steps to create a socialist state in Venezuela.

“We’re heading toward socialism, and nothing and no one can prevent it,” he said in the speech.

“All of that which is privatized, let it be nationalized,” Chavez added. Chavez’ control of Venezuela-his third term as president so far-is locked in until 2013.

Venezuela’s major electric company, Electricidad de Caracas, is majority-owned by Arlington, Virginia-based AES Corp. AES has an 82 percent stake in the company, with the rest being locally owned.

Reuters reported that shares of AES Corp. fell more than 4 percent after the announcement, even though Chavez did not specifically address which companies would be impacted. (Most other Venezuelan power companies are already state-owned, however.)

The Associated Press reported a decline of 77 cents or 3.7 percent in trading.

“We view this as a very serious announcement and not a trial balloon,” stated Elizabeth Parrella, a research analyst with Merrill Lynch who follows AES Corp. closely.

“Venezuelan political risk has long concerned AES investors,” she continued. “Even so, the nationalization announcement came as a surprise.” Parrella expects that the local base of 18 percent stakeholders in Electricidad de Caracas will help AES defend its interests in the country.

According to Merrill Lynch, the Venezuelan utility contributes about 15 percent of AES’ earnings before taxes, which was already valued below acquisition cost before the announcement.

“The “˜street’ exchange rate declined to a new low of about 4,000 [bolivars to U.S. dollar] after the Chavez announcement,” Parrella continued. AES forked over nearly $1.65 billion for its stake in 2000. The exchange rate then was about 680 bolivars to the dollar.

However, Merrill Lynch does not anticipate that problems with Electricidad de Caracas (EDC) will impact AES’ other businesses. At press time, they were maintaining a neutral rating on AES stock.

Parrella stated, “We believe that investors have generally applied a discounted multiple to EDC earnings and cash flows, and thus we view the downside risk to the stock-should EDC be nationalized without adequate compensation-to be no more than 5 percent from current levels, despite what would be a larger impact on earnings and cash flows.”

Cellnet, We Energies Expand Advanced Metering Program

Cellnet has entered a new 15-year expansion contract with Milwaukee, Wisconsin-based We Energies, a subsidiary of Wisconsin Energy Corp.

Under the terms of the agreement, Cellnet and We Energies will expand the fixed-network advanced metering program with the addition of 201,000 new electric and gas customers throughout service areas in Kenosha, Racine, Waukesha, and portions of Washington and Ozaukee counties. The new contract also provides for the addition of approximately 4,000 new commercial gas customers in the Milwaukee area.

The contract represents the fourth system expansion since the program started in 2001. (We Energies is one of the largest United States providers of on-demand, advanced metering services to its customers.)

Upon installation of the latest expansion, We Energies’ fixed-network advanced metering program with Cellnet will cover more than 1,530,000 electric and gas customers throughout its service territory. During 2006, Cellnet and We Energies installed an average of more than 23,000 new electric and gas customers a month under the program.

We Energies vice president of customer service Joan Shafer remarked, “Our smart metering program is an important component of our long-term strategy to continually improve the services and information we provide our customers.” In October 2006 Chartwell awarded We Energies its Best Practice Award for utility customer service in recognition of We Energies’ We Care Program.

Cellnet president and CEO Mike Zito concluded, “We Energies is setting a very high market standard for customer service. Cellnet is justifiably proud of the success of the We Energies advanced metering program that is reinforced by this fourth contract expansion in five years.”

The Cellnet contract with We Energies was executed with subsidiary Cellnet Technology Midwest, Inc.

Con Edison Announces New Vegetation Management Program

Consolidated Edison Co. of New York Inc. (Con Edison) is initiating a three-year, enhanced tree-trimming program in hopes of preventing storm-related power outages throughout Westchester County.

The company estimates that the new program, starting this month, could result in a 20 percent reduction in the number of outages experienced during major storms. The effort will also help minimize public safety hazards created by windblown branches and broken limbs that bring down live power lines.

“More than 50 percent of the outages experienced by customers during major storms in Westchester have been caused by tree-related damage,” said William J. McGrath, Con Edison’s VP of electric operations for Bronx/Westchester. “The damage results in millions of dollars in recovery costs for municipalities and our customers.”

He added: “We have consulted with tree-care professionals and community leaders to ensure that appropriate tree pruning takes place with community involvement.”

The new initiative follows a series of outages triggered by overgrown trees in Westchester, particularly in September when tropical storm Ernesto battered the tri-state area. The storm downed trees, tree limbs and branches that extended onto power lines, causing outages to 76,000 customers in Westchester County.

“When a storm hits the area, accessing damaged equipment and restoring power as safely and quickly as possible are the top priorities of tree-pruning and electrical crews,” McGrath said. “So it’s best to proactively trim to minimize the amount of emergency work that’s needed later. Often these limbs pose risks to electric reliability and public safety, even during mild weather.”

Con Edison expects to trim approximately 85,000 trees annually in Westchester in a three-year cycle. Clearance will be 10 feet below, 15 feet above, and 10 feet beside a power line.

WECC Selects PowerBase and PROMOD IV

NewEnergy Associates, a Siemens company, announced that the Western Electricity Coordinating Council (WECC) has licensed NewEnergy’s PowerBase and PROMOD IV for performing economic analysis of transmission expansion projects.

The selection of the NewEnergy software came after an evaluation of eight other software systems, which was performed by the Production Simulation Program Task Force (PSPTF).

The newly formed Transmission Expansion Planning Policy Committee (TEPPC) will use PowerBase and PROMOD IV to oversee database management and guide the analyses and modeling for Western Interconnection economic transmission expansion planning.

NewEnergy’s solution will be used by WECC in production simulation activities including database management and transmission expansion scenario evaluation.

“The database management capabilities, along with NewEnergy’s expertise, were key drivers in our selection of PowerBase and PROMOD IV,” stated WECC chief senior engineer, Donald Davies. “This combination will facilitate WECC initiatives to maintain a transmission expansion planning database for the Western Interconnection, to perform studies regarding possible transmission projects, and to support the DOE Western Transmission Congestion Assessment.”

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