Spending on Distribution Increasing, but Reliability Still at Risk

Based on research and analysis completed recently by consulting firm R.J. Rudden Associates Inc., the reliability of the nation’s electric distribution system is likely to be put to the test in the future.

Further, expenditures to close the reliability gap will place upward pressure on distribution rates, and attract closer regulatory scrutiny. Rudden’s conclusions are based on a combination of “field analyses,” interviews with distribution engineers and managers, analysis of data from major utilities nationwide, and secondary research that relied on reports and analyses performed by some of the country’s leading research, academic and industry institutions.

“Our research demonstrates that, in recent years, the pace of utility spending on electric distribution operations and maintenance, as well as capital, has exceeded the rate of growth in load and numbers of customers served by a significant degree,” said Michael Mount, one of the report’s three co-authors. “This would normally be good news, and it certainly is not bad. Yet, this leaves the impression that everything is OK with the nation’s distribution system. In fact, we feel that a number of factors might be masking true trends in reliability. Further, a number of interviewees suggested that much of the acceleration in expenditures on distribution was much-needed ‘catch up’ investment to compensate for a previous period of severe under-investment.”

Kevin Harper, another co-author, pointed out that transmission problems have been receiving most of the press recently, and for good reason. “A sound transmission system is the backbone of cost-effective, competitive markets, and the nation needs to get its priorities straight on this matter,” Harper said. “However, reliability and power quality-two essential ingredients to a healthy digital economy-are overwhelmingly related to distribution.” Harper pointed to the nation’s distribution system as “more critical to future reliability than either lack of generation reserves or congested transmission systems.”

The report identified a number of reasons why recent trends in the traditional measures of reliability may not be telling the whole story. “First, as our research shows, while national average trends in reliability measures appear acceptable, the averages mask some challenging conditions in certain parts of the U.S.,” Mount said. “In many parts of the country, the lack of severe weather has not stressed the integrity of many systems. Further, reliability statistics themselves do not necessarily reflect the underlying condition and age of a system. However, we do know that the distribution infrastructure is aging rapidly on many systems, especially in many central cities, and that without significant replacements and upgrades, reliability problems could begin to arise.” The report also suggests that the reliability indexes themselves are not adequate indicators of the essential quality of power required by the digital economy.

Harper also indicated that customer dissatisfaction with reliability and power quality is rapidly approaching, if it is not already at, unacceptable levels. “Aside from the anecdotes we have all heard about frustrating momentary outages, there is a body of research that suggests that customers are becoming very concerned over the issue, and are making physical plant decisions accordingly,” Harper said. “One survey of national account customers, conducted by the Edison Electric Institute, indicated that about 22 percent of customers could tolerate outages of no more than five seconds, 39 percent said they were beginning to make new facility site selection based on reliability, and fully 49 percent said they were planning future expenditures at their facilities to assure reliability.”

The complete article is available at www.rjrudden.com. From the home page, click on “Profiles” then click on “Papers” after filling out a brief registration.

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