As state legislatures across the country extend invitations for competition by passing industry restructuring bills, electric utilities are perking up and taking notice. Consideration of electricity pricing is an immediate concern, but moving to the top of priority lists is the development and refinement of customer retention strategies. Although not immediately identified as such, power quality monitoring programs may fit this niche nicely.
Because most nascent competition involves commercial and industrial customers, utilities have learned customers not only expect power at the best possible price, they also demand power quality that won`t interrupt their production or processes. Detroit Edison (DTE) is one utility to have identified this demand as an opportunity to present itself as a value- added provider.
DTE signed special manufacturing contracts (SMC) addressing power quality with Michigan automakers in August 1994. Andy Dettloff, DTE transmission planning engineer, presented results achieved after four years into the 10-year contract periods at the recent IEEE/PES T&D Conference in New Orleans.
Three clients signed SMCs-DaimlerChrysler (14 locations), Ford/Auto Alliance (29 locations), and General Motors (15 locations). The original SMCs stipulated performance targets only for interruptions-defined as zero voltage at the interface of the utility with the facility`s main service entrance. Targets were based on 1993 performance, and there were no payment caps. If DTE exceeds an occurrence limit, it pays the customer a predefined amount of money, which is not the actual cost of the specific interruption (see Tables 1 and 2).
Dettloff said, “Payment from the utility is a negotiated amount based on 365 days per year operation, taking into consideration that an interruption on Christmas morning (a period of scheduled production slowdown) is not going to have the same impact as at 2 p.m. on some other day.”
Lynn Saunders, senior staff engineer for General Motors Corp. (GM) Worldwide Facilities Utilities Services, added, “The amount paid is a negotiated value to provide a big enough amount of money to be looked at as significant.” Both parties see the amount as significant, said Saunders-DTE perceives financial incentive to provide quality while GM identifies acceptable compensation for interruptions.
Saunders said the newly competitive electric market might result in utilities cutting costs in areas that affect reliability; for example, decreasing resources committed to tree trimming. He said, “Our goal was to not permit or allow a deterioration in the quality of service we were getting. It`s going to cost us in the long run if we don`t maintain a certain level of performance.”
Saunders pointed to the importance of looking at the engineering in these cases, and making sure the technical issues are understood. He said, “Until you put it into financial terms, it`s difficult to get the utility or company to focus on taking a proactive approach.”
Dettloff outlined “commercially reasonable” projects DTE identified to meet performance expectations of customers like Saunders, including the following:
– additional maintenance on specific lines;
– replacement of equipment;
– animal deterrents; and
– best-feed operating configuration (switch-gear reconfiguration) at 15 locations.
Overall interruption performance across the three SMCs showed improvement from 1995 to 1998. Interruption occurrences decreased by about 40 percent, and the amount of DTE`s overall payments decreased about 60 percent.
Dettloff said, “To make the system to a point where there are no interruptions is just not feasible.” Payments will most likely continue to be made through 2004 (the end of the contracts).
Voltage sags added to SMCs
The automakers were interested in contingencies for voltage sags as early as 1994 when the SMCs were signed, but no historical performance data was then available on which such agreements could be based. To remedy this situation, 136 monitors (PML ACM 3720) were installed at the 58 SMC locations in 1995.
The monitors were set to trigger when voltage sagged to 92 percent of normal voltage, and their data were retrieved once daily and loaded into a power quality database. Qualifying voltage sags were defined as follows:
– voltage sags below 75 percent of the normal voltage on at least one phase and all durations;
– voltage sag is not caused by the customer and occurs only on loaded services;
– a 15-minute aggregation period is used; the worst sag each 15-minute period per location is considered; and
– an interruption excludes sags during the period.
Qualifying sags are scored with the sag score being the average percent of normal voltage lost. The deeper the sag, the higher the score. For example, if the voltage sags to 85 percent of normal voltage, the score is 0.15, indicating a 15 percent loss of normal voltage. A deeper sag to 75 percent of normal voltage results in a score of 0.25, representing 25 percent loss of normal voltage.
When voltage sag targets are exceeded, DTE makes payment to the customer. Payment equals sag score or portion in excess of target, multiplied by the location`s agreed upon dollar amount. For example, sag score of 0.28 at Location B, which receives $100,000 for interruptions, is calculated as 0.28 x $100,000 = $28,000.
Voltage sag agreements were signed in October 1998 and coverage was retroactive to Jan. 1, 1998. Results so far are very encouraging-DTE`s 1998 payment total was $230. Targets for 1999 are 50 percent to 95 percent of the 1998 targets.
Saunders said GM also has SMCs with Consumers Energy (Jackson, Mich.) and FirstEnergy (Akron, Ohio) for other facilities.
Both Dettloff and Saunders cited benefits derived from SMCs. Dettloff said the contracts allowed DTE to capture the clients` loads in a time of uncertainty, and further strengthened DTE`s relationships with those clients.
Saunders said a major benefit gained by SMCs is the collection of monitored data, allowing decisions to be made based on facts rather than assumptions. He said, “Generalities now become very specific.” The data allow root-cause analysis, time and duration definitions, and provides cost values for interruptions and voltage sags. “You can`t control if you can`t measure and monitor,” he said.
The SMC clients also receive annual kWh reductions, and benefit from DTE being more responsive and proactive at improving power quality. With the right negotiations, power quality monitoring programs can provide win-win situations for both parties. n