Forecasting model cuts vegetation control costs

Mark Allen

Chicago

Saving 25 percent to 35 percent on vegetation management costs-that`s what utilities around the country are finding they can do. These savings result from taking a long-term view of vegetation management-a strategy that, until recently, was not standard practice for many electric power companies.

“A number of utilities have told me that, when budgeting for vegetation management, they don`t look beyond three years. But, we know from the past experiences of several utilities and recent data from Virginia Polytechnic Institute and Clemson University, that the vegetation control decisions made today have a major impact on budgets for a decade or more,” said Jim Bean, utility sales manager for American Cyanamid Co.

Interestingly, some utilities have evaluated vegetation management costs using a long-term perspective-and changed their practices after doing so. In an extreme case, a distribution cooperative, Amicalola Electric Membership Corp., reported an 80 percent reduction in its annual vegetation management costs.

To help utilities take the long view and find long-term savings, Bean developed a new computerized financial model. This model compares the net present value (NPV) of various vegetation control programs, such as mowing, cutting and low-volume herbicide brush control programs. NPV measures the cost of today`s dollars spent in the future, based on an appropriate discount rate (the time-value of cash resulting from inflation and interest costs). So, utilities see an “apples-to-apples” comparison of various vegetation control options over time.

Bean meets with utility companies across the country, evaluating their current programs and helping them make informed choices via the computer model. “The process requires some initial fact-finding, and, where facts don`t exist, we work with the utility to find the best possible estimate,” explained Bean.

The evaluation begins with an assessment of a utility`s current situation. The accompanying sidebar summarizes one utility`s assessment. Utility X, an investor-owned electric power company located in the Southeast, uses only mechanical methods (mowing and hand cutting) to manage its 1,650 (125 ft. wide) transmission line miles. The company`s total transmission line acres are about 15,000-60 percent of which requires brush control. It mows these areas on a 3- to 4-year rotation. Currently, the average cost to manage vegetation on the lines using mechanical methods is $143 per acre. (Average mechanical cost per acre is based on mowing 95 percent of the brush acres at a price of $140 per acre, and the other five percent being hand cut at $200 per brush acre.)

The computer model forecast Utility X`s current vegetation management program would cost $16,632,475 by the end of year 16.

“It`s helpful for a utility to see the costs of its current program over time. Once we see the current situation, we can look for more cost-effective alternatives,” said Bean.

The model then compares Utility X`s program with an integrated vegetation management (IVM) program, using a mix of mechanical methods and herbicide brush control programs. The results in this case are encouraging. In this scenario, Utility X incorporates a herbicide mix of 1 pint ARSENAL herbicide and 4 quarts ACCORD herbicide and uses mechanical methods only in areas where herbicides are not an option.

To start the IVM program, Utility X mows the lines as usual in year one. In year two, the utility sprays the herbicides via tractor. In year six, Utility X makes selective “spot” herbicide treatments via backpack sprayer. It repeats these maintenance treatments in years 11 and 16.

At the end of year 16, Utility X will spend approximately $11,932,830, saving close to $4.7 million-nearly 30 percent overall. Using the NPV analysis at a discount rate of eight percent and the current inflation rate, the IVM program could save Utility X $1,315,749 in present dollars.

“Each scenario is different, so we work with individual utilities to incorporate their unique characteristics, such as geography, history, local costs, etc.,” said Bean. “If a utility company is already using a herbicide brush control program, we can use the model to fine tune their existing program.”

Bean has given demonstrations to utility companies nationwide. “Both vegetation managers and upper management find this analysis and data very helpful. We`ve also found that utility upper management is often receptive because this analysis speaks their language-and they welcome the input,” said Bean.

Utility managers may call 800-545-9525 ext. V2822 to request a demonstration of the American Cyanamid NPV computer model.

Mark Allen is a business writer based in Chicago.

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