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Distribution Systems Redesign

TR-111683

Final Report, December 1998

EPRI Manager
Harry W. Ng

EPRI 3412 Hillview Avenue, Palo Alto, California 94304 PO Box 10412, Palo Alto, California 94303 USA
800.313.3774 650.855.2121 askepri@epri.com www.epri.com
DISCLAIMER OF WARRANTIES AND LIMITATION OF LIABILITIES
THIS REPORT WAS PREPARED BY THE ORGANIZATION(S) NAMED BELOW AS AN ACCOUNT OF WORK
SPONSORED OR COSPONSORED BY THE ELECTRIC POWER RESEARCH INSTITUTE, INC. (EPRI).
NEITHER EPRI, ANY MEMBER OF EPRI, ANY COSPONSOR, THE ORGANIZATION(S) NAMED BELOW, NOR
ANY PERSON ACTING ON BEHALF OF ANY OF THEM:

(A) MAKES ANY WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, (I) WITH
RESPECT TO THE USE OF ANY INFORMATION, APPARATUS, METHOD, PROCESS, OR SIMILAR ITEM
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REPORT OR ANY INFORMATION, APPARATUS, METHOD, PROCESS, OR SIMILAR ITEM DISCLOSED IN
THIS REPORT.

ORGANIZATION(S) THAT PREPARED THIS REPORT

Arthur D. Little, Inc.

ORDERING INFORMATION
Requests for copies of this report should be directed to the EPRI Distribution Center, 207 Coggins Drive, P.O. Box
23205, Pleasant Hill, CA 94523, (925) 934-4212.

Electric Power Research Institute and EPRI are registered service marks of the Electric Power Research Institute, Inc.
EPRI. POWERING PROGRESS is a service mark of the Electric Power Research Institute, Inc.

Copyright 1998 EPRI, Inc. All rights reserved.


CITATIONS

This report was prepared by

Arthur D. Little, Inc.


Four Embarcadero Center
San Francisco, California 94111-4173

Principal Investigators:
E. Wetmore
H. Vela

Assisted by:
J. Burke, ABB as Project Integrator
J. Kelley, Frontline Technologies
D. Divan, Soft Switch Technologies
W. Marek, Center for Management of Professional Work
J. Hughes, Paragon Consulting
C. Feinstein, Santa Clara University

EPRI Manager:
H. Ng

Assisted by:
L. Carmichael, EPRI
S. Chapel, EPRI
V. Longo, EPRI
S. Okonek, EPRI

This report describes research sponsored by EPRI.

The report is a corporate document that should be cited in the literature in the
following manner:

Distribution Systems Redesign, EPRI, Palo Alto, CA: 1998. TR-111683.

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REPORT SUMMARY

Deregulation, rapid technological advance, and vastly increased customer choice will
challenge the traditional design of electric distribution systems. The EPRI Distribution
Systems Redesign Project has developed two conceptual designs to help distribution
companies (DISCos) understand the possible needs of the distribution system of the
future (5 to 15 years).

Background
As deregulation looms, the environment in which the electric utility industry does
business is undergoing rapid change. This change is the biggest event to occur since the
industry was created. It is even possible that vertically integrated utilities that produce
and distribute electricity will be replaced with separate companies specializing in the
generation, transmission, and distribution of electricity. What is certain is that meeting
the needs of the new environment will provide an opportunity, or a demand, to
redesign the distribution system. Before significant investments are made, however, the
industry must decide how to position themselves for the future. This study was
undertaken to identify business visions and conceptual designs for possible future
distribution companies.
Objective
To develop conceptual designs that will allow DISCos to plan for the future.

Approach
The project team first identified plausible types of future DISCos. In parallel, the team
held conferences with leaders from industry to gather visions of various technology
areas that will be important in the future. With guidance from the advisory
committeeconsisting of many members of the Distribution Business Councilthe
team identified six pure types of DISCos (business visions) and defined the services
they would provide. The team then selected two business visions that incorporated the
broadest array of technologies to refine into conceptual designs.
Results
A total of six different DISCos were identified as possible pure business visions. The
actual distribution companies of the future are not likely to mirror any one of the
business visions exactly, but they will likely be a blend of the visions. Two of the six
visions were then selected for development into a conceptual design: Service DISCo,

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and Multiple Utilities Manager (MUM). While these visions are not necessarily the
most likely future scenarios, they are reasonable visions that most comprehensively
cover a variety of technologies that will be needed by the DISCo of the future.
Service DISCo has the primary goal of increasing revenue by offering a variety of
products and services to customer segments willing to pay premiums for added service
levels. MUM has the primary goal of becoming the low cost supplier for a range of
products such as electricity, gas, water, and basic telecommunication services, reducing
costs through exceptionally skillful asset management and high utilization of
infrastructure.
The report provides conceptual designs for the future distribution system, including
the risks, challenges, and the benefits and technologies available in the next 5 to 15
years that meet these performance requirements. The designs also outline a migration
path to the new DISCo. Two important general conclusions emerged from the design
work undertaken in this project: any future distribution system will be extremely
complex and communication will play a major role in the operation of the new
distribution system.

EPRI Perspective
The electric distribution system and company of the future will look very different than
the utility company of today. Competition will drive change, just as it has in the
deregulated telecommunication industry. This report will help DISCos plan for the
future and take the actions required now to position themselves in the new
environment. The reader may not agree with all views of the future reflected in this
reportin fact, the participants in the project had many spirited debatesbut the study
was intended to be provocative and, most of all, thought provoking. A natural next step
might be to create a conceptual design for a DISCo based on a specific utilitys vision of
the future and its present distribution system.

TR-111683
Interest Categories
Reliability
Advanced planning and operations
Reliability assessment
High quality delivery service

Keywords
Distribution planning
Distribution
Future distribution

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EXECUTIVE SUMMARY

Introduction

Todays environment in the utility industry has created opportunities for many of its
associated stakeholders. The pressures of customer choice, a pro-market regulatory
environment, and technological advances have already led to significant change in the
electric utility industry. Although the distribution sector is still primarily part of the
traditional regulatory mindset, the aforementioned drivers will lead to opportunity in
the distribution sector as well. These newly formed distribution companies (DISCos)
can respond to the new environment with a number of business strategies, or visions,
all of which will have implications for the industrys stakeholders.

To reap the benefits of the changes in tomorrows electric distribution sector, however,
two of these stakeholdersutilities and suppliers of utility R&D servicesneed to
make certain strategic decisions today. Utilities need to start thinking about the
business strategy that is the most appropriate for their company in the future. Once the
utility has determined its DISCo strategy, that utility will have to decide what
distribution system capabilities will be required and what technologies and assets will
be needed to enable those capabilities. As a result of the changing needs of these
utilities, suppliers of utility R&D, like EPRI, need to make decisions about their R&D
portfolios to ensure that the future needs of utilities are met.

Objective and Scope

The primary objective of EPRIs Distribution Systems Redesign Project is to develop


conceptual designs for the selected business visionsService DISCo and Multiple
Utilities Managerthat will allow stakeholders to plan for the future by investing in
their current distribution assets and work processes. The distribution system design
has not been substantially changed in the U.S. for the past 40 years, with exception of
several incremental improvements in technology. However, in response to expected
radical changes in business behavior and potential business visions of distribution
companies, the distribution system design of the future will likely change dramatically,
and planning for these changes is of critical importance for the DISCo.

The scope of the electric distribution system for this project was defined by the flow of
energy products. The front end of the system starts at the distribution substation where
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the voltage is stepped down from the transmission level voltage. For the back end,
assets beyond the meter are considered if they have upstream impact on distribution
assets.

Business Visions

To better relate technology to a business context, it was determined that the conceptual
designs for the redesigned distribution system would be driven by business visions,
instead of being driven solely by technology concepts. It is important to understand
that the business visions were developed first, and that these business visions then
drove the development of the conceptual designs. For example, the performance
requirements that a DISCo must meet in order to pursue a particular business vision
dictate what technologies are integrated into the conceptual designs.

A variety of business visions were evaluated, and based upon Advisor input, it was
decided to develop conceptual designs for two specific visions: the Service DISCo and
the Multiple Utilities Manager. While these visions are not necessarily the most likely
future scenarios, they are reasonable visions that most comprehensively cover a variety
of technologies that will be needed by the DISCo of the future. For example, a
Commodity WiresCo visiona DISCo that only offers basic electric distribution
servicesis another reasonable vision that we initially evaluated, but it provided
minimal opportunity to cover a broad technology set and therefore is not included in
this report.

A summary of the two visions that drive the development of the conceptual designs are
described below:

Service DISCo: The primary goal for the Service DISCo is to increase revenue by
offering a variety of products and services to customer segments willing to pay
premiums for added service levels. Importantly, the Service DISCo is willing to
invest to support its vision (i.e., a low cost focus is not necessarily a requirement in
this vision).

To facilitate a high level of service beyond the meter, the Service DISCos
relationship with the retail segment of the utility business is important in this vision.
Although the link to the RetailCo needs to be strong, the RetailCo does not have to
be owned by the Service DISCo, as alliances can be formed.

Multiple Utilities Manager (MUM): The primary goal of the MUM is to become the
low cost player for convergence products. The MUM will reduce costs through
exceptionally skillful asset management and high utilization of its infrastructure.
The MUM chooses a few basic products (e.g., electricity, gas, water, and basic
telecommunication services) and seeks to improve margins through excellence in
operations and management of the distribution system.

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The service levels in this business vision are adequate to provide a basic level of
satisfaction to customers. Unlike the Service DISCo, the MUM does not seek to
expand its offering of products and services through a high level of differentiation.
Support of higher service levels requires the use of assets that are not necessarily
core assets. Core assets, in this case, are those that the MUM is most capable of
leveraging. Because implementation of these non-core assets is a distraction from
management of core operations, the MUM chooses not to increase service levels and
chooses instead to keep cost levels at a minimum.

One more point needs to be noted, and understood by the reader. Each business vision
was based upon a number of assumptions. In reality, these visions will not evolve
exactly as envisioned: each state will have its own, unique set of regulatory changes;
certain technologies will advance more rapidly than others; and unforeseen
circumstances will arise. An absolute pure play of these visions is unlikely.
However, these business visions are plausible representations of the future, and they
enable the development of conceptual designs that allow stakeholders to anticipate
and proactively plan forthe future. Strategies need to continually evolve, and
companies cannot wait for all the questions to be answered before they develop their
strategy.

Conceptual Designs

As stated earlier, the primary objective of the Distribution Systems Redesign Project is
to develop conceptual designs for the selected business visionsService DISCo and
Multiple Utilities Managerthat will allow stakeholders to plan for the future by
investing in their current distribution assets and work processes. This section
comprises the bulk of this report, translating the business visions into conceptual
designs for the DISCo of the future.

In the conceptual designs, the features and benefits of distribution technologies are
thought of in terms of the specific distribution business visions. The performance
requirements that a DISCo must meet in order to pursue a particular vision dictate the
technologies (and resulting benefits) that are integrated into the conceptual design. The
following areas are discussed in this section:

System Assets

High Level Design Considerations

New Technology Dimension (Description)

System Performance Attributes

Review of Products and Services

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System Costs

Risks and Challenges

Identification of Key Benefits

Migration Path

Summary of Stakeholder Interviews

A variety of stakeholders were interviewed to obtain an objective review of the


business visions and the corresponding conceptual designs. The intent of these
interviews was not to prove or disprove the validity of our work, but rather to identify
what issues might arise if either business vision is pursued. The following stakeholder
groups were interviewed:

Customers

Regulators

Employees of the DISCo

Shareholders of the DISCo (Investors)

Stakeholders With an Environmental Interest

Stakeholders With a Concern For Public Safety

Appendix

The following sections are included in the appendix:

Technical Specialist Comments: Based on Advisor input, four technical areasdistributed


resources, power electronics, two-way communications, and constructionare
evaluated in the context of the two business visions. While these comments are
integrated into the conceptual designs, a copy of each technical section is included in
the appendix for additional support.

Stakeholder Interviews: A complete listing of stakeholder comments is included.

Multiple Utilities Manager of Today: To support the development of the MUM business
vision, several utilitiesdomestic and internationalthat are currently operating some
form of a multiple utility system were interviewed. These interviews provide some
insights into the realities of today.

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The Distribution Cost Structure Analysis: The analysis preceded the redesign project, but
due to the importance of its findings, a summary of this analysis is included. This cost
structure analysis highlights where utilities are currently spending their distribution
dollars, and in turn, sets the stage for the distribution redesign project from a cost
perspective by identifying where cost-based improvement opportunities exist.

Next Steps

This report completes the first phase of the Distribution Systems Redesign Project. This
phase was extremely challenging and thought provoking, with a wide variety of
opinions contributing to the development of this report. Through Tailored
Collaboration, Phase II could move past the conceptual design of a distribution
system, into a technical design.

In Phase II, one conceptual design would be tailored to a specific utilitys future
distribution business. This would entail the following primary steps:

Refining the utilitys distribution vision and strategy based upon the agreed upon
vision (Service DISCo or Multiple Utilities Manager).

Evaluating the utilitys current distribution system (e.g., capabilities, performance


dimensions and metrics, products and services, assets, etc.) and determining what
capabilities and performance requirements will be necessary for the future
distribution system.

Outlining the specific migration stagebased upon the availability and cost of
technology during the entire period under considerationand determining the
necessary capital investment and benefits for the specific migration stages.

Developing a detailed technical plan for the initial migration stages and outlining
the implementation plan.

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CONTENTS

1 BUSINESS VISION DISCUSSION ...................................................................................... 1-1

2 DESCRIPTION OF ASSETS ............................................................................................... 2-1


2.1 Traditional Distribution System .................................................................................... 2-1
2.2 System of the Future ................................................................................................... 2-2
2.3 Two Visions ................................................................................................................. 2-4
Specialist Comments ........................................................................................................ 2-12
Distributed Resources ................................................................................................... 2-12
Service DISCo........................................................................................................... 2-12
Multiple Utilities Manager .......................................................................................... 2-13
Construction .................................................................................................................. 2-13
Power Electronics ......................................................................................................... 2-14
Communications ........................................................................................................... 2-15
Service DISCo........................................................................................................... 2-15
Multiple Utilities Manager .......................................................................................... 2-16

3 HIGH LEVEL DESIGN CONSIDERATIONS........................................................................ 3-1


3.1 DC Distribution System ................................................................................................ 3-1
3.2 Superconducting DC Cable ......................................................................................... 3-3

4 NEW TECHNOLOGY DIMENSION ..................................................................................... 4-1


4.1 Distributed Resources.................................................................................................. 4-1
4.1.1 Solar Power........................................................................................................... 4-1
4.1.2 Wind Power........................................................................................................... 4-1
4.1.3 Fuel Cells .............................................................................................................. 4-2
4.1.4 Micro Turbines ...................................................................................................... 4-2
4.2 Power Conditioners...................................................................................................... 4-2

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4.2.1 Introduction ........................................................................................................... 4-2


4.2.2 Power Line Conditioners ....................................................................................... 4-3
4.2.3 Surge Suppression................................................................................................ 4-3
4.2.4 Constant Voltage Transformers (CVTs) ................................................................ 4-5
4.2.5 Isolation Transformers........................................................................................... 4-6
4.2.6 Line Conditioners .................................................................................................. 4-7
4.2.7 Relative Costs ..................................................................................................... 4-10
4.3 Custom Power Devices.............................................................................................. 4-11
4.3.1 Adaptive Var Compensator (AVC) ...................................................................... 4-11
4.3.2 Batteries.............................................................................................................. 4-12
4.3.3 Solid State Switch ............................................................................................... 4-13
4.3.4 Dynamic Voltage Restorer (DVR)........................................................................ 4-16
4.3.5 Solid-State Breaker (SSB)................................................................................... 4-18
4.3.6 Series Capacitors................................................................................................ 4-19
4.3.7 Superconducting Magnetic Energy Storage (SMES) .......................................... 4-22
4.3.8 Static Series Voltage Regulator (SSVR) ............................................................. 4-25
4.3.9 Cost..................................................................................................................... 4-26
4.3.10 Energy Only ...................................................................................................... 4-26
4.3.11 Conclusions....................................................................................................... 4-27
4.4 Power Quality Standards ........................................................................................... 4-27

5 SYSTEM PERFORMANCE ATTRIBUTES.......................................................................... 5-1


5.1 Introduction .................................................................................................................. 5-1
5.2 Reliability Indices ......................................................................................................... 5-1
5.3 Survey Results............................................................................................................. 5-3
5.4 Causes of Outages ...................................................................................................... 5-4
5.5 Power Quality Standards ............................................................................................. 5-7
5.6 Budget Constrained Planning ...................................................................................... 5-8
5.7 Performance Based Indices......................................................................................... 5-9
5.8 Losses ....................................................................................................................... 5-10

6 REVIEW OF PRODUCTS AND SERVICES ........................................................................ 6-1


6.1 Service DISCo ............................................................................................................. 6-1
6.1.1 Products:................................................................................................................ 6-1

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6.1.2 Services: ............................................................................................................... 6-2


6.2 Multiple Utilities Manager ............................................................................................. 6-2
6.2.1 Products:............................................................................................................... 6-2
6.2.2 Services: ............................................................................................................... 6-3

7 WORK PROCESSES .......................................................................................................... 7-1


7.1 Distributed Resources.................................................................................................. 7-1
7.2 Direct Current............................................................................................................... 7-2
7.3 Communications .......................................................................................................... 7-3
7.4 Metering....................................................................................................................... 7-4
7.5 Electric Vehicles........................................................................................................... 7-5
7.6 Power Quality .............................................................................................................. 7-5

8 SYSTEM COSTS................................................................................................................. 8-1

9 RISKS AND CHALLENGES................................................................................................ 9-1


9.1 Distributed Resources.................................................................................................. 9-1
9.2 DC DISCo .................................................................................................................... 9-3
9.3 Electric Vehicle Platform .............................................................................................. 9-4
9.4 Communications .......................................................................................................... 9-4
9.5 Power Quality .............................................................................................................. 9-5
9.6 Construction................................................................................................................. 9-6

10 KEY BENEFITS............................................................................................................... 10-1


10.1 Power Electronics .................................................................................................... 10-1
10.2 DC DISCo ................................................................................................................ 10-1
10.3 DC DISCo using Superconductivity ......................................................................... 10-2
10.4 Electric Vehicles (as a source of distributed power)................................................. 10-2
10.5 Real Time Systems Analysis.................................................................................... 10-3
10.6 Communications ...................................................................................................... 10-3
10.7 Convergence/Partnership ........................................................................................ 10-3
10.8 Power Quality Management..................................................................................... 10-4

11 MIGRATION PATH.......................................................................................................... 11-1


11.1 Service DISCo ......................................................................................................... 11-1
11.2 Multiple Utilities Manager ......................................................................................... 11-2
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12 SUMMARY OF STAKEHOLDER INTERVIEWS ............................................................. 12-1

A APPENDIX..........................................................................................................................A-1
TECHNICAL SPECIALIST COMMENTS ............................................................................ A-2
DISTRIBUTED RESOURCESTECHNICAL SPECIALIST COMMENTS ...................... A-2
Introduction ................................................................................................................. A-2
New Technology Description....................................................................................... A-3
Embedded and Discarded Technologies .................................................................... A-3
Work Processes .......................................................................................................... A-4
System Cost Analysis.................................................................................................. A-5
Risks and Challenges.................................................................................................. A-6
Key Benefits ................................................................................................................ A-7
Migration Path ............................................................................................................. A-7
POWER ELECTRONICSTECHNICAL SPECIALIST COMMENTS ................................. A-9
Introduction ..................................................................................................................... A-9
Multiple Utilities Manager ............................................................................................ A-9
New Technology Description..................................................................................... A-10
TWO-WAY COMMUNICATIONSTECHNICAL SPECIALIST COMMENTS ................... A-37
Two-Way Communication ArchitectureOverview ....................................................... A-37
Products and Services Discussion ................................................................................ A-50
Overview ................................................................................................................... A-50
CONSTRUCTIONTECHNICAL SPECIALIST COMMENTS .......................................... A-59
New Technology Description......................................................................................... A-59
STAKEHOLDER INTERVIEWS ........................................................................................ A-66
MULTIPLE UTILITIES MANAGER OF TODAY................................................................. A-75
Breadth of Utility Operations ......................................................................................... A-75
Benefits ......................................................................................................................... A-76
Complications................................................................................................................ A-78

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LIST OF FIGURES

Figure 2-1 Traditional Distribution System ............................................................................. 2-1


Figure 2-2 Typical Load Character ........................................................................................ 2-2
Figure 2-3 Distribution System of the Future ......................................................................... 2-4
Figure 2-4 MUM Schematic ................................................................................................... 2-8
Figure 2-5 Historical Product Flow ......................................................................................... 2-9
Figure 2-6 MUM Product Flow ............................................................................................... 2-9
Figure 2-7 Service DISCo Schematic .................................................................................. 2-11
Figure 3-1 Potential Sites for DC Distribution System............................................................ 3-3
Figure 3-2 Schematic of DC Distribution System ................................................................... 3-4
Figure 3-3 DC Distribution System......................................................................................... 3-4
Figure 4-1 MOV Clamping of Transient Voltage .................................................................... 4-4
Figure 4-2 Surge Supression ................................................................................................. 4-4
Figure 4-3 Elements of ferroresonant regulation using a transformer.................................... 4-5
Figure 4-4 Isolation Transformer............................................................................................ 4-6
Figure 4-5 Motor generator with flywheel............................................................................... 4-8
Figure 4-6 UPS Configurations .............................................................................................. 4-9
Figure 4-7 Schematic of AVC .............................................................................................. 4-11
Figure 4-8 One-line Diagram of Battery Storage Device...................................................... 4-12
Figure 4-9 Static Switch Transfer Sequence-Single Phase Diagram ................................... 4-13
Figure 4-10 Bypass Scheme................................................................................................ 4-15
Figure 4-11 DVR Schematic ................................................................................................ 4-16
Figure 4-12 DVR Voltage Injection to Counter Voltage Sag ................................................ 4-17
Figure 4-13 Schematic of Typical SSB ................................................................................ 4-18
Figure 4-14 Uses for SSB .................................................................................................... 4-19
Figure 4-15 Series Capacitor (Old Design) .......................................................................... 4-20
Figure 4-16 Series Capacitor (New Design)......................................................................... 4-21
Figure 4-17 Conceptual Illustration of SMES ....................................................................... 4-22
Figure 4-18 SMES Block Diagram ....................................................................................... 4-23
Figure 4-19 Application of SSVR ......................................................................................... 4-25
Figure 4-20 SSVR Operation ............................................................................................... 4-25

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Figure 5-1 Percentage of Companies using Indices (48 Companies Responded)................. 5-3
Figure 5-2 Duration of a Momentary Outage ......................................................................... 5-4
Figure 5-3 Reported Cause of Outages................................................................................. 5-5
Figure 5-4 Outage Caused .................................................................................................... 5-6
Figure 5-5 Map of Distribution Lines Highlighted to Identify Location of Voltage Sags.......... 5-6
Figure 5-6 Sags to Industrial Customers................................................................................ 5-7
Figure 5-7 System Losses ................................................................................................... 5-10
Figure 5-8 Distribution System Losses Might Be Reduced with Addition of DR................... 5-11

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LIST OF TABLES

Table 2-1 High Level Performance Requirements ................................................................. 2-5


Table 2-2 Criteria Rating........................................................................................................ 2-5
Table 2-3 Performance Requirements ................................................................................... 2-6
Table 2-4 Distribution Asset Attributes................................................................................... 2-6
Table 2-5 Importance of Advanced Technologies ................................................................. 2-7
Table 2-6 Mapping of Redesign Concepts............................................................................. 2-8
Table 2-7 MUM Technologies and Services ........................................................................ 2-10
Table 2-8 Service DISCo Technologies and Services ......................................................... 2-12
Table 4-1 Relative Cost and Characteristics of PQ, Service Interruption Equipment........... 4-10
Table 4-2 Ratings of Solid State Transfer Switch ................................................................ 4-13
Table 4-3 Ratings of Medium Voltage Transfer Switch ........................................................ 4-14
Table 4-4 Estimated Cost of Operating Various Customer Power Devices ......................... 4-26
Table 4-5 Estimated Total Cost to Operate Various Customer Power Devices ................... 4-27
Table 5-1 Typical numbers for customer based indices......................................................... 5-2
Table 7-1 Status of MVDC ..................................................................................................... 7-3
Table 8-1 Assessment of Present DR Cost ........................................................................... 8-2
Table 8-2 Assessment of Future DR Cost ............................................................................. 8-2
Table 8-3 Assessment of Present and Future Construction Cost .......................................... 8-3

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PREFACE TO CONCEPTUAL DESIGNS

Integrator's Comments

The following is an analysis of materials created for EPRI reflecting possible changes to
the environment we call the Distribution System. It is based on the assumptions that
there are two mentalities: the Commodity World, where low cost positioning is
prevalentand the Market World, where service differentiation is prevalent. The
Service DISCo is more linked to the Market World and leverages services to maintain a
strong contact with the customer. The Multiple Utilities Manager, on the other hand,
has ties to both worlds.

The integrators opinion on all this is as follows:

Commissions will allow industrial, commercial and residential customers to


eventually purchase energy from whomever they want

Rate cuts will prevail

Remaining barriers to non-utility generation will be removed

Utilities must become the Low Cost Provider of Choice to survive and they must
do this by creating cost effective operations, strong customer orientation, and
flexibility to the changing environment

Specialist Comments1

Distributed Resources

Distributed Resources provide an alternative to more traditional investments made by


distribution companies. Distribution system investments are made for several reasons,
including the need to satisfy increased customer demand. As demand increases, or
becomes more uncertain, it may be possible to defer for some time or delay indefinitely

1
Specialist comments are greatly edited in some cases. Complete comments are included in the
Appendix.

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traditional capacity expansion investments by distributing generation, storage, and


demand-side management technologies throughout the distribution system.

Power Electronics

It is anticipated that the issues of quality power delivery to the customer are not truly
part of the MUM's area of concern, unless the quality falls outside the bounds of what is
specified in the contract. If the customer desires higher power quality than the
minimum specified, he will need to invest in (possibly with the utility's or a PQ
consultant's guidance) power quality devices, which will give him the level of quality
he needs. As such, the MUM needs to have familiarity, but does not need to be a
provider in this area. (It is anticipated that in actual life, for select customers, the MUM
may need to do more, and in effect move closer to a Service DISCo in some aspects of
their business).

The Service DISCo seeks to gain a competitive advantage by forming a close


relationship with the customer and providing him with services that extend beyond the
mere provision of energy. For instance, improved power quality, energy audits,
providing monitoring and maintenance of all electricity supply, cogeneration and back-
up power equipment and services, financing, for meeting a customer's power quality
and service enhancement needs, and generally working in partnership to realize higher
levels of productivity. Power electronics will play an increasingly important role in
this universe. For instance, on the utility side, if the customer desires a premium power
service, then the utility would install the PQ enhancing equipment on its side of the
meter, and would bill the customer appropriately. Alternately, the utility could finance
or help with locating, specifying and commissioning the equipment on the customer
side of the meter. Several new possibilities exist for the utility in this universe.

Communications

From a communications perspective, the electric distribution system of the future seeks
to develop communication and application inter-operability with dozens of devices
connected to a variety of communication media. It should be noted that the
fundamental technology components listed below are representations of a class of
technologies. There could, for instance, be literally dozens of manufactures each with a
number of product lines for each of these categories. The manufacturer can offer
different levels of functionality at appropriate price points to meet the consumer's task
and financial resources.

Customer Premise Gateway

Intelligent Electric Unit Device

Distributed Generation Communication Interface

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Open System Communication Protocols and Standards, including the Utility


Communication Architecture (UCA)

Construction

Construction technologies and methods will be available and will be a cost effective
way for the DISCo owner to maintain and construct his outside plant at the best
possible price. In 15 to 20 years a radical departure from the construction methods of
today, such as pole line construction and excavation for underground, is unlikely. The
processes mentioned are advances in these specific areas that will be more refined.

Further, these technologies and methods will benefit the MUMs operation because
they are low-cost, effective methods. The difference between the MUMs operation and
the Service DISCos operation is that the MUM will probably use more contracted
maintenance help rather than their own employees. Contracted labor is used because
the firm is only paying for the services that are needed and the contractors they call are
geared for on-call maintenance and have the skilled people to respond at a moments
notice. The contractors hourly rates reflect these types of services that they provide and
the MUM operator will know how to program these rates in their yearly operating
budgets. Now you have a situation where the MUM does not have to have that large
work force to maintain their facilities and outside plant and only pays for the services
that are needed. To the low-cost MUM this is a win-win situation. Most DISCos have
long-term labor agreements that restrict this type of operation.

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BUSINESS VISION DISCUSSION

The Service DISCo

Strategic Thrusts

The main goal in the Service DISCo is revenue growth through the offering of new
products and services to customer segments willing to pay premiums for added service
levels. This vision is premised on the assumption that margins on commodity
electricity will be low, and consequently, value-added services and additional products
will be required to increase profitability. It is also important to note that the Service
DISCo is willing to invest to support its vision (i.e., a low cost position is not necessarily
a requirement in this vision).

A key thrust in Service DISCos vision is its relationship with the retail segment of the
utility business. To fully understand the requirements of its customers, a strong retail
segment is required by the DISCo. Moreover, the DISCo needs a strong link with the
2
RetailCo to further capture customer information and to facilitate a high level of
service beyond the meter. Although the link to the RetailCo needs to be strong, the
RetailCo does not have to be owned by the Service DISCo; looser alliances can be
formed. Another key thrust for the Service DISCo is the requirement for partnerships
to support value-added service to customers. These partners could be providers of
alternative products, financial partners (services to customers), or technology suppliers.

Scope / Assumptions / Boundaries

The key drivers for the scope of Service DISCos vision are requirements for close
relationships with the customer and control of the customer interface. Service DISCos
will be involved in ownership of the meter. If the regulators do not allow direct
ownership, the Service DISCo will still look to partner with meter technology
providers. The regulatory model that is most similar to the one in this vision is the UK

2
RetailCo (a.k.a. Energy Service Provider): A deregulated business providing energy services and a variety of
other value-added customer services that may be moved economically through marketing channels. These
companies will create value by aggregating large numbers of customers, utilizing economies of scale, applying
financial and risk management capabilities, and developing innovative products and services. Their relationship
with the DISCo will also be critical.

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REC model, where regulatory returns are combined with unregulated returns in the
retail environment beyond the meter.

The value chain elements that will receive the most emphasis in this business vision are
the sales, marketing, and customer service functions. The sales and marketing
functions are critical in supporting the profitability model for the businessaccess to
new customer segments through growth. The customer service function is important to
build customer loyalty that will command premium prices and to collect valuable
market information that will assist in differentiating products and services.

Products / Services

The Service DISCo will offer a differentiated, but targeted portfolio to those customer
segments that are willing to pay for value-added products and services. The Service
DISCo will seek to enhance the value of energy offerings through the use of
downstream assets. In addition, the Service DISCo will become a conduit of
information for deploying other technologies such as remote monitoring and two-way
customer communication.

Three types of products and services will be offered by the Service DISCo. The first
type of product/service can be described as value-added electricity. The value added
to the electricity could be through use of equipment (e.g., power quality) or through
use of information to facilitate automated services. The second type of product/service
is pricing flexibility. The aforementioned information could also be used to drive
advanced billing, financial options, and price indexing. The third type of
product/service is driven by field operation. Example products in this category are
home security products and appliance services. It is important to note that the products
and services in this third category may have less impact on core distribution
technologies than other types of products, and therefore, are not extensively covered in
our work.

Asset Attributes and Leverage

Assets in the Service DISCo are configured around the customer. In other words,
technologies are included in the system specifically to support a particular customer
need. Todays systems are generally reactive, whereas the Service DISCo is proactive in
nature. In order to make this conversion, a significant amount of investment will be
required.

Several hard assets / technologies embedded within the Service DISCo include:

There is significant use of power electronics to guarantee higher levels of power


quality to certain customer segments. The assets needed to drive the power quality
can be placed close to customers or at the transformer or primary voltage level.

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Communications technologies are needed in several places in the Service DISCo.


The communications technologies are needed to fully capture the benefits of
controlling the customer interface. Moreover, internal communications (those that
do not directly involve the customer interface) are used to improve system
operation through distribution automation, which in turn, improves service levels to
customers.

Advanced underground cable technologies are used in the Service DISCo. Because
of the close relationship with customers, brand image is critical to the Service
DISCo. Increased use of underground assets enhances the companys image in this
vision.

DC Distribution plays a role in the Service DISCo. DC technologies can be


leveraged to deliver higher quality power to large customers. These technologies
are also used to facilitate the use of distributed resources, which are positioned as a
value-added service to customers.

There is significant investment in customer information systems and computer


technology. These technologies are used to manage customersin databasesand
as an interface with employees.

There is significant investment in operations and maintenance tools. A well-


maintained system is the best for delivering a high service level to customers;
therefore, this area is important. Advanced technologies, both hardware and
software, are used in the Service DISCo.

Performance Requirements

The Service DISCo needs to maintain strong performance. Reliability needs to be high
to command high margins on services and to maintain brand loyalty. For the same
reasons, customer service performance also needs to be high. To maintain public
image, environmental and safety standards are high for the Service DISCo. Power
quality requirements are also high, especially among large customers in C&I segments.

The Multiple Utilities Manager

Strategic Thrusts

The goal of the Multiple Utilities Manager (MUM) is to become the low cost player for
convergence products. The main thrust in the MUM is cost management through
exceptionally skillful asset management and high utilization. The MUM chooses a few
basic products (e.g., electricity, gas, water, and basic telecommunication services) and
seeks to improve margins through excellence in operations and management of the
distribution system.

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Business Vision Discussion

The service levels in this business vision are adequate to provide a basic level of
satisfaction to customers. Unlike the Service DISCo, the MUM does not seek to expand
its offering of products and services through a high level of differentiation. Support of
higher service levels requires the use of assets that are not necessarily core assets.
Core assets, in this case, are those that the MUM is most capable of leveraging. Because
implementation of these non-core assets is a distraction from management of core
operations, the MUM chooses not to increase service levels and chooses instead to keep
cost levels down.

Although service levels are relatively low when compared to the Service DISCo, the
MUM needs to maintain fairly high power quality and reliability. Requirements for
high power quality and reliability are not driven by customer needs, as in the Service
DISCo. Instead, the driver is in low cost operations which is facilitated when the
system is running smoothly. Because of the desire to keep the system running well,
strength in field operations on the core distribution assets is also required.

Scope / Assumptions / Boundaries

The MUM is a transporter of energy and other products that utilize synergistic assets.
The MUM is not a retailer, as products are sold through other organizations. The link
to the customer interface does not need to be strong. The MUM seeks excellence in
power delivery asset management and in system operations. The MUM aspires to be
strong in power marketing, but more from the purchasing side (low-cost interests)
rather than the end customer interface.

Because of the upstream emphasis, in the MUM does not necessarily need to own the
meter. The customer may not even know the level of involvement of the MUM
primary attention in this vision from the customer standpoint is still on the retail entity.
Returns to the MUM in this vision are regulateda high level of similarity to todays
environment.

Products / Services

The MUM offers a basic portfolio of products with limited service levels. The products
to be considered here are electricity, gas, water, and basic telecommunications services.
The service elements of the MUM offering are in bundling of products to retailers. The
MUM may offer a sophisticated meter to measure usage of all products, but it is not the
core service. The MUM may have some back office assets to support basic services to
the retailer, although the MUM may opt to outsource the back office in favor of assets
that leverage more vital areas.

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Asset Attributes and Leverage

Unlike the Service DISCo, the MUM does not leverage technology in a broad set of
areas. Instead, the MUM chooses to target a few key areas with technology investment.
The degree to which these investments are stressed depends on the specific ownership
structure of the MUM.

The MUM will seek to leverage a few key assets:

The utility will use distribution automation as a low cost driver. Of particular
interest are the distribution automation systems that can be used across product
types.

Communications technologies will be leveraged, although it depends in part on


who the MUM chooses as a partner. If the MUM seeks a partnership with a
telecommunications company, then communications technologies will be of high
importance due to shared competencies. If the partnership is with a gas company,
then communications could be less important.

Construction technologies are important in the MUM. To effectively build, operate,


and maintain core assets, the MUM will have to utilize advanced construction
technologies. The understanding is particularly important in the convergence of
gas, water, etc. (whenever utilities share a common trench) where the expense of
underground construction warrants strong management.

Performance Requirements

Performance requirements for the MUM are not as strong as that of the Service DISCo.
Requirements for reliability and power quality are moderate. They are needed to
support low cost internal operations, but they are not required specifically for
customers. Customer service is moderate because of the weak link to end customers.
Environmental standards are at a threshold level. In other words, legal requirements
are met, but public perception is not a driver of this vision. The one performance
standard that is high is safety, driven by the need for excellence in asset management
and operations.

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Integrators Commentary:

"I got on an airplane today where my ticket could be cancelled at no penalty to the
airline. I had not eaten lunch and assumed it would be a great treat to receive a box
lunch since I assumed a bag of peanuts would be my main course. I sat in the back of
the airplane and contemplated my triumph. I had paid only $203 where just 5 years
ago I had paid $900 for the same trip. I sat back and realized that in a de-regulated
industry, barriers to entry go down, prices go down, and levels of service go down. I
told myself I could always fly first class if I was willing to pay the price. With this
thought I began to write this report and remembered how this same airline had treated
me only 5 years earlier."

Jim Burke, Integrator


3/l/98

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DESCRIPTION OF ASSETS

2.1 Traditional Distribution System

The traditional distribution system (and there are many varieties) is characterized on
the premise that it is RADIAL. Because it is radial, virtually all intelligence to control
voltage level (drop), overcurrent protection, ampacities of lines and cables, and
reliability are based on the relative distance of the load from the substation. This
philosophy has resulted in simple, low cost methodologies to achieve certain goals,
some of which are mandated by electrical standards which have evolved for 50 years.
The variety of equipment deployed in the current distribution system is shown in
Figure 2-1:

Figure 2-1
Traditional Distribution System

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Description of Assets

Typical load characteristics seen on a distribution system are illustrated in Figure 2-2.
As can be seen, maximum loadings are generally much less than component capability
in order to allow backfeeds for emergency condition. Transformers, likewise, are
usually very conservatively rated. Unbalances due to single phase taps, short circuit
levels, voltage drop, etc. are all controlled based on system configuration and on the
premise that distance from the substation plays an important role in what equipment is
utilized and what protective levels are set. Electrons in this system flow from the
substation to the customer.

Figure 2-2
Typical Load Character

2.2 System of the Future

The system of the future is nothing like what we are used to. The biggest single change
in this system is that the system is NO LONGER RADIAL and things become far more
complicated (a distribution engineers dream or nightmare depending on your
perspective). Electron flow will be in all directions. This system will be characterized
by the need for communications and smart devices. Voltage can no longer be assumed
to be lower the farther away you get from the substation. Likewise, short circuit levels
cannot be assumed to decrease as you electrically travel out from the substational.
Cable ampacities may actually have to get larger in remote areas to accommodate
distribution storage and generation (DSGs), and electric vehicles (EVs). Some of the
changes in assets that will likely occur are as follows:

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Monitoring Substations will have to monitor virtually all power quality parameters
in order to ensure compliance with performance based rates. Customers will have PQ
monitoring built into their meters as well. Transformer will be loaded more heavily
and this will necessitate monitoring to insure no unusual loss of life. Other equipment
deemed critical will also be considered for monitoring.

Substation relays These relays will have to be more intelligent in order to


accommodate for the various conditions imposed by the new devices. This will involve
communications with protective devices being used by DSGs, and even EVs may
necessitate some protective action. The effect of reclosing on new technologies, like
microturbines, have to be re-evaluated.

Reclosers Reclosers must become bi-directional since electrons will flow in both
directions and settings must accommodate different settings to reflect this. In some
cases, reclosers will be adapted to act as sectionlizers (counting devices) to maximize
reliability capability. Communications will be necessary to allow flexibility for ever
changing configurations.

Capacitors All capacitors will be switched and have communications since the
standard parameters of control will be useless.

Regulation - Regulation at the substation will no longer use LTC since the technique
becomes invalid in this new environment. Monitoring of system parameters (volts and
amps) will become crucial and communications between regulating devices will
become necessary since the system changes due to DSGs and other devices.

Meters - Meters will become smart and programmable. Some will have the capability
to calculate reliability indices, power quality parameters, time-of-use, flicker, rates, etc.
Some will monitor other utilities and home security functions.

Electric Vehicles - Electric vehicles will have a major impact in how transformer,
cables, and protective devices are specified. All traditional approaches will be out the
window.

Interfaces The interfaces to DSGs, custom power devices, EVs, etc. will all be critical.
For example, what is the impact on a microturbine when the utility recloser goes
through its operations of opening and closing. The microturbines is a small devices
spinning in excess of 90,000 rpm with very little capability to store this energy during
these dead periods.

Harmonics Harmonics have not really been a problem in the traditional utility
environment. The introduction of many of the harmonic producing devices creates a
system similar to an industrial environment where resonant conditions can be a major
concern.

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Safety The industry is going to have to address the impact of these devices, not only
on the safety of those that own and operate them, but on utility personnel working on a
completely foreign design, some of which they may have little knowledge or control.

Power Quality Monitor


PQ

Directional Recloser

Distribution 3 Main
Substation R

1 Meter
M -PQ
-Time of use
-Security
Switched -Gas
Capacitor -Water

Distributed
Microturbine Regulator (With Communication) Generation
(Photovoltaics)
REG

Batteries

Custom Gas
Power DC Bus
Turbine
Device

Industrial
Power Quality Park
R Directional Recloser
Distribution Substation

Electric
Vehicles

Figure 2-3
Distribution System of the Future

2.3 Two Visions

The information shown below illustrates the results of survey data submitted by
participating utilities (the Advisors). The integrator agrees with the perceptions
obtained in this excellent analysis. The question presented to the integrator in this task
is how are the schematics of the two business visionsService DISCo and Multiple
Utilities Managerdifferent? The answer is difficult since most of the responses show
strong requirements for the Service DISCo and moderate requirements for the MUM.

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Table 2-1
High Level Performance Requirements

High level performance Service DISCo MUM


requirements
Reliability (electricity delivery) Strong Requirement Moderate Requirement
Power Quality Strong Requirement Moderate Requirement
Power Flow Control Moderate Requirement Moderate Requirement
Customer Service Strong Requirement Moderate Requirement
Environmental Standards Strong Requirement Threshold Requirement
Safety Standards Strong Requirement Strong Requirement

The following table shows that member utilities gave the most weight to feasibility for
selection concepts, and least to system performance.

Table 2-2
Criteria Rating

Feasibility Financial Customer System External


Benefits Satisfaction Performance Stakeholders

Feasibility X 0 0 0 3

Financial 14 X 0 0 6
Benefits

Customer 14 14 X 2 0
Satisfaction

System 14 14 12 X 10
Performance

External 11 8 14 4 X
Stakeholders

TOTAL 53 36 26 6 19
POINTS

In the next table, performance requirements for Service DISCos and MUMs are
illustrated, demonstrating that the performance requirements for the Service DISCo are
stronger than that of the MUM.

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Table 2-3
Performance Requirements

Performance Requirements Service DISCo Multiple Utilities Manager


Reliability Strong Moderate
Power Quality Strong Moderate
Asset Utilization Moderate Moderate
Maximization
Power Flow Control Moderate Moderate
Customer Service Strong Moderate
Environmental Standards Strong Threshold (Regulatory Mandate)

It is the integrators opinion that the Service DISCo would have stronger performance
requirements. The Service DISCo differentiates itself from the MUM by meeting the
performance demands of the customer with the internal resources whereas the MUM
allows these special requirements to be met by others.

Table 2-4 below illustrates the distribution assets of the two visions. As can be seen, the
MUM is interested primarily in the hard assets or wires, while the Service DISCo has
major interests in all areas. (Analysis only considered electric power distribution
attributes.)

Table 2-4
Distribution Asset Attributes

Distribution Asset
Attributes Service DISCo Multiple Utilities Manager
Hard Assets Certain Asset Attribute Certain Asset Attribute
(wires, etc.) (likely >70% usage) (likely >70% usage)
Smart Grid Certain Asset Attribute Possible Asset Attribute
(likely >70% usage) (likely >30% usage)
Network Design Certain Asset Attribute Possible Asset Attribute
(likely >70% usage) (likely >30% usage)
Investment in Underground Certain Asset Attribute Possible Asset Attribute
(above mandate) (likely >70% usage) (likely >30% usage)
Soft Assets (e.g. Certain Asset Attribute Possible Asset Attribute
management systems) (likely >70% usage) (likely >30% usage)
Control of Customer Certain Asset Attribute Possible Asset Attribute
Interface (likely >70% usage) (likely >30% usage)

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Description of Assets

The relative importance of advance technologies between the two visions was even
more difficult to assess, as shown in Table 2-5. Again the Integrator agrees with the
assessment of the respondents, i.e. Service DISCos are more concerned than MUMs.
The question is What does medium concern mean? and how do I, as a utility, create a
structure or environment to deal with medium concerns for distribution automation.
And, if I have high concern for distribution automation, does that imply that I must
do it to adhere to the business vision? Or just that I must be more concerned?

Table 2-5
Importance of Advanced Technologies

Technologies Service DISCo Multiple Utilities


Manager
Power Electronics High Medium
Communications High Medium
(advanced meters and
measurement devices, fiber
backbone)
Advanced UG Cable High High
Technologies
Distribution Automation High Medium
Operations and Maintenance High High
Tools
(hardware and software)
Distributed Resources Medium Low
DC Distribution High Medium
Customer Information Systems High Medium

The result of mapping the redesign concepts (technologies)3 to the two business visions
is shown in the next table. As can be seen, there is really no clear-cut line of
demarcation. In 3 out of 4 areas the Service DISCo has a strong requirement, whereas
the MUMs requirements differ.

3
Based on Advisor input, these technical areas were selected as most critical, and correspondingly are integrated
into the conceptual designs for the Service DISCo and the MUM. A complete copy of each technical section write-
up is included in the Appendix.

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Table 2-6
Mapping of Redesign Concepts

Service DISCo Multiple Utilities


Manager
Smart Grid / DC DISCo Strong Moderate
Requirement Requirement
Distributed Resources Strong Moderate
Requirement Requirement
Information Technology/ Strong Strong
Convergence Requirement Requirement
Construction Moderate Strong
Requirement Requirement

If we assume that the MUM strives to be the low cost player on convergent products,
then the core assets are minimized. It is also assumed the MUM does not sell power or
energy services. The following is an attempt to predict the asset concerns of the MUM.

Standardized overhead construction and


better, more reliable design

Low cost, easy to install


underground components

Does not own the


M
meter or sell energy

Automation where cost effective

Figure 2-4
MUM Schematic

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Description of Assets

The product flow (assets) in the past was that engineering would start the process of
defining the assets as shown below:

Engineering
Case

Engineering
and Service
Quality
Standards

Budget Minimize
Planning
(Load Growth
etc.)

Best Budget
that Meets
Standards

Figure 2-5
Historical Product Flow

In the new MUM environment, where low cost is the driver, the scenario is different, as
is shown below:

Budget
Defined

Service
Standards
Managing
Process

Best Plan
That Meets
Budget

Figure 2-6
MUM Product Flow

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A brief review of the way the MUM will address the new technologies and services is
shown below:

Table 2-7
MUM Technologies and Services

MUM

Technologies Services

Underground Components Low cost Engineering Internal work at most,


and ease of installation consultant use

Overhead Components Standardized Maintenance Look at low cost outside


to reduce costs firms

Meter Will not own or operate Inventories Reduce by consolidation


and alliances

Automation Only if cost effective Outage Restoration Alliances with


other utilities probably lower overall
reliability

Distributed Resources Allow others


to tap this market

Monitoring For reliability monitoring


and wheeling scenarios

Power Electronics Allow others

Superconducting Cable No

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Description of Assets

A schematic of a Service DISCo is shown below. As discussed in other sections, the


Service DISCo will have to address customer needs beyond the meter as well as play a
major part in billing, performance based rates, power quality, etc.

Power Quality Monitor


Communication
PQ

Directional Recloser

Distribution 3 Main
Substation R

1 Meter
M -PQ
-Time of use
-Security
Switched -Gas
Capacitor -Water

Distributed
Microturbine Regulator (With Communication) Generation
(Photovoltaics)
REG
5 kV - 35kV
Batteries

Custom Gas
Power DC Bus
Turbine
Device
277/480 AC
+/- 100V
+/- 100V DC
Industrial Smart
Power Quality Park Transformer
R Directional Recloser

+/- 10kV DC
Distribution Substation

DC Superconductivity Cable
120/240 Electric
Vehicles

AMR Residence

Urban Load

Figure 2-7
Service DISCo Schematic

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Description of Assets

A brief review of the way the Service DISCo will approach technologies and services in
the environment is as follows:

Table 2-8
Service DISCo Technologies and Services

Service DISCo

Technologies Services

Automation Probably a requirement Engineering Provided to the customer

DC Offered to improve reliability and PQ Efficiency Programs Offered as a service

Power Electronics Engineer purchase, Environmental Services Address any and


install and maintain for preferred all issues at a cost to the customer
customer.

Communication - #1 investment Power Quality Services Part of


performance based rates

Metering Complex, automatic and Outage Restoration - Automated


necessary to own

Specialist Comments

Distributed Resources

Service DISCo

Under this vision, there are incentives to develop power quality / reliability enhancing
DR for application on the customer side of meter. The extent of penetration of DR
assets depends on the evolution of the technologies with respect to performance and
costs. In general, to meet individual customer needs for power quality / reliability, it
may be less expensive to apply DR technologies locally rather than to provide the same
level of service for all customers through some more centralized technology.

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Multiple Utilities Manager

Under this vision, there are incentives to develop decentralized utility services,
managed by one company. These incentives are driven by economics rather than
technical capabilities. Distributed generation can provide locally sited locally
controlled supply. Where it is economically more efficient to use local generation for
providing energy service, there will be a strong incentive to develop the technology.
Again, the extent of the penetration of DR assets depends on the evolution of the
technologies with respect to performance and costs.

Construction

A variety of construction technologies or methods are discussed below: Many of the


construction technologies exist today, but electric utilities have been slow to adopt.
Using these new technologies can potentially save a utility many dollars in the
installation cost.

Cable Installation: Cable installation technologies emerging today will reduce the cost
to install cables in the future. Developments like guided boring developed in the 70s
and early 80s are now emerging as successful, commercially deployed equipment.
With further development, boring has the potential to be less costly than open
trenching. In many cases, this is already a reality in situations where surface
restoration is costly or where open trenching is not allowed.

Cable Removal: The cable in underground conduits are routinely abandoned in place
when the cable can not be removed from the conduit. The conduit space is an
extremely valuable commodity as space is used up by other utilities. The lodged cable
is hydraulically vibrated out of the surrounding conduit even if the cables are lodged in
by years of dirt and corrosion.

Cable Installation in Conduit: The installation of cable into a conduit will be


accomplished by pushing or blowing the cables into the conduits versus the pulling
methods that are a standard of today. Pushing a cable into a conduit is much easier
and faster to accomplish than pullling the same cable into a conduit. This is existing
technology from the 70s but has not been implemented by industry.

Ground Penetrating Radar: Systems have been developed that penetrate the ground
surface using radar technology that can locate underground utilities and obstacles. The
GPR makes use of advances in antenna design and digital signal processing to produce
an easy to interpret 3D map of what is in the ground. GPR can also help describe the
soil type and conditions. They are pushcart mounted, normally with two wheels, that
project radar signals into the ground.

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High Speed Narrow Trenching: High speed trenching machines (OCC135 Vermeer)
using a narrow wheel type cutter, wheel cutting widths as small a 3.5, that cut through
concrete, asphalt and rock without any precutting of the surfaces and the trencher can
cut to depths of 48. These trenching machines trench at a speed of 10 to 15 ft per
minute. Most machines have self loading units that attach to the trenching machines
that load the trench spoil directly into waiting dump trucks.

Slurry Backfill: This is usually a mixture of cement mixed with sand and water and
delivered to a job site in a transit mixer truck (cement mixer truck) as a flowable
material, the same way that ready mix cement is delivered. The lean cement mix helps
the set-up and usually eliminates the problem of trench compaction. The material is
porous and does not set up a moisture barrier at the trench location. Some cement
companies are using fly ash (ash from burnt coal material that would come from a coal-
fired powerplant) mixed with sand, cement & water to make up a flowable slurry
backfill material. This material works well with the narrow rock wheel trenching
machines.

Vacuum Trenching or Excavation: Vacuum excavation utilizes the kinetic energy in a


high velocity air stream to penetrate, expand, and break up soil. The loosened chunks
of soil and rocks are then removed from the excavation using a powerful vacuum
system. In this way a hole is created that is typically one to two feet square and as deep
as required to expose buried utilities without harm. A major advantage offered by
vacuum excavation is safety for both operator and the buried utility. This is commonly
known as soft excavation.

Joint Trench: Multiple companies sharing in the architectural design, engineering,


fiscal participation, costs, space and responsibilities of the utility trenches.

Power Electronics

Several new technical innovations are presented below. These are segmented into
several categories by dominant impact in one of several areas.

Power Flow Control: Power electronics can improve power flow control. Use of
switched capacitors (electromechanical and thyristor switched) is fairly common. New
techniques, based on power electronics, that have been proposed include Custom
Power devices, Dstatcon, Thyristor Based Phase Shift Controllers, Thyristor Based
Voltage Regulators, Series Active Compensators, Dynamic Voltage Restorer, Fault
Current Limiters, large storage devices, harmonic current flow control, active filters,
etc. These devices are targeted at the 2-200 MW level, and are in varied stages of
development and availability.

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Power Quality Improvement: A second category of application for power electronics


converters is in the area of power quality improvement. The dominant problems that
are solved using power converters relate to voltage sag navigation, control of harmonic
current flow, and provision of back-up energy to handle outages, spinning reserve and
dispatched distributed generation. The dominant current problem is possibly in the
area of voltage sags. Given the close association of the Service DISCo with the end-
user, it is probably more interested in the technology than is the MUM.

Smart Grids and Distributed Generation Systems: Service DISCos, in particular, will
benefit by customizing the grid and interface to the customer: Firstly, this will provide
a higher level of service and differentiation for the Service DISCos. Secondly, by
increasing customer dependence on special equipment and services, the Service DISCo
will increase the barrier against the customer seeking alternative competitive vendors.

Alternate Frequency Systems: Efforts have been made in the past, both in the US and
in Japan, to propose the use of higher frequencies for distribution within industrial
plants. Frequencies of 400-500 Hertz seem to be most common, although a 20 kHz ac
bus has been proposed in the past for the US space station. The higher frequency
allows a simple bidirectional frequency converter interface between the smart grid and
the utility, as well as between the loads and the smart grid. It has been proposed that
the higher frequency transformers and simpler converters required would realize more
economical plants. This concept once again, has higher potential use for the Service
DISCo than for the MUM.

Communications

The distribution systems of the future, specifically the Service DISCo and the MUM,
will contain new smart equipment. This equipment will contain microprocessors and
data storage. Such new distribution systems will require integrated communication
systems in order to provide monitoring, control, and coordination of this new utility
and customer equipment. EPRI has developed the Utility Communications
Architecture (UCA) for this purpose. The UCA provides interconnectivity among
various equipments and interoperability among various databases and
microprocessors. The UCA contains open protocols and uses national and international
standards that are publicly available. It is openly available to electric, gas, and water
utilities and their vendors. The UCA integrates all operational systems including
control centers, transmission, distribution, meters, and customer systems and will be
extended in the future to include plants and corporate systems.

Service DISCo

The Service DISCo network communications system is based on a fully integrated


distributed computing environment that spans the Service DISCo enterprise, and

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Description of Assets

integrates with all of the entities that are serving the restructured environment. This
standardized communications manages the distribution environment including
monitoring operating parameters, and managing the distributed generation and
resources deployed on the system. In addition, the Service DISCo communication
system integrates with equipment deployed within customer facilities and, as
necessary, with equipment owned and operated by the customer. This environment is
enabled through the maturity of the information technology (IT) industry and by the
levels of distributed computing standardization for established utility specific devices.
This maturity is manifest through open infrastructures, such as the UCA, that meet all
of the international specifications for equipment interoperability and interworkability
including information security and management. These environments have yielded a
variety of IT tools that enhance the information systems already deployed. The concept
of the Service DISCo has, through communications, redefined the delivery of electrons
to a customer "service entrance." The Service DISCo provides a visible and specific
function to the customer. For instance, instead of providing three phase service to an
industrial customer, the Service DISCo now has the ability to provide premium power
to specified circuits within their facility.

Multiple Utilities Manager

The MUMs Communications System is envisioned to use industry standard


distributed computing communications similar to the Service DISCo. The MUM
functions, however, are limited to the minimum functions necessary to operate in a
restructured utility environment. Many functions, such as revenue metering, may not
be carried out by the MUM, but by third parties. Standardized interoperable
equipment communications across the industry are important to achieve cost effective
operations. Cost effectiveness is achieved through equipment that is competitively
procured and can be easily integrated and maintained. The equipment necessary to
operate the future distribution system in a restructured utility environment is assumed
to be similar to that required of the Service DISCo since many of the system operation
challenges that the Service DISCo encounters will also be encountered by the MUM.
The MUM however does not directly interface communications with the customer.

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3
HIGH LEVEL DESIGN CONSIDERATIONS

3.1 DC Distribution System

DC has a long history, and interest in it being used again by utilities has been
increasing with the development of energy storage devices such as SMES and batteries
and renewable energy sources such as photovoltaics, fuel cells and wind which
naturally supply DC. Present system designs using AC mean that these devices must
interface via a converter to the system. With a DC distribution system, it would be
possible to interconnect these devices directly without the interfacing converter, or
power conditioning system. Also, connecting an AC generator or motor to a DC system
offers the possibility to design the machine to operate at higher (or lower) and more
optimal AC frequency to improve the efficiency, size and cost of the equipment.

The advantages indicated by proponents of DC are as follows:

Full control of power flow

No EMF

Cable ratings higher and installations cheaper

Customer is independent

Good for areas having DSGs

Independent pole operation

Fast control of reactive power and voltage, reducing the need for local generation or
SVC to provide voltage support

Only active power is transmitted, low losses

Low short-circuit currents

Modular and compact design offers staging and uprating flexibility

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Assumed reduction in PQ issues

Some of the disadvantages and concerns are as follows:

Component reliability is questionable

Limited ratings

Cost of components

Harmonic generation

Source impedance

Voltage transformation and regulation

Cable overload is not a major problem for most existing AC systems

Difficult to interrupt

Lack of available equipment

Conversion of line to DC takes time

Relaying is more difficult

Many of the good characteristics associated with DC occur only for very long lines

Lightning protection is more difficult

Assumes little or no switching transients

Potentially higher electrical hazard

The driving force to many for a DC system is the possible proliferation of DSGs that
are naturally DC as well as a number of Custom Power devices that are also naturally
DC. An example of a distribution system showing some of these devices can be seen in
Figure 3-1. A large drawback to this design is that the interconnection back into the AC
system is complicated and expensive mainly due to the conversion of DC back to AC.
A DC bus where these types of devices are interconnected makes a certain amount of
sense since it takes advantage of the positive characteristics of these devices, greatly
reduces cost, and provides a large degree of isolation from the AC grid should this be
desired.

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Hospital with
Diesel
Generator
& UPS

DISTRIBUTION
SUBSTATION
Farm with
Wind Turbine
Feeder 15kW
breakers

Computer
Factory with
facility
Fuel Cell
with S M E S
2MW 1.5MW
Utility
Photovoltaic
Site
3MW
+ Batteries

Figure 3-1
Potential Sites for DC Distribution System

Low voltage DC bus could be utilized by an industrial, commercial or PQ Park to take


advantage of the inherent nature of these devices. Figure 3-1 shows a possible design
concept for a Power Quality Park approach. Figures 3-2 and 3-3 show one line
diagrams to a total DC DISCO concept. This approach has been suggested by a number
of industry experts and large companies as a solution to many of the problems
associated with AC.

3.2 Superconducting DC Cable

Superconductivity is apparently in a state where it is capable of linking relatively long


distances (2 or 3 miles minimum) using existing duct width. This has clear advantages
where the need to upgrade is necessary and the cost of a new installation where
disruption of the areas creates major problems. Superconductivity, by its nature, is
more applicable to DC. Cost is a major drawback to this technology. The
superconducting tape used is apparently the major component to this cost and not the
liquid nitrogen and its associated supporting technology. SC has been marketed as
having advantages in the following areas;

High current connections between substations

Increased loading in existing ducts

Loadings where transformation is difficult

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13.8 kV AC

AC MAIN
DISTRIBUTION AC
INVERTER LOADS
PANEL
DC BUS +100V

DC BUS -100V

ENERGY PHOTO
FUEL DC
STORAGE VOLTAIC
CELL LOADS
DEVICE ARRAY

Figure 3-2
Schematic of DC Distribution System

Bulk Power from


Substation Transmission
Lines

+ 10kV A

Neutr, 2
-10kV 3 4 AC
B Main
Distribution
Panel

120 V
Neutr.
120V

Fuel Cell

6
D Photo
E
AC Bus voltaic

C F 7 DC Bus
5 +10kV Energy
Grid Neutr. storage
Connection -10kV device
Power converter
Inverter

Figure 3-3
DC Distribution System

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4
NEW TECHNOLOGY DIMENSION

Dispersed generation, storage, or custom power devices can be owned either by the
utility or the customer. One of the difficulties when assessing distributed generation is
that the characteristics and ratings of these devices vary significantly. Cases have been
made that the use of DSGs will allow equipment deferment, relieve generation, relieve
transmission and reduce losses. While this may be true in some cases, in others its
very questionable due to the characteristics of the devices. A brief overview of some of
these characteristics is as follows:

4.1 Distributed Resources

4.1.1 Solar Power

Cost of 5.5 cents per kWh have been pledged by Enron by the end of the decade

Installed costs of many pilot projects seem to normally exceed over $10,000 per kW
for residential applications (4 to 8 kW)

Enron reports it will build a solar facility of 100 MW. This is more than 10 times the
size of any other facility. Other utilities are investigating facilities of approximately
10 MW

4.1.2 Wind Power

Costs have declined from 20 cents/kWh to about 5 cents per kWh for the larger
wind installations

Installation costs are about 1000 to 2000 dollars per peak kW installed

Wind energy increases more rapidly than wind speed

Ratings for residential units are up to about 10 kW and for utility owned site they
range from 2 MW to 41 MW

Blade cracking has been a problem for some of the state-of-art-machines

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4.1.3 Fuel Cells

Advantage is that more energy reaches the customer. For example for every 10
joules of gas, about 4.5 joules of this will be converted to electricity and the other 5.5
will go into space heating, water heating, etc.

Reliability of some types of fuel cells is good (2500 hours between forced outages).
Other types are not as far along

Modular construction makes them ideal for adding incremental capacity

High efficiency

Extremely low emissions has exempted them from emission requirements

Cost is very high, exceeding $3500/kW. This compares with reciprocating engines
costing under $500/kW

Extensive add-ons for fuel preparation, stack preheating, power conditioning, steam
generation, air compression, etc. are needed.

4.1.4 Micro Turbines

Rating range 25 to 250 kW

Weight is typically about 165 pounds

Costs are promised at about $500/kW

Turbine efficiency is about 20%

Problem is that fuel pressure ratios must be up to 30:1 and at least 250 psig. Few
companies maintain line pressures above 125psig and most gas pressure fuel
supplies are only 25 psig

4.2 Power Conditioners

4.2.1 Introduction

Utility engineers throughout the country are finding that knowledge of just their power
system is inadequate when working in the area of power quality. More and more,
utility customers who are experiencing power-related problems for sensitive loads are
depending on the utility for solutions, even when the only solution is on the customers
premises. For this reason, it is important that the utility distribution engineer become
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knowledgeable of the power line conditioning options available as well as the


Customer Power devices available to the industry as a whole.

4.2.2 Power Line Conditioners

Power-line conditioners mean different things to different people. The term power-line
conditioner can be applied to any device that protects against one or more of the
following power problems:
Overvoltages and undervoltages
Sags
Outages
Surges
Harmonics

There are some power disturbances, which exist all the time but do not cause any
malfunction or component stress on computers or similar delicate electronic equipment.
For example, there is always some harmonic distortion on the power line sinewave,
and there are occasional transients. These distortions generally cause no harm.

The price range of power line conditioners can vary from $25 to well over $10,000, and
the buyer cannot always be sure what is being purchased for that price. Generally,
complete specifications are not always available for the product and if an attribute is
not described on the packaging of the device, it will more than likely not have that
capability. A line conditioner should solve most power quality problems, and its
specifications should cover each type of disturbance listed above. This section will
briefly discuss the advantages and disadvantages of the more commonly applied
devices.

4.2.3 Surge Suppression

Surge suppressers are devices, which conduct electricity when the voltage exceeds a
limit. The device does not really suppress the surge (like a filter) but rather diverts it
(usually to ground). Figure 4-1 shows the effect of the surge suppresser known as an
MOV (Metal Oxide Varistor).

The amount of energy these suppressers can absorb is directly related to their size. If
the device is overstressed, it will self-destruct; thus it is very important that the energy
level of the transient for a particular location be known. For example, suppressers at
the panelboard will be much larger than those generally found in wall receptacles or on
electronic devices.

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CLAMPING
VOLTAGE

LINE

MOV

NEUTRAL

GROUND

Figure 4-1
MOV Clamping of Transient Voltage

Evaluating the performance of a surge suppressor is not an easy task. The


configuration of components (line-to-ground, line-to-neutral, and neutral-to-ground),
as well as the quality and characteristics of the components are not easily determined.
Marketing information tends to disclose only what the devices will do and nothing
about what they will not do.

The best surge suppression on the DISCos primary distribution system is not adequate
for the protection of a customers sensitive equipment. Voltage transients coming from
the utility system, as well as those (over 90%) generated internally, can only be
mitigated on the secondary at the customers premises (see Figure 4-2). This power
conditioning is cheap and, in the opinion of many, mandatory for good performance.

Figure 4-2
Surge Supression

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4.2.4 Constant Voltage Transformers (CVTs)

A constant voltage or ferroresonant transformer is essentially a transformer operating


in the saturated mode. Ferroresonant transformers (see Figure 4-3) regulate voltage
and, to a degree, can perform wave shaping. While the CVT has many positive
qualities which made it very popular for DC power supplies (IBM used nothing but
ferroresonant DC power supplies in their computers for many years), it does have the
following disadvantages:

The transformer leakage impedance limits the short circuit current, which is good.
This impedance however, can become a severe limitation when it involves start-up
currents of a motor and other electronic equipment.

If more than one device is on the transformer, start-up of one can cause the magnetic
field to collapse. This can result in the misoperation of the other(s).

Since the circuit (essentially a tank circuit) stores energy, it has some ability to ride
through certain minor disturbances.

If a tank circuit loses power, then it must replace this power. Because of this, a one-
cycle outage can look like a multi-cycle voltage sag, which may have a greater effect
on the proper performance of the equipment.

Devices are heavy, noisy, and cause output transients that can greatly interact with
computers.

In Out

Wp Ws

Figure 4-3
Elements of ferroresonant regulation using a transformer

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4.2.5 Isolation Transformers

Figure 4-4 shows how an isolation transformer was used to break the ground loop in
order to eliminate common-mode problems (this is now prohibited by Federal law).
These types of problems are reduced because a common-mode pulse cannot develop a
magnetic field in the core of the transformer; yet the common-mode, high frequency
impulses can still pass through to the secondary because of the transformer coupling
capacitance. Common-mode attenuation capabilities can be substantially improved in
an isolation transformer by using electrostatic Faraday shielding around the windings.
The shields effectively adds bypass capacitance which routes high frequencies to
ground.

Line Line

IN OUT

Neutral Neutral

Common Mode
Disturbances

Ground
E

Dedicated
E

Quality Ground
Power Line
Ground

Figure 4-4
Isolation Transformer

Some of the drawbacks of isolation transformers are as follows:

Cannot remove any normal-mode signal or disturbance.

Shielding can form an LC circuit which is resonant at some high frequency.

Can cause severe power loss that causes clipping of the sinewave peaks that are
above nominal rating.

Can saturate during transients and distort the next few cycles.

Saturation currents can result in nuisance fuse blowing.

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4.2.6 Line Conditioners

While power line conditioning can, in most peoples minds, refer to anything from a
simple surge arrester to a complex UPS system, a power line conditioner generally
brings to mind a device which provides several functions, including impulse
attenuation, filtering, voltage regulation, and isolation. In truth, some line conditioners
do provide these functions, and some do notso be careful. Two of the more common
types of line conditioners are described as follows:

Enhanced Isolation Transformer: The enhanced isolation transformer, shown in


Figure 4-5, uses the inductance of the chokes to attenuate higher frequencies, the
MOV to attenuate impulses, and the capacitor to improve normal mode attenuation.
Some are available with single, double, or triple Faraday shielding to improve
common-mode attenuation. The major drawback to this type of line conditioner is
that it does not regulate voltage.

M-G Sets: An M-G Set, or a motor-generator set, consists of a drive motor


mechanically connected to an ac generator. M-G sets generated a new voltage
waveform for the load and are therefore somewhat isolated from minor
disturbances on the power system.

Motor-generators can shield the load from impulses and from voltage sags and
surges. For power line voltage changes of 20% or more, voltage to the load is
maintained at nominal. A useful feature of the motor-generator is its ability to
bridge severe short-term sags or outages. The momentum of the rotating elements
permits the motor-generator to span outages of up to 0.3 seconds (approximately).
This time span is mainly limited by the drop in frequency (speed) as energy is
removed. The period can be extended by adding inertia via a flywheel as shown in
Figure 4-5. Through the combined use of variable-speed, constant frequency or
quick-starting engine generator techniques and flywheel inertia, it is now practical
to extend the time an outage can be spanned so that it is long enough to protect
against the common problem of clearing and reclosure caused by feeder faults.
Costs, however, are considerably higher with this system than with conventional
motor-generators.

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MOTOR ALTERNATOR
OPTIONAL FLYWHEEL FOR
INCREASED INERTIA

Figure 4-5
Motor generator with flywheel

The problems with motor-generators are mostly on the output or load side. High
generator output impedance can cause substantial voltage dips in response to sudden
load changes, such as those resulting from large motor starting current. And in
addition, response to load changes can be sluggish. Also the drive motor may overheat
under long-term brownout or low-line voltage conditions unless it is oversized. Motor
generator efficiency is, as a rule, relatively low, so that electrical energy costs over its
lifetime may be substantial. Heat dissipation, weight and bulk, and the potential for
audible nose are factors which must be considered in motor generator installation.
Essentially silent machines are available at extra cost. In many cases, bearings must be
inspected and periodically replaced and/or lubricated particularly when flywheels are
used. Reliability potential, however, is very high.

As can be seen (Figure 4-6), all the systems contain a battery. The inverter preferred
system is essentially the standard configuration for critical equipment because it
provides full isolation and power conditioning. The line preferred system (standby)
receives its normal flow of power from the DISCo and relies on a cycle transfer
switch to isolate utility system disturbances. This type of system is obviously not as
effective as the inverter preferred system and is generally used for small, low-cost
computer systems where operation is not as highly critical.

Line interactive systems, like line preferred systems, have found application in the
smaller, less critical sensitive equipment systems. They too change mode of operation
upon power failure. They can provide somewhat more power conditioning that the
line preferred system, but are inherently the least reliable of the three systems.
Normally, power flows through the single-throw static switch and the inductor to the
sensitive equipment load and to the converter which, in this mode, acts as a battery
charger. By various techniques, the voltage to the sensitive equipment can be
conditioned similarly to the fast response or ferroresonant regulators. Upon failure of
the line, the static switch is opened and the function of the converter is changed to that
of an inverter delivering power to the sensitive equipment, resulting in less than a
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cycle disturbance. A line interactive system is vulnerable to loss of output if there is a


failure of the converter at any time. Also, taking the converter in and out of service
cannot be done without incurring a momentary interruption of voltage to the load. A
more recent version of this system provides for isolation of a failed or serviced
converter by use of an additional static switch. These problems do not exist with the
inverter preferred system.

Static
Rectifier Inverter Switch

Line
Preferred

Static
Rectifier Inverter Switch

Inverter
Preferred

Battery

Line
Interactive

Inverter
Charger

Battery

Figure 4-6
UPS Configurations

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4.2.7 Relative Costs

Relative costs and characteristics of the various mitigating equipment are shown below
in the following table:

Table 4-1
Relative Cost and Characteristics of PQ, Service Interruption Equipment

System Basis of UPS System UPS System Motor Solid-state Specialty


Rating Comparison and Standby Generator line-voltage shielded
Generator Regulator insulating
(diesel) xfmr
100 kVA Installation $1,700- $1,200- $500 per kVA $250 per kVA $50-$150 per
and $2,000 per $1,500 per kVA
equipment kVA kVA
cost
Maintenance $12,000 per $8,000 per Less than Less than N/A
cost year year $1,000 per $1,000 per
year year
Operating 85% 85% 83% 90% 98%
Efficiency

Energy Cost $5,300 per $5,300 per $6,000 per $3,500 per $700 per
year plus year year year year
generator
exercising
costs
300 kVA Installation $1,200 per $700-$800 $250 per kVA $200 per kVA $25-$100 per
and kVA per kVA kVA
equipment
cost
Maintenance $15,000 per $10,000 per Less than Less than N/A
cost year year $1000 per $1000 per
year year
Operating 89% 89% 88% 90% 98%
Efficiency

Energy Cost $12,000 per $12,000 per $14,000 per $12,000per $3,000 per
year plus year year year year
generator
exercising
costs

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4.3 Custom Power Devices

Custom power devices are defined as devices using power electronics (rated above
1000V) which are used to attain better power quality and reliability. Some of these
devices are still in the experimental stages or early stages of production and have yet to
be proven in large scale installation at utilities. The application of these devices, and
their effectiveness is not well established at this time. The following is a brief summary
of what they are and what they are supposed to do:

4.3.1 Adaptive Var Compensator (AVC)

Micro-
System Sensing Circuit Opto-Trigger
Processor

Solid State
Capacitors System
Switch

Figure 4-7
Schematic of AVC

Features of AVC

Allows independent VAR control of phases

Unaffected by waveform distortion

Switches are optically isolated from electronics

Reactive compensation within 1 cycle

Optimum amount of VAR compensation on a cycle-cycle basis

Setting can be controlled remotely

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4.3.2 Batteries

Bypass Breaker

SELECTOR

Utility SWITCH Critical


Loads
Status Control

Utility SELECTOR 208/480 VAC


Monitor Stability & SWITCH Isolation
Presence CONTROL Transformer

Control Status

SYSTEM CONTROL,
POWER CONDITIONING

Figure 4-8
One-line Diagram of Battery Storage Device

Capabilities

Designed to eliminate voltage sags, swells, and momentary outages

Delivers up to 20 MVA for 10 seconds at a .7 leading or lagging power factor

Operations

In normal system conditions all current passes through the inline ESP

Switches to battery for abnormal system conditions

Switches back to utility system after 2 seconds of normal system operation

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SOURCE 1 SOURCE 2

LOAD
SOURCE 1 SOURCE 2

TRANSFER TIME
< 4 mSEC

LOAD

Figure 4-9
Static Switch Transfer Sequence-Single Phase Diagram

4.3.3 Solid State Switch

a) Low Voltage Ratings

Table 4-2
Ratings of Solid State Transfer Switch

Current Amps Voltage Volts

800A 208V

1000A or

1200A 480V

or
1600A
600V
2000A

3000A

4000A

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b) High Voltage Ratings

Table 4-3
Ratings of Medium Voltage Transfer Swtich

Continuous Short Circuit Inpulse


Voltage Class Current Rating (RMS, Power (MVA) Withstand, BIL
Rating asymmetrical) Rating (kV)

15 kV 200 A 25.5 kA 5 MVA 95 kV

15 kV 600 A 20.4 kA 15 MVA 95 kV

25 kV 200 A 25.5 kA 8 MVA 125 kV

25 kV 600 A 20.4 kA 26 MVA 125 kV

35 kV 200 A 25.5 kA 11 MVA 150 kV

35 kV 600 A 20.4 kA 35 MVA 150 kV

c) What is it:

1/4 cycle solid-state switch

No wear out mechanism

Protects loads against:

outages

momentary interruptions

sags & swells

d) What it isn't:

Solution for all power problems

Requires relatively independent sources

No noise or harmonic filtering

Failure free

As inexpensive as electromechanical switches

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(e) Typical Bypass Scheme

SOURCE 1 SOURCE 2

NC NC
Input CB Input CB

Bypass NO NO Bypass
CB CB
Interlocked Interlocked
NC Output CB

LOAD

Figure 4-10
Bypass Scheme

Advantages Over Other PQ Gear

Low loss

Safe

Low maintenance (compared to UPS & SPS)

Commercially available

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4.3.4 Dynamic Voltage Restorer (DVR)

Series Injection Transformers

Solid State

3 MOV 3 MOV
Arresters Bypass
Arresters

AC Filter

DC to DC
Inverter & DC to AC
Energy Converter
Storage
DC Link
Capacitor

Figure 4-11
DVR Schematic

(a) Technical Characteristics:

2 to 10 MVA

460 to 34.5kV

Energy storage-.2 to 5 MW seconds (megajoules)

Response time, 1/2 cycle

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(b) Voltage Injection Capability of the Dynamic Voltage Restorer

Fault

Incoming Supply DVR Response Corrected Supply

Vs
Vs Vd
Vd

DVR Provides Dynamic


Voltage
Voltage Injection
Restorer

Figure 4-12
DVR Voltage Injection to Counter Voltage Sag

c) Characteristics of DVR

Connected in series

Capable of supplying reactive power

Theoretically can limit fault current

Can inject or absorb real power

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4.3.5 Solid-State Breaker (SSB)

ZN0 Arrester

Current Fault
Limiting SCR Switch Current
Reactor

SBNR SBNR

GTO Switch
M

SBNR SBNR SBNR


Load

Figure 4-13
Schematic of Typical SSB

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Applications of SSB

Breaker with STATCON Transfer Switch

Load

Load

STATCON

Current Limiter
Soft Starter

Load M

Bus Tie

Figure 4-14
Uses for SSB

Characteristics of SSB
Can be current limiting and subcycle
Cannot conduct high surge currents
Series devices

4.3.6 Series Capacitors

Low cost method to reduce flicker


Had technical concerns

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Old Design

Figure 4-15
Series Capacitor (Old Design)

Problems

Ferroresonance

Self-excitation of induction motors

Inrush caused oscillation during energization

Virtually driven to extinction

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Series Capacitor (New)

Figure 4-16
Series Capacitor (New Design)

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4.3.7 Superconducting Magnetic Energy Storage (SMES)

Figure 4-17
Conceptual Illustration of SMES

Advantages of SMES

Energy stored indefinitely

Rapid response

Rapid recycling

Low maintenance and clean

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Block Diagram of SSD (Superconducting Device) Alias SMES

Figure 4-18
SMES Block Diagram

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Technical Specs of SMES (SSD)

System Capability 1400 kVA

Usable energy storage capacity 1400 kW-sec

Load size for carryover 1400 kVA

Carryover time:

1 second at full load 1400 kVA

2 second at full load 750 kVA

Standard magnet charging time 1.5 min.

Input voltage* 480 VAC

Output voltage* 480 VAC

Auxiliary load voltage 480 VAC

Power delivery rate 1.4 megawatts for a second

Expected number of discharge cycles 1,000,000+

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4.3.8 Static Series Voltage Regulator (SSVR)

Figure 4-19
Application of SSVR

Purpose of SSVR

Boost voltage on one or more phases during faults


Provide quick (approx. 2 msec) response)

-Y Transformer Voltage

Figure 4-20
SSVR Operation

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4.3.9 Cost

It is difficult to obtain comparative cost information regarding custom power devices


since many are still in the R&D phase or are being produced in relatively small
quantities, and they differ dramatically as to the sag level they can mitigate and the
duration of this sag. The following is a matrix of costs for both the energy capability
cost component of each device as well as the total system:

4.3.10 Energy Only

Total System (100% below nominal)

Table 4-4
Estimated Cost of Operating Various Customer Power Devices

Energy Stored Duration ($/kW) ($/kWh)


(kWh)

Small SMES 0.25 0-2 250 1.5M

Batteries 0.8 0-30 25 3000


0-30 Seconds

Batteries 8-4000 30-900 240 60


30 Seconds
15 Minutes
Electroclytic 0-1.4 0-5 50 43K
Capacitors 0-5
Seconds
Flywheel 8-4000 30-900 250-300 75

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Total System (100% below nominal)

Table 4-5
Estimated Total Cost to Operate Various Customer Power Devices

Time (sec) Cost ($/kVA)

Battery Capacitor LTS Flywheel

5 141 195 635 235

1000 660 - - 640

4.3.11 Conclusions

The difficulty in making comparisons between these devices is:

1. The cost numbers obtained are from manufacturers' publications and can be
significantly different (lower) than the cost of an actual installation.

2. Devices have vastly different capabilities in terms of sag magnitude and duration.
For certain devices, cost per kVA changes dramatically with size.

4.4 Power Quality Standards

ANSI C84.1-1989 American National Standard for Electric Power Systems and
Equipment Voltage Ratings (60 Hertz)
Establishes nominal voltage ratings and operating tolerances for 60 Hz electric
power systems from 100 V through 230 kV.
IEEE Std. 493-1990 IEEE Recommended Practice for Design of Reliable Industrial and
Commercial Power System (IEEE Gold Book).
Chapter 9 deals specifically with voltage sag analysis and methods of reporting
sag characteristics graphically and statistically.
IEEE Std. 519-1992 IEEE Recommended Practices and Requirements for Harmonic
Control in Electric Power Systems.
Provides guidelines and limits for current and voltage distortion levels on
transmission and distribution circuits.

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IEEE Std. 1100-1992 IEEE Recommended Practice for Powering and Grounding
Sensitive Electronic Equipment (IEEE Emerald Book).

IEEE Std. 1159-1995 IEEE Recommended Practice for Monitoring Electric Power
Quality
This is the recommended practice for the monitoring of single-phase and
polyphase AC power systems.
IEEE Std. 1250-1995 IEEE Guide for Service to Equipment Sensitive to Momentary
Voltage Disturbances.
This guide was developed out of an increasing awareness of the incompatibility
of modern electronic equipment with a normal power system environment.
IEEE P1366 Trial Use Guide for Electric Power Distribution Reliability Indices.
This guide, presently under ballot, is to identify useful distribution reliability
indices and factors that affect their calculation.
Specialist Comments

Distributed Resources

Service DISCo

Over time, with increased penetration of DR, and deterioration of aging conventional
assets, it is reasonable to expect that an increasing proportion of capacity needs will be
met by DR assets. EPRI's DR Strategic Market Assessment (C. Clark 1995, TR-106055)
suggested that, under certain conditions, most additional capacity requirements would
be met by DR investments. This is perhaps an extremely optimistic forecast. Initially
DR will be providing selective reliability improvements and enhanced PQ.

Multiple Utilities Manager

As in the Service DISCo scenario, initially DR will be providing selective reliability


improvements and enhanced PQ. Over time, we expect that the incentives to use DR in
this scenario will be significantly weaker (than under the Service DISCo), based on
reasonable demand forecasts, because in this scenario the market demand for special
services is limited.

Construction

New technologies developed today on removal and installation of distribution cables


include:

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Hydraulically pulled using ultrasonic vibration methods of removing embedded


cables in conduits, coupled with the skills and knowledge how to apply this
technology will be used to replace the existing cables.

Rather than open cutting trenching methods of today in replacing existing buried
cables in residential and commercial areas, directional drilling (ground conditions
permitting) will be used.

In rural areas, cables could be installed by plowing instead of open trenching,


eliminating the overhead pole line.

Cable installations, for smaller diameter cables (up to 1"), can be pushed or blown
into the conduit rather than pulled.

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5
SYSTEM PERFORMANCE ATTRIBUTES

5.1 Introduction

Distribution reliability is in a state of change. Standardized indices are being adopted,


new definitions of reliability which will include momentaries and sags are under
consideration and utilities are now designing contracts that include severe penalties for
reliability problems. On the other hand, a host of new design concepts and products to
correct the problem have invaded the marketplace with little history and performance
analysis to determine their effectiveness. The need for understanding of the operation
of the distribution system and the analytical tools necessary to evaluate them has never
been greater.

The purpose of this section is to define some of the performance parameters for the
"new distribution system" in the areas of reliability, power quality and losses.

5.2 Reliability Indices

There are two methods of calculating reliability indices in the US. The majority of
companies calculate indices on the number of customers per outage and the duration of
the outage. There is another group that calculates indices based on the amount of load
that is lost. They do not keep track of the actual load that is lost, but rather use the peak
load value of any given section in calculating their indices. The companies that base
their reliability indices on lost load are doing so as a precursor to the customer based
index system. At present, their databases are not as extensive as the other companies.
Indices that have been defined by various groups such as the IEEE (Institute of
Electronics and Electrical Engineers), EEI (Edison Electric Institute), EPRI (Electric
Power Research Institute), and CEA (Canadian Electric Association) are as follows:

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CMPII = Customer Minutes per Interruption


Customer Minutes Per Duration
CMPII =
No. of Interruptions

SAIFI = System Average Interruption Frequency Index


Total No. Customers Interrupted (No. Customers Interrupted) (No. of Interruptions )
SAIFI = =
Total No. of Customers Total No. of Customers

SAIDI = System Average Interruption Duration Index


Customer Interruption Durations ( Duration of Outage) ( No. of Customers Affected)
SAIDI = =
Total No. of Customers Total No. Customers

CAIFI = Customer Average Interruptions Frequency Index


Total No. of Customers Interruptions
CAIFI =
No. of Customers Affected

CAIDI = Customer Average Interruptions Duration Index


Customer Interruption Durations
CAIDI =
Total No. of Customer Interruptions

ASAI = Average Service Availability Index


Customer Hours Service Availability
ASAI =
Customer Hours Service Demand

ATPII = Average Time Until Power Restored


Interruption Duration
ATPII =
No. of Interruptions

These indices are based on the peak connected load during an interruption rather than
on the number of customers interrupted. The companies that are using this system
plan to upgrade their systems to customer based indices when their customer
information systems track the number of customers interrupted. Typical numbers for
customer based indices are as follows:

Table 5-1
Typical numbers for customer based indices

Customer Based Indices


SAIDI SAIFI CAIDI ASAI

95.9 min/yr 1.18 int/yr 76.93 min .999375 int/yr

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5.3 Survey Results

A survey of utility distribution reliability practices throughout the United States was
conducted in the early 90s. Among the most pertinent findings are that the most
commonly used indices are ASAI, SAIFI, SAIDI, and CAIDI as shown in Figure 5-1.

OTHER (22.9%)
ASAI (64.58%) No Index

ATPII (6.25%)
SAIFI2 (8.33%)

SAIFI (77.08%)
CAIDI (70.83%)

CMPII (4.17%)
CAIFI (6.25%)

SAIFI1 (6.25%)
SAIDI (83.33%)

Figure 5-1
Percentage of Companies using Indices (48 Companies Responded)

In less technical terms, most utilities are interested in the following:

Average Customer Minutes Outage Per Year This is the average cumulative amount
of time a given customer would expect to be without service in a one year period (CMO
or SAIDI). A typical value for SAIDI is about 100 minutes.

Average Duration of a Given Outage Some outages can be very short, other quite
long. This number is simply the average duration (CAIDI). A typical number for
CAIDI is about 80 minutes.

Average Annual Number of Outages This is the average number of times a given
customer can expect an outage in a year (SAIFI). The average customer in the US can
expect to see about 1.25 outages per year (SAIFI = 1.25).

Availability of Service This is the ratio of the total number of customer hours that
service was available to the total customer hours demanded (ASAI). Although rarely
used in discussion of distribution reliability, it is generally calculated for comparison to
other parts of the utility system.

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Another important survey finding was that most utilities do not classify an interruption
as an outage until its duration exceeds about 5 minutes (see Figure 5-2). This of
course means that temporary faults and their associated breaker or recessing operations
are not considered outages.

14
Number of Companies Reporting Durations

12
10
8
6
4
2
0
5 Min 3 Min 2 Min 1 Min
Maximum Duration

Figure 5-2
Duration of a Momentary Outage

5.4 Causes of Outages

It is very difficult to generalize on the causes of outages since they are somewhat
particular to the geography of the region and the practice of the utility. It is easy to
assume, for example, that utilities in high lightning areas will see a large number of
outages caused by lightning. This, however, may not be true since many of these same
utilities use overvoltage protection practices which greatly mitigate the effects of
lighting. Figure 5-3 illustrates results from a study by the integrator. As can be seen, a
large percentage of outages cannot be identified. The most commonly reported causes
of outages are lightning and tree contact. One utility in this same study reported that
virtually all their outages were animal related.

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Causes of Fault

Fuses

Animals
Maintenance

Supply
Overload

Errors
Customer Equip

Unknown
Trees

Lightning
Equipment Failure

Accident
Planned
Stroms
0 20 40 60 80 100
% of Companies Reporting

Figure 5-3
Reported Cause of Outages

Momentaries and Sags

No longer is the industry just concerned with outages which are defined as
interruptions lasting 5 minutes or more. Since some customers see outages for utility
system disturbances lasting only microseconds, one of the major trends in reliability is
the concern for momentary interruptions and even sags when discussing the reliability
of customer service.

Momentaries are the result of reclosing, whether it is the result of breakers with
reclosing relays or feeder reclosures. The purpose of this reclosing is to re-energize
temporary faults (lightening, trees, etc.) to save the fuse and allow the system to return
to normal with no customers experiencing an outage (defined as an interruption of 5
minutes or more). The problem with reclosing is that all customers connected to the
same feeder experience a momentary interruption as was described earlier. Blocking
the instantaneous reduces momentaries but decreases reliability since some customers
now experience an outage, causing a situation difficult to explain to the power
commission.

Studies indicate that momentaries to the customer loads are caused by both the utility
and the industrial system to an almost equal degree. Since momentaries are so
important to certain customer loads, many utilities now keep record of their
performance in this area. Figure 5-4, shown below, illustrates that the total number of
outages to an industrial load is about 10 per year with half of them being caused by
internal problems and the rest the result of utility operation.

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UTILITY CAUSED
50% UTILITY CAUSED

INDUSTRIAL CAUSED

INDUSTRIAL
CAUSED
50%

Figure 5-4
Outage Caused

Sags which are caused by faults and motor starting are very common. The DISCo is
also concerned with these since it is generally only the severe sags caused by faults as
opposed to the lesser sags caused by motor starts that causes the customer problems.
Many utilities are now providing their customers with expected sag profiles which
provides the customer with both the expected frequency and severity of the sags
annually. By knowing the areas of the system causing the most severe sags to the
customer (see Figure 5-5), it is sometimes possible to make system changes to reduce
these occurrences.

Figure 5-5
Map of Distribution Lines Highlighted to Identify Location of Voltage Sags

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Sags are defined by standards as being voltages less than 90% of normal. Usually,
voltage sags have to be below 60% or 70% before they cause a problem to most
customers. Industry data shows that the industrial causes most of their own sags.
Figure 5-6 indicates the utility contributes to less than 10% of all sags experienced by
the industrial customer.

Industrial
Caused Industrial Caused
92%
Utility Caused

Utility Caused
8%

Figure 5-6
Sags to Industrial Customers

5.5 Power Quality Standards

The IEEE, as well as other standards making bodies, will continue to create guides and
standards addressing:

Reliability Indices

Sags

Momentaries

Harmonics

Flicker

Voltage Drop

Surges

Swells

Etc.

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It is conceivable that as budgets are cut, the pressure on standards making groups will
be to actually reduce the traditional levels of power quality and reliability that we are
accustomed to. This is particularly true if the customer is given a choice of rates based
on reliability.

It is also possible that sensitive industrial loads will become less sensitive. If the lowest
cost solution to problems resulting in outages is to make minor adjustments in the
equipment itself as opposed to modifying the entire power delivery system then in a
de-regulated environment where the customer will probably pay for the solution, the
lowest cost alternative will prevail. In order to help expedite some of these changes to
sensitive equipment, the DISCo should provide guidance on the actual characteristics of
their system which this equipment should be designed to. Some preliminary
suggestions are to have proper operation for the following:

Sags to .6 p.u. voltage

Immunity from surges due to lightning and capacitor switching

Flicker less severe than standards

Swells to 1.35 p.u. or more

+ or 10% continuous voltage variation

Momentaries lasting less than 3 seconds

Harmonics as defined by IEEE 519

5.6 Budget Constrained Planning

The reduction of budgets will reduce the overall reliability of the system. It is
conceivable that as budgets are slashed, residential customers will suffer most. They
are not considered as profitable a load as industrial and commercial loads and are less
sensitive to outages and other PQ problems.

As overall system reliability is reduced, the DISCo find themselves in the unenviable
position of having increasing demands for reliability placed on them by their largest
customer who have sensitive equipment. With the newfound ability of these customers
to obtain power from others or even produce the power themselves, it becomes
imperative for the DISCo to devise rates and policies acceptable to their customers to
maintain long term loyalty.

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To obtain capital to satisfy the needs of their larger clients, DISCo will be forced to
increase the loading limits of various equipment after careful consideration as to the
effect on short term and long term reliability. Understandably, these new loading
conditions may prematurely fail some equipment as well as prevent emergency
measures traditionally used to re-route power. The overall effect is more outages
lasting longer in duration for the majority of customers.

As capital for projects becomes tighter, it is anticipated that system design expenditures
for new loads will be minimized resulting in lower reliability and availability, unless
the customer is willing to foot the bill for additional system improvements. Monies
for upkeep and maintenance of the existing system will now need to be prioritized to
determine who gets what? for the reduced budget.

The DISCo must work SMARTER. Smarter means spending money on new equipment
wisely and using engineering as a tool to increasing reliability of the entire system (old
and new) at minimal cost. Some examples of items to be considered are:

Increasing loading limits on transformers

Higher fuse ratings to prevent nuisance fuse operations

Better quality equipment

Better system design

Elimination of some switches

5.7 Performance Based Indices

Theyre not coming, theyre already here!!!! As traditional levels of system reliability
become more and more difficult to obtain due to reduced budgets, customers who need
more reliability will pay for it. Considering the fact that they paid for service, there
will no doubt be more penalties to organizations who dont meet their promises. There
are already utilities who pay large penalties to important industrial loads for both
outages and sags. The utilities accept these penalty clauses in order to obtain long term
contracts with these large industrial customers.

The problem with performance based indices is that it is sometimes difficult to supply
varying degrees of reliability to adjacent load having completely different
requirements. One possibility is the application of interruptible rates. Customers
opting for the lowest rates would either allow the utility to drop them from the system,
without notification, or to cut back a prearranged amount on request during peak load
conditions. This, of course, would look like an outage to the customer involved. The

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advent of custom power devices also provides a little more flexibility to the DISCo
toward providing different degrees of service.

5.8 Losses

It is estimated that the typical integrated utility sees about 10% of its generated power
consumed by losses. Over 50% of these losses typically occur on the distribution
system. The reduction of even a fraction of these losses in the distribution system can
result in enormous savings to utilities since these losses have a ripple effect right up to
the generator (see Figure 5-7).

Figure 5-7
System Losses

The rapid increase in the cost of both energy and capital, as well as the difficulties
utilities are experiencing in siting new generation, is causing utility management to
assess the effects of system losses both in the operation and planning of electric
systems. Utilities are also receiving varying degrees of pressure from their regulating
commission to improve their loss management techniques. All of these reasons have
increased their interest in this subject. The nature of distribution system losses,
techniques on how to measure them, and program requirements to minimize their cost
constitute a major concern for today's competitive environment.

While utilities are aware that losses do occur and results in large loss of revenue, it is
not obvious where they occur. Depending on individual practices, i.e., feeder length,
wire size, voltage levels, loading practices, etc., losses for one utility may be different
than for another. For example, that utility #1 may have most of its losses in the
distribution transformer, where utility #2 sees most of their losses in the secondaries
and services. This is due to the fact that utility #1 has short feeders and short
secondaries whereas utility #2 has lines covering three quarters of one state.
Recognizing these differences allows both these utilities to concentrate their resources
in the proper areas to minimize these losses.

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System Performance Attributes

SUBSTATION
FEEDER

DSG

System losses before DSG


Kw LOSS

System losses after DSG

One Day

Figure 5-8
Distribution System Losses Might Be Reduced with the Addition of DR

Losses will become a much more difficult item to address in the new utility
environment. On the one hand, utilities are being forced to reduce spending, and on
the other, they are more concerned than ever with the cost of losses. Some utilities are
considering pushing their equipment much harder which increase losses and others are
considering reducing wire sizes, etc., to minimize new investment. It is conceivable
that this area will have to be totally reassessed in this new environment.

Another complexity to the situation is the fact that DSG's look very promising for the
future and one of the advantages of dispersed generation is that they reduce system
losses, as shown in Figure 5-8. The real advantage of the DSG at a remote feeder
location is that it may also free up enough system capacity to allow the DISCo to
postpone or even cancel otherwise needed system upgrades.

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6
REVIEW OF PRODUCTS AND SERVICES

The following is a summary review of the products and services that should be
considered for the Service DISCo and the Multiple Utilities Manager. For this summary
it is assumed that a Service DISCo is an aggressive entity whose goal is to increase
revenue by offering services, charging premiums for these services and whose
philosophy is to venture beyond the traditional metering point. The Multiple Utilities
Manager, on the other hand, is a transporter of energy and not a retailer. Its mission is
to provide an adequate level of service at lowest cost. This distribution company will
have a weak link to the customer and will not provide anything to the customer that
can be provided more cheaply to the customer by others. They will use things such as
automation only when it is decided to be a low cost driver.

6.1 Service DISCo

6.1.1 Products:

Automation - Automation will be used to better serve customers. This may mean
better reliability to comply with performance based rates, better operational
effectiveness to restore outages, time-of-day rates to reduce energy costs, automatic
metering and billing, security systems, etc., since the communications system would
be in place.

DC - DC will be offered to customers as a supplemental service. DC will be


provided to those having generation, energy storage and/or power conditioning
that is naturally DC (custom power devices, fuel cells, EVs, microturbines, etc.).

Power Electronics Power Electronics, in terms of custom power devices, will be


engineered, purchased, installed and maintained for customers .at a price. The
introduction of performance based rates will be viewed as an opportunity to
maintain customer loyalty and make money.

Distributed Resources Distributed Generation and Storage will be provided to


customers in an effort to provide them with a combination of low cost energy
and/or reliable service.

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Review of Products and Services

Communications A communications channel to the customer will be viewed as a


mechanism to provide marginally profitable services to customer in order to
maintain a loyal customer based. Items like security services, power quality
analysis, time-of-day information, real time energy pricing, energy control, etc.,
will be provided on a low margin basis since local competition will be significant.

6.1.2 Services:

Engineering Engineering services will be provided to the customer. This will


require that the Service DISCo be able to specify, purchase, install, and maintain the
electrical equipment of their customer as well as diagnose problems after
installation. It will probably be provided with a performance based contract and
will necessitate the utility having expertise in areas not previously needed. It will
also have to be competitive with outside enterprises offering the same capabilities.

Customer Efficiency Programs Efficiency programs to provide the customer with


the lowest cost power will be offered. Knowledge of distributed resources, rates,
energy costs, etc. will be required.

Environmental Services - Capability to address environmental issues will be


offered. Aesthetics, EMF, efficiency, safety, siting, pollution, etc. will be some of the
expertise provided to customer on a fee basis.

Power Quality Audits The DISCo will provide these customers with power that
meets their specific power quality requirements. This means the ability to anticipate
power quality concerns such as outages, momentaries, sags, swells, etc., suggest
means of mitigation (arresters, custom power devices, UPS, etc.) and set up
performance based contracts.

Outage Restoration Traditional outage restoration services as well as services on


the customer side of the meter will be provided.

Demand Side Management - DSM programs will be provided and the DISCo will
provide all installation, maintenance and information services offered.

6.2 Multiple Utilities Manager

6.2.1 Products:

Underground Components Cables, splices, terminations, switches, transformer,


etc. will be purchased on the basis of low cost, maintenance and ease of installation.
The trend toward fewer crews with limited experience will favor products requiring
less skilled labor for proper operation.

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Overhead Components - Overhead products will become more standardized to


reduce cost. Components will be designed that provide inherent increased
reliability to faults caused by trees, animals, lightning, etc.. Reliability will be
maintained by better designs, not expensive mitigation techniques. High
performance requirements will be provided by others (UPS, custom power devices,
etc.)

Diagnostic Tools Systems are becoming old. Historical practices of upgrading


and replacing will be performed on an as needed basis to keep cost down.
Diagnostic tools to determine the condition of transformers, cables, arresters, etc.,
will be needed. These tools must be portable and easy to use.

Automation Automation will be used where it is cost effective. Automation will


be used to increase reliability only in instances where conventional approaches are
ineffective. Reliability will be maintained but not necessarily improved at these
utilities. Automation will most likely be utilized where it shows clear savings in
system operations and manpower reductions.

Distributed Resources DR will be used to reduce system peaks, delay system


upgrades or where such an additions improves system characteristics (voltage
drop, losses, etc.) better than the alternatives.

Monitoring - Monitoring will become more prevalent as system components are


required to provide higher loadings. Maintenance, loss of life calculations and
economic operation of systems will become much more important.

Power Electronics Power Electronics will become important for major loads that
are sensitive to traditional disturbances. Customers insisting on better power
quality will either provide their own mitigation or pay the DISCo for additional
system requirements. These may also be provided by a third party.

Superconducting Cables These will only be used if they show clear economic
advantages over the alternatives and reliability is proven. It is not anticipated that
this technology will serve more than a few niche areas in the next ten years due to
cost.

6.2.2 Services:

Engineering In-house staff reductions and use of outside firms for traditional
engineering services will be the desire. Staffing to accommodate the new product
areas described above will be required and could in fact increase overall staffing
depending on product implementation. Areas such as communications,
automation, power quality, power electronics will all require in-house staff but
major projects will be farmed out.

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Maintenance Utilities will look to private firms to provide traditional


maintenance (tree trimming, pole inspection).

Construction It is anticipated that design, purchase and construction could all be


contracted out.

Inventories - Inventories will be greatly reduced due to alliances with


manufacturers as well as consolidations with other utilities.

Outage Restoration Alliances with other utilities, and contracts with private firms
will allow vast staff reductions. Additionally, contracts can be structured that will
allow the utility to use contractors during non-office hours at regular rates.

Specialist Comments

Distributed Resources

In general, there is so-called "market-pull" effect such that prices would tend to
decrease as DR penetrations increase. This effect should be far greater under the
Service DISCo vision. See attached tables (in the appendix) that: 1) describe current
cost, performance and service attributes of existing DR technologies and; 2)
qualitatively describe future cost and performance attributes of the technologies. The
lower values in the cost ranges reflect the price effects of the anticipated market-pull
plus assumed technological breakthroughs for some technologies.

Communications

This section contains the much abbreviated comments from the communications
specialists. A more detailed explanation of these products and services can be found in
the appendix.

The following is a list of generic business services and products that require integrated
communications and distributed computing technologies. Such integrated
communications and databases are required to provide the information flow to
managers for better and faster decision making. This, in turn, gives the utility the
competitive edge.

Service DISCo Products and Services

Revenue meter reading services


Distribution system electric metering
Natural gas metering
Water metering
Advanced billing services

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Electronic billing and pricing system


Customer Service and Administrative Functions
Payment authorization, credit and collection
Customer service management
Tamper/theft detection and security
Customer interface monitoring and network management support/diagnostic
functions
Load management services
Direct load control
Distributed load control
Quality of service monitoring
Electric outage and service reliability detection
Power quality monitoring services
Power quality mitigation
Natural gas service reliability and system operations
Premium natural gas services
Water quality monitoring services
Value added services
Electric energy end use analyses
Gas energy end use analyses
Building services
Heating, ventilation, air conditioning system services
Motor and drive services
Appliance and other equipment support services
On-site power generation monitoring/control
Weather data collection and services
Data monitoring/text messaging for value added services scenario
Maintenance agreements
Customer accessing of utility databases
Third party services
Distribution system distributed computing infrastructure management

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7
WORK PROCESSES

The purpose of this section is to discuss changes to the existing distribution system,
personnel requirements, main tasks, equipment required, etc. Previous sections have
dealt with the new technologies, the products associated with them, and the services
required by the Service DISCo and the Multiple Utilities Manager. This section deals
with some of the fundamental system changes that need to be anticipated to
accommodate these changes and technologies. The areas selected as contributing to the
fundamental changes which could occur in work processes are in the areas of:

Distributed Resources

DC

Communications

Metering

Electric Vehicles

Power Quality

7.1 Distributed Resources

In the de-regulated environment, the consensus of opinion is that the area holding the
most potential for change is in generation and storage technologies. The advantages of
distributed resources is that they are modular, can be used where needed, and can
delay costly system infrastructure changes. In addition, claims are made that DR will
reduce energy costs and increase reliability. These devices have been around for many
years, but a large proliferation of them will have a major impact on how utility
distribution systems operate. Figure 2-1, shown earlier, illustrates the fact that these
devices essentially change a radial system to a looped configuration, greatly
complicating traditional protection schemes. To accommodate such a system the
following changes in system components and the manpower to operate them must
occur:

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a. Smart Protective Devices Traditional protective devices like reclosers,


sectionalizers, and relays must become directional. Some smart devices, such as
reclosers, are already capable of not only directionality but also complete
changes of their characteristics from that of a time/overcurrent devices to that of
a sectionalizer depending on the direction of the fault current.

b. System Interface Modules - The interface to the utility has always been a
concern. The application of devices like microturbines is not trivial when it
comes to the interface. This device spins at greater than 90,000 rpm and has little
capability to absorb energy when disconnected from the distribution system
during reclosing operations.

7.2 Direct Current

The introduction of direct current will require a wide range of changes to traditional
utility work process. Low voltage DC buses will more than likely be localized while
HVDC Light can be used for long distance transmission problems. Some of the more
important considerations are as follows:

a. Rectifier/Inverter Technologies Introduction of DC will require a quantum


jump in the ability to rectify and invert large MVA loads at a low cost. The
development of this technology is key to other areas such as custom power and
PQ. The concern is that some consider this technology somewhat mature and
costs associated with it are not expected (by some) to decrease dramatically in
the near future.

b. Switching - Switching is difficult and costly for DC and this technology needs
significant development to allow widespread use of DC.

c. Applications HVDC Light (transmission), at the present time, points to power


ranges up to 50MW. Possible applications include supplying power to distant
loads and the connection of distant generating plants, while the back-to-back
connection of small loads located between asynchronous networks is considered
by some to be economical. Some of these specific applications are:

Small, isolated remote loads

Power supply to islands

City center infeeds

Multi-terminal systems

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MVDC is functionally similar to an AC distribution system and has the


advantage of increased power carrying capability and immunity from certain
power quality problems associated with AC. Applications associated with this
technology are:

Industrial Parks

Congested Areas

Rural Customers

Integrated DSG Areas

Table 7-1
Status of MVDC

TECHNOLOGY EXISTING NEEDS DEVELOPMENT


Modular Design for Yes Yes
converter, breaker and
transformer
Control and Protection Yes Yes
Strategies
Fast means to ground Yes Yes
return mode for DC pole-
line fault
Ground electrode design No Yes
Control strategies for No Yes
meshed network
Technique for converting Yes Yes
AC line to DC line which
will minimize outage time
Dedicate metallic return Yes Yes

7.3 Communications

Utilities will continue to see major changes in communications technologies and will
require experts and consultants to stay on top of this rapidly changing area. Some of
the traditional and emerging methods being used are as follows:

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Power line carrier renewed interest in this technology as problems associated


with earlier systems are being overcome. New technology to greatly increase
data transfer rate under development.

Microwave generally too expensive for distribution automation functions

Radio 900 Mhz dominates, cheap for one way communications and getting
cheaper for two way

Satellite expensive but getting cheaper and good coverage for rural areas

Telephone effective but considered too expensive

Cellular - good for voice, difficult for data transmission, not effective for rural
application

Infrared effective for short, line-of-sight applications

Packet Radio - sends and receives data fast and dependable and at low cost

Internet already being used for power quality monitoring surveys

Large utilities may use a combination of the above communcation technologies. Such
combination systems would be selected for optimum performance and least cost.

7.4 Metering

Metering is changing rapidly and utilities must take an active role in its transformation,
both in terms of equipment purchases and the technical expertise, to stay abreast of
developments. Metering at the residential, commercial and industrial levels are all
undergoing rapid development. Some areas utilities should be considering are:

Power Quality Meters already have the ability to monitor customer power
quality in terms of sags, swells, harmonics, interruptions, etc.

Reliability Indices Customers will be able to know the exact indices they are
paying for (SAIDI, CAIDI, SAIFI, etc.). New indices to measure sags (SARFI) are
now being considered and most utilities agree that mandatory minimums are
coming. Performance based rates will also drive these developments.

Voltage Flicker Flicker meters are coming. The adoption of the IEC
Flickermeter standards appear very possible.

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Automatic Meter Reading (AMR) Radio, telephone, power line carrier (PLC),
and the Internet are already available for AMR and monitoring PQ.

7.5 Electric Vehicles

Electric vehicles have been around a long time and many of the problems associated
with them (range, cost, and size) are still far from solved. While they do not seem to
pose a major threat to the traditional auto industry, they do appear to be on their way
as a result of government mandates concerning the environment. The impact of the
electric vehicle cannot be underestimated since this load and potential generator is a
major kw device. Homes owning electric vehicles may need major equipment
upgrades to accommodate their operation.

7.6 Power Quality

With the advent of de-regulation and the accompanying cost cutting provided by
utilities in an effort to reduce rates, it only makes sense that reliability will deteriorate
on a total system basis. On the other hand, utilities must fight to maintain their large
profitable loads. In many instances, these loads are very sensitive and require even
better power quality than is traditional. It would seem inevitable then that utilities
must develop techniques, equipment and expertise to address the differentiated needs
of their various customers. This means they must specify, purchase, and maintain all
varieties of power quality (UPS, etc.) and Custom Power (static switches, DVR, etc.) to
attain the required levels of power quality. With the advent of performance based
rates, this function will be that much more important for the future.

Specialists Comments

Service DISCo

The impact on work processes will be significant only for the service DISCo scenario,
where there is potentially large penetration of DR assets. DR will generate the need for
a new skill set at the distribution level. New functions will include:

fuel purchasing and management

generating asset maintenance and operations

dispatching and control of local generation

monitoring and maintaining reliability standards

environmental (air, water, noise, sight, etc.) impact management and compliance

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Multiple Utilities Manager

Even under low penetrations of local generation, the DISCo will still be responsible for
such functions as fuel purchasing, generation plant maintenance and reliability and
power quality control.

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8
SYSTEM COSTS

Nothing is more subjective and distorted as determining true costs of developing


technologies. One of the problems is that some costs are only for the technology and
others reflect the interconnection costs (inverter, batteries, etc.). They really cannot be
compared. The following are the best estimates for the costs for some of the
technologies discussed in this report:
Wind Systems $2000 per peak kW
Fuel Cell $3500 per kW
Solar (home, installed) $8000 per kW
Solar panels $600 per kW
Batteries $100 per kW
Backup Generator $300 per kW
Inverter $600 per kW
UPS $1500 per kW
Motor/Generator $400 per kVA
SMES $250 per kW
Capacitor $50 per kW
Flywheel $300 per kW
Specialist Comments

Distributed Resources

In general, there is so-called market-pull effect such that prices would tend to
decrease as DR penetrations increase. This effect should be far greater under the
Service DISCo vision. See attached tables that 1) describe current cost, performance
and service attributes of existing DR technologies and; 2) qualitatively describe future
cost and performance attributes of the technologies. The lower values in the cost ranges
reflect the price effects of the anticipated market-pull plus assumed technological
breakthroughs for some technologies.

In the discussion of work processes, we pointed out that there is a need for enhanced
skill sets to apply DR successfully. This makes the distribution company more labor
intensive. We estimate that labor requirements could increase as much as ten to fifty
percent under the Service DISCo vision just to meet the needs associated with
distributed generation.

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Table 8-1
Assessment of Present DR Cost

Technology Technical Capital Cost Operating Dispatchable Environment


Maturity ( $ / kW ) Cost

Solar Med. / Low $7000 - Low No Good


$10,000

Fuel Cells Low $2000 - $5000 Med. Yes Good

Engines Med. / High $500 - $1200 High Yes Poor

Batteries High $300 - $1500* High Yes ?

Flywheels Very Low N/A** High Yes Good

* This is the cost for a battery that has one hour of storage. The range reflects
that there are different kinds of batteries available for various applications.

** The technical development of flywheels is in its infancy. Costs for a


commercially available machine are not available at this time.

Table 8-2
Assessment of Future DR Cost

Technology Capital Cost Assessments

Total Cost Range Low Scenario High Scenario

Solar $500 - $5000 $500 - $1500 $3000 - $5000

Fuel Cells $500 - $4000 $500 - $1000 $2000 -$4000

Engines $200 - $1000 $200 - $500 $500 - $1000

Batteries $200 - $1500 $200 - $500 $500 - $1500

Flywheels $200 - $5000 $200 - $1500 $3000 - $5000

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Construction

Some of the costs associated with existing and now technologies are:

Table 8-3
Assessment of Present and Future Construction Cost

Present Future
($/ft) ($/ft)

Three Phase Cable Replacement 15 17

Cable Pushing 1.50 1.5

High Speed Narrow Trench 12 15

Slurry Backfill 2.75 5.50

Vacuum Trenching 3.75 2.15

Joint Trenching (old system) 130 200

Joint Trenching (new development) 60 70

Joint Trenching (rural one phase) 3.25 4.15

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9
RISKS AND CHALLENGES

The question of risk in this section has a lot to do with the regulatory environment. It
must be noted that the regulators do not know where this is all going. Every regulator
has a different compass. It used to be that the regulators role in a regulated industry
was relatively simple. They were to ensure that the regulated industry did not abuse
what market power they had. In a completely competitive environment the role is
actually simple also..allow competition. The present role of the regulator in the
present world is very complex since he sees of hybrid situation. For example,
competition is allowed in some markets but not in others, regulated companies must be
allowed flexibility to change their rates to compete, and regulated industries carry the
additional burden of reporting requirements while some of their competition does not.
Finally, the courts have limited the ability of the regulators to permit limited
competition.

The following is a review of the risks and challenges involved with the new
technologies. Each of these technologies could have regulatory, technical and customer
implications which the DISCo needs to be aware of.

9.1 Distributed Resources

Distributed generation and storage capability is one of the fundamental changes


forecast for the industry. Costs in most of these areas is still high, but many feel that
de-regulation will exploit this high value market and bring cost down where they are
competitive with traditional forms of generation. This section of the report discusses
some of the questions that come up with respect to some of these devices:

Regulatory - It is still very confusing as to how DSGs will be treated by the


regulatory bodies. At present, the same regulatory standards apply to small
generation as it does to large generation. Many utilities are being asked to divest
themselves of generation so it would seem difficult to envision how these utilities
could be involved with distributed generations unless regulatory changes are made.
Energy Service Providers are expected to enter this market, but regulatory issues are
unclear. It is expected that the initial markets they will go after are large industrial
and commercial clients (shopping centers, apartment complexes, etc.). Many of

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these customers are the utilities most profitable clients, so the loss of them could
have a potentially major effect on the wires company.

Customers Some customers will want the lowest rates and accept the lowest
quality and reliabilitysome will want the highest quality and reliability. Most
will want something in between the two extremes. Large customers, desiring the
lowest energy costs, have been courted for years by companies selling combined
cycle gas turbines. This will continue as prices on these units drops to even more
competitive values. Likewise, customers desiring reliability will continue to
purchase backup diesel generators. Microturbines, solar, fuel cells, etc., are really
not proven to have either economic advantage or reliability, so it is the integrators
opinion that these technologies will continue to attract niche customers where their
advantages can be utilized (remote areas, green power localities, etc.). Distributed
resources could be a major player in markets where time-of-use provides major
energy savings. It is conceivable for the DISCo, where new construction is difficult
and costly, or where electrical characteristics are already marginal (voltage drop,
reliability etc.), distributed resource economics may save major dollars and be the
largest cost expenditure in the construction budget.

Technical - The following is a brief summary of some of the technical risks and
challenges associated with a sampling of some of the new technologies:

Microturbines
1. Safety Rotate in excess of 90,000 rpm and high gas pressure
2. Noise - OK for industrial environment but noisy for residential areas
3. Gas - High pressure gas requirements are over 100 times that of gas pressure
in a typical home.
4. Utility Interface Utility practice of reclosing could be a problem since
turbine energy must be absorbed during this period.

Solar
1. Cost of solar panel is cheap but interface is not
2. DC inverters produce harmonics
3. Not efficient in certain areas and only efficient when in direct sunlight (no
trees)
4. Inverters are expensive
5. Require energy storage to achieve reliability

Batteries
1. Expensive
2. High maintenance

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3. Safety may become an issue


4. Space requirements can be a major consideration

9.2 DC DISCo

The DC DISCo offers some major opportunities as discussed in previous sections of the
report. Some of the challenges that must be addressed are as follows:

Regulatory In a low voltage, isolated environment it is not expected that


regulatory issues will be a major factor. For MVDC, the DISCo will face the same
regulatory issues they presently do with AC, plus standards must be created to
insure safety of both utility personnel and customers.

Customers The customer runs the risk of having to utilize unproven technologies.
Historically, no one wants to be first, so research sponsored parks will probably be
the rule for a while, with critical loads provided with both AC and DC.

Technical Utilization equipment is not yet available for low voltage DC levels.
Voltage regulation is still an issue since low cost transformation is not as easy as it is
with AC. Switching is much more difficult and expensive with DC, so this technical
challenge must be addressed. Finally, standards will have to be created to address
this technology, and this can take years.

Low voltage DC was, of course, used many years ago in the Edison Direct Current
Network. This system was noted for its high degree of continuity, but there were
several disadvantages as reported below:

1. The low voltage of this system necessitates a large investment for feeders and
substations and in already congested areas, this is an impossible situation.

2. The heat given off by the low voltage direct current caused a serious rise in
temperature with the result that the normal carrying capacity of the cables had to
be reduced.

3. Required a large investment in conversion equipment and its chief advantage,


namely continuity of service, could be secured only by making a large
investment in storage battery capability.

4. High maintenance costs and conversion losses made the Edison system the most
expensive.

5. Very serious operating problems occurred in the event of a complete system


outage since battery storage could be depleted and system capacity was
insufficient to operate the system and re-charge the batteries.

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9.3 Electric Vehicle Platform

The impact of EVs on the utility system cannot be underestimated since these loads are
potentially very large. The following are issues that should be addressed, since EVs
may be mandated.

Regulatory EVs present a major load, or source, when connected to the


distribution system. If these vehicles are re-charged at system peak the DISCo may
have to make extensive changes to the capacity of their distribution system and
regulatory bodies must be petitioned to allow recouping of these expenditures.
Likewise, if the EV were used as a source of generation, they must be regulated to
insure that rates paid the customer reflect the costs and savings during off peak and
peak conditions.

Customer Customers in the US will want to re-charge quickly and at their


convenience. The integrator does not see this attitude changing. If the customer is
charged for their actual impact on the distribution system the cost of energy and
demand may prove excessive. Mandates, of course, nullify economic theory to the
point that customers may actually be subsidized for operation of these platforms.

Technical - The EV is a major, harmonic producing, load (or generator) never before
seen on a distribution system. The impact of this platform could completely alter
system design should this technology become substantial. The EV, if adopted as a
generator or load to any significant degree, will have more impact than the air
conditioning load in terms of system design considerations.

9.4 Communications

No technology will change or grow more (from a utility viewpoint) than


communications. Relays, meters, breakers, switches and virtually any intelligent
device being applied to a utility system now comes from the manufacturer with the
ability to access via a communications channel. Some of the risks and challenges in this
area are as follows:

Regulatory The telephone company, cable company, etc., already communicate


with the customer. Any marriage to one of these may necessitate large regulatory
intervention. However, marriages have been made in some states with virtually no
regulatory problem. Likewise, if the utility wants to go it alone, they must get
much more involved in the regulatory issues in these industries.

Customer Communication with the customer will create issues of who owns the
data and what are they allowed to do with the data. This could be a major legal
issue. If the customer owns the meter things may get even more complicated.

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Technical The technology in this area is changing so rapidly (see previous


sections) that the risk in subscribing to any particular communication technology
will remain substantial. Standardization of protocol will continue to be the most
important issue in this area. The only open protocol that is presently available for
all utility operations in the UCA. The UCA uses open protocols based on national
and international standards. Hence it is available to present and future vendors to
use for interoperable communications. Metering technology will be an area of
major technological development and a variety of meters will be utilized depending
on the size and type of loads. EPRI and some vendors are developing modular
meters to provide the capability to interconnect different meters with different
communications systems. This will mean that a variety of communication types
will be deployed depend on the economics of meter reading for the individual
utilities. It is conceivable that the meter could be owned by the customer, jointly
with another utility, or by a third party. Metering services for power quality
parameter are already being supplied by third parties utilitizing the internet.

9.5 Power Quality

Power quality will remain a major issue in the industry. Previous sections of the report
have listed some of the important characteristics of many of the devices presently
available. Some of the potential risks and challenges in this area are as follows:

Regulatory The biggest issue here is performance based rates. If the regulatory
commission mandates or allows rates based on system performance the areas
associated with power quality will take on major importance. Issues as to who pays
for the equipment, who maintains it, and who is liable will become paramount.

Customer Customers are already specifying contracts based on performance and,


in the integrators opinion, this trend will grow quickly since it can benefit both
parties. The challenge for the utility in this area is that they must become much
more familiar with the customers loads, the power quality problems that affect
them, and the lowest cost methods to mitigate them. The risk is that the utility may
develop costly solutions to problems resulting in the customer going to a third party
or resorting to on-site generation as an alternative if things do not prove satisfactory
from either a cost or performance perspective.

Technical The major risk in this area is in providing mitigation devices that dont
perform adquately due to improper application. Development of some custom
power technologies are in its early stages, but there are some custom power devices
that are being offered commercially. Technological advances for cost reductions
does not appear to be imminent in many supporting technologies which improve
power quality and system design improvements to prevent the problems from
occurring (e.g. DC, or more conventional techniques) may be found to be a better

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approach than mitigation after the fact. De-sensitizing the equipment itself may
negate the need for much of this. Cost effectiveness of custom power devices is not
black or white. Each case must be studied and its alternatives considered.

9.6 Construction

With the aging of much of the infrastructure and the conclusion of the Distribution Cost
Structure Study that construction is the area of largest expenditures, the need for low
cost construction techniques is a major consideration in the future. If these techniques
can also improve reliability the utilities would have a major incentive to fund research
in this area. Some of the risks and challenges to be considered in this areas are as
follows:

Regulatory Any major change in design and construction practices may


necessitate regulatory intervention and new standards which can take a
considerable amount of time.

Customer Construction practices which are greatly simplified can mean the
customer may want to do it themselves or contract third parties. This has both
advantages and disadvantages from the utilities point of view. Untested new
construction practices runs the risk of unforeseen outages to the customer.

Technical Changes in construction practices take many years to conceptualize,


build and test. Murphys law loves this kind of thing.

Specialist Comments

Distributed Resources

Cost uncertainty, performance risks, and uncertain environmental impacts associated


with DR technologies do not directly pose a risk or challenge to the future distribution
company. The fact that these cost, performance and environmental issues exist will
determine the extent that the DR resource is used to meet future customer needs
(assuming that markets are permitted to operate freely with limited intervention by
regulators). If the costs and perceived risks of the technologies are too great, other
assets (non-DR) will be used to meet needs. The real question is whether it is cost
effective to use DR given their cost and performance characteristics. DR provides an
opportunity to lower costs. DR is not necessary for either of these scenarios to be
achieved. Indeed, an important risk is whether regulators decide to give DR
technologies preferential treatment independent of economic performance, thus
requiring the integration of such technologies into an existing system. The risk is that
the result of such a regulatory policy could be high cost electricity and reduced
revenues.

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There are technical risks, especially with flywheels and microturbines because of their
required large angular velocities, that have both safety and economic implications.
Fuel cell stack life is another technical uncertainty that affects the economic
performance of that technology. Siting risk, which entails safety and environmental
(including esthetics) hazards, is present for all DR technologies and is especially
problematical for engines and microturbines.

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10
KEY BENEFITS

The following is a list of the key benefits associated with the new technologies, both
from a financial and non-financial point of view. Material utilized for this section is
from White Papers Presented in Two Concept Panel Meetings, which was developed
at the start of this project for the Advisors. EPRI, and the integrator, may not
necessarily agree with claims made in these papers, but the advantages indicated by
the various authors are included for the reader to form their own opinion.

10.1 Power Electronics


Enables energy storage and generation in the utility system
Custom Power offers new level of PQ capability
Makes distribution system the key value added point
Improves system reliability and power quality
Improves overall efficiency/asset utilization of the system
Value added point moves closer to the customer
Allows flexibility
Enhances distribution system value

10.2 DC DISCo
Customer independence and assurance of service continuity
Customer facility and grid need not be designed for peak load
No EMF
Separate asynchronous link
Supports high degree of dispersed generation and storage
Cables may be place close to other utilities
Customer independence and isolation
No eddy currents meaning less resistive loss
Time is right to replace cables
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May become economical


Much of the generation and storage is naturally DC
Can be operated independent of AC grid
No EMI
Can be operated at higher voltage than equivalent AC cables

10.3 DC DISCo using Superconductivity


Reduction of complexity
Low voltage, high current system
Full UPS capability
High level of reliability
Modular
Central control not required
Easy to add taps
Low losses
Simple connection to fuel cell, etc.
Uses existing technology
Space Station Electric Power System (SSEPS)

10.4 Electric Vehicles (as a source of distributed power)


Economies of scale associate with transportation application
Contributes to managing and planning energy resources
Environmentally clean
40 to 50 kW of on-board power capability
Efficient (up to 50%)
Can switch to gas
Owners are paid to generate
Electric platforms (fuel cells, battery, hybrid) are increasing
15% of road vehicles could provide all the power generation

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10.5 Real Time Systems Analysis


Increased profit from operation of distribution system
Increased revenue from new services
Communication bandwidth will become available and allow additional services
Quality of power and reliability will be an issue
Ongoing performance assessments
Detailed descriptions of disturbances
State estimation
Historical databases for planning
Integration of customer equipment controls

10.6 Communications
Low cost metering
Enables automation
Can be sold for future services
Customer contact
Lower cost.time-of-day rates and energy retailers
Capital improvement of capacity
Control of local generation
Management of energy consumption
Monitoring of customer sites
Information services including weather, load status, temperature, rates, etc.
Allows customer blocks for buying leverage

10.7 Convergence/Partnership
Retain higher percentage of customers
New revenues
More rapid buildup of information
Improved efficiency
Enhanced communication infrastructure
Partnership brings enormous opportunity
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Combine with entrepreneurial company


Can advertise on TV if combined with cable
Communications advantages (automation, billing)
Culture transfer
Fleet advantages
Communications is dynamic industry

10.8 Power Quality Management


Tailored service
Maximizes revenue
Differentiated service levels at a price

Service DISCo

The key benefits are (1) increased economic efficiencies in meeting demand for
improved and diverse services and (2) the resulting enhanced financial performance of
the distribution company. Another benefit is the reduced dependence on the bulk
generation market and thus the reduced exposure to potentially volatile electricity spot
prices. Specifically, local generation may reduce the effective demand on the
transmission system, thus avoiding the effect of regional transmission constraints on
local spot prices. This permits the distribution company to be relatively unaffected by
very high prices in periods of high demand, such as summer peak days.

Multiple Utilities Manager

The key benefit provided by DR is reduced distribution costs. As in the Service DISCo
vision, DR penetration reduces the exposure to the potentially volatile electricity spot
market, resulting from swings in demand and regional transmission constraints.

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11
MIGRATION PATH

There will undoubtedly be a wide variety of paths a utility will use to get to a new
system since there will be a wide variety of new systems. The previous sections
provide insights into many of the issues utilities must address when pursuing either
vision. Some thoughts related to specific directions a utility might follow for the two
visions is outlined below:

11.1 Service DISCo

Meters

1. Form alliances with manufacturers

2. Create technical awareness of needs in the industry (PQ, etc) and influence meter
development and standards

Distributed Generation

1. Investigate various economic and technical considerations as outlined in previous


sections

2. Visit manufacturers to influence interface considerations

3. Create standards through IEEE

DC DISCo

1. Fund research in this area

2. Develop Power Quality Parks based on this principle

3. Go carefully

Communications

1. Purchase or form alliances with cable and other communications companies

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2. Create standards for protocol and communications technologies

Electric Vehicles

1. Perform studies to determine impact of EVs on distribution system as well as a load


as well as a generator

2. Work with manufacturers to solve problems related to excessive load and


generating capability of these loads should they become popular

3. Create standards through IEEE to insure that EV characteristics (harmonics, flicker,


etc.) do not become a major problem

Automation

1. Perform automation studies that determine the true cost/benefit of the various
functions associated with automation

2. Assist the industry in determining standard protocols and communications

3. Create standards

Construction

1. Fund research on better methods to construct distribution systems at lower costs


using less skilled labor

2. Fund research to determine better designs to eliminate causes of flashovers, sags


and outages

3. Need to direct additional efforts towards reducing overall construction costs,


particularly labor intensive activities

11.2 Multiple Utilities Manager

Software

1. Develop software to evaluate optimum wire size and losses

2. Develop software to determine optimal loading of equipment

3. Develop software to determine optimal maintenance schedules

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Manpower Reduction

1. Investigate pros and cons of using outside engineering services

2. Investigate pros and cons of selling engineering services

3. Form alliances with other utilities, and private services to reduce crew size

4. Leverage others in the communications arena

Metering

1. Form alliances with manufacturers or let others perform the function

2. Join with other utilities

Automation

1. Use only as a low cost driver

Power Quality

1. Provide only adequate reliability and power quality

2. Allow others to provide PQ products and service

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12
SUMMARY OF STAKEHOLDER INTERVIEWS

A variety of stakeholder groups were interviewed to obtain an objective review of the


Service DISCo and Multiple Utilities Manager visions and the corresponding
conceptual designs. The intent of these interviews was not to prove or disprove the
validity of this work, but rather to highlight the issues that might arise if either
business vision is pursued by a DISCo.

Each stakeholder that was interviewed appreciated the opportunity to participate in


this project. Further, all stakeholders stated that this was an extremely valuable
exercise that was necessary due to the fundamental changes that are occurring in the
electric utility industry. Regardless, not a single stakeholder was shy about describing
what they thought might become an issue if either business vision is pursued (also, we
agreed to keep all stakeholder comments anonymous, which enabled a more a
complete disclosure of opinions).

It is necessary to note that these are the opinions of the individuals that were
interviewed, and not necessarily the opinion of EPRI. We merely wanted to capture the
full spectrum of opinions about the business visions.

A summary of comments made by each stakeholder groupcategorized by business


visionis included below. A full listing of stakeholder comments is included in the
appendix of this report.

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Summary of Stakeholder Interviews

Stakeholder Service DISCo Multiple Utility Manager Common to Both


Group Visions

Customers Popular vision. Luke-warm reaction. Customers want to be


Customers want a Customers do not involved in the decision
variety of options, and perceive much benefit, making process.
many customers will unless costs are
evaluate electricity reduced.
based upon overall
value, not just low cost.
Uncertain whether
todays utilities can
pursue this vision.

Regulators Significant skepticism Variety of opinions Consensus that this is


about this vision. some extremely an extremely valuable
Regulators are naturally positive, and some exercise that needs to
suspicious when extremely negative. be performed.
regulated companies Believe that this as a Like the Commodity
work in deregulated viable option, but it may WiresCo vision (provide
areas. be difficult to implement basic, regulated
Concerned about and may make distribution services).
cross-subsidization. regulation more The Federal Energy
complex. Regulatory Commission
(FERC) will not play an
active role in regulation
of the DISCo.
If reliability decreases
significantly, the
regulators will become
more involved.

Employees of Viable option to pursue. Viable option to pursue.


the DISCo Employees will need to Need common
increase their technical technology for all utility
abilities, but this can be functions if this vision
done. will be successful.
Some efficiencies will
be realized, but
specialized
maintenance crews will
still be needed for each
utility function.

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Summary of Stakeholder Interviews

Stakeholder Service DISCo Multiple Utility Manger Common to Both


Group Visions

Shareholders Compelling vision, but Popular vision. Want companies to


of the DISCo concerned that this Significant potential to become bolder, more
(Investors) may be too costly to increase profits and aggressive.
implement. realize economies of Companies need to
Vision may breed over- scale. understand what they
investment in Uncertain if one do well, and what they
distribution company, or do not do well. It is
infrastructure. management team, can impossible to be
provide a full array of everything to
services. everybody.

Stakeholders Popular option. Reasonable vision, but Other than overhead


With an Strong preference for certain risks need to be vs. underground, there
Environment underground eliminated before this were no significant
al Interest distribution, which is vision will be accepted environmental issues
consistent with this (e.g., combination of (more concerned with
vision. electricity and water, generation than
underground boring, distribution).
etc.).

Stakeholders Reasonable option. Reasonable option. Concerned that the


With a Concerned if the MUM utility is more
Concern For can ensure reliability concerned with
Public Safety and safety. pleasing its
shareholders, not with
ensuring the reliable
and cost-effective use
of electricity.
Not willing to sacrifice
safety for reduced
costs.

Other Product liability will


Comments become an important
issue if a utility pursues
this vision.

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A
APPENDIX

TECHNICAL SPECIALIST COMMENTS................................................................................A-2


Distributed Resources......................................................................................................... A-3
Power Electronics ............................................................................................................... A-9
Two-Way Communications ............................................................................................... A-38
Construction...................................................................................................................... A-60

STAKEHOLDER INTERVIEWS............................................................................................A-67

MULTIPLE UTILITIES MANAGER OF TODAY....................................................................A-76

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TECHNICAL SPECIALIST COMMENTS

During the initial stages of EPRIs Distribution Systems Redesign Project a wide variety
of technologies were considered for further evaluation. Based upon Advisor input, the
following four key technical areas were selected as most critical, and correspondingly
are integrated into the conceptual designs for the Service DISCo and the Multiple
Utilities Manager:

Distributed Resources

Power Electronics (emphasis on smart grid and DC distribution)

Two-Way Communications

Construction

Each technical section is developed in the context of the selected business visions,
discussing how these technologies can be utilized by a DISCo to pursue a particular
vision. While portions of these comments are integrated into the conceptual designs, a
complete copy of each technical section is included here for additional support.

It should be noted that the conceptual design, at times, varies from original comments
made by the technical specialists included in the appendix. Due to the subjectivism of
this topic, there are a variety of opinions, and we believe this strengthens the overall
report.

DISTRIBUTED RESOURCESTECHNICAL SPECIALIST COMMENTS

Introduction

Distributed Resources provide an alternative to more traditional investments made by


electric distribution companies. Distribution system investments are made for several
reasons, including the need to satisfy increased customer demand. As demand
increases, or becomes more uncertain, it may be possible to defer for some time or
delay indefinitely traditional capacity expansion investments by distributing generation,
storage, and demand-side management technologies throughout the distribution
system. Such distributed resources can be matched to local peak loads and provide the
necessary capacity (as well as energy) upon demand. Originally conceived as a means
of lowering cost and more effectively utilizing both capital and system assets,
distributed resources can also provide operating benefits to the distribution system.
The economic and operating benefits provided by distributed resources vary with

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respect to investment and operating costs, general economic conditions, local load
characteristics, and, as applicable, regulatory and market conditions.

New Technology Description

Service DISCo

Under this vision, there are incentives to develop power quality / reliability enhancing
DR for application on the customer side of meter. The extent of the penetration of DR
assets depends on the evolution of the technologies with respect to performance and
costs (discussed later in this document). In general, to meet individual customer needs
for power quality / reliability, it may be less expensive to apply DR technologies
locally rather than provide the same level of service for all customers through some
more centralized technology.

Multiple Utilities Manager

Under this vision, there are incentives to develop decentralized utility services,
managed by one company. These incentives are driven by economics rather than
technical capabilities. Distributed generation can provide locally sited locally
controlled supply. Where it is economically more efficient to use local generation for
providing energy service, there will be a strong incentive to develop the technology.
Again, the extent of the penetration of DR assets depends on the evolution of the
technologies with respect to performance and costs.

Common To Both Visions

The overall conclusion for both visions is that the evolution of the technologies is not
likely to be strongly vision-driven. Instead, there is a threshold effect with respect to
economic performance. If the economic performance of a technology is competitive (or
even close enough to competitive), then the evolution of the visions will naturally drive
the development of that technology. If the economic performance is not competitive,
then the visions will not drive the technology, regardless of the engineering
performance characteristics of that technology. Because the benefits provided by the
technology are not sufficient to overcome the lack of economic performance, such a
technology will not be applied.

Embedded and Discarded Technologies

Service DISCo

Over time with increased penetration of DR, and deterioration of aging conventional
assets, it is reasonable to expect that an increasing proportion of capacity needs will be

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met by DR assets. EPRIs DR Strategic Market Assessment (C. Clark 1995, TR-106055)
suggested that, under certain conditions, almost all additional capacity requirements
would be met by DR investments. This is perhaps an extremely optimistic forecast.
Initially, DR will provide selective reliability improvements and enhanced PQ.

Multiple Utilities Manager

As in the Service DISCo vision, initially DR will provide selective reliability


improvements and enhanced PQ. Over time, we expect that the incentives to use DR in
this vision will be significantly weaker (than under the Service DISCo), based on
reasonable demand forecasts, because in this vision the market demand for special
services is limited.

As already discussed, the extent of the penetration of DR assets depends on the


evolution of the technologies with respect to performance and costs. Our analysis
suggests that the evolution of the technologies and thus the penetration of DR is very
uncertain. Indeed, currently the technologies are not economically competitive (except
in some very special niche applications). Therefore the degree to which existing
technologies will be discarded cannot be precisely determined at this time. Any
forecast that we could make would be subject to assessments of the likelihood of DR
technologies achieving the low end of the capital cost ranges presented below. We
assess that the likelihood that any of the DR technologies achieves the low end of its
capital cost range is relatively small. We are especially confident in this somewhat
pessimistic (if not realistic) assessment for solar, fuel cells, flywheels, and
microturbines.

Work Processes

Service DISCo

The impact on work processes will be significant only for the Service DISCo, where
there is potentially large penetration of DR assets. DR will generate the need for a new
skill set at the distribution level. New functions will include:

fuel purchasing and management

generating asset maintenance and operations

dispatching and control of local generation

monitoring and maintaining reliability standards

environmental (air, water, noise, sight, etc.) impact management and compliance

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Multiple Utilities Manager

Even under low penetrations of local generation, the utility will still be responsible for
such functions as fuel purchasing, generation plant maintenance and reliability and
power quality control.

System Costs

In general, there is so-called market-pull effect such that prices would tend to
decrease as DR penetrations increase. This effect should be far greater under the
Service DISCo vision. See attached tables that 1) describe current cost, performance
and service attributes of existing DR technologies and; 2) qualitatively describe future
cost and performance attributes of the technologies. The lower values in the cost ranges
reflect the price effects of the anticipated market-pull plus assumed technological
breakthroughs for some technologies.

In the discussion of work processes, we pointed out that there is a need for enhanced
skill sets to apply DR successfully. This makes the distribution company more labor
intensive. We estimate that labor requirements could increase as much as ten to fifty
percent under the Service DISCo vision just to meet the needs associated with
distributed generation.

System Cost Analysis

Table 1
Assessment of Current DR System Costs

Technical Capital Operating


Technology Maturity Cost ($ / kW) Cost Dispatchable Environment
Solar Med. / Low $7000 - Low No Good
$10,000
Fuel Cells Low $2000 - $5000 Med. Yes Good
Engines Med. / High $500 - $1200 High Yes Poor
Batteries High $300 - $1500* High Yes ?
Flywheels Very Low N/A** High Yes Good

* This is the cost for a battery that has one hour of storage. The range reflects
that there are different kinds of batteries available for various applications.

** The technical development of flywheels is in its infancy. Costs for a


commercially available machine are not available at this time.

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We have categorized operating costs as low, medium and high. These are relative to
current operating costs of conventional power plants (a range of 2 to 5 cents per kWh).
Storage devices are in the high operating cost range because of turn-around efficiencies.
The capital cost assessments include the full cost of an operating power plant but not
the cost of such things fuel delivery and fuel storage systems.

Table 2
Assessment of Future DR Capital Costs

Capital Cost Assessments


Technology

Total Cost Range Low Scenario High Scenario

Solar $500 - $5000 $500 - $1500 $3000 - $5000

Fuel Cells $500 - $4000 $500 - $1000 $2000 - $4000

Engines $200 - $1000 $200 - $500 $500 - $1000

Batteries $200 - $1500 $200 - $500 $500 - $1500

Flywheels $200 - $5000 $200 - $1500 $3000 - $5000

The information in Table 2 is provided as a forecast of the possible future capital costs
for the five distributed technologies. For the high cost, less technically mature
technologies, (solar, fuel cells and flywheels), achieving the low scenario requires
significant technical advances. The high scenario is based on the assumption that
technical advances do not occur. Achieving the low end of the range in the high
scenario requires increased manufacturing volume and fabrication improvements. The
demand-pull effect associated with the Service DISCo vision would put downward
pressure on costs independent of the technical advances. This impacts all technologies.

Risks and Challenges

Cost uncertainty, performance risks, and uncertain environmental impacts associated


with DR technologies do not directly pose a risk or challenge to the future distribution
company. The fact that these cost, performance and environmental issues exist will
determine the extent that the DR resource is used to meet future customer needs
(assuming that markets are permitted to operate freely with limited intervention by
regulators). If the costs and perceived risks of the technologies are too great, other
assets (non-DR) will be used to meet needs. The real question is whether it is cost

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effective to use DR given their cost and performance characteristics. DR provides an


opportunity to lower costs. DR is not necessary for either of these visions to be
achieved. Indeed, an important risk is whether regulators decide to give DR
technologies preferential treatment independent of economic performance, thus
requiring the integration of such technologies into an existing system. The risk is that
the result of such a regulatory policy could be high cost electricity and reduced
revenues.

There are technical risks, especially with flywheels and microturbines because of their
required large angular velocities, which have both safety and economic implications.
Fuel cell stack life is another technical uncertainty that affects the economic
performance of that technology. Siting risk, which entails safety and environmental
(including esthetics) hazards, is present for all DR technologies and is especially
problematical for engines and microturbines.

Key Benefits

Service DISCo

The key benefits are (1) increased economic efficiencies in meeting demand for
improved and diverse services and (2) the resulting enhanced financial performance of
the distribution company. Another benefit is the reduced dependence on the bulk
generation market and thus the reduced exposure to potentially volatile electricity spot
prices. Specifically, local generation may reduce the effective demand on the
transmission system, thus avoiding the effect of regional transmission constraints on
local spot prices. This permits the distribution company to be relatively unaffected by
very high prices in periods of high demand, such as summer peak days.

Multiple Utilities Manager

The key benefit provided by DR is reduced distribution costs. As in the Service DISCo
vision, DR penetration reduces the exposure to the potentially volatile electricity spot
market, resulting from swings in demand and regional transmission constraints

Migration Path

Service DISCo

For DR to support the service DISCo vision, current high prices of the technologies
must be reduced to the range of $100-$300 per kW (1998). This will require bringing
some technologies, such as fuel cells and photovoltaic generation, down in cost by at
least an order of magnitude. Some of the reduction can come through manufacturing
efficiency due to greater volumes and fabrication innovation. However, analyses have

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shown that manufacturing improvements alone will not be sufficient to achieve this
required reduction. Technology innovation is almost surely required see the cost
assessments in Table 2.

One current technology that looks promising is local generation (engines and
microturbines). Conventional reciprocating engine technology is well-developed and
thus unlikely to experience a significant reduction in price with increased penetration.
In addition, local generation faces siting uncertainty because of potential air quality,
noise, and visual problems. Further, microturbines operate at very high angular
velocities. It is not yet known whether such operations are safe and reliable in the long
term. Therefore, the path to acceptance for even the most well-developed technologies
is uncertain.

Multiple Utilities Manager

There will be relatively little demand-pull for DR technologies under this vision
(compared with the Service DISCo vision). Indeed, the cost reductions will therefore be
less, but most of the installations will be high-value niche applications that require
smaller cost reductions to be economically competitive. For example, the solar market
is currently growing, despite the large capital costs of the technology. The market of
solar is likely to continue to grow, but the applications are mainly remote power
generation and storage needs that cannot otherwise be cost-effectively served by
conventional wires technologies.

The migration path is one of the aspects of the analysis of distributed resources. In
order to forecast the role of DR in the evolution of the distribution company, it is
essential to understand the costs of the technologies and the way those costs are likely
to change. The tables described in Task 5 describe our assessments of the appropriate
costs

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POWER ELECTRONICSTECHNICAL SPECIALIST COMMENTS

Introduction

Multiple Utilities Manager

This model focuses the utility on the supply of the lowest cost power to their customers.
It is felt that primarily larger (industrial or multiple consumers in a cooperative
arrangement for instance a new housing subdivision) customers will be interested in
such an arrangement. Lowest cost of delivery is accomplished by many different
approaches, such as sharing rights of way, servicing and billing with several services
including electricity, water, telephone and television. The use of standardized
components in the entire power generation and delivery chain is important. The ability
to trade electricity futures as a way of ensuring that electricity is available at a given
rate will be an important part of a MUMs competencies. Finally, the ability to
arbitrage the cost of electricity over daily cycles could have a huge impact on the ability
of the MUM to make a profit.

It is anticipated that the issues of quality power delivery to the customer are not truly
part of the MUMs area of concern, unless the quality falls outside the bounds of what
is specified in the contract. If the customer desires higher power quality than the
minimum specified, he will need to invest in (possibly with the utilitys or a PQ
consultants guidance) power quality devices, which will give him the level of quality
he needs. As such, the MUM needs to have familiarity, but does not need to be a
provider in this area. (It is anticipated that in actual life, for select customers, the MUM
may need to do more, and in effect move closer to a Service DISCo in some aspects of
their business).

A bigger need, although with a lower degree of relevance, concerns the need for the
MUM to provide a minimum level of service to his customer. For instance, it is not
clear whether a large local storage unit is within the realm of what a MUM would need.
This would allow them to purchase power when it was cheap and to supply it when it
was more expensive and needed. Several large storage systems (350 MVA) based on
compressed air have been operational for several years and have shown good potential.
Arbitrage, in my opinion, is a key component of low cost energy provision. Larger
SMES systems have also been proposed for this type of use, but have not gotten beyond
a detailed design stage.

It is thus seen that power electronics plays a moderate role in MUMs, as has been
presented earlier.

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Service DISCo

The Service DISCo seeks to gain competitive advantage by forming a close relationship
with the customer and providing services that go beyond the mere provision of energy.
For instance, improved power quality, energy audits, providing monitoring and
maintenance of all electricity supply, cogeneration and back-up power equipment and
services, financing for meeting a customers power quality and service enhancement
needs, and generally working in partnership to realize higher levels of productivity.
Power electronics will play an increasingly important role in this universe. For
instance, on the utility side, if the customer desires a premium power service, then the
utility would install the PQ enhancing equipment on its side of the meter, and would
bill the customer appropriately. Alternately, the utility could finance or help with
locating, specifying and commissioning the equipment on the customer side of the
meter. Several new possibilities exist for the utility in this universe. Some of these
possibilities that are enabled by advances in power conversion technology are
discussed briefly here.

Each new technical innovation is first described briefly along with a circuit schematic
and intended function. The status of the technology is discussed briefly along with its
possible use by a MUM or Service DISCo. Those technologies or assets which will be
discarded, or otherwise impacted by the new technology, are also defined. Work
processes that need to be developed as a result will be defined where possible. System
costs will be described where available. Risks and challenges to realizing the promise
of this technology will also be briefly outlined. Finally key benefits and a migration
path to widespread use of the new technology will be covered. Once the basic
information is generated, a table will be developed to represent the most pertinent data
in a succinct format.

New Technology Description

Several new technical innovations have been presented here. These are segmented into
several categories by dominant impact in one of several areas. These categories include
Power Flow Control, Power Quality, Smart Grid and Distributed Generation Systems.

1. Power Flow Control


Power electronics can improve power flow control. Use of switched capacitors
(electro-mechanical and thyristor switched) is fairly common. New techniques,
based on power electronics, that have been proposed include FACTS devices,
Statcon, Thyristor Based Phase Shift Controllers, Thyristor Based Voltage
Regulators, Series Active Compensators, Dynamic Voltage Restorer, Fault Current
Limiters, large storage devices, harmonic current flow control, active filters etc.
These devices are targeted at the 2-200 MW level, and are in varied stages of

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development and availability (detailed discussion for each device is included later
in this document).

Static VAR Compensator (SVC)

Statcon

Thyristor Controlled Phase Shifter-

Universal Power Flow Controller (UPFC)

Thyristor Switched Series Capacitors (TSSC)

2. Power Quality Improvement


A second category of application for power electronics converters is in the area of
power quality improvement. The dominant problems that are solved using power
converters relate to voltage sag mitigation, control of harmonic current flow, and
provision of back-up energy to handle outages, spinning reserve and dispatched
distributed generation. The dominant current problem is possibly in the area of
voltage sags. Given the close association of the Service DISCo with the end-user, it
is probably more interested in the technology than is the MUM. The end-use
customer is also typically interested in mitigating sags, as these events directly
impact the customers productivity. Similar linkages can be demonstrated for the
distributed generation/back-up power area. In the area of harmonic control, unless
the customer is experiencing a direct problem, they would have no interest in a
solution unless mandated by regulations and standards. The Service DISCo and
MUM, on the other hand, can better utilize their assets if harmonics are better
managed. Several new technologies are now becoming available (or at least visible).
Some of these are summarized below.

Voltage Sag Mitigation Devices


It has been shown conclusively through the Distribution Power Quality (DPQ)
study, and through other studies conducted by utilities, that momentary voltage
sags and outages are the dominant power quality problem on the power grid.
Further, unlike issues such as harmonics, which tend to be regulation driven,
process interruptions caused by voltage sags cause real economic loss and
productivity loss to the utilitys customer. As such, mitigation of such events can
have real added value to the customer. Several options are available to the
utility. In addition to providing (or helping to provide) mitigation equipment on
either side of the meter, the utility can supply significant value by locating the
sensitive equipment and in effect minimizing the cost of the fix to both parties.
Sag mitigation devices are now available at ratings of up to several megawatts.
These devices are in two basic categories: with and without substantial energy
storage. Those with energy storage include micro-SMES units from American

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Superconductor, battery storage systems from Omnion, Exide, Liebert and


others, and flywheel based systems from Trinity and Active Power. These
systems are typically rated for 2 to 20 seconds of ride-through upon detection of
an abnormal supply condition, and cost in the range of $400 to $1000 per kVA of
load.

Alternate solutions which use a reduced amount of energy storage, and operate
interactively with the ac line even during sag conditions tend to be more cost
effective, but are somewhat more restricted in the types of events that they can
protect against. These solutions include the Dynamic Voltage Restorer (DVR)
from Westinghouse (now Siemens), the Sipcon from Siemens, and the SSVR from
GE. Devices such as the Statcom have also been used to provide voltage support
through VAR compensation, but with rather limited usefulness in customer side
applications. These solutions have ranged from $250-$400 per kVA (without
energy storage) at the 2-10 MVA level for medium-voltage installations on the
utility side of the meter. A new solution has recently been introduced by Soft
Switching Technologies for use on the customer side of the meter. Rated at 2 to
2000 kVA, the Dynamic Sag Corrector (DSC) product is targeted for use in 480
volt applications. This product offers deep sag protection and optional
momentary outage protection at a new and unprecedented price level of $100-
$150 per kVA. At this price point, the economics of providing sag mitigation to
customers are dramatically changed.

Existing solutions for voltage sags tend to be rather limited in their efficacy.
These include surge suppressors, CVTs, servo stabilizers, and UPS. Of these
devices, surge suppressors are ubiquitous in their application, primarily because
they protect equipment from physical damage, and because they are small and
low-cost. However, they do not protect against voltage sags, the dominant
power quality issue that the Service DISCo will have to solve. Of the other
solutions, only UPS provides adequate protection, but at $500-$1000/ kVA they
are too expensive to be widely applied.

As other power quality regulations, such as harmonic limits and conducted EMC
become more widely applied, there will be other opportunities for the utility to
provide meaningful support to the customer to identify problems, to recommend
and then possibly supply the equipment for mitigating the problem.
Dynamic Voltage Restorer (DVR)
Dynamic Sag Corrector (DSC)
Shunt Active Filters
Hybrid Shunt Active Filters (HSAF)
Series Active Filters
Dominant Harmonic Active Filters (DHAF)

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3. Smart Grids and Distributed Generation Systems


Service DISCos, in particular, will benefit by customizing the grid and interface to
the customer: Firstly, this will provide a higher level of service and differentiation
for the Service DISCos. Secondly, by increasing customer dependence on special
equipment and services, the Service DISCo will increase the barrier against the
customer seeking alternative competitive vendors. The smart grid can include
functions of improved power quality and reliability, provision of back-up power,
ability to draw from multiple energy sources to allow arbitrage opportunities to the
DISCo (and possibly the customer), as well as integration of energy storage
functions to handle peak loads and regenerative requirements. The smart grid
could be ac (50 Hz, 60 Hz or other frequency) or dc, or a mix of both. The smart
grid would be specified, installed and maintained by the DISCo for the customer.
The interface of the various storage and alternate devices with the grid (or smart
grid), and the control, safety and protection of distributed generation systems are
major issues which need to be fully understood before widespread
commercialization can occur. Issues related to various specific components of a
smart grid are considered below.

DC Distribution Systems

Alternate Frequency Systems


Efforts have been made in the past, both in the US and in Japan, to propose the
use of higher frequencies for distribution within industrial plants. Frequencies
of 400-500 hertz seem to be most common, although a 20 kHz ac bus has been
proposed in the past for the US space station. The higher frequency allows a
simple bi-directional cycloconverter interface between the smart grid and the
utility, as well as between the loads and the smart grid. It has been proposed
that the higher frequency transformers and simpler converters required would
realize more economical plants. This concept once again, has higher potential
use for the Service DISCo than for the MUM.

Although impressive laboratory prototypes have been built, this technology


seems rather limited in its use unless several key changes occur. Firstly, the use
of 400 hertz power would be beneficial if customer loads used the same
frequency. This would make these 400 hertz loads non-standard, and much
more expensive. Alternately, even the most mundane of loads would need a
frequency converter to interface standard loads to the smart grid, not a cost
effective solution. Consequently, even though the concept has appeal in
principle, it is difficult to justify the use of this technology based on business
reasons.

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Distributed Generation Systems

The remainder of this Power Electronics section includes detailed discussion about
specific technologies.

Technology: Active Filters


Shunt Active Filters, Hybrid Shunt Active Filters (HSAF),
Series Active Filters, Dominant Harmonic Active Filters (DHAF)

New Technology Description

Service DISCo: most likely user of active filters. See description below

Multiple Utilities Manager: a possible user of series active filter technology.

Common To Both Visions:


Shunt Active Filters
The use of high performance inverters to realize harmonic power flow control has
been applied in the US and in Japan. Active filters are connected in shunt with the
load and the utility, and are typically controlled so as to prevent any harmonic
currents from flowing into the power grid. The ability to compensate for higher
order harmonics is directly related to the control bandwidth of the inverter. For
instance, to compensate for the 19th harmonic, an effective inverter switching
frequency of 18-20 kHz is required. This is not possible with conventional hard
switching inverters without significant cost. Newer soft switching inverter based
active filters provide a more cost-effective approach to shunt active compensation
for loads rated up to several megawatts.

Shunt Active Filter

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The cost of active harmonic compensation is still fairly high ($400-$700/kVA in


Japan), although lower cost solutions ($200-$250/kVA) are becoming available.
Conventional solutions, such as passive trap filters, require extensive engineering
and often create resonances. The passive solutions also provide leading VARs,
which are often not required. Further, the lack of consistently applied harmonic
limits weakens the commercialization of this effective technology. If the standards
were to be mandated, Service Discos would benefit from applying this technology
at the customer level.

Hybrid Shunt Active Filters (HSAF)


A new use for shunt active filters is in hybrid topologies. In the HSAF, the active
filter is connected in series with a single or switched capacitor bank (which is all
connected to the utility in shunt, as shown in the right-most figure below). This
topology can provide active harmonic compensation, if so desired. However, the
active filter is now controlled to provide a harmonic isolator function, wherein the
filter appears as a short circuit for the fundamental frequency, but as a high
impedance at all harmonic frequencies. This allows capacitors to be switched, while
ensuring that no resonances are excited. The HSAF can also help control the flow of
harmonic currents in the power system.

Hybrid Shunt Active Filter

An interesting opportunity can be realized with the application of these filters as


harmonic isolators. The use with switched capacitor banks (which are ubiquitous)
could significantly improve the design and operation of the capacitors, making the
solution interesting for both Service Discos and MUMs. Demonstration of this
technology is in the planning stage. It may be possible to retrofit this solution to
existing capacitor switching stations, or to apply it in new installations. Risk of
application seems to be low, as it can be bypassed without compromising the
integrity of the original system.

Series Active Filters


The high-performance active filter building block can also be applied in series
connection with the utility system. At the line frequency, this then provides the
same level of functionality as the DVR and other series connected devices, including
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voltage regulation, line impedance compensation and fault current limiting.


However, the use of high performance inverters, extends the control functionality to
harmonic frequencies as well. Series active filters can be controlled as harmonic
isolators, to decouple harmonic current flows on either side of the filter. Series
active filters can also be controlled as a fully variable and controllable negative or
positive inductance. As a negative inductance, it compensates for line inductance,
behaving similarly to a TSSC device, but without introducing any resonances.
Under fault conditions, the simulated inductance can be positive, thus functioning
as a fault current limiting device.

Technology: DC Distribution Systems

New Technology Description

Service DISCo: most likely a user. See description below

Multiple Utilities Manager: not a likely user.

Common To Both Visions:


DC distribution is one form of smart grid that may be used by a Service Disco to
provide additional value to their customers. DC distribution on a limited basis is used
by several industries. In particular, in situations where a large number of variable
speed motor drives are applied in a critical process, it makes sense to have a common
dc bus, possibly with a large battery bank, to provide ride-through capability to the
process. The interconnected system makes optimal use of regenerated and system
inertial energy and minimizes the battery requirement. Another important application
of dc distribution is the use of a 48 volt dc bus in telecommunication plants, where the
entire telephone exchange is backed up by a vast bank of batteries. The most common
application of a dc bus is definitely the automobile. The 12 volt bus used currently is
already rated at several kilowatts, and is increasing in capacity quite rapidly. This is
prompting a move toward a higher voltage electrical power distribution bus.

The US Navy is also moving toward a zonal electrical distribution system architecture
(ZEDS), wherein dc power is distributed across the various zones in a ship. All loads
are interfaced with the dc bus using a power converter. Further, fast protection at each
zonal boundary can isolate sections of the ship when the section is damaged. In the
case of power quality parks or smart grid implementations, an important consideration
concerns the dc nature of most storage and alternate energy distributed generation
media under active consideration. It is felt that using an intermediate dc bus as the
distribution means will minimize overall system cost. Finally, several aircraft also still
use a dc bus for internal power distribution. The dc bus is rated at 270 volts normally,
although some specific small aircraft exist with 24 volt systems. Although the
Department of Defense is ostensibly making a move toward Commercial Off The Shelf

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(COTS) products, this is not likely any time soon, and any volume advantages will
possibly remain unrealized in the short term.

In recent years, some companies including ABB, have introduced a format for dc
distribution which they call HVDC Light. This technology uses voltage source
inverters and rectifiers to realize medium voltage dc systems which operate at lower
power levels than traditional HVDC systems, and are thus useful in captive smart
grid applications.

DC systems based on superconductive transmission lines have also been extensively


discussed in literature. There does not seem to be any strong business or technical
reason to pursue this option at this time. System justification is based on cost savings
obtained from losses in the superconducting cable. Unless the system is a simple radial
feed, controlling currents in any given part of the mesh is virtually impossible. Further,
the cable has to be designed to handle the current being carried in the event that part of
the cable goes normal under fault or abnormal operating conditions. This precludes
substantial savings in the cable cost itself. Finally, all the power conversion and control
systems that are required with normal cable are required in any case, eliminating any
potential for cost savings in that area.

Important issues to be considered with dc systems are cost and safety. In industrial
environments, existing assets of distributing ac power would continue to be used,
except for new facilities. Without some level of redundancy, reliability levels would
become compromised. Further, unless the design could be based on some high volume
components, cost would tend to be higher than for conventional 60 hertz systems. In
such a case, other justification for the dc distribution would be required. Fault
management without isolation between the various dc load points becomes an
important issue. Isolation is possible, but requires dc/dc converters at each interface
point adding substantial cost and complexity. Of most concern are line to line faults
and low-cost methods for arc suppression, and line to ground faults and the operation
of sensitive enough GFI breakers to guarantee human safety. If isolation exists for each
customer, then fault issues are more manageable within a specific customers facility.

Issues of discarded and embedded technologies loom large here. Except for new green
field plants, the existing infrastructure would pose a cost barrier. Training of service
and installation staff is an issue. DC systems are well known, so regulatory barriers are
not likely to be insurmountable. Cost, safety, system availability, system reliability,
and equipment availability are all important issues that need to be addressed before a
dc smart grid would become widely applied.

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Work Processes

Service DISCo:
More or less labor: Converter station equipment will be modular and fully factory-
tested for simple installation. However, power electronics require a controlled
temperature environment. Hence, installation often requires a new building with
air conditioning equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.
Risks and Challenges

Service DISCo:
Regulatory risk: moderate
Technical risk: low-moderate. HVDC Light converter stations are commercially
available.
Customer risk: Cost, safety, system availability, system reliability, and equipment
availability are all important issues that need to be addressed before a dc smart grid
would become widely applied.
Key Benefits

Service DISCo:
In situations where a large number of variable speed motor drives are applied in a
critical process, it makes sense to have a common dc bus, possibly with a large battery
bank, to provide ride-through capability to the process. The interconnected system
makes optimal use of regenerated and system inertial energy and minimizes the battery
requirement. Cost savings are realized by using a single large rectifier for all the
drives.

Distributed generation (DGS) or energy storage (ESS) along a common DC bus may
simplify and reduce the cost of the power conversion interface for the DSG or ESS

Other possible benefits were listed in the ABB Preliminary Draft document:
Distribution Systems Redesign Project ETI Report No. 98-0140-75 dated May 7, 1998.

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Technology: Distributed Generation Systems (DGS) and Energy Storage


Systems (ESS)

New Technology Description

Service DISCo: more likely user. See description below

Multiple Utilities Manager: less likely user. See description below

Common To Both Visions:


DGS are being pursued by many major utilities as a means of deriving competitive
advantage. This will be true in the Service Disco universe. Several different means of
distributed generation are being contemplated. These include photovoltaics, wind
energy, storage, fuel cells, micro-turbines, natural gas engine-generator sets, and other
existing and yet to be discovered approaches. The primary objective of locating
distributed generation and/or storage within a service Discos scope, is the possibility
of arbitrage on the price of electricity, and more importantly providing a higher level of
service guarantee to a specific customer, with spill-over benefit to other customers. As
the Service DISCo has no direct control over the performance or price of the energy
supplier, having storage will allow them to choose the rates at which they charge and
discharge the storage unit. Storage technology includes larger systems such as
compressed air storage (100-400 MW) and pumped hydro, and smaller customer site
specific units such as batteries, flywheel arrays, and micro SMES systems.

Power electronics plays an important part of the interface in many of the newer storage
and generation technologies. In particular, fuel cells, wind energy, PV, batteries, SMES
and flywheels, all require power converters to perform the basic power conversion and
utility interface function. This gives the ability to realize compact and more efficient
systems, with fast controls. Key issues that remain are cost and line interface. As DGS
systems become more prevalent, the issues of islanding and protection of utility
personnel become of paramount importance. No low-cost, fail-safe, anti-islanding
scheme exists for massively distributed DGS systems. The success of DGS depends on
solving this problem.

Another important point to realize is the role that this DGS can play. For some systems,
such as flywheels, battery storage, and micro-SMES a true back-up power option can be
provided, much like a UPS. However, for fuel cells and microturbines, the start-up or
load change response is so slow that load transients cannot be effectively handled
without local battery type of storage with significant impact on system cost. This
implies that such DGS systems can only be scheduled and cannot be used to provide
uninterrupted power to the customers load, unless significant storage is present.
Finally, for alternate energy systems such as PV and wind, once again energy
availability is not guaranteed, and the economics of the application can only be based
on energy cost and on no other considerations stemming from the provision of

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premium power to the customer. It should be noted that for fuel cells and other DGS
systems requiring natural gas, ownership of the gas lines at the customers facility has a
big possible impact on the cost effectiveness of this approach.

For MUMs, the concept of DGS has some important possible impact. Primarily, if the
utility provides gas and electricity service to the customer, then by locating a co-gen or
DGS unit at the customers site, the utility can choose the most economical means of
providing electricity locally. The utility also has the ability, if it is a utility owned
resource, to dispatch the DGS unit and to perform peak shaving or to use a lower cost
resource. Also, as cost of electricity is the primary driver for the MUM, providing local
storage can also help control the costs to the utility, and hence provide some level of
protection from wide electricity price fluctuations.

Risks and Challenges

Common To Both Visions:


Technical risk: Key issues that remain are cost and line interface for the various energy
storage media and DGS.

Key Benefits

Service DISCo
DGS are being pursued by many major utilities as a means of deriving competitive
advantage. The primary objective of locating distributed generation and/or storage
within a service Discos scope, is the possibility of arbitrage on the price of electricity,
and more importantly providing a higher level of service guarantee to a specific
customer, with spill-over benefit to other customers. As the Service DISCo has no
direct control over the performance or price of the energy supplier, having storage will
allow them to choose the rates at which they charge and discharge the storage unit.

Multiple Utilities Manager


For MUMs, the concept of DGS has some important possible impact. Primarily, if the
utility provides gas and electricity service to the customer, then by locating a co-gen or
DGS unit at the customers site, the utility can choose the most economical means of
providing electricity locally. The utility also has the ability, if it is a utility owned
resource, to dispatch the DGS unit and to perform peak shaving or to use a lower cost
resource. Also, as cost of electricity is the primary driver for the MUM, providing local
storage can also help control the costs to the utility, and hence provide some level of
protection from wide electricity price fluctuations.

Common To Both Visions:


For fuel cells and other DGS systems requiring natural gas, ownership of the gas lines
at the customers facility has a big possible impact on the cost effectiveness of this
approach.

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Technology: Dynamic Voltage Restorer (DVR)

New Technology Description

Service DISCo: more likely user. See description below

Multiple Utilities Manager: less likely user. See description below

Common To Both Visions:

Series connected active converters that have been proposed include a variety of active
filters, as well as devices such as the dynamic voltage restorer (DVR). All these devices
are connected to the line in series through a transformer, and can inject fundamental or
harmonic voltages in the line. The DVR type of device, for instance, can inject a series
voltage to compensate for line voltage sags. The DVR can also, in principle, provide
additional series impedance to limit the fault currents in the system. The DVR
recirculates energy between the phases or uses stored energy to provide the voltage
boost for single line to ground or line to line faults. In the case of a symmetrical fault,
the level of protection is limited by the amount of stored energy. The DVR is available
at ratings of 2 to 10 MW at medium voltage levels with several installations in the field.

The solution is rather expensive (at $400-$800/kVA) due to the energy storage and the
fault handling requirements on a medium voltage bus. The ability of the DVR to limit
fault currents also places challenges on the fault coordination, rating and cost of the
system.

Vr + V - Vs

Energy Vdc
Energy
Savings
Storage

Dynamic Voltage Restorer

The DVR is installed on the utility side of the meter, in series with the line feeding an
industrial customer with sensitive equipment.

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Work Processes

Common To Both Visions:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (GTOs or IGBTs and
controls) presently require a controlled temperature environment. Hence,
installation often requires a new small building or trailer with air conditioning
equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.
System Costs

Common To Both Visions:


Cost information: $400-$800/kVA with limited energy storage

Risks and Challenges

Common To Both Visions:


Regulatory risk: Low. Commercial systems are now in use.
Technical risk: Low. Similar commercial equipment is now available. Future cost
reduction will require improved switching devices (GTOs, IGBTs) and energy
storage media.
Customer risk: Moderate. The DVR will compensate most, but not all disturbances.
The DVR becomes under-utilized if better distribution-level power quality can be
provided in another way.
Key Benefits

Common To Both Visions:


The DVR can inject a series voltage to compensate for line voltage sags. The DVR can
also, in principle, provide additional series impedance to limit the fault currents in the
system.

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Migration Path

Service DISCo:
The DVR would be sited near a particular customer after the Service DISCo has
identified that customers equipment sensitivity to voltage sags. The DVR would be
sold (directly, or through premium power pricing) to medium-size industrial
customers or cooperatives of smaller customers.

Technology: Dynamic Sag Corrector (DSC)

New Technology Description

Service DISCo: most likely user. See below

Multiple Utilities Manager: a less likely user.

Common To Both Visions:


The application of voltage sag correction devices at the customer end possibly provides
a more cost-effective solution than the DVR approach due to lower operating voltages
and the possibility of only supporting sensitive loads. A new type of device, the
dynamic sag corrector (DSC) is now available at ratings of 2 to 2000 kVA in single and
three phase versions, at voltages of up to 480 volts. The DSC compensates for deep
voltage sags down to 50% of nominal voltage for several seconds, and also can
compensate for even deeper sags for up to 10 cycles. Sag and momentary outage
protection are the only primary function of the DSC.

Static Switch

Regulator
& Storage Module
Load

Unprotected Protected
Input Output

Dynamic Sag Corrector

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The DSC is a compact and low cost device ($100-$150/kVA), which significantly lowers
the cost of providing sag correction. It can be used by Service Discos to build a better
relationship with the customer, either by using the DSC as a low cost customer
retention device or by making the solution available to the customer on reasonable
terms. The DSC can also be a component of a smart grid by providing selective
voltage support to important and sensitive loads. The DSC is in early stages of
introduction, with extensive field trials scheduled in the near term.

Work Processes

Service DISCo:
The DSC is provided to the end-use customer, for installation on the customer side of
the meter. No skill, labor, equipment, or maintenance is required by the DISCo beyond
distribution of the product to the user. This is analogous to the distribution of set-top
converter boxes by cable television companies. At higher kVA rating sizes, the DISCo
may choose to provide installation services for industrial customers.

System Costs

Service DISCo:
Cost information: $100-$150/kVA from Soft Switching Technologies.

Risks and Challenges

Service DISCo:
Regulatory risk: Low. Devices will be UL or ETL tested and approved. The
solution is cost-effective in todays regulatory environment.
Technical risk: Low. Pre-production units have been fully tested. Extensive field
trials are scheduled in the near term.
Customer risk: Low. The DSC will provide protection against the majority of end-
user power quality problems, without the lifetime restrictions imposed by a UPS
battery.
Economic risk: Low. The performance of the DSC will be extensively proven in
field trials.
Key Benefits

Service DISCo:
The DSC compensates for deep voltage sags down to 50% of nominal voltage for
several seconds, and also can compensate for even deeper sags for up to 10 cycles. Sag
and momentary outage protection are the only primary function of the DSC.

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Migration Path

Service DISCo:
The development of a distribution channel for the DSC is required. This channel may
be already present if the Service DISCo also provides telecom or cable service. The
Service DISCo may elect to install a larger DSC on the utility side of the meter for
premium power pricing or as a customer retention tool in, e.g., apartment buildings or
for industrial customers. The first step for the DISCo is identifying those customers
who would most benefit from voltage sag mitigation, or those larger customers most
open to the DISCos competitors.

Technology: STATCON (or Adaptive VAR Compensator)

New Technology Description

Service DISCo: see below

Multiple Utilities Manager: see below

Common To Both Visions:


The Statcon is a shunt connected inverter (with filter) used to provide continuous VAR
and harmonic compensation. Typically the GTO-based voltage source converter is
shunt connected to the utility through a filter reactor and a transformer. The converter
draws a controlled amount of leading or lagging reactive current from the line. Unlike
a capacitive compensator (e.g., SVC), the Statcon can provide full leading or lagging
current, and can do so even as the line voltage collapses. It is thus felt that a Statcon can
provide better line stabilization than a typical switched capacitor can. The Statcon is
more economically implemented at the 5-15 MVAR level than at higher power levels.
However, it is significantly more expensive than typical switched capacitor systems.

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Statcon

The Statcon would improve the quality of power on the grid, providing similar
improvements as the SVC. However, the cost of the solution is still very high, and its
limited power rating limits its usefulness in higher rating distribution systems. The
Statcon is available from a few vendors, but has not been widely commercially applied.

Work Processes

Common To Both Visions:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (GTO/diode valves
and controls) presently require a controlled temperature environment. Hence,
installation often requires a new small building or trailer with air conditioning
equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.

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Risks and Challenges

Common To Both Visions:


Regulatory risk: Low. Commercial equipment is already in use. But Statcon
functions may become unnecessary if the fully-deregulated utility environment
does not materialize.
Technical risk: Low. Similar commercial equipment is now available. Future cost
reduction will require improved gate turn-off devices (GTOs and IGBTs) and more
easily manufacturable converter designs. Also needed are fully modular converter
enclosures that can be installed outdoors.
Cost reduction is the major challenge.
Customer risk: The benefit of the Statcon may be marginal for many customers in
terms of increased productivity.
Economic risk: General market acceptance at present costs is highly uncertain. The
changing regulatory environment may negate the need for many Statcon functions.
Key Benefits

Common To Both Visions:


The Statcon provides continuous VAR and harmonic compensation and can provide
full leading or lagging current, even as the line voltage collapses. It improves voltage
regulation, improves line stability, reduces transmission losses, increases transmission
capacity, and damps small disturbancesover a wider range of conditions than the
SVC. The major present use is for reduction of voltage flicker near arc furnace loads.

Migration Path

Common To Both Visions:


The technology is fairly mature and commercially available at medium power levels,
but needs cost reduction.

The DISCo will use the SVC for:


Installation for some new highly-variable VAR support needs.
Gradual replacement of some fixed capacitors as manufacturing volume rises and
prices fall.
It is not clear that, in a non-subsidized market, sufficient manufacturing volume can be
reached to achieve the cost reduction that would encourage wide acceptance of the
technology.

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Technology: Static VAR Compensators (SVC), Thyristor Switched Capacitors (TSC)

New Technology Description

Service DISCo:
See below

Multiple Utilities Manager:


See below

Common To Both Visions:


SVCs have been used in the past to provide fast VAR correction on the transmission or
distribution system. The use of thyristors, as opposed to conventional breakers,
provides the ability (in principle at least) to turn the capacitors on and off with zero
voltage across them, thus minimizing the transient on the system. With fine resolution
on the switched capacitors (as supplied by some vendors), the SVC can be used to
provide voltage regulation, and reduce flicker. Continuous control of the VAR
compensation can be obtained by coupling a thyristor controlled reactor (TCR) with a
fixed capacitor. This approach has higher losses, but offers continuous VAR control
and transient free operation.

TSC FC TCR

Possible components of a Static VAR Compensator (SVC)

The SVC could be used by both the MUM and the Service DISCo. This would replace
switched capacitors used on the system presently, and could also replace some voltage
regulators. This solution is available from several vendors, but is not yet widely
applied, primarily due to higher cost.

Capabilities: improving line stability, reducing transmission losses, increasing


transmission capacity, damping small disturbances and improving voltage regulation.

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The SVC is mainly deployed for VAR support near industrial customers,

Embedded and Discarded Technologies

Common To Both Visions:


What technology/asset is replaced (discarded): In the future highly meshed
distribution system, adjustable VAR support will be required. Most fixed capacitor
banks will be replaced with switched capacitors (SVC), possibly through retrofit
additions.

Work Processes

Common To Both Visions:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (thyristor valves and
controls) now require a controlled temperature environment. Hence, installation
often requires a new small building with air conditioning equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.
Risks and Challenges

Common To Both Visions:


Regulatory risk: Low. Similar equipment is already in use. But SVC functions may
become unnecessary if the fully-deregulated utility environment does not
materialize.
Technical risk: Low. Similar commercial equipment is now available. Future cost
reduction will require improved thyristor devices and more easily manufacturable
valve designs. Also needed are fully modular valve enclosures that can be installed
outdoors.
Challenges include resonances that occur as the SVC is switched through its range
of VARs. These resonances can be avoided by adding an active filter device in
series with the capacitors.

Customer risk: The benefit of the SVC may be marginal for many customers in
terms of increased productivity.

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Economic risk: Market acceptance at present costs is uncertain. The changing


regulatory environment may negate the need for many SVC functions.

Key Benefits

Common To Both Visions:


SVC would provide higher power quality on the grid than existing solutions by
improving line stability, reducing transmission losses, increasing transmission capacity,
damping small disturbances and improving voltage regulation. In addition it provides
basic adjustable VAR support to large customers and distributed smaller customers.

Migration Path

Common To Both Visions:


The technology is mature and commercially available, but needs cost reduction.

The DISCo will use the SVC for:

Installation for new VAR support needs.

Gradual replacement or retrofit of fixed capacitors as manufacturing volume rises


and prices fall.

It is not clear that, in a non-subsidized market, sufficient manufacturing volume can be


reached to achieve the cost reduction that would encourage wide acceptance of the
technology.

Technology: Thyristor Controlled Phase Shifter (TCPS)

New Technology Description

Service DISCo: less applicable

Multiple Utilities Manager:


The thyristor controlled phase shifter (TCPS) is a controlled series injection device,
which can alter the amplitude and phase of the line voltage dynamically to control real
or reactive power flow in the transmission line. Secondarily, the TCPS can also help
stabilize the network, and help manage fault currents. This can help increase
utilization of lines in a meshed network, and can help direct power flow.

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V
Vr + quad - Vs

9 3 1

Example of Thyristor Controlled Phase Shifter (TCPS)

The TCPS is mainly targeted at MUMs, with less usefulness to a Service Disco.

The TCPS would improve power flow control and line utilization, and provide voltage
regulation. It could also improve line behavior under fault conditions.

The TCPS has been built and installed in at least one commercial installation as a
demonstration project. As far as we are aware, this is not extensively used yet.

Work Processes

Multiple Utilities Manager:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (thyristor valves and
controls) now require a controlled temperature environment. Hence, installation
often requires a new small building with air conditioning equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.

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Risks and Challenges

Multiple Utilities Manager:


Regulatory risk: Low. Similar equipment is already in use. But TCPS functions
may become unnecessary if the fully-deregulated utility environment does not
materialize, i.e., if radial distribution systems remain the norm.
Technical risk: Moderate. Several circuit topology options are available. The TCPS
has been built and installed in at least one commercial installation as a
demonstration project. As far as we are aware, this is not extensively used yet.
Cost reduction is a major challenge.
Key Benefits

Multiple Utilities Manager:


The TCPS can control the real and reactive power flow in distribution lines, help
stabilize the network, and help manage fault currents. This allows improved
utilization of lines in a meshed network and can also provide voltage regulation.

Migration Path

Multiple Utilities Manager:


The technology does not appear to be commercially available at this time. Further
demonstration projects may be needed to help develop the product for the marketplace.

Technology: Thyristor Switched Series Capacitors (TSSC), Controlled Series


Compensators (CSC)

New Technology Description

Service DISCo: less applicable

Multiple Utilities Manager:


Series capacitors have been extensively used to increase the power carrying capability
of transmission lines. However, the possibility of sub-synchronous resonances limits
the level of compensation attainable with fixed capacitors. The use of thyristor
switched series capacitors (TSSC) devices allows a modulation of the amount of series
capacitance to increase power flow capability without impacting the transient stability
limit, and to optimally direct power flow. Continuously variable versions of the TSSC
can also be realized by pairing a TCR with a fixed capacitor.

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TSSC TCSC

Thyristor Switched or Controlled Series Capacitors

The TSSC can increase capacity of transmission lines, and can also control power flow
along parallel lines. It is primarily useful to MUMs, with limited applicability to
Service Discos. Application is at medium (12 kV) to high voltage.

The issue of fault management is an important one, as the TSSC is a series connected
device with active power semiconductor devices riding directly on the high voltage
lines. These TSSC devices are now commercially available, but are not yet widely
applied.

Embedded and Discarded Technologies

Multiple Utilities Manager:


What technology/asset is replaced (discarded): Most fixed series capacitors will be
replaced with TSSC in the future highly-meshed distribution system.

Work Processes

Multiple Utilities Manager:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (thyristor valves and
controls) now require a controlled temperature environment. Hence, installation
often requires a new small building or trailer with air conditioning equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.
Maintenance changes: Inspection should be mostly unnecessary. Status will be
monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.

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Risks and Challenges

Multiple Utilities Manager:


Regulatory risk: Low. Similar equipment is already in use. But TSSC functions
may become unnecessary if the fully-deregulated utility environment does not
materialize, i.e., if the radial distribution system continues to be the norm.
Technical risk: Low. Similar commercial equipment is now available. Future cost
reduction will require improved thyristor devices and more easily manufacturable
valve designs. Also needed are fully modular valve enclosures that can be installed
outdoors.
Key Benefits

Multiple Utilities Manager:


The TSSC can increase capacity of transmission lines and can also control power flow
along parallel lines.

Migration Path

Multiple Utilities Manager:


The technology is mature and commercially available, but needs cost reduction.

The MUM will use the TSSC for:


Installation for new line reactance compensation needs.
Gradual replacement or retrofit of fixed series capacitors as manufacturing volume
rises and prices fall.
It is not clear that, in a non-subsidized market, sufficient manufacturing volume can
be reached to achieve the cost reduction that would encourage wide acceptance of
the technology.
Technology: Universal Power Flow Controller (UPFC)

New Technology Description

Service DISCo:
Lower power versions could provide voltage and harmonic support near customer.
See description below

Multiple Utilities Manager:


The UPFC provides power flow control capability, and is targeted mainly at MUMs.
See description below

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Common To Both Visions:


The UPFC is a back to back connected pair of GTO based voltage source converters
which are connected in series and shunt with the line. The series connected inverter
can inject a voltage with arbitrary phase angle to help simultaneously control both real
and reactive power flow in the transmission line. In addition to balancing the real
power flowing in the series connected converter, the shunt connected converter can also
provide limited VAR support on the line. In principle, the UPFC can also provide
compensation for harmonic currents in the line as well as harmonic voltages. At high
power levels this is rarely done.

Vr + V - Vs

Vdc

Universal Power Flow Controller

The solution is rather expensive, due to the need for two converters and two coupling
transformers. Managing faults, particularly for the series converter, is very daunting
when the UPFC is used on high voltage transmission systems with high fault currents.
Several units have been installed at demonstration sites.

Work Processes

Common To Both Visions:


More or less labor: New equipment will be modular and fully factory-tested for
simple installation. However, power electronics components (GTOs or IGBTs and
controls) now require a controlled temperature environment. Hence, installation
often requires a new small building or trailer with air conditioning equipment.
Different Skills: Electronics sub-modules will be field-replaceable, requiring basic
electronics knowledge. Self-monitoring and diagnostics software should reduce the
need for trouble-shooting skills.
Different equipment needs: The two-way communications link will provide status
to the central controller. Only basic electronics and electrical equipment are needed
for changing field-replaceable modules.

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Maintenance changes: Inspection should be mostly unnecessary. Status will be


monitored by communications link. Inspection of moving parts (cooling fans, etc.),
and cleaning of cooling fins may be scheduled.
Risks and Challenges

Common To Both Visions:


Regulatory risk: Low. Demonstration equipment is already in use.
Technical risk: Low-moderate. Commercial-grade equipment has been installed
and tested at demonstration sites. Future cost reduction will require improved
switching devices (GTOs, IGBTs) and improved packaging.
Economic risk: The technology is not likely to be cost-competitive for power flow
control in the near future.
Key Benefits

Service DISCo:
Lower power versions could provide voltage and harmonic support near customer
facilities.

Multiple Utilities Manager:


The UPFC can help simultaneously control both real and reactive power flow in the
transmission line. It can also supply limited VAR support on the line.

Migration Path

Common To Both Visions:


The cost must be reduced before the UPFC becomes competitive with other solutions.

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TWO-WAY COMMUNICATIONSTECHNICAL SPECIALIST COMMENTS

Two-Way Communication ArchitectureOverview

From a communications perspective, the electric distribution system of the future seeks
to develop communication and application inter-operability with dozens of devices
connected to a variety of communication media. It should be noted that the
fundamental technology components listed below are representations of a class of
technologies. There could, for instance, be literally dozens of manufacturers, each with
a number of product lines for each of these categories. The manufacturer can offer
different levels of functionality at appropriate price points for to meet the consumer's
task and financial resources.

Customer Premise Gateway (CPG)

Intelligent Electric Unit Device (IED)

Distributed Generation Communication Interface (DGCI)

Standard Open System Communication Protocols

It is important to note that the CPG, IED and DGCI are very similar in both architecture
and functionality. That is, they each carry out four tasks. First, they interface (attached
to, or embedded in) the hardware (distribution and customer premise). Second, they
monitor or control performance parameters of the hardware. Third, they are able to
transmit information about the hardware to a Wide Area Network (WAN) for remote
monitoring, communication and interface. Fourth, they are able to receive remote
instructions to modify the operating standards of the equipment.

Each of these four component tasks are effectively developed and integrated if and only
if there are open standards and communication protocols that allows each of these
devices to interact. Hence, the fourth component in the communication architecture of
a future distribution system is 'Open Standards'. In the absence of open standards,
separate 'communication translators' will be required for the CPG, IED, and DGCI. The
lack of open standards is certainly not 'fatal' to the development of or implementation
of a future distribution system. The lack of open standards does, however, translate
into more costs and time before the benefits of a future distribution system are realized.

Another key component of the two-way communication architecture is the notion of


inter-operability. Inter-operability considers the process by which devices
communicate and carry out effective work with each other. Application software
resident to the device must be able to interface to the communication network. But by
and large, the application software is resident to the device and the activities carried
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out by the device. Manufacturers will do well to ensure open communication interfaces
are available so that different vendor equipment to inter-operate and inter-work. It is
these interfaces or 'boundaries' that must be designed, managed, and maintained before
a distribution system of the future can be realized.

Service DISCo
The Service DISCo network communications system is based on a fully integrated
distributed computing environment that spans the Service DISCo enterprise, and
integrates with all of the entities that are serving the restructured environment. This
standardized communications manages the distribution environment including
monitoring operating parameters, and managing the distributed generation and
resources deployed on the system. In addition, the Service DISCo communication
system integrates with equipment deployed within customer facilities and, as
necessary, with equipment owned and operated by the customer. This environment is
enabled through the maturity of the information technology (IT) industry and by the
levels of distributed computing standardization for established utility specific devices.
This maturity is manifest through open infrastructures that meet all of the international
specifications for equipment interoperability and interworkability including
information security and management. These environments have yielded a variety of
IT tools that enhance the information systems already deployed. The concept of the
Service DISCo has, through communications, redefined the delivery of electrons to a
customer service entrance. The Service DISCo provides a visible and specific
function to the customer. For instance, instead of providing three-phase service to an
industrial customer, the Service DISCo now has the ability to provide premium power
to specified circuits within their facility.

Multiple Utility Manager


The Multiple Utility Manager (MUM) Communications System is envisioned to use
industry standard distributed computing communications similar to the Service DISCo.
The MUM functions, however, are limited to the minimum functions necessary to
operate in a restructured utility environment. Many functions such as revenue
metering are not carried out by the MUM, but by third parties. Standardized
interoperable equipment communications across the industry are important to achieve
cost effective operations. Cost effectiveness is achieved through equipment that is
competitively procured and can be easily integrated and maintained. The equipment
necessary to operate the future distribution system in a restructured utility
environment is assumed to be similar to that required of the Service DISCo since many
of the system operation challenges that the Service DISCo encounters will also be
encountered by the MUM. The MUM however does not directly interface
communications with the customer

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Technology #1

Standard Open System Communication Protocols

Much of the new technical innovation envisioned for the future distribution system is
based on the integration of many of the generic categories of technologies that exist
today in addition to those required for the future. This technology is predominantly
based on standardized approaches to distributed computing based collaborative
development work with the vendor community, standards organizations, and
refinement of the standards based on real-world implementation experience. This, in
turn, creates a common or shared infrastructure for distributed information
processing. This technical innovation is more of a logical or conceptual construct than
an individual piece of equipment. Standard open system communication protocol is a
key enabling technology. The open communication protocol represents a 'class' of
technologies, not a specific protocol itself. A weak approximation of open
communication protocol is the Internet. However, the Internet does not stand as a good
example of the technically rigorous level of distributed computing infrastructure
needed for the distribution system.

Service DISCo Multiple Utilities Manager Common


Technology Open communication
Description See 'Common' Description See 'Common' Description standards for:
Utility distribution
equipment.
Customer premise gateway
Inter-facility networks.

Description of Discarded: (1) proprietary


Embedded & See 'Common' Description communication protocols;
Discarded (2) inventory of inflexible
Technologies equipment and related
documentation, training,
servicing procedures.

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Technology #1
Standard Open System Communication Protocols
(continued)

Service DISCo Multiple Utilities Manager Common


Work Processes Increased focus on Operational engineering Ability to specify, develop,
equipment integration, focusing on protocol integrate and manage
customer service, selection / open standards systems based on open
marketing, and finance. that provide cost savings protocols.
Analytic market research. through increased Interchangeable technical
Translating data into functionality, reduced O/M, labor pool.
technical specifications for or increased equipment life rd
cycle. Potential outsource to 3
protocol specifications. service providers.
Standards and protocols Software engineering-
selection network protocols Active end-user
evaluated relative to current development environment
and future offerings as well and standards.
as the business Risk management emphasis- Robust business / vendor.
opportunities. calculating the costs of development.(manufacturer
communication system s and third party
Cost / benefit, payback and developers).
functional analyses interruption-fail safe systems
(including sensitivity (mission critical).
analyses) for thoroughly Engineering trade-off
reviewed in advance of analysis that balances costs
protocol selection. against functionality.
Financing and a permanent Interface skills-customer
relation (line of credit) with service who integrate with
financial institutions. multiple retail energy service
Legal council required for providers and who
contract evaluation and seamlessly behave as part of
management as many of the the retail energy service
bundle offerings with other provider organization.
providers (e.g., ESCO
services) require review and
evaluation.
System Costs Competitive procurement
See 'Common' Description See 'Common' Description and system flexibility is
facilitated.
Initial costs incurred to
migrate to an open system
architecture.
Long-term cost reductions
enabled through
interchangeable
components.

Key Benefits Anticipated lower capital,


See 'Common' Description See 'Common' Description and O/M costs
More robust system
architecture.
Competitive procurement.

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Technology #1
Standard Open System Communication Protocols
(continued)

Service DISCo Multiple Utilities Manager Common


Migration Path Appropriate value Appropriate value Active participation in
proposition for additional proposition for cost appropriate standards
functionality for the end- reductions. development.
user. Equipment manufacturers
will need to be involved in
the processes to develop
open interfaces to their
equipment.
Caution needs to be
exercised in taking into
account the capital
requirement to negotiate
these changes.
Standards and technical
agreements will need to be
specified for inter-
gratability will need to be
specified in cooperation
with the vendor
community.
Open connectivity to
database technology will
need to be developed to
enable vendor-neutral
access to different
databases.

Technology #2

Customer Premise Gateway (CPG)

The Customer Premise Gateway (CPG) is a generic name for a device that includes the
hardware, and software that integrates communications between the utility and the
customer's facility. The CPG is not a single technology but the effective integration of
several including wide-area communications, building communications and the
necessary resources to support the internetworking function including network
management and security. This device serves several functions in the future utility
since it serves as a key enabling technology for the provisioning of the future
distribution companys service. In the product and services scenarios considered
herein this device enables the Service DISCo to consider the end-use loads as the sink
for energy. That is, the traditional service entrance is no longer the "end point" on the
distribution grid. The end-use loads may become the new end point of the energy
distribution function within the Service DISCo scenario.

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The discussion also illustrates the roles this device could play within the MUM
scenario. The physical device(s) is/are deployed at or near the service entrance at the
customer's facility. For the Service DISCo the CPG will serve to support the automation
of the distribution system since it can be considered the effective endpoint of the
energy distribution network of the future. Most important, however, is the notion that
the CPG will enable industry restructuring functions now in development through
State and Federal Regulatory bodies.
Service DISCo Multiple Utilities Manager Common
Technology Device to internetwork the The meter and/or customer
Description DISCo and the customer premise gateway will not be N/A
Premise based equipment / owned / operated by the
loads interface to the DISCo
premise gateway Consequently, under the
Manages the MUM scenario the CPG
communications between technology becomes a non-
the customer and DISCo event.

Description of Discarded: equipment that


Embedded & (a) cannot be retrofitted to See comment above N/A
Discarded communicate with the CPG;
Technologies (b) where the value received
from the new equipment is
> than the remaining life of
the old equipment.
Work Processes Remote servicing / trained
personnel who can trouble See comment above N/A
shoot and dispatch when
and where necessary.
Opportunity for new
businesses (revenue) to
create new revenue streams.
Additional network
management requirements.

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Technology #2
Customer Premise Gateway (CPG)
(continued)

Service DISCo Multiple Utilities Manager Common


System Costs Communication cost for
WAN functionality (may be See comment above N/A
able to be carried out over
existing public switching
networks.
Additional hardware-
capital and O/M.

Key Benefits Ability to provide offerings


in addition to commodity See comment above N/A
energy.
Closely tied to customer for
long-term, enhanced value
proposition.
Mechanism to catapult the
retail affiliate for mass
markets (residential).

Migration Path Standardized in-facility and


WAN infrastructures. See comment above N/A
Sufficient volumes to
reduce capital requirements.
Bona fide value proposition
for which the customer will
vote their dollars.
Equipment manufacturers
will need to be involved in
the processes to develop
open interfaces to their
equipment.
Standards and
interoperability agreements
will need to be specified for,
inter-operability, and
migratability.
Appropriate access fees will
be assess by the hardware
owners to transmit data
packets over networks.
Access fees will likely be
volume (bandwidth) driven.

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Technology #3

Intelligent Electronic Device (IED)

The Intelligent Electronic Device (IED) is used to communicate with and control
equipment within the distribution system. This device is a generic representation of
many similar devices used to monitor and control distribution functions. This device
implements the communications and applications necessary to effectively integrate the
utility equipment under the DISCo's jurisdiction. Generic functions with this device
include implementing any necessary network administration/management, security
and control functions, this device also integrates with the overall system manager and
integrator that oversees industry functions. This equipment is used within substations
and in the 'field'. This means that it will have substantial computing resources
available and should not be considered a constrained environment. It will be
necessary for this equipment to communicate as necessary over the required standards,
so its design and implementation is dependent also on the standards that emerge for
the future utility. The master station also runs required database applications to store
and archive the system operation as required and will need to conform to the data
management standards of the future distribution system.
Service DISCo Multiple Utilities Manager Common
Technology An intelligent electronic
Description See 'Common' Description See 'Common' Description device that monitors, stores,
and reports performance
parameters of distribution
system equipment.
Programmable, monitoring
control, protection or data
processing device with
communication capabilities.

Description of Discard old devices or


Embedded & See 'Common' Description See 'Common' Description kluged systems attached to
Discarded equipment that cannot be
Technologies integrated to an open
architecture.
Leave in-place those devices
that can be cost-effectively
integrated into an open
architecture.

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Technology #3
Intelligent Electronic Device (IED)
(continued)

Service DISCo Multiple Utilities Manager Common


Work Processes Increased ability to specify Operational engineering Personnel required with the
and integrate open system focusing on correct skill sets to specify,
environments. equipment specification that integrate, and/or outsource
Ability to capture functional provides cost savings and manage open system
requirements for the IED through increased architectural components.
into technical specifications functionality, reduced O/M, Automated monitoring,
for equipment purchases. or increased equipment life control and dispatch.
cycle.
Equipment sized and
evaluated relative to current Software engineering-
and future offerings. selection network protocols
and standards.
Cost / benefit, payback and
functional analyses will Risk management emphasis-
have to be prepared and calculating the costs of
thoroughly reviewed in communication system
advance of equipment interruption-fail safe systems
selection. (mission critical).

Legal council will be Engineering trade-off


required for contract analysis that balances costs
evaluation and management against functionality.
as many of the bundle Interface skills-customer
offerings with other service who integrate with
providers (e.g., ESCO multiple retail energy service
services) will require review providers and who seamless
and evaluation. behave as part of the retail
energy service provider
organization.

System Costs Competitive procurement


See 'Common' Description See 'Common' Description and system flexibility is
facilitated.
Initial costs incurred to
migrate to an open system
architecture.
Long-term cost reductions
enabled through
interchangeable
components.

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Technology #3
Intelligent Electronic Device (IED)
(continued)

Service DISCo Multiple Utilities Manager Common


Key Benefits Anticipated lower capital,
See 'Common' Description See 'Common' Description and O/M costs
More robust system
architecture.
Competitive procurement.

Migration Path Participation with standard


See 'Common' Description See 'Common' Description committees
Closely coordinate with
equipment manufacturers
for product development,
field testing, refinement of
specifications and ramp-up.

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Technology #4

Distributed Generation Communication Interface (DGCI)

The Distributed Generation Communication Interface (DGCI) is used to communicate


with and control distributed generation equipment deployed within the DISCo. These
devices implement the communications and applications necessary to effectively
integrate energy produced by the distributed generation equipment. Generic functions
with these devices include implementing any necessary administration/management,
security and control functions, this device also integrates with the overall system
manager and integrator that oversees distribution system integrity. This equipment is
built within the workstation environments of the future distribution utility. It will be
necessary for the DGCI equipment to communicate as necessary over the required
standards. The master station also runs required database applications to store and
archive the distributed generation system operations as required and will need to
conform to the data management standards of the future distribution system.

Service DISCo Multiple Utilities Manager Common


Technology Reference 'Common' Reference 'Common' Communication interface
Description description. description. between the DISCo and the
Communication interface Communication interface in distributed generation
can be leveraged to provide minimum to monitor and equipment.
monitoring of generation evaluate key parameters
equipment in addition to effecting the operation
managing grid intertie, and distribution grid.
information network

Description of Discard old control /


Embedded & See 'Common' Description See 'Common' Description communication devices that
Discarded cannot be integrated to an
Technologies open architecture.
Leave in-place those control
/ communication devices
that can be cost-effectively
integrated into an open
architecture.

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Technology #4
Distributed Generation Communication Interface (DGCI)
(continued)

Service DISCo Multiple Utilities Manager Common


Work Processes Ability to develop technical Operational engineering Professional embedded
specifications for equipment focusing on equipment electronics professionals
purchases. selection that provides cost who can specify and
Equipment sized and savings through increased implement appropriate
evaluated relative to current functionality, reduced O/M, systems to achieve targeted
and future offerings as well or increased equipment life results.
as the business cycle. Network and
opportunities. Software engineering- communication system
Cost / benefit, payback and selection network protocols professionals.
functional analyses will and standards. Professionals who can
have to be prepared and Risk management emphasis- monitor and appropriately
thoroughly reviewed in calculating the costs of adjudicate parameters to
advance of equipment communication system make decisions.
selection. interruption-fail safe systems
(mission critical).
Engineering trade-off
analysis that balances costs
against functionality.
Interface skills-customer
service who integrate with
multiple retail energy service
providers and who seamless
behave as part of the retail
energy service provider
organization.

System Costs Competitive procurement


See 'Common' Description See 'Common' Description and system flexibility is
facilitated.
Initial costs incurred to
migrate to an open system
architecture.
Long-term cost reductions
enabled through
interchangeable
components.

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Technology #4
Distributed Generation Communication Interface (DGCI)
(continued)

Service DISCo Multiple Utilities Manager Common


Key Benefits Reduced O/M costs
See 'Common' Description See 'Common' Description With significant volumes,
lower costs for standard
components
Risk management,
protecting the investment.
Migratable architecture
allows for expandability
and integration for new
functionality.
Outsource through service
bureau; competitive bidding
for services.

Migration Path Appropriate value Appropriate value Active participation in


proposition for additional proposition for cost appropriate standards
functionality for the end- reductions. development.
user.
Develop generic interfaces
and equipment control and
grid integration
specifications with vendor
community and relevant
standards organizations.

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Products and Services Discussion

Overview

This is intended to provide context to some of the generic business services and
products that become enabled through the application of the future distribution system
communication and distributed computing environments envisioned.

Revenue Meter Reading Services General (Service DISCo)


Metering Services functions are an important set of services that are required to fully
restructure the energy industries. Restructuring requirements are calling for energy
accounting from metering data that can originate anywhere on the utility system, and
could stand as a substantial business service in itself. It should be noted that
communications for these and other services within the Service DISCo will require the
minimum level of network communications management functions including the
execution of network security functions. This is particularly the case for
communications environments that must be shared with other service providers. The
meter reading services function under restructuring for instance could require the
remote switching of secure access to the raw data of revenue meters. This will require
significant attention to the design of even the meter reading function.

Metering services encompasses all scenarios related to development, installation and


implementation of the metering functions required across all market sectors including
but not limited to residential, commercial, industrial, agricultural and other. In
addition this section covers meters that reside within the utility plant (such as
substations), those that serve the monitoring and auditing of energy inputs into the
future distribution system for both operations and for meeting restructuring
requirements. These services also cover metering data security management and access
control at the remote meter level.

The future utility system will have the capability of remotely reading meters and
managing a network of remote revenue meters that are read by a variety of energy
service providers serving any given energy utility customer base. Core functions of this
service includes the capability of remotely reading energy and demand readings at 15
minute intervals for any given customer base.

Distribution System Electric Meter Metering


The fundamental job of metering the flows of energy are now to be combined with
other metering within the utility system to support industry restructuring. Although
the equipment used to measure greater flows of power than that used for revenue
metering the communication models for metering are now consistent with metering
functions that appear anywhere on the utility system. The functions encompassed by

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the following meter types should be considered within this fundamental concept:
polyphase, bi-directional flow, load survey, instrument transformer based metering,
metering functions specific to electric vehicle charging, compensating meters, non-
intrusive load monitoring, non-revenue qualified meter readings.

Natural Gas Metering for Gas Distribution System Operations


The Service DISCo also has an opportunity to leverage the customer communications
investment by providing gas metering services as well. The Gas meter communications
can be locally integrated with the Customer Premise Gateway, which serves several
higher level network management functions as well. Gas service metering encompasses
the metering required to provide services to all market sectors and contractual
exchange points where a metering function is necessary including that required for
natural gas service. In addition, data can also be captured for more advanced gas
metering functions such as electronic flow monitors, which also take into account
parameters such as: temperature, pressure or other gas volume compensation
parameters. In addition gas metering services can also include load profiling, volume
correction, and any parameters necessary for the monitoring of the product quality or
how the product may be billed in the future i.e. heat content.

Gas submetering of individual loads within industrial facilities is also a service that
could be provided through either the customers in-building network or independent
communications.

Water meter reading


Water meter reading services may also be implemented through integration with the
Customer Premise Gateway as the connection to the Wide Area Network to the Service
DISCo

Advanced Billing Services


Many large national account customers can benefit from specialized billing services
such as aggregated bills provided by geographic area or other specialized categories
that may be requested. These services could be performed by the Service DISCo
provided the data management capabilities are in place.

Electronic Billing and Pricing Systems


This effort should take into account current thinking behind the possible permutations
of future tariffs and rate structures. A variety of new, more flexible pricing options are
currently under consideration and efforts should capture those that may impact
required functions within a future customer interface. This effort may be blended with
metering scenarios as appropriate and may take into account several rate and tariff
structure options that are likely to be available in the future. This scenario includes the
variations on Real Time Pricing (RTP) that are now under consideration including
day ahead, and immediate hour updates of the rate.

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Payment Authorization, Credit and Collection


This scenario anticipates the required responses to a customer bill mailed electronically.
Payment authorization allows the customer to separately review the bill and return
evidence to indicate payment OK. Funds transfer would be initiated through the utility
financial transaction between the bank and the utility similar to the current automated
payment system. These services require execution of transaction processing
applications.

Customer Service Management


These services encompass the functions necessary to support customer service
alterations. These functions may include service disconnection/reconnection, soft shut
off or other changes of service that may be included under a portfolio of future
customer service options.

Tamper/Theft Detection and Security


This service includes the local sensing functions to detect physical tampering with
customer interface equipment and electronic tampering / attempts at breaching utility
network security.

Customer Interface Monitoring and Network Management Support/Diagnostic


Functions
This service is related in infrastructure management and in the restructured
environment. This service can be substantial, given the scale of the customer
communications systems required for industry restructuring. The functions supporting
this service include communications equipment self check and diagnostics for
equipment local to the customer and serving the customer interface. These services
could also include the ability to remotely diagnose the customers network.

Load Management Services


Load management approaches should follow EPRI definitions for local, direct and
distributed load control. Gas and Electric load management services could be provided
through customer communications and carried out within individual loads within
facilities.

Direct Load Control


Direct Load Control is the most common form of active load control in use today and is
characterized by the utility directly controlling customer equipment such as cycling Air
conditioners or water heaters. These scenarios should consider how direct load control
approaches may be enabled in the future. This scenario may also include Emergency
load-shedding. This involves non-routine control of loads subject to prior customer
agreement, generally when there are system supply limitations, e.g., power plant
outage, gas pipeline breaks or other acts of God.

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Distributed Load Control


The distributed form of load control blends local and direct load control approaches
into a sharing between the customer and the utility. The utility may signal the desire
for load shedding/reduction and the customer has the option of how they will respond.
One could conceive of generic load shed signal(s) being sent by the utility and the
customers response is monitored. Another form of distributed load control is that
which is stimulated through pricing such as TOU or Real Time prices.

Quality of service monitoring


The quality of service monitoring includes the parameters required to differentiate
products and meet customer needs for delivered product quality. This scenario
includes more rigorously monitored parameters and encompasses utility services such
as Premium electrical power and higher quality natural gas services.

Electric Outage and Service Reliability Detection


This service function includes simple outage detection scenarios including event
notification (time/date stamp), number of times supply was interrupted and
cumulative time supply was not available. Other measures of service reliability that
may not be included as part of Power Quality monitoring such as minimum/maximum
voltages on each phase averaged over a period, together with time and date on which
these occurred.

Power Quality Monitoring Services


This service includes all plausible business and technical aspects of providing
monitoring for premium levels of power quality, including the monitoring of
equipment necessary to capture and analyze PQ events, segments of wave forms, or
other monitoring parameters. All PQ disturbances should be considered, including,
but not limited to, transients, sags, surges, harmonics and identification of customer
equipment characteristics that may exacerbate problems (e.g. resonance).
Communications enables the PQ monitors to be located anywhere on the distribution
system and networked with close time synchronization. This enables the further
analysis of the nature and propagation of PQ events throughout the distribution system
including the identification of disturbances originating within customers facilities. PQ
Monitoring services could also be provided down to specific loads within the customer
facility and this could enable Premium Power services to be implemented by customer
load if so desired.

Power Quality Mitigation


Power Quality mitigation services could be part of a premium service offering that is
provided by the Service DISCo. Communications enables the remote monitoring of PQ
mitigation equipment to ensure its ability to provide the required protection services.
This capability could be provided within the customers facility on specifically
designated sensitive loads.

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Natural Gas Service Reliability and System Operations


This scenario would include such items as the following: minimum/maximum
pressures averaged over a period, together with time and date on which these
occurred. Minimum/maximum flow rates averaged over a period, cumulative time for
which supply was not available, number of times supply was interrupted, metering
temperature, pressure and heating value.

Premium Natural Gas Services


Similar to premium electrical power services, a gas utility may need to provide natural
gas with higher degrees of quality or purity to specific customers. High technology
product manufacturing or other end-uses of natural gas could require higher levels of
product quality.

Water Quality Monitoring Services


This scenario anticipates water quality monitoring functions outlined within the
AWWARF UCA documents.

Value Added Energy Services


Energy Services encompasses functions that provide more specific information about
energy usage by end-use within a customers facility. This includes equipment and
device specific performance monitoring functions to support a variety of customer
business functions. An initial list of energy services topics follows. The following list
begins with functions that are conceptually close to the services already provided by
the utility. Proceeding down the list, the energy services functions become
progressively more detailed in the services provided to specific loads.

Electric Energy End Use Analyses


This category of services provides an evaluation of energy use (Energy, Demand,
Quality of Service) by end use category. End-use category may include campus,
building, occupied unit or section, or specific equipment. The service provided is one
of metering specific loads for the customer for the purposes of cost allocation by
business unit or by production unit or other purposes.

The ability to monitor individual circuits and loads within a customers facility opens
the opportunity for additional value added services. Submetering could also open the
opportunity to serve the customer by end-use service function (i.e., space cooling, space
heating, hot water, lighting, etc.) and the potential to bill for the actual end-use function
provided. Metering services within a customers facility could also be revenue
qualified and enable commercial and industrial customers to more accurately account
for energy in their production process, or services functions. For instance, it would be
possible for customers that have large facilities that are used for specified periods by
other companies to correctly bill for energy usage of their facilities. This scenario also
includes submetering for rental space or for meeting other customer needs. Topics

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include the following: Revenue Qualified Submetering, Non-revenue qualified


Submetering of end use equipment. This includes virtual submetering approaches.

Gas Energy End Use Analyses


Similar to electric these services provide an evaluation (Energy, Heat, Load, Quality of
Service) by end-use category. End-use category may include campus, building,
occupied unit or section, or specific equipment. Topics include Revenue Qualified
Submetering, Non-revenue qualified submetering of end use equipment. This includes
virtual submetering approaches.

Building Services
Building services encompass a variety of functions to ensure the proper installation and
operation of major building subsystems. Most small to medium sized commercial and
residential buildings are weather driven loads that have substantial impact on the
energy systems supplying power to them. Buildings however also offer opportunities
for thermal storage and other methods to shape utility loads and are therefore a
potential service opportunity for the Service DISCo.

Building Commissioning methods ensure that the systems are installed correctly
during initial construction or building retrofit activities. The following functions could
also be supported in whole or in part through customer communications:

Design support

Regulatory conformance

Predictive or Conditioned based Maintenance

Overall Building Diagnostics

Building performance monitoring and trending

Indoor Air Quality (IAQ)/ Ventilation monitoring

Comfort condition monitoring

Lighting monitoring and control

Energy Building Code Validation

Home Energy Rating Systems Support/ Energy Efficient Mortgage Support

Heating ,Ventilation, Air Conditioning (HVAC) System Services


HVAC System services functions that are enabled through remote collection of data
that support the following functions for HVAC equipment for all customer classes:

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Commissioning

Design support

Regulatory conformance

Predictive and Condition based Maintenance

Performance Monitoring and Diagnostics analyses

Comfort Condition monitoring

Ventilation and IAQ monitoring (ASHRAE 62)

Energy Building Code Validation

Home Energy Rating Systems Support/ Energy Efficient Mortgage Support

Motor and Drive Services


Most of the electrical energy used in the industrial sector runs through a motor/drive
system. Monitoring key motor performance parameters can help to alleviate
catastrophic failures and improve plant operations. Mid-size firms may not retain the
expertise to monitor and analyze motor/drive system performance. The following
functions could be supported in part through motor/drive parameter monitoring:

Commissioning

Design support

Predictive and Condition Based Maintenance

Diagnostics

Performance monitoring and trending

Appliance and Other Equipment Support Services


Similar to HVAC systems, appliances can be monitored for performance provided the
data acquisition system has access to key parameters. Services can be prepared to offer
a variety of appliance monitoring and diagnostics support in addition to the following
list of appliance specific functions:

Load Control

Performance monitoring and trending

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Safety related monitoring

Diagnostics

On-site Power Generation Monitoring/Control


As customers install on-site generation, remote monitoring and control can be used to
manage the asset for the customer or for the utility. The following are a few of the
functions that could be supported through communications with on-site generation:

Prime mover (e.g. engine) Monitoring/Control

Photovoltaic Monitoring

Fuel Cell Monitoring/Control

Other power source Monitoring/Control

Power Conditioning Equipment Monitoring/Control

Grid intertie equipment Monitoring/Control

Weather Data Collection and Services


Utilities may extend the both the reach and usefulness of their existing weather data
collection and storage to both collect and provide weather information which
customers will value. This data may be collected local to the customer site and may be
offered as a service.

Regional Data

Local Data

Micro Data

Data monitoring/ text messaging for value added services Scenario

Security system remote monitoring/alarm.

Health monitoring

Medical alert monitoring/alarm

Other monitoring

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Maintenance Agreements

Customer Accessing of Utility Databases


This service envisions the need to allow controlled access from the customer site back to
the utility host for the purposes of accessing permitted data available for customer
consumption planning. Such data might be too voluminous to broadcast to all
customer sites. Therefore some controlled interaction may be desirable.

Third Party Services


Providing access to the customer site for contractors, owners, and managers via a
communications network could be a valuable service. Today, many such parties need
to install specific hardware and software for their equipment to support the remote
diagnostics, reporting, and servicing of equipment. Using an already installed
communications capability with a uniform data model would be an advantage for this
application.

Distribution System Distributed Computing Infrastructure Management


This service is focussed on managing the network communications and distributed
computing infrastructure necessary to operate either the Service DISCo or the MUM in
the envisioned future. This infrastructure will have substantial complexity and will
rival the electric distribution system in terms of management. Services could be build
around the ability to specify, design, construct, and maintain the information systems
necessary to run the restructured distribution system

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CONSTRUCTIONTECHNICAL SPECIALIST COMMENTS

New Technology Description

Super Conducting Cables: It is reasonable to assume that super conducting cables will
be available in the near future that will function in the distribution voltage range.
Along with the newer placement technologies the types of cables that are going to be
produced will affect the reliability and distribution of any system whether it is
overhead or underground, new or existing. Existing underground systems that have
direct buried cables, cable in conduit systems (CIC), or conduit structure systems that
will be easily renewed super conducting cables. With sizes being a maximum of 1 it
will be practicable and possible to change out existing systems. When the construction
of the newer cables start, it will be imperative that the construction of these cables
include a fiber optic cable extruded into the sheath of the newly power cable.

The placement of these newly developed cables will not follow the standard
construction practices of today. The cable in existing underground CIC will be the
hydraulically vibrated out of the surrounding conduit and even if the cables are lodged
in by years of dirt and corrosion these vibrating units will be able to dislodge and
remove existing cables that are lodged in CIC systems. Directional drilling will be the
construction method of choice for placing new conduits in existing outside
underground systems that have been direct buried. The cable placement will be
accomplished by pushing or blowing the cables into the conduits verses the pulling
methods that are a standard of today. Costs of pushing cables verses pulling cables
today in the aforementioned projects are under $1 per foot, which includes a pickup
truck, generator, simple cable pushing devise and 2 men (to push cables) and $3 to $5
per foot to pull cables into smaller conduits using the standard line trucks, pulling
winches, equipment and a 4 to 5 man crew.

Directional Drill Guided Horizontal Drilling (HDD): Guided horizontal drilling is a


steerable and controllable technique for installing underground cables, conduits and
pipes using a special drill rig, drill head and guidance equipment.

Cable Installation methods by pushing and blowing vs. pulling: Tools have been
developed and distributed by Trenchless Technology Products of Glendale, Arizona.
The cable pusher is an innovative, light-weight, electrically belt driven tool that pushes
cable into conduits without the need of placing pull ropes or fish lines. The machine
can accommodate cable diameters of 1 to 3. The electrical machine has a push
strength of 700 lbs. maximum and pushes at a speed of 30 ft./minute. It is powered by
115 volts on a 25amp circuit. The portable field power is 4000-watt generator. This
machine can also be powered hydraulics or pneumatic.

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Ground penetrating radar: Systems have been developed that penetrate the ground
surface using radar technology that can located underground utilities and obstacles.
They can also help describe the soil type and conditions. They are small pushcart
types, normally with two wheels, that project radar waves into the ground. Some of
technology that is being used today these are focused on underground mapping.

High speed narrow trenching: High speed trenching machines (OCC135 Vermeer)
using a narrow wheel type cutter, wheel cutting widths as small a 3.5, that cut through
concrete, asphalt and rock without any precutting of the surfaces and the trencher can
cut to depths of 48. These trenching machines trench at a speed of 10 to 15 ft per
minute. Most machines have self loading units that attach to the trenching machines
that load the trench spoil directly into waiting dump trucks.

Slurry backfill: This is usually a mixture of cement mixed with sand & water and
delivered to a job site in a transit mixer truck (cement mixer truck) as a flowable
material, the same way that ready mix cement is delivered. The lean cement mix helps
the set-up and usually eliminates the problem of trench compaction. The material is
porous and does not set up a moisture barrier at the trench location. Some cement
companies are using fly ash (ash from burnt coal material that would come from a coal-
fired powerhouse) mixed with sand, cement & water to make up a flowable slurry
backfill material. This material works well with the narrow rock wheel trenching
machines.

Vacuum trenching or excavation: Vacuum excavation utilizes the kinetic energy in a


high velocity air stream to penetrate, expand, and break up soil. The loosened chunks
of soil and rocks are then removed from the hole through the use of a very powerful
vacuum. In this way a hole is created that is typically one to two feet square and as
deep as required to expose a buried utility. A major advantage offered by vacuum
excavation is safety for both operator and the buried utility. This is commonly known
as soft excavation.

Multiple conduits: It is not uncommon now to have a conduit supplies bundle up a


group of conduits and join them together. I recently spoke with a leading conduit
supplier and he stated that they can supply conduits in any configuration that any
owner would require.

Joint trench: Multiple companies sharing in the architectural design, engineering, fiscal
participation, costs, space and responsibilities of the utility trenches.

Common To Both Visions:


The above mentioned technologies and construction methods will be available and will
be a cost effective way for the DISCo owner to maintain and construct his outside plant
at the best possible price. In 15 to 20 years a radical departure from the construction
methods of today, such as pole line construction and excavation for underground, is

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unlikely. The processes mentioned are advances in these specific areas that will be
more refined.

Further, these technologies and methods will be beneficial to the MUMs operation
because they are low-cost, effective methods. The difference between the MUMs
operation vs. the Service DISCos operation is that the MUM will probably use more
contracted maintenance help rather than their own employees. Contracted labor is
used because the firm is only paying for the services that are needed and the
contractors they call are geared for on-call maintenance and have the skilled people to
respond at a moments notice. The contractors hourly rates reflect these types of
services that they provide and the MUM operator will know how to program these
rates in their yearly operating budgets. Now you have a situation where the MUM does
not have to have that large work force to maintain their facilities and outside plant and
only pays for the services that are needed. To the low-cost MUM this is a win-win
situation. Most DISCos have long-term labor agreements that restrict this type of
operation.

Embedded and Discarded Technologies

Service DISCo
What technology/asset is replaced (discarded)? When we look into future electrical
systems, lets assume that the conduits of todays outside plant are the embedded
architecture that will continue to exist. The cables that are handling the currents of
today will be replaced with the newly developed super conducting cables of tomorrow
handling currents for primary and secondary distributions. With the sizes of the
conduits that exist in todays outside plant designs, it is practical to assume that the
future cables, being smaller in diameter, will take up less space and therefore will be
easily installed into the existing conduits. We refer to the new technologies developed
today on removal and installation of power cables.

Hydraulically pulled using ultrasonic vibration methods of removing embedded


cables in conduitscoupled with the skills and knowledge how to apply this
technologywill be used to replace the existing cables so they can be replaced by
the higher technically developed cables of tomorrow. This is a very cost effective
method of removing existing cables (technology developed by EPRI) and is only in
its infancy. As this technology receives more exposure in the electrical industry,
more companies will adopt this as standard operating practice in removing cables.
Todays success rate in removing embedded cables is 99.9%. It is only the very rare
case and the exception that a cable cannot be removed.

Cable installations, for smaller diameter cables ( up to 1), can be pushed or blown
rather than pulled. This technology is in the market place today and is extremely
cost effective (EPRI developed technology).

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Rather than use the standard open cutting methods of today in replacing existing
direct buried cables in existing residential and commercial areas, directional drill,
where practical (ground conditions permitting), will be used instead of standard
trenching methods. Tomorrows technology will be that the operator will sit on the
directional drill machine, have a predetermined drill path that has be researched by
GPR (ground penetration radar), and drill to this predetermined path from the
operators seat. Pot-holing utilities will not be necessary and the risk of accidentally
striking another utility or and underground structure will be minimized.
Production rates will increase because the locating technology of today will be
replaced by locating technology that pre-engineers the drill path that gives correct
aysmith and inclination positions. The operator will simply drill to the engineered
drill path positions. All locating will be done by above ground positioned sensors
that receive signals from the underground sonde positioned on the front of the drill
bit head and transmit that signal to the operator on the machine. This allows the
operator to see exactly what is going on with every movement of the drill and allow
the operator to make the necessary corrections to keep on the engineered drill path.
When the drill completes the drilling operation the recorded drill path will be able
to be downloaded onto a disc and used for as-built drawings. Using GP (global
positioning) technology coupled with the locators of today as-built accuracy
position is to the centimeter.

Distribution Systems: Use of super-conducting cables in rural areas for primary and
secondary distribution could be placed by plowing, eliminating the standard pole
line construction methods. Plowing is not a new technology, but it is the most cost-
effective technology that will compete with the cost of pole line construction. This
type of construction method would eliminate the use of poles, thus being more
environmentally sensitive to the use of wood.

Transmission Systems: Plowing (single circuit) would apply to transmission and be


less costly than the pole line construction that is being used today. With the
technology of the super conduction cables and the equipment that we have today
69KV or 110KV systems could be plowed underground at a very low cost. If deeper
is better, these cables could be direct buried at the 7 level without any problem.
Today in the agricultural industry, farmers are pre-ripping their raw land parcels to
the depth of 7 feet in order to prepare the land for crop production. Vineyards are
being prepared in the same fashion. The plow attachments that are being used are
12 to 18 inches wide and 10 to 12 foot long from top to bottom. It usually takes a D-
10 Caterpillar Tractor, (735 HP machine weighing 100 tons ) two passes to get to the
8 foot depth. It will be possible to plow up to 5 miles of cable in a single day.

Work Process

Automation and control systems of today are already being installed to operate and
control generation, switching and monitoring units of equipment. Today, fewer

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people are being used in the traditional blue-collar jobs and more electrical, electronic,
computer literate types are replacing the traditional operator to monitor and operate
these systems. The change is happening rapidly, and there is a definite need in the
industry to have a more technical, electronic and computer based labor type employee.
The traditional labor type jobs will be minimized. Traditional labor type jobs will not
go away completely, but the typical type of person that is the electrician, operator,
laborer etc. will have to be multiple-skilled and able to function within the technology
that today is the black box concept and tomorrow will be normal operating procedure.
The electrician of today has to understand automation and the technical functions of
how individual controls communicate with each other, where yesterday this was the
function of the communication company. The excavator operator or directional drill
operator of tomorrow will have to understand how the PC thats controlling the
functions of his or her piece of heavy equipment

The maintenance person of tomorrow, when looking at a smart meter on a persons


home, will have to have the ability to trouble shoot a problem on a chip or board and
be able to replace it as normal routine work. Computer based and communication
technology literate work skills will be the demand of tomorrow.

System Costs

Directional Drilling:

Replacing cable in conduits 3 phase: $12.00 to $15.00 per foot

Future replacement costs, because of advances in the technology and the where labor
and equipment cost are going to, will increase, but the amount of labor to operate the
equipment will lower. We should see a slight increase to $14.00 to $17.00 per foot.

In the future, placing smaller diameter super conducting cables direct buried will be
$8.00 to $11.00 per foot.

Cable Installation pushing and blowing vs. pulling

Todays costs for pushing electrical cables 1 in diameter and less in size

$0.50 to $ 1.50. per foot

Future costs should be about the same. This technology will advance and the cable
sizes and weights will reduce.

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High speed narrow trench methods

Cost in the market today range from $ 8.00 to $12.00 per foot

Future equipment and labor is higher $10.00 to $15.00 per foot

Slurry backfill material for open trench to eliminate compaction problems

Today $ 2.00 to $ 2.75 per cubic foot

Future $ 4.00 to $ 5.50 per cubic foot

Vacuum trenching for open cut method in downtown or congested areas, used for
inspecting and pot-holing existing utilities and excavations for spot utility repairs

Vacuum excavation for trenching is a newly developed technology and there is not
good cost information at this time.

Pot-holing using a vacuum excavator ( 3 to 4 of cover )

Today $20.00 to $35.00 per pot hole $2.15 to $3.75 per cubic foot

Future $15.00 to $20.00 per pot hole $1.60 to $2.15 per cubic foot

In the future the equipment will get better and the cost of the equipment should lower.
Labor will increase but it is the equipment that is doing the work. This should become
a one-man operation.

Joint trenching for multiple utilities

If we are looking at a project that would typically remove the existing overhead
construction and place it in an improved commercial , business or residential (concrete
sidewalks and asphalt streets) the costs for this type of trenching is usually shared
between the electric, gas, telephone, cable television and street light companies.

Today $75.00 to $130.00 per foot

Future $100.00 to $200.00 per foot

The typical new building developments and housing developments will be developed
and engineered (pre-planned) for a joint trench application. One engineering and
development source will handle this type of project, whether it is the Service DISCo or
MUM or a private entity. It has become common practice for the developer to include
the joint trench project in their development costs. The trenching that is involved in

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this type of work is in native soil and backfilled with screened native soil or select
import around the cables and conduits. The trench configuration is usually two tiered
with the primary and secondary cables on the bottom and the gas, telephone, CATV
and street lighting located in the upper section. The gas lines are usually plastic and
are placed so the location of the gas line is at the backside of the concrete sidewalk
covering the joint trench.

Today $35.00 to $60.00 per foot

Future $40.00 to $70.00 per foot

Joint trench by plowing in rural areas

This is covered as joint trench application because power cables, plastic gas lines,
telephone cables and CATV lines could be placed at the same time. This is not common
practice, but this can be done. With the horsepower and weight of todays machines
the type of footage that is stated above can be accomplished. It is typical to rip
agricultural land @ the rate of 7300 feet per hour @ 7 deep using a 735 hp machine.
Production for cable plowing and installation would be 3,300 feet per hour @ 7 deep
and installing the multiple utilities in plowable soil.

Typical plow pricing for single cable installations not using the types of machines as
stated above are:

Today $1.25 per foot to $3.25 per foot

Future $1.50 per foot to $4.15 per foot

Plowing multiple utilities is not a common practice. However, it is possible to plow


more than one service in using the machinery that is available today (Caterpillar D-10).
These are expensive machines and the people that have them usually keep them
running all the time.

A cost estimate was developed that fits into the above stated price ranges for plowing
cable today. The problem is not getting the number of utilities in one plow shoot, but
the amount of ripping to depth that needs to be accomplished. The direct costs that
range from $0.46 per foot to $0.77 per foot. These are only estimated costs but are
verified by the work that is being done in the agricultural fields of Central California
Valley.

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STAKEHOLDER INTERVIEWS

As discussed in the body of this report, a variety of stakeholders were interviewed to


obtain an objective review of the business visions and the corresponding conceptual
designs. A complete listing of comments made by each stakeholder groupcategorized
by business visionis included below.

Customers Comments
Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments: Positive Comments: General Comments:
From the customer If this option reduces costs, Many customers have been
perspective, the Service the customer will be pleased. left out of the decision
DISCo was a popular option. making process (large
Negative Comments:
Customers will evaluate industrial customers made
Do not see this as a likely
electricity purchases based the decisions, not the mid-
candidate (not many
on value, not only on price. size guy).
companies are capable of
Is electricity a commodity? this). Large industrial and
Not really, but the onus will residential customers get the
Minimal benefit for
be on the utility to prove that benefits
customers, unless it reduces
it is not a commodity. The costs. No incentive for the utility of
Service DISCo appears able today to invest for reliability.
Concerned that management
to do this. Commodity WiresCo is a
has the expertise for all
Customers will drive the systems, or operational reasonable vision to choose
market place. The Service experience to provide (understands that this vision
DISCo appears well multiple utility services. would not cover the
positioned to meet this technologies in the level of
Concerned that technology
demand. detail that we want, and
might be too diverse for cross
Expect reliability as a therefore out of the scope of
training of personnel.
customer. this project).
General Comments: Expect the DISCo to be the
If reliability becomes an The MUM needs to ensure
issue, customers will look for supplier of last resort, now
reliability. and in the future.
companies that will provide
reliable power.
The Service DISCo will make
money through serving the
ESP (e.g., connects and
disconnects, outage
restoration).
Small ESPs may want more
services than other ESPs
(e.g., billing, call centers,
meter reading, etc.).

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Customers Comments (continued)


Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments (continued):
Customers do not want to install
distributed resources at their site to
bypass his system. This is not the
customers core competency, and
therefore customers will pay the
Service DISCo to do this.
Negative Comments:
Utilities now are not necessarily
customer responsive (e.g., takes a
month to set a meeting). Will the
Service DISCo vision ever be a
reality for the regulated utility?
Providing value added products and
services will be challenging. This is
the ESPs domain.
Not much opportunity to pursue
products and services after the
meter.
Deregulated competitors will have
advantages over the Service DISCo.
Assumption that the customer will
deal with the DISCo for wires issues
(e.g., sag), but not for the sale of
electricity (ESP).
ESP controls Distributed Resources,
not the DISCo. Therefore, the
Service DISCo should not be
involved with distributed resources.
General Comments:
Who is responsible for reliability?
Customer? DISCo? ESP?
It will be important to understand
how costs will be recovered and
how the Service DISCo will evaluate
capital expenditures.
Cannot envision current electric
utility providers acting like a Service
DISCo. Good thought, but can this
be implemented.

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Regulators Comments
Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments: Positive Comments: Positive Comments:
As long the Service DISCo Already know how to This is an extremely valuable
does not sell the power and regulate this type of business. exercise.
work for the ESP, this is a Like the idea of a MUM Good phase 1, but another
vital exercise that shows (economies of scale; not anti- phase should further
what the distribution system competitive). evaluate regulatory
needs to operate. implications.
Negative Comments:
Negative Comments: Regulation will exponentially Would like to see follow-up
Regulators are naturally increase if utilities pursue the on one of the less leveraged
suspicious when regulated MUM vision. scenarios (e.g., Commodity
companies work in WiresCo vision).
deregulated areas. Separation between regulated
and unregulated operations Regulation is not set in
Competition should not be will become more complex stone, and EPRI and the
the main objective of the (i.e., separation of utilities can still affect the
utility and the regulators will competitive functions and regulatory process.
be suspicious if the utility monopoly functions).
ever tries to enter new Negative Comments:
competitive areas. More burdensome for Good start, but the DISCo is
regulators. the driver of this, there are
Concerned with expertise other options.
and cash flowing from General Comments:
regulated company to Not impossible, but tough to General comments:
deregulated company (cross- implement. Laws may not have caught
subsidization). Data communication could up to reality (e.g., liability
become an issue (cannot issues), but eventually
Regulated business could not
share all customer data). regulation will catch up.
be leveraged to the benefit of
the deregulated entity (e.g., The FERC will play a very
regulated business cannot minor role, if any, in
recommend that the regulating the distribution
customer uses certain types system of the future.
of products or services, such The FERC would become
as a type of photovoltaic involved if the market was
system) set up in a way that the retail
Not comfortable with the customer was paying
utility pursuing separately for the
entrepreneurial type transmission service (direct
activities. to the industrial customer).
The onus will be on the If reliability decreases
utility to prove that they are significantly, the regulators
not being anti-competitive. will step in.
Regulators want a separation
of infrastructure and
services. This is inconsistent
with the Service DISCo
vision.

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Regulators Comments (continued)


Service DISCo Multiple Utility Common to Both
Manager Visions
Negative Comments
(continued):
Trying to combine monopoly
and retail functions (this will
go against the desires of the
regulators)
Ancillary services are the
ESPs business.
The Service DISCo needs to
focus on its infrastructure,
not on ancillary products and
services.
The Service DISCo cannot
control the meter. This is the
ESPs domain.
Regulators will be wary of
preferential treatment of
customers (can distribution
company be accused of
providing preferential
treatment to own generation
or transmission customers).
General Comments:
The Service DISCo could
offer two sets of services:
one subject to regulatory
incentive mechanics, the
other offered as competitive
services at Shareholder risk.
The costs need to be
separated.

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Employees of the DISCo Comments


Service DISCo Multiple Utility Common to Both Visions
Manager
Positive Comments: Positive Comments:
Viable option to operate. Viable option to operate.
See this as a combination / Could adjust to operate a
partnership between the MUM, but this will be a
DISCo and the ESP. This can challenge.
work. See common construction,
Employees need to increase common maintenance
technical training to pursue facilities, some common
this strategy, and this can be maintenance crews, but some
done. specialized crews for each
DISCo could outsource meter type of utility.
installation and meter Right now, our biggest
reading (DISCo has volume problem is other utilities
purchase advantages, but has digging up our lines. With
an expensive work force). the MUM, this could be
ESPs dont want to put cash minimized.
into the system, they want Negative Comments:
the DISCo to do this. Water lines and gas lines are
General Comments: different ball games.
Need service level agreement Different skill set required
with ESP if the DISCo is to for employees. What
enhance reliability and incur recurring efficiencies will be
additional costs (different realized?
level of rates for different
General Comments:
levels of reliability).
Need common technology
for all utility functions if this
vision will be successful.
Need to be able to
communicate with all utility
functions at one time (do not
necessarily need one meter,
but need common
communication protocol).
Need joint collaboration on
meter development (EPRI
and other R&D institutes).
One meter is secondary
retrieving information
through one AMR system
with a common
infrastructure is primary.

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Shareholders of the DISCo (Investors) Comments


Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments: Positive Comments: General Comments:
I like it, but Im not sure Im a big fan of this vision, My decision criteria focuses
that its workable, though. It my biggest concern is the on management team, cash,
appears as though this quality of the management and the return on that cash.
strategy is throwing team and their ability to It is still too early to tell
economics to the wind. provide reliability with all which companies will emerge
I would be willing to invest the services being offered. I as the best in the business;
this type of company if they like the idea of leveraging laws are still evolving and
pursued this strategy in fixed infrastructure and the being modified as we speak.
phases, but Im still ability of providing one bill I would like companies to
concerned with the creates the perception of become bolder, however they
economics (they need to be value to consumers. need to be honest with
able to measure the return Companies have the potential themselvesthey need to
associated with the to increase profits by really understand what they
technologies) leveraging the economies of do well and what they are
scale that exist with this not so good at. It is
Negative Comments: impossible for them to be
business vision.
Concerned because this everything to everybody.
vision is not in keeping with You could easily leverage They also need to keep
the current distribution this vision into the retail economics in mind.
model and also it seems to sector and adopt some of the
breed over-investment. Service DISCo offerings, too.
However, if the Service
Believe that it would be
DISCo vision were pursued,
difficult to adopt this
it would be difficult to adopt
strategy without a full
some of the convergence
understanding of the actual
ideals of the MUM strategy.
returns that would be
realized from implementing General Comments:
the various technologies. Good strategy, but I have
yet to identify a management
team that is competent in
providing a full array of
services, such as electricity,
gas, and
telecommunications.
A long-term issue with this
strategy is ensuring that the
utility is the best supplier
of the given service (e.g.,
can an electric company
really provide the best
telecommunication or water
sewage service?)

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Stakeholders With an Environmental Interest Comments


Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments: Positive Comments: General Comments
Strong preference for Already doing things like the Other than overhead vs.
underground distribution MUM (like the concept; underground, there were no
systems, which is consistent certain risks exist today that significant concerns about
with Service DISCo vision. need to be eliminated if our other environmental issues.
Willing to accept higher cost MUM will be accepted
for underground (richer, combination of water and
savvier neighborhoods get electric; underground boring
this already). can take out fiber optic cables
or gas mains).
Can put reasonable costs into
rate base (e.g., cost of Like convergence issue.
underground). Want streetlights coordinated
Consumers want with the MUM.
undergrounding, and Negative Comments:
regulators will work with the Difficult to combine water
utilities to use this technique with electric because some
as much as economically regulators require separation
possible. for safety.
With overhead vs. May be some technical
underground, the utility problems that need to be
does not have a choiceits resolved.
the regulators choice.
General Comments
Sewer would not lend itself
well to this type of
combination.

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Stakeholders With a Concern For Public Safety Comments


Service DISCo Multiple Utility Common to Both
Manager Visions
Positive Comments Positive Comments: Negative Comments:
Overhead plant is beginning Regulators more comfortable Concerned that the utility is
to deteriorate (public and with nuts and bolts type more concerned with
employees are at danger). business (i.e., MUM is more pleasing its shareholders, not
Underground distribution nutss and bolts, Service with ensuring the reliable
systems are more desirable DISCo is somewhat unusual). and cost-effective use of
from a safety perspective. electricity.
General Comments:
Negative Comments: With the MUM model, will General Comments:
Many regulatory agencies are the work forces be large Problems with safety and
not currently prepared to enough to be able to deal competitionsystems have
regulate companies that want effectively with storms, begun to slide (pressure on
to pursue a Service DISCo outages, and other problems regulators to prevent this).
type operation. since they are providing such Directional boring, although
a diverse offering of services less expensive, is often too
(electricity, gas, telecom, risky in urban environments
etc.). From a regulators (take out fiber optic lines or
point of view, the most gas mains).
important concerns are safety
and reliability. High speed drilling is also
risky (willing to accept more
cost for more safety).
All in favor of new
construction technologies,
but its just too risky right
now (we need to prove that
this is safeonus is on the
utility or EPRI to prove that
technology is safe)
Build distribution systems
that are safe to work on, safe
for the public, and reliable.
Regulators are not prepared
to set standards for batteries
or microturbines.
Want utilities to cooperate
with the commissions as they
go through their thought
process.

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Other Comments
Service DISCo Multiple Utility Common to Both
Manager Visions
General Comments:
Liability litigationnow that
were in a competitive
market place, how do we
determine who is responsible
and how do we structure
ourselves so were covered?
This will be an issue with the
Service DISCo.
Need to be concerned about
the failures of ancillary
products and services
(liability for utility), even if
the ESP is directly
responsible for these
products and services.
Product liability will become
more important if pursuing
this vision.
Management structure needs
to indoctrinate its
employeesparticularly
sales and marketingabout
what it can do when it sells
its products.
The Service DISCo will need
to establish proper product
design precautionary stages
(prevent product defects
from being sold).

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MULTIPLE UTILITIES MANAGER OF TODAY

To support the development of the Multiple Utility Manager (MUM) business vision,
several domestic and international utilities that are currently operating some form of a
multiple utilities system were interviewed. These interviews provide valuable insights
into the realities of today, highlighting the benefits realizedand not realizedtoday.

While the intent of Distribution Systems Redesign Project is to conceptually design two
electric distribution systems of the future, and therefore we did not want to limit
ourselves by focusing on the realities of today, these interviews helped us think about
needs of the MUM in the future. This information refined the development of the MUM
conceptual design, it was not the basis for the MUM conceptual design.

It should also be noted that a complete evaluation of the multiple utilities of today was
not performed. Rather, the desire is to pass along some interesting information that
was gathered in the course of completing the objectives of this project. This
information is categorized into the following sections:

Breadth of Utility Operations

Benefits

Complications

Breadth of Utility Operations

In the course of performing interviews and conducting secondary research, many


multiple utility companies were identifiedalthough this does not necessarily imply
that these utilities operate one coordinated system. At a minimum, however, some
utilities of today jointly operate electric, gas, water, and telecommunication systems.

In the U.S., the most common type of investor owned multiple utility is comprised of
gas and electric operations. Of the 54 investor-owned electric utilities classified as
combination companies, 36 companies provide only electric and gas service, and 51
provide electric, gas, and some other utility service.4 Electric co-ops and municipals are
also not strangers to the multiple utility world, and they are more heavily involved
with external telecommunication services than investor-owned electric utilities.

4
Edison Electric Institute, Catalogue of Investor-Owned Electric Utilities, 1997.

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In Europe, the multiple utility concept is more common than in the U.S., largely due to
deregulation. Table 1 lists several examples of European multiple utilities and
summarizes the breadth of their utility operations.

Table 1
Examples of European Multiple Utilities

Country Company Electricity Gas Water Telecom


UK Hyder X X X
UK United Utilities X X X X
UK National Grid X X
Netherlands PNEM (PMG) X X X X
Germany Municipals X X X
Germany o.tel.o X X
(RWE/Veba joint
venture )
France/Belgium Suez Lyonnaise X X X X
Sweden Sydkraft X X
Finland IVO X X

Source: Presentation by Dr. Clive Elphick, Multi-Utilities The Way Ahead?, Group Strategic Planning Director
for United Utilities, June 1998; interviews.

It was not evident that any utilities operate a completely coordinated multiple utility
system as envisioned by MUM strategy, but utilities are actively pursuing this vision.
If the MUM business vision proves to be successful, however, it is fair to say that we
are in the infancy stage of multiple utilities.

Benefits

In the course of our interviews we noted a wide range of benefits that are currently
realized by electric utilitiesfrom minimal or no operational benefit to significant
operational benefits. It was evident that there is tremendous opportunity to realize
additional benefits, assuming electric utilities are willing and able to change and the
appropriate technology exists.

The benefits noted during the interviews are as follows:

Common Infrastructure/Assets: The infrastructure of electric utilities is used for more


than just the transmission and distribution of electricity. Existing electric infrastructure
has been used in conjunction with gas, telecommunication, and water services. Again,
the cross-utilization of infrastructure is not as extensive as described by the MUM
business vision, but benefits are derived today by electric utilities.

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An example of an electric utility running a telecommunications network profitably is


Energis, a network provider of advanced broadband national communication services
in the U.K. Energis is a wholly owned subsidiary of the National Grid, the owner and
operator of the electricity transmission system in England and Wales. The Energis
Network was constructed in only 19 months by overlaying high-capacity fiber optic
cables primarily along the National Grids electric transmission infrastructure and the
RECs electricity distribution infrastructure. This was done at a cost of around (L) 340
million, which is a fraction of the capital expenditure required to build a national
network by more conventional methods (e.g., digging trenches and laying cables),
which could cost up to (L) 2 billion. 5 This was a one-time cost savings, but it is rather
significant.

With the passage of the federal Telecommunications Act of 1996, U.S. electric utilities
are more commonly entering the business of providing ancillary telecommunication
services. Other examples noted include using low voltage distribution lines and
electric meter for transferring telecommunication data, common maintenance bases for
all utility services, common equipment, and joint trenches for all utility services.

Common Skills: The successful management of multiple utility systems relies to a


large extent on common skills, such as construction, maintenance, and support services
(e.g., call centers, billing, etc.). While this area is not being leveraged as much as it
could, many utilities are realizing savings now and are looking for additional savings
in the future. Set forth below are some examples that noted in the interviews:

Some multiple utilities use joint construction crews at time of installation. However,
another multiple utility used to use joint construction crews, but experienced
problems and is now moving back to separate construction crews.

When possible, many electric utility crews perform standard maintenance for other
utility systems. For example, Energis appoints the National Grid to perform all
maintenance and repair work to the Energis Network (telecommunication).

Combined work management and materials management systems.

Combined mapping systems.

Combined meter reading, installation, and repair.

One interviewee stated that electric utilities already have competencies that are
needed for the telecommunication business. They already have strong knowledge
about telecommunications through internal communication, and they have strong

5
Morgan Stanley, Analysts Report for Energis, March 2, 1998.

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knowledge of processing a huge amount of customer data. In this case it is less


important for the telecom company to share the infrastructure as it is to gain access
to the knowledge.

Common Customers: Through common customers, multiple utilities realize economies


of scope. For example, utilities have combined common customer contact and
combined billing. This is a true benefit now, and in the future, but to what extent a
U.S. electric distribution companies will be allowed to realize these benefits will vary
by state.

Joint Ownership: Through joint ownership, utilities realize economies of scale. For
example, some utilities consolidated administrative functions into one corporate office
or obtained more efficient procurement through volume purchases. While this was the
most common benefit we noted in the interviews, this is not an operational benefit and is
correspondingly not within the scope of Distribution Systems Redesign Project.

Complications

The concept of combining multiple utility systems is fairly straightforward. However,


in practice, it is rather complicated. Some of the problems that we noted in our
interviews are as follows:

Regulation: Due to regulatory complications, some interviewees were struggling


to integrate utility systems. This should continue to be an on-going complication.

Specific Skills: In spite of owning and operating multiple utility systems, many
utilities use separate construction and maintenance crews for each type of utility
operation. This is an area that the interviewees wanted to improve upon and would
welcome technological improvements.

Customized Infrastructure/Assets: In some instances, customized equipment for


each type of utility is needed out in the field (e.g., different remote communication
units for electric and gas systems). Our interviewees stated that future costs could
be reduced if new technology is developed to standardize the equipment.

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Distribution Cost Structure Appendix


Distribution Redesign Final Report

By Steve Okonek

A Distribution Cost Structure Analysis was conducted during the first half of 1997 as a
precursor to the Distribution Redesign project. This work was based on the belief that
as the traditional vertically-integrated utility business structure broke up through
deregulation, distribution companies (DISCos) would face increasing pressure to better
understand their costs in order to generate sufficient returns attracting investors to their
stand-alone business. Depending on the regulatory scenario, distribution companies
might well find their primary customers being multiple power vendors and retail
energy companies (RETAILCos or ESCos). Assuming monopoly protection remains
for the distribution business, these entities will still drive distribution companies to
have a better understanding of their cost structure.

The projects objectives were to identify the costs for the key processes within the
distribution business, identify and characterize the cost drivers and provide an
analytical base for various distribution R&D planning exercises. Additionally, a better
understanding of these costs and their drivers would be important to the redesign
effort as it could help predict the areas where technology could play a major role in
responding these changing business needs. Public information on distribution costs is
not nearly as readily available at the same level of detail as for transmission or
generation. What data is available typically represents FERC-driven accounting
classifications such as internal labor, materials/supplies, contracted efforts, capital asset
base and equipment.

This project instead focused on distribution costs from an activity-based perspective.


Activity-Based Costing (ABC) breaks a business down according to all the major
activities performed and relates them to customer needs and costs. It represents how
activities consume resources and ultimately aims to manage the activities, and not the
symptomscosts. A methodology was developed dividing the distribution business
into seven major activities. (See Figure A-1) Costs were developed for each activity by
translating the various resources typically shown on accounting statements into a
relative cost by activity. These seven activities were then further broken down into
sub-activities which represented all of the various effort that went into a given process.
(See Figure A-2)

Each process was specifically defined to ensure a reasonable across-the-board


comparison among the participants. New Construction, for example, reflected
activities initiated by the distribution planning department to relieve system constraints
due to area load growth, whereas New Customer Hook-Ups reflected activities
specifically initiated by the customer.

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The overriding focus of the utility site visits is to establish the


linkages between resources consumed and activities.
Activities Costs Drivers Resources
Substation
$
Maintenance Labor
Circuit
$
Maintenance Wages
Time required to Supplies
New Construction $
perform the activity
Crew Size
Tree Trimming $
Frequency of
activity Equipment
Service
$ Cost of equipment
Restoration
New Customer Frequency of
$ replacement Services
Hookups
Road and Bridge
$
Relocations
Capital

Figure A-1
On-site ProcessCost Structures

The seven major processes and associated subprocesses to


understand the distribution cost structure.
Major Distribution Processes

1. New Information Prepare designs,


Scheduling Switching Construction
collection and drawings and
Construction analysis issue WO

2. New Customer Process Prepare designs,


customer drawings and Scheduling Construction
Hook-ups information issue WO

3. Circuit Collect Prepare designs,


information and drawings and Scheduling Switching Construction
Maintenance analysis issue WO

4. Substation Collect Prepare designs,


information and drawings and Scheduling Switching Construction
Maintenance analysis issue WO

Construction
5. Service Problem Problem Dispatching (fault
Restoration notification evaluation crews clearing/restorati
on)

Tree trimming
6. Tree Trimming Planning
operations
Inspection

Prepare designs,
7. Road and Receive request
drawings and
Scheduling Switching Construction
Bridge Relo issue work
orders

Figure A-2
Work PlanCosts Structure

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The scope of the analysis was limited to include equipment at distribution voltages
<69kV, both overhead and underground distribution feeders, and all departments
involved in distribution planning, construction and O&M activities. It did not include
meter installation, meter reading, billing, general customer service, street lighting, or
transmission substations. As a result, the scope of the study represents typically
between 70-80% of the entire annual distribution budget which averaged $140-million
for the participants. The results represent a one-year snapshot of each distribution
utility and do not show trending over time.

The project team visited each of the participating utilities for one week to analyze
accounting and work practice data as well as conduct interviews with distribution
personnel covering all aspects of the business. The study represents the most in-depth
assessment of specific distribution businesses ever undertaken by EPRIs Distribution
Business Area. Over 300 company employees from the five companies were
interviewed during the course of the project. The data model was then populated and
short return visits were subsequently made to fill in gaps and verify accuracy.

Five utilities participated in the project via EPRIs Tailored Collaboration program:
Duke Power, Duquesne Light, Omaha Public Utility District, Public Service Electric &
Gas, and San Diego Gas & Electric. All were members of both the Distribution Systems
and Underground Distribution Infrastructure targets. This sampling provided
examples of companies with an aging urban underground infrastructure as well as
companies with suburban growth. All had significant amounts of underground
distribution along with overhead distribution. Some of the participants already had
cost data easily identifiable by activity. Considerable effort was necessary at others to
translate accounting data into activity based numbers. Additionally, some activities
were easily traceable such as Tree Trimming where a large portion of expenditures is
clearly identified subcontracting effort. Substation Maintenance, on the other hand,
was more difficult to separate given each utilitys unique division of effort between
transmission and distribution.

Mean data from the total costs covering all participants show the importance of New
Customer Hook-Ups, New Construction, and Substation Maintenance which together
accounted for 63% of distribution spending. (See Figure A-3) While the relative size of
the Customer Hook-Up number was large due to considerable activity during the test
year at two utilities, its weighting against the other six activities was clear. As the
seven activities were broken down into their respective subactivities, the importance of
Construction and associated Maintenance/Repair expenditures predominates. It is
clear from the study results that improvements in construction technologies represents
the biggest improvement opportunity for containing distribution cost followed by
technology-based improvements to O&M.

Specific key improvement opportunities and possible options to consider were


identified for each participant based on both the data and extensive interviews. Broad
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improvement opportunities included improved asset management, work practice


modifications, field data integration, equipment and design standardization, predictive
maintenance and improved contracting practices. Current research efforts in EPRIs
Distribution R&D portfolio address many of these areas.

The Distribution Cost Structure methodology represents one way of looking at how the
distribution company spends its resources and identifying where the most promising
opportunities lie for high impact improvements via technology or improved work
practices. It aims to improve a distribution companys knowledge of the cause and
effect relationships between costs and their sources.

Proprietary reports were published for each study participant. A report summarizing
the methodology, average percentage findings, and general improvement opportunities
Distribution Cost StructureMethodology and Generic Data (EPRI TR-109178, February,
1998), is available to other investors in EPRIs Distribution Systems and Underground
Distribution Infrastructure targets.

Three processesincluding new construction, new customer hook-


ups, and substation maintenanceaccount for 63% of distribution
spending.
Overall Distribution Expenses
Road & Bridge Relo
7.2%
12.9% 6.4%
Tree
Trim
Feeder & Line
Maintenance

13.2%
Substation
Maintenance

New Customer
Hook-Ups 34.3%
New
Construction

16.1% Service
Restoration

9.9%

Source: EPRI Cost Study

Figure A-3
Costs Structure Analysis

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