1 / 37

Transmission Business Evolution In a Period of Significant Resource Constraints Patricia A. Park

Transmission Business Evolution In a Period of Significant Resource Constraints Patricia A. Park UCONN MBA PROGRAM April 24, 2008. The Cost of Reliability-August 10, 1996, Power Outages in the Western State.

prem
Télécharger la présentation

Transmission Business Evolution In a Period of Significant Resource Constraints Patricia A. Park

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Transmission Business Evolution In a Period of Significant Resource Constraints Patricia A. Park UCONN MBA PROGRAM April 24, 2008

  2. The Cost of Reliability-August 10, 1996, Power Outages in the Western State The blackout in the western states on August 10, 1996, was a complex and dramatic reminder of the importance our modern society places on reliable electricity service. Ultimately, power was interrupted to approximately 7.5 million customers, for periods ranging from a few minutes to about nine hours. Immediate costs to the region’s economy were estimated at $2 billion. The August 10 outages were caused by multiple transmission line failures over a period of several hours. A single transmission line failure is a contingency that is routinely considered in reliability planning. However, the failure of several lines, combined with the day’s pattern of operation, caused the system to become unstable (which had not been anticipated by reliability planners), causing automatic controls to open the California Oregon Intertie, a major link between the northern (Pacific Northwest) and southern (California) portions of the western system. Opening the Intertie produced a power surge from the Pacific Northwest through the eastern portion of the grid toward Arizona and southern California, causing many lines to disconnect automatically and eventually fracturing the western grid into four separate electrical “islands.” Within each island, large blocks of customers lost power when their electricity demands suddenly exceeded available local generation. The situation was worst in the southern island where automatic controls disconnected over 90 generators to prevent them from being further damaged. Some of the larger units were out of service for several days. Source: J. Hauer and J. Dagle, 1999. Review of Recent Reliability Issues and System Events. Report PNNL-1 3150.

  3. Reliability Reality Check • Over the next five to ten years, electricity demand (25% +) will far outpace transmission capacity (increasing at a pace of only 4%). This short fall may lead to serious transmission congestion and reliability problems. • The benefits of increasing transmission capability to ensure reliability, even if this insurance is used only once to prevent a system-wide blackout, would be enormous and could far outweigh any potential gains from increased trade.

  4. Today’s Discussion Topics • Transmission History • US Transmission System • NU Transmission System • Transmission Major Projects • Mitigating Risk of Resource Constraints • Labor Constraints – The Quanta Deal • Material Constraints & Contracting Strategies • Additional Information – Lead Times/Source of Supply

  5. Transmission’s History • For nearly 100 years, US Power Industry was dominated by vertically integrated monopolies that generated, transmitted and distributed electric power in their own service territories • Initially, transmission was built by each utility for its own load purposes and to provide emergency support locally. • From the mid 1980s to 1994, approximately 23,000 miles of transmission capacity was added to the system. • From 1994 to 1998, total transmission capacity remained unchanged! • Factors contributing to construction lag included association with electric and magnetic fields (EMF), complexities of siting process, including required approvals from Federal, State, and local agencies. • During the 1990s, restructuring of the Power Business (under Order 888) began with generation, which was the easiest component to lend itself to free competition. Transmission and Distribution remained regulated.

  6. Transmission’s History, Cont’d Public Utilities Regulatory Policy Act of 1978 (PURPA) • During the 1970s, increased oil prices and higher inflation resulted in rising electricity production costs. • PURPA was drafted during this time to address the problem of America’s generation power plants operating at lower generation efficiencies. • PURPA created a special class of non-utility generators that constructed small power plants and co-generation facilities called Qualifying Facilities (QFs) • PURPA was not meant to start deregulation, but QFs began to flood the market.

  7. Transmission’s History, Cont’d Energy Policy Act of 1992 (EPAct) • EPAct of 1992 created a competitive wholesale market and the associated trading activities, ordering utilities to provide third-party access to their transmission systems. • During this time, utilities were still vertically integrated, owning generation. • EPAct enabled generation competitors (known as independent power producer or IPPs) to have transmission access. • Mid 1990s – IPPs began to search for new customers, as the regulator’s pricing policies required a lowering of prices paid by the utilities to the IPPs. • Access to transmission lines was critical for serving new customers who did not have their own lines. • This was a turning point in the history of transmission

  8. Transmission’s History, Cont’d FERC Order 888 • 1996 FERC Order 888 called for the “unbundling” of vertically integrated utilities into generation, transmission, and distribution activities • Order 888 reflected FERCs commitment to provide free access to the transmission grid • Order 888 had mixed results: • The generation sector saw an increase in generation facilities and many utilities sold off their generation assets; • Transmission sector suffered the consequences, with increased load becoming too high for the transmission lines to handle. • North American Electric Reliability Council (NERC) initiated transmission loading relief protocols to avoid damage to the system during peak usage.

  9. US Transmission System • Comprised of more than 150,000 circuit miles of extra high voltage (EHV 230kV and above) lines. • While the transmission system experienced significant growth during the 60s and 70s, the past few decades experienced dramatic decline or slowing of growth because of regulatory uncertainties, siting restrictions, and delays. • The electric transmission system is comprised of tens of thousands of electrical and mechanical devices and components that are interconnected. These components include electric generators, transmission lines (cable) and protection components such as circuit breakers and relays.

  10. The NU Transmission System Upgrading NU’s Transmission System requires a significant increase in capital investment. Major Projects: • Bethel / Norwalk Line • Middletown / Norwalk Line • Glenbrook Cables • Long Island Replacement Cable (LIRC) • New England East West Solution (NEEWS)

  11. Four Major Southwest Connecticut Transmission Projects – A $1.68 Billion Investment, About 2/3 Complete COMPLETE Bethel-Norwalk 345-kV underground & overhead $350 Million • 21 miles 345-kV (56% underground) • 10 miles 115-kV (100% underground) • Completed October 2006 at a cost of $335 million 50% of CT Load Middletown-Norwalk 345-kV underground & overhead $1,047 Million (NU share) Glenbrook Cables 115-kV underground $223 Million Long Island Cable 138-kV cross-sound $72 Million (NU share) • 69 miles 345-kV (35% underground) • 57 miles 115-kV (1% underground) • Joint project with United Illuminating • Projected in-service date: Second-half 2009 • 62% complete at 1/04/08 • 9 miles 115-kV underground • Projected in-service date: December 2008 • Under contract – construction under way, 69% complete at 1/04/08 • 11 miles 138-kV submarine cable • Joint project with LIPA • Projected in-service date: mid-2008 • 63% complete at 1/04/08

  12. 2008-2012 Transmission Capital Expenditures Increase By Over 20% From Previous Five-Year Program Historic Forecast $1,816 Million Up To $3.0 Billion $1.1 billion of additional forecasted projects Successful completion of SWCT projects Springfield 115-kV Cables project ramping up $560 million of major SWCT projects in 2008-2012 forecast period; $1.68 billion in total Springfield 115-kV Cables projects estimated at $350 million during the 2008-2012 forecast period In Millions NEEWS projects ramping up NEEWS projects estimated at $1 billion during the 2008-2012 forecast period

  13. Historical Transmission Capital Expenditures

  14. Projected Transmission Capital Expenditures $740-$750 $706 $663 $506 $432 $ Millions

  15. NEEWS Project Schedules - Forecast Project Total $1 Billion

  16. PSNH WMECO CL&P $'s Millions $'s Millions $'s Millions 115-kV Reliability Program 25.0 115-kV Reliability Program 15.0 115-kV Reliability Program 30.0 Fiber Optic Communications 15.0 Fiber Optic Communications 10.0 Fiber Optic Communications 20.0 Scobie 3rd Autotransformer 12.4 Ludlow Transformer Repl. 12.0 310/368 Line Split 29.0 White Mountain Region Upgrades 14.9 Berkshire 2nd Autotransformer 9.9 Eastern Connecticut Reliability 190.5 Monadnock Region Upgrades 26.6 Barbour Hill Autotransformer 10.7 Aging Equipment & NERC Compliance Upgrades (100% Nashua Area Solution 14.0 Aging Equipment & NERC in RSP) 64.5 Compliance Upgrades (24% in Deerfield & Gosling Autos 52.7 RSP) 91.4 Numerous Projects Addressing Maintenance, Reliability & Aging Equipment & NERC Numerous Projects Addressing Load Growth (46% in RSP) Compliance Upgrades (64% in 23.5 Maintenance, Reliability & RSP) 163.8 Total WMECO Other Projects 134.9 Load Growth (55% in RSP) 202.9 Numerous Projects Addressing Total CL&P Other Projects 574.5 Maintenance, Reliability & Load Growth (42% in RSP) 76.9 Total PSNH Other Projects 401.3 Other Forecasted Projects Total $1.1 Billion $1.1 Billion

  17. Mitigating Resource Constraints Cross-Functional Team Approach (Transmission Group, Purchasing, Legal) • Construction Expertise – experienced, proven firm, track record with NU • Burns & McDonnell (Transmission, including MN, Glenbrook, NEEWS) • Master Service Agreement Signed 8/2005, re-negotiated 2008 for another 5 years to 2013. • Labor – partnered with the largest U.S. transmission constructor • Contract signed with Quanta for $750 million in transmission construction services • Provides for 70% of labor over the next six years • Material – established worldwide network to procure key components • Transformers, poles, underground cables and control systems

  18. The Quanta Contract • Terms • 1/1/08 to 12/31/13 (six years) plus work awarded but not completed past 12/31/13 • Commitments • Northeast Utilities Company (NUSCO) to award $ 750 million of work to any Quanta company (PAR, MJ Electric, Dashiell, etc) during contract term. Work awarded may be associated with any NUSCO Company or function (CL&P, WMECO, PSNH, Transmission, Distribution, etc.). • Quanta guarantees workforce to execute $ 750 million of work during contract term. All work offered by NU but refused by Quanta shall be treated as if it was work awarded. • Work can be awarded as T&M, fixed price (lump sum) or T&M with negotiated target. • Opt-out Clause • If NUSCO fails to award $ 750 million of work during contract period (or elects to cancel contract), there is a fee schedule that begins at $ 5 million and is reduced proportionate to work awarded and goes to zero when $ 500 million is awarded. • The opt-out clause is reciprocal for Quanta’s commitment.

  19. Transmission Equipment Procurement Strategy Team Initiated: August 2007 Members: Purchasing, Transmission Group, Legal

  20. Goals • Identify and prioritize equipment requiring procurement strategies • Identify tasks and sub-teams • Begin negotiations for new contracts, revisions to contracts and Master Services Agreements

  21. Raw Material Index

  22. Raw Material Index

  23. Raw Material Index

  24. Identify Equipment • Equipment Priority: • The following equipment priorities were established: • Equipment RFP Date Status • Transformers in process NU - final negotiations • Underground Cable in process NU – final negotiations • Poles/Towers 4/25/2008 B&M • Overhead Cable 7/2/2008 B&M • Hardware 10/2/2008 B&M • Fiber Optic Cable TBD B&M • GIS Equipment TBD NU • Breakers 6/22/2008 NU • CCVT’s TBD NU • Relays TBD NU • Control Cables TBD B&M

  25. Status Update • Transformers • Issued 3rd amendment for 3 single phase transformers for Ludlow S/S – completed 2/26/08 • Continue to gather information and negotiate with Areva to finalize amendment for additional transformers for 2009 – 2013 • Lessons Learned • Difficult to gather information regarding total transformer requirements and schedules • Original contract for transformers not flexible to use as blanket order – in process of modifying contract structure • Underground Cable • Final negotiations in process with vendor • Lessons Learned • Coordination of non-NEEWS requirements (e.g. UG requirements for Norwalk Harbor) • Poles • Reviewing scope of work document and vendor list • Burns & McDonnell is preparing to issue RFP by 4/25/08 • Master Service Agreements • Final negotiations completed with Siemens

  26. Transformer Contracting Strategy • Purchasing/Transmission finalizing a 5-year agreement with Areva; • Value per transformer is $2M • Working to obtain quantity data (# of transformers required) from Transmission Projects Group • Typical lead time for transformers is out 24 months. • Deal to include 6 production slots yearly; guarantee by vendor to produce within 18 months vs 24 months. • Pricing Structure • Firm price for given period of time; • Formula based pricing • Base firm with index floating for copper, core steel, oil (transformer), adjustments for currency.

  27. Underground Cable Strategy • Contracting strategy to select one player in the market place to provide 115kV and 345 kV cable. • Long term agreement ranging 3-5 years with preferred treatment for manufacturing slots • Price of cable would be fixed, with fluctuation allowances for metals and currency. • If a domestic supplier c/b identified, • Currency issue disappears • Transportation risk goes away

  28. Master Services Agreements • Create a standard set of terms and conditions for equipment & services • Identify vendors to start immediate negotiations SupplierStatusCompletion Date • Siemens complete 3/31/2008 • Areva start 4/15/2008 t/b/d • ABB start 6/1/2008 t/b/d

  29. Additional Information Lead Time Reports Sources of Supply

  30. Transmission Lead Time Report

  31. Transmission Lead Time Report, Details

  32. Transmission Lead Time Report, Details

  33. Transmission Lead Time Report, Details

  34. Transmission Lead Time Report, Details

  35. Established Worldwide Access to Key Suppliers GC Scada Cabinet from GE Harris in Canada M-N Overhead Ground Wire from Intral in Canada GC Cable from Prysmian in Finland M-N GIS from Mitsubishi in Japan GC DFR from Qualitrol in Ireland M-N Shunt Reactors from Siemens in Germany M-N 115-kV Cable from Prysmian in Italy GC Breakers & Switches from ABB Power in U.S. M-N 345-kV Breakers from HICO in South Korea M-N 345-kV Cable from Silec in France M-N Steel Poles from Thomas & Betts in U.S. B-N Underground Cables from VISCAS in Japan M-N Autotransformers & Transformers from Areva in Brazil

  36. Numerous Firms Support NU Transmission’s Capital Program Engineering Firms $90M • American Electrical Test • Black & Veatch Corporation • Burns & McDonnell Engineering • Commonwealth Associates, Inc. • Engineering & Environmental Consulting, LLC • L. E. Myers Co. (an MYR Group company) • Power Engineers, Inc. • Sargent & Lundy, LLC • TRC Companies, Inc. Construction $1.3B • Bond Brothers • E. S. Boulos (an NU company) • Hawkeye • Henkels & McCoy • KemsCo Equipment Co. • Mass. Electric Construction Co. (A Kiewit company) • McPhee • MJ Electric (Quanta) • New River Electrical Corp. • PAR Electrical Contractors, Inc. (Quanta) • S. M. Electric Co. • Thiro USA • W. A. Chester Poles $75M • PennSummitt Tubular LLC • Sabre Tubular Structures • TransAmerican Power Products • Thomas & Betts • Valmont Cables & Wire $375M • ABB • Alcan • LS Cable • Nehring • Nexans • Okonite • Pirelli/Prysmian • Silec/General Cable/Sagem • Southwire • Sural USA • Viscas/Fujikura Substations $300M • ABB • Areva • BTW • Crompton Greaves / Pauwels Group • General Electric • HICO • Mitsubishi • Siemens

  37. Acknowledgements • Muraleedharan Gopinathan, Director (Interim) Convex Operations • Allen Schindler, Director Enterprise Planning & Development • Kyle Alldredge, Manager Corporate Purchasing Corporate Purchasing Senior Staff • David Hyatt • David Evans • Mary Emerson • Lisa Smith

More Related