rmel electric energy issue 1 2011

spotlight on critical energy issues

ISSUE 1 / 2011www.rMel.org

spotlight on critical energy issues

electric

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Departments 6 Message from the President

8 2011 Spring Electric Energy Conference

40 RMEL Membership Listings

49 2011 Calendar of Events

50 Index to Advertisers

42 WECC’s Synchrophasor Program is Boosting Grid Reliabilityby Deston S. Nokes, Independent Consultant, Western Electricity Coordinating Council

46 Technology Options: You Have Themby Samuel Scupham, Energy Consultant, Black & Veatch Corp.

Features 10 Distributed Electricity Energy

Storage: An Emerging Modelby Doug Staker, Vice President, Business Development, Demand Energy Networks

18 Quantitative Easing as Alchemy: Why Electric and Gas Utilities Should Hedge Their Capital Construction Risk Todayby Mark Bridgers, Senior Consultant, Electric Utilities, Continuum Advisory Group

28 Winds of Changeby Peter Castles, Public Involvement Manager, HDR, Inc. and Emily Siedschlag, Public Involvement Specialist, HDR, Inc.

36 A Decade of Power Plant Simulation at KCP&L’s La Cygne Stationby Kenneth Luebbert, P.E., Principal Performance Engineer, Kansas City Power & Light

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Electric Energy is the official magazine of rmel. Published three times a year, the publication dis-cusses critical issues in the electric energy industry. subscribe to Electric Energy by contacting rmel. editorial content and feedback can also be directed to rmel. advertising in the magazine supports rmel education programs and activities. For advertising opportunities, please contact deborah Juris from Wiesnermedia, llC at (303) 883-4159.

www.RMEL.orgPublished spring 2011

president’s message

RMEL—An Industry ResourceNetworking and Education to Face Today’s Challenges and Opportunities

as president of rmeL and president of Yampa vaLLeY Electric Association, Inc., I’ve had the chance to speak with many utility industry leaders about what’s keeping them up at night. Even among the diverse utility types, we are faced with many of the same issues.

These concerns were discussed at RMEL’s 2010 Fall Convention last September. The discussion included topics and questions around the public, public policy, politics and the media; environmental, security and reliability regulations; renewables and transmission; economy and finance; and future strategy – workforce and utility management.

RMEL leadership has weaved forums, presentations and discussions about those vital issues identified into every facet of the association. Whether you’re asking how your utility is going to build all the transmission necessary for new renewables or where you’re going to find qualified employees for new projects – RMEL will help you find an answer.

In fact, the entire framework of RMEL has recently evolved to enable all of us to quickly find answers. RMEL Education Sections for Generation, Transmis-sion, Distribution, Safety and Management were created so people like you and I can identify our interests and

RMEL can send relevant information to us. Answers and solutions are really what we’re all after, and that’s the focus of the

optimistic tone and technical content of this issue of Electric Energy magazine. Regardless of what we face with politics, public and media misconception or massive regulation increases, if we stick to what we know – technology and engineering – we will drive the industry in a positive direction.

Be proud of your industry, and get involved in RMEL. Write an article for this magazine, send your company’s news to [email protected], submit your ideas on the Education Hotline at www.RMEL.org and present at and/or attend an event. This is the time to get active.

I look forward to meeting you at RMEL events in 2011!

Larry CoviLLo

2010-2011 President, RMEL,

President, Yampa Valley

Electric Association, Inc.

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2011 spring conference

If you are managing people or projects, engineering, planning or operating systems in the electric utility industry, this conference is for you. The Spring Manage-

ment, Engineering and Operations Conference has been a tradition since RMEL’s early beginnings. Known for providing outstanding continuing education and networking opportunities, this conference is a must attend event for engineering, operations and management personnel in the electric energy industry. With 30 presentations, this confer-ence covers issues in generation, transmission, distribution, safety, customer service, human resources and other manage-ment topics. The timely topics and breakout structure of the conference allow attendees to customize their education experience to focus on presentations and resources that address their needs. Ample time is also provided to network with industry peers and visit with exhibitors.

The educational program will begin on Monday with a general session focused on the challenges and opportunities for electric utilities that are outlined in the FCC’s National Broad-band Plan. Tom Magee, Partner, Keller and Heckman LLP, will discuss Smart Grid development, demand side management of electricity consumption, RUS loans to electric co-ops and a host

of proposed regulations regarding pole attachments.Doug Buresh, Sr. VP, Planning and Operations, Indiana

Municipal Power Agency, will tackle the issue of politics versus reality when it comes to electric generation during the second general session. He will address the technological challenges and financial implications of meeting our future electricity needs under a variety of legislative futures while focusing on some of the biggest questions utilities are asking right now.

Another big issue for the electric energy industry – workforce challenges – will be in the spotlight during Tuesday morning’s general session. Dick Blais is the Director, Preparation for Tomorrow, Southern Regional Educational Board (SREB). SREB is an education program intended to develop the nation’s future workforce, which is leading a 12 state consortium to develop and implement in each state a high school program of four courses; one for each grade 9-12 in career areas that are important to the nation’s future workforce needs.

Along with these general session presentations, the event features educational breakout sessions in three tracks: generation; transmission and distribution; and management.

The slate of generation track presentations will guide attendees through topics like unintended consequences

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w w w . r m e l . o r g 9

of wind generation, recent gas turbine advancements and steam turbine retrofit potential. Pam Graika, General Manager, Regional Operations, Xcel Energy, is one of the speakers in this track and will share strategies Xcel is using to deal with the planning and retirement of a plant, repowering the grid, transitioning to natural gas, impacts on operations and facilities, environmental issues and the effects on workforce.

Look forward to details on automated demand response, transmission and distribution line inspection and patrols and renewable firming with hydrogen in the transmission and distribution track. A presentation from JD Linscott, Sr. Engineer, T&D Design, Lincoln Electric System, and Theresa Baker, Public Involvement Specialist, HDR, Inc., will cover LES’ strategic approach to turn standard public involvement into authentic public engagement when the utility was faced with building transmission in a highly dense and developed urban area. The conclusion of this effort resulted in 368 public comments and 547 individual project participants, and the Central Lincoln Reliability Project was approved as a 63% underground and 37% overhead line with a unanimous vote from the LES Board of Directors.

The third track of presentations, focused on management, covers the gamut of high-level challenges faced by managers throughout the utility industry, including preparing for plug-in vehicle load, social media risks and rewards, a 30,000 ft. view of new arc flash standards and distributed energy storage. Elizabeth Firkins, Lead Superintendant, T&D Operations, Unisource, and Terry Nay, Corporate Safety Directory, Unisource, will provide an overview of a successful process implementation and highlight some key strategies for behavior based safety (BBS) processes, which have proven to be a very successful tool in significantly reducing injury rates.

This event offers something for every person in the utility

industry, whether you need to make the right contacts or find the right answers. Utilities of all types of ownership participate including IOU, G&T, municipal, cooperative, and others. Vendors of all types are valued participants in the conference and community dialogue to improve operations and enhance customer service.

GOLf OUTING TO BENEfIT RMEL fOUNDATION SCHOLARSHIPS

Enjoy a golf outing at Highland Meadows Golf Course on May 15th. The format will be a four-person scramble and proceeds will benefit the RMEL Foundation scholarship program.

GUESTS AND SPOUSES ARE WELCOMEBring your guest to the 2011 Spring Management,

Engineering and Operations Conference. If your guest registers for the full conference, they are registered for dinner and the Champions Receptions on Sunday and Monday. If they register for an individual day, they will be registered for dinner and the Champions Reception for that day only. Guest registration prices simply cover the cost of dinner.

All attendees will receive a continuing education certificate. The certificate provides professional development hours based on participation. For more information and to register for the Spring Management, Engineering and Operations Conference, go to www.RMEL.org or call (303) 865-5544.


Distributed Electricity Energy Storage:

An EmErging modElBy

Doug Staker,

Vice President,

Business

Development,

Demand

Energy

Networks

w w w . r m e l . o r g 11

he electricity supply system is a good example of a just-in-time inventory model. Supply must react to a change in demand with only a marginal buffer

to absorb variations. Like any inventory system, the supply chain must be built to handle peak demand, which leaves the system underutilized during lower usage periods. Generation, transmission and distribu-tion must each be sized to handle the peak seasonal requirements. The ability to increase the capacity of any of the three segments of the supply chain is chal-lenging, and in some cases is restricted by public senti-ment or law. Failure for supply to match demand causes system stability issues that result in voltage variation or even blackouts if the imbalance reaches extremes.

Of the electric, gas and water utilities, only the electric systems operate without storage as a resource in the daily operation model. Gas and water utilities have the advantage of storing their commodity during low usage periods to meet the peak demand of the day or season. Electricity storage systems have been deployed and operated for some time but at a small scale of the energy supply system. An emerging focus on electricity storage solutions is driven mainly from the issues associated with renewable intermittency and system stability. Electricity storage has the ability to transform a just-in-time inven-tory system into a more managed inventory model with options to meet the dynamics of the daily energy cycle.

The electric energy market is in a time of dynamic change. Load growth will increase as the economy rebounds. The ability to add new generation resources is a challenge from both capital and regulatory perspec-tives. Building new transmission systems is challenged by environmental reaction, regulatory uncertainty and the public’s general sentiment of “not in my backyard.” Renewable energy goals are testing the system’s flexibility to allow for intermittent resources to become part of the supply chain. Distributed solar generation on both commercial and residential buildings is gaining momentum and is drawing the attention of distribu-tion system operators on how best to integrate these intermittent resources while maintaining local stability. Wind energy production that tends to occur overnight while the load diminishes is driving wholesale market pricing negative to get the renewable energy credits produced to meet trading demand. All of these issues are converging on utility operations and making it a real challenge to move forward.

Energy storage has two key areas of focus that require two different modes of operation. A market for ancil-lary services has emerged where storage systems react

on 15-minute cycles to either store or release energy to help balance system stability. In the second model, energy is stored during off-peak periods and released to match demand during peak periods. While both are important emerging solutions, this article is focused on peak shaving and the value proposition around it—in particular, the benefits of distributed energy storage.

A next generation of demand response, DR 2.0, is coming to the market that involves managing both load and generation to better optimize the capacity of the supply chain (generation, transmission and distribu-tion). Distributed energy storage offers a new tool in the mix to help offset the challenges of building the supply chain to meet the peak while allowing renewable energy to become a scheduled resource that system operators can optimize and use to improve the overall value of grid infrastructure. The ability to move energy through the supply chain during off-peak periods and then releasing that energy during high demand will improve the utilization factor of the system without needing to grow capacity. Stored energy released locally can create a noninvasive, passive solution to a demand response event where from the supply side it looks like the event occurred but from users’ perspective, they have not reduced load but supplied part of their load with energy that was transported overnight and released during the peak. Participation rates could be 100 percent since the end consumer is not interrupted. Customer participation has traditionally been the challenge in most DR programs.

Electricity Storage Today Proven storage solutions are in use today. Pumped

hydroenergy storage systems were developed in the 1890s in Italy and Switzerland. More than 90 GW of pumped hydro are installed today worldwide and new systems are being developed. The key challenge in developing new pumped hydro storage systems is to find the right site that can supply the land necessary for both reservoirs as well as close proximity to the transmission system for delivery. Compressed air is a similar emerging solution that uses geologic features (salt domes or similar caverns) where air is stored and released to assist gas turbine production. Again, this solution is bound by the geographical parameters required for operation and the associated siting, permitting and public support challenges.

Kinetic energy storage such as flywheels is being developed to support the ancillary services model for energy storage. These systems are in use today to support


data centers in the form of uninterruptible power supply systems as they convert to standby generation during a grid outage. They are now being applied to the ancillary services market for load balancing.

Battery-based energy storage systems have been proven and deployed across a wide variety of chemis-tries and technologies. Sodium sulfur, lead acid, nickel metal hydride and lithium ion solutions have been deployed in both ancillary services and peak shaving solutions. Flow batteries, which use two chemical reac-tants mixed across a fuel cell type of reactive chamber, have also been deployed in various grid systems to support system stability issues. Research and develop-ment in energy storage is on the rise. New chemistries and solutions are finding their way to markets that need a mixture of solutions to meet the operational challenges presented with growing loads.

Electricity Storage models Most current electricity storage is large-scale and

centralized near the generation source to support base load and ancillary services. A new model that distributes the stored energy and matches it more closely to local load requirements is emerging.

Distributing storage at the load centers allows the entire delivery chain to be optimized. The concept of caching content is well-established in video and Internet network system designs. Content like on-demand video is streamed to local set-top boxes during off-peak periods. If on-demand content was required to be delivered in real time through the network system, the distribution system would experience congestion or require that it be overbuilt to manage the peak traffic flow. Internet providers cache content and popular

web pages in data centers that are distributed globally. If Google required the system to draw content from a single corporate data center, the response time would be impacted and the effectiveness of the Internet impaired. These systems have developed the use of storage in a way to balance the system operation and optimize the utiliza-tion factor of every component in the delivery system.

So how can distributed energy storage help optimize the supply chain? Starting at the generation system, there is a difference in the efficiency of base load generators and generation dedicated to peak or variable loading. Heat rate ranges for different types of genera-tion can vary from 6000 to 8000 BTUs per kWh for the most efficient base load generators versus 10,000 to 12,000 BTUs per kWh for variable output peak generators. Granted, heat rate is not the only measure for efficiency and the dollar per BTU differential for fuel types plays into the total cost, but power plants that can operate at high-capacity factors run more effi-ciently than plants that must adjust to variable output to meet peak demands. If distributed energy storage could create more base load during off-peak periods and create local capacity to shave the peak demand, the overall generation efficiency would improve as well as the blended capacity factor for a regional fleet of generation. Better utilization of the existing fleet can avoid or reduce the additional flexible capacity needed to meet load growth.

One of the constraints that occur in the electric supply system is in transmission. Generation is often located near the energy source with access to transmission and water for cooling. Many transmission corridors have experienced load growth that has not been met with expanded capability. The ability for regional transmis-sion organizations and Independent System Operators

Distributed Electricity Energy Storage

w w w . r m e l . o r g 13

to build new transmission is challenging at best. At costs between $1 million to $4 million per mile, it may be challenging to get regulatory approval but is not nearly as difficult as establishing right-of-way access and public approval. Building transmission is easy as long as it is “in someone else’s backyard.” The ability to create Dispatchable Load™ with distributed storage and move off-peak energy through the transmission system can relieve peak congestion and improve the utilization factor of existing infrastructure.

The integration of wind power has similar challenges and can be optimized with distributed storage. In Japan, energy storage has been collocated with generation to support the intermittent nature of renewable energy. However, if transmission is a constraining factor, moving wind resources through the system during the peak may be moot. In some regions, wind tends to produce at night when demand is low and base generation is meeting the demand. In the Pacific Northwest during the spring, the Columbia Basin Hydro Power System has a requirement that maintains minimum stream flows to assist in salmon

and steelhead fish migration. This requirement is further constricted by dissolved gas levels that can be detrimental to the juvenile fish as they migrate to the Pacific Ocean. To keep the gas level in compliance, water cannot be released through the spillway and is passed through the turbines. The ability for the hydro system to be able to turn down its generation levels may be limited, and access to the grid becomes competitive.

The Renewable Energy Certificate market allows wind producers to earn credits only when power is put onto the grid. During off-peak periods, wind generators

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may pay other generation resources to shut down to create a production credit. In the spring of 2010, the cost of getting other resources to go offline went as high as 10 KWH. Wind producers paid to put energy onto the grid to earn the REC. Wind production in the region is planned to expand from its current level of 3000 MW and the ability of the hydro system to firm the added capacity will diminish. Distributed energy storage can effectively time-shift load by creating load when wind production is in excess and correlating wind production with peak demand.

The last link in the energy supply system is the distribution system. As the utility market went through various levels of deregulation, the resolution about who would

Distributed Electricity Energy Storage

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own and operate the distribution system was unclear. As utilities waited for clarification on the rules of a “wires only” ownership model, some system enhancements and maintenance updates fell behind the load growth and many distribution assets are undersized for the load they carry today. During the past 20 years, while load has continued to grow, infrastructure investment nationally in the United States has been reduced. As a result, the infrastructure that was designed in the past is not necessarily designed to meet the load of today. Substation transformers may be overloaded in peak seasons; conductors may be undersized for the feeder circuits they support, increasing line losses; and distribu-tion transformers may be undersized for the connected load they serve. Placing storage at the load centers can reduce peak loading and optimize stressed feeder circuits to a level within operational guidelines without replacing the existing distribution equipment.

One of the key issues driving the interest in energy storage is the deploy-ment of distributed photovoltaic solar generation. While distributed solar can reduce the load on a feeder or substation, a problem occurs when a cloud comes by and shades a neighbor-hood. Suddenly, distribution needs to make up for the loss of generation. As incentives continue to increase the amount of solar connected on a distribution feeder, system stability starts to become problematic. Distributed storage collocated at distribution transformers or even as part of the PV solar generation system can alleviate the intermittent chal-lenges. One model of connecting PV directly to a battery system with the capability of time-shifting the produc-tion to coincide with peak demand is being studied for solar as possible demand-side management systems. In the Northeast, an urban investor-owned utility is evaluating the use of

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direct benefits and nine indirect benefits to applying storage in solving power, capacity and energy challenges in the supply chain. The value varies between $500 and $7500 per KW for a system that has a 10-year operational life. This report is one of the most thorough compila-tions about energy storage and should be read by all involved in the electricity supply business. It is available online at http://prod.sandia.gov/techlib/access-control.cgi/2010/100815.pdf.

The electricity supply chain will continue to evolve and will require all types of resources to be deployed. Distributed energy storage is becoming a recognized component that can unlock tremendous value of the under-used existing integrated system assets. The ability to be strategic about where storage is located and solve specific system and load issues allows a fleet of these systems to be highly optimized and increases the aggregate value of the solution. Research and development will continue to drive innovations, and the cost of electricity energy storage will continue to decline and reach economic levels that will allow these systems to become commonplace in the daily operation of the next generation electricity supply system.

Doug Staker has spent the past 25 years in the electric power industry. His career started in the hydroelectric sector and he spent 20 years with Itron, a world leader in Smart Grid technology. He is currently the vice president of business development at Demand Energy Networks, a company focused on developing distributed energy storage systems. Contact Staker at [email protected].

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storage connected directly with solar to alleviate connected peak load during summer air conditioning season. The IOU is looking to eliminate connected peak load, and the intermittent nature of solar without storage will not qualify for the DSM program since it would have to make up the load as clouds reduced the solar output.

Distributed energy storage offers a new tool in the management of the electricity supply chain—but at what cost? It may be better to first understand its value and how the value proposition applies to various segments of the supply chain. One of the best research reports on the value of energy storage was produced by Sandia Labs. Co-authors Jim Eyer and Garth Corey have spent more than 10 years looking at how storage can be used to optimize the electricity supply chain. They have looked at 17

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Quantitative Easing as Alchemy:

Why Electric and Gas Utilities Should Hedge Their Capital Construction Risk Today

Executive SummaryFearing continued economic stagnation and high unemployment, the Federal Reserve recently announced a policy of “quantitative easing” as a panacea for these ills. There is broad diversity of opinion about whether using $600 billion to purchase bonds will work, even among the Federal Reserve System’s Board of Governors.

“ [Quantitative easing] won’t push inflation to ‘super ordinary’ levels.” -Ben Bernanke, Federal Reserve System Board of Governors Chairman, Nov. 3, 2010

“ The Federal Reserve is not a repair shop for broken fiscal, trade or regulatory policies. Given what ails us, additional monetary policy measures are, at best, poor substitutes for more powerful pro-growth policies.” -Kevin Warsh, Federal Reserve System Board of Governors, Nov. 8, 2010

Many electric and gas utility leaders wonder how this policy will affect their ability to construct capital assets environments. What is certain is that inflation in the United States will increase, the dollar will depreciate in value and dramatic commodity price increases will take place. Unprepared utilities will be punished by these environmental changes in 2012 and beyond.

w w w . r m e l . o r g 19

Long-Term Credit MarketsAdjustments to the federal funds rate tend to have low impact on the cost of longer-term forms of credit like Treasury and corporate

bonds. The interest rate or cost for these credit instruments is more directly tied to longer-term economic risks faced by both the borrower and lender. Exhibit 1.2 presents the coupon rates for 1-year, 10-year and 30-year Treasury bonds over the past 40 years. Both 10-year and 30-year bonds are at the low end of their historical range while 1-year Treasury bills are at unprecedented low rates.

Federal Reserve SystemThe Federal Reserve controls the interbank borrowing or federal funds rate and pushed this rate down to essentially 0

percent. This rate is the cost for reserve system member banks to borrow funds and in theory lend these amounts to indi-viduals and businesses. Exhibit 1.1 displays a 40-year period covering seven recessions and comparing the federal funds rate to one measure of inflation (the consumer price index) and the U.S. unemployment rate. The federal funds rate is much lower than it has ever been during this 40-year period, and both inflation and unemployment are at their historical extremes.

A low federal funds rate traditionally boosts economic growth but in this case, it has not sparked a higher growth rate or reduced unemployment. This rate indirectly affects interest rates that utilities or large industrial firms pay for financing. It is, however, related. When the federal funds rate goes down, the interest rates these firms will pay for various forms of credit can fall. The Federal Reserve effectively steps on the brake or accelerator for the economy with this tool.

ExH

IBIT

1.1

40-Year Comparison of Recessionary Periods to Federal Funds, Inflation (CPI) and Unemployment Rates

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

1970 1971

1972

1973

1974

1975

1976

1977

1978

1979

1980 1981

1982

1983

1984

1985

1986

1987

1988

1989

1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

U.S. leaves gold standard Paul Volcker takes office Alan Greenspan takes office Ben Bernake takes office

CPIFedFundRateUnemployment

Source: Department of Labor, Federal Reserve, compiled by Mark Bridgers

ExH

IBIT

1.2

1-Year, 10-Year and 30-Year Bond Coupon Rates

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1970 1971

1972

1973

1974

1975

1976

1977

1978

1979

1980 1981

1982

1983

1984

1985

1986

1987

1988

1989

1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1-Yr Treasury10-Yr Treasury30-Yr Treasury

Source: Federal Reserve, compiled by Mark Bridgers


Quantitative Easing as Alchemy? Given that there is little more that the Federal Reserve

can do with interbank borrowing rates, it has moved to a policy of quantitative easing. The $600 billion anticipated to implement this policy is created either by crediting the accounts of banks and brokerages from which it buys securi-ties or printing currency through the Treasury. The net effect of either approach is the same: placing more currency into circulation. This is manufactured demand for bonds and an increase in the money supply. The first round of $75 billion was undertaken in November of 2010, a second round of the same amount occurred in December of 2010 and subsequent monthly expenditures are expected through June 2011. The result will be a more direct lowering of the long-term rates for bonds as higher rates are not necessary any longer to attract the dollar investment. The hope is that

A good catalyst needs to absorb the reactant molecules strongly

enough for them to react, but not so strongly that the product

molecules stick more or less permanently to the surface.

BaCl2 (aq) + Na2SO4 (aq) 2 NaCl (aq) + BaSO4(s)

these efforts will get the economy growing at a higher rate and reduce the unemployment rate.

What is taking place is similar to a chemistry experi-ment. The Federal Reserve is going to pour a catalyst (the $600 billion) into a liquid (the economy) and see what happens. We already know that this catalyst will have a chemical reaction; we just don’t know if the $600 billion is enough catalyst to cause an observable or visual reaction—higher economic growth rates and more jobs.

While the $600 billion is applied, there will be vigilant observation of the economy to see what happens. If little is observed over some time period, a decision about addi-tional expenditures and pouring more catalyst into the economy will be made. The problem with this approach is no one can really know how much catalyst is necessary to have a visual reaction nor how long to wait to observe

this reaction. Therefore, it is more likely we will get the mix wrong as there are many more wrong answers than there are right ones. If the Federal Reserve is wrong on the too much cata-lyst side, we will experience high inflation and if we are very wrong, potentially hyperinflation. There are nearly 20 recent examples of hyperin-flation over the past 50 years around the globe described at Wikipedia:Hyperinflation.1

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ExH

IBIT

1.3

Value of the U.S. Dollar vs. Euro

10/1

/10

10/3

/10

10/5

/10

10/7

/10

10/9

/10

10/1

1/10

10/1

3/10

10/1

5/10

10/1

7/10

10/1

9/10

10/2

1/10

10/2

3/10

10/2

5/10

10/2

7/10

10/2

9/10

10/3

1/10

11/2

/10

11/4

/10

11/6

/10

11/8

/10

11/1

0/10

11/1

2/10

11/1

4/10

11/1

6/10

11/1

8/10

11/2

0/10

11/2

2/10

11/2

4/10

11/2

6/10

11/2

8/10

11/3

0/10

12/2

/10

12/4

/10

12/6

/10

12/8

/10

12/1

0/10

12/1

2/10

12/1

4/10

12/1

6/10

12/1

8/10

12/2

0/10

12/2

2/10

12/2

4/10

12/2

6/10

12/2

8/10

12/3

0/10

1 U.S

. DOL

LAR

TO EU

RO

1.24

1.26

1.28

1.30

1.32

1.34

1.36

1.38

1.40

1.42

1.44

Source: Federal Reserve, compiled by Mark Bridgers

What Will It Mean to a Utility and Its Capital Construction Program?

The bond markets are already anticipating higher inflation rates over the long term. Recent rises in oil and other commodity prices are precursors to a more competitive and volatile environ-ment. Devaluation of the U.S. dollar has already started and is impacting some commodity prices. Uncertainties primarily revolve around the speed of economic recovery and growth and employment rates in the United States.

Utilities of all types will face three certainties: increasing inflation in the United States, devaluation of the dollar outside of the United States and increasing construction commodity prices. All three will punish unprepared utilities operating in what is likely to be a slow-growth U.S. economy.

Inflationary Pressure IncreasingThe likelihood of the United States experiencing hyperinfla-

tion, defined by the International Accounting Standards Board as greater than 25 percent annually, is low. The likelihood the United States will experience inflation at a rate higher than our recent history is very high. Roughly speaking, the United States has experienced annual inflation of less than 5 percent for essentially the last 30 years (Exhibit 1.1). In the late 1970s and early 1980s, the United States experienced much higher inflation than this level, and for several periods it approached or exceeded 10 percent. From a current economic standpoint, all of the factors that are likely to cause inflation currently exist and if they are not unwound in the next 12 to 36 months, the United States will enter a period of higher inflation. In point of fact, the quantitative easing policy is intended to create inflationary pressure to stave off the threat of economic stagnation defined as a very low growth rate of 1 percent or less. The policy-makers at the Federal Reserve currently fear stagnation to a greater degree than they see future inflation as problematic.

One example of inflationary expectations is found in a recent auction of inflation-adjusted securities sold at an anticipated negative return. This negative return is an overpayment for the face value of the security, like buying a $10 bill for $11. The buyers of these securities anticipate that the inflation adjustment mechanism of these bonds will be used in the future and result in higher interest payments. Essentially, investors expect to earn the negative return back with these higher interest payments over time. If inflation at higher rates does not come to pass, investors will simply have paid too much for these bonds, again like buying a $10 bill for $11.

“The Treasury sold $10 billion of five-year Treasury Infla-tion Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in sparking inflation.”2

U.S. Dollar DevaluationTransactions or purchases denominated in dollars for

goods or services created outside of the United States will result in the makers of these goods or services demanding more dollars for their efforts as the value of the dollar falls in relative terms to their home currency. Exhibit 1.3 displays the value of the U.S. dollar as measured in euros. Since the implementation of the quantitative easing policy on Nov. 3, 2010, the U.S. currency has lost value in comparison to the euro. The British pound sterling has followed a similar trajectory. Closer to home, the Brazilian real and Canadian dollar are also appreciating against the U.S. dollar, eroding the purchasing power of the U.S. currency. Overall, devalua-tion of the dollar makes U.S. exports more cost-competitive and attractive as well as making imports to the United States more expensive. Many construction commodities, particularly oil, petrochemical products and copper, are imported or internationally sourced through transactions denominated in dollars.

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ExH

IBIT

1.4

Commodity Pricing Index

30.0

70.0

110.0

150.0

190.0

230.0

270.0

Jan-

70Jan-

71Jan-

72Jan-

73Jan-

74Jan-

75Jan-

76Jan-

77Jan-

78Jan-

79Jan-

80Jan-

81Jan-

82Jan-

83Jan-

84Jan-

85Jan-

86Jan-

87Jan-

88Jan-

89Jan-

90Jan-

91Jan-

92Jan-

93Jan-

94Jan-

95Jan-

96Jan-

97Jan-

98Jan-

99Jan-

00Jan-

01Jan-

02Jan-

03Jan-

04Jan-

05Jan-

06Jan-

07Jan-

08Jan-

09Jan-

10

INDE

X BA

SE O

F 100

.0 IN

1982

+76% Nonferrous

All Construction MaterialsSteel ProductsNonferrous (Copper, etc.)

-3% Steel

+82% Steel

Source: U.S. Department of Labor, Bureau of Labor & Statistics, compiled by Mark Bridgers

Commodity Price IncreasesThe quantitative easing policy will have an immediate

effect on the cost of construction commodities. The price of oil, which has risen to nearly $100 per barrel since November 2010 in part due to the change and anticipated change in the value of the dollar, is one example. The Economist on Jan. 15, 2011, pondered, “Given that the global recovery is at a very early stage, do high prices indicate that the world faces significant supply constraints … for years to come … prolonged inflation … tighten[ing] monetary policy … speculative activity in the futures market?”3

Changes in commodity, material and equipment costs will obviously impact construction budgets. In the vast majority of cases, utilities putting in place capital assets over the previous two years have observed savings on construction spending related to lower commodity, materials and equipment costs rather than lower labor or construction labor costs. In Exhibit 1.4, the drop in steel and nonferrous metal (such as copper) pricing since 2008 is obvious. Not shown in the chart is the high point of steel pricing in mid-2008 and the low point that occurred in early 2010 resulting in excess of a 40 percent reduction. “Higher pricing may cause a surge in headline inflation but [its] main effect will be to act as a tax on consumers [of these commodities].”4 Utilities, as one of the biggest consumers of construc-tion commodities, have benefited over the previous two years but will see these gains eroded through this “tax” over the coming 24 to 36 months through rising commodity prices. Nonferrous metals like copper are already experiencing increases in pricing that are expected to accelerate.

w w w . r m e l . o r g 25

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While this writer places little faith that the Chinese governmental authorities have the best interests of the United States at heart, their perspectives on the quality of U.S. government debt are relevant as they are currently the largest debt holder. The Chinese ratings agency Dagong scorned quantitative easing as “a practice resembling drinking poison to quench thirst. … In essence the depreciation of the U.S. dollar adopted by the U.S. government indicates that its solvency is on the brink of collapse.5” Federal Reserve policy, industry regulation, financial and banking reform, and most importantly, a return to robust economic growth in the United States will all dictate whether the nation is consuming “poison” or nourishment. Prudent utility leaders will take action today and ensure they make a “stitch in time.”

Mark Bridgers is a principal with Continuum Advisory Group, specializing in driving transformation of the capital construction process. He can be reached at (919) 345-0403 or [email protected].

1 HyperInflation, Wikipedia, http://en.wikipedia.org/wiki/Hyperinflation, downloaded Jan. 2, 2011.

2 Eddings, Cordell, and Kruger, Daniel, “Treasury Draws Negative Yield for First Time During TIPS Sale,” Bloomberg, Oct. 25, 2010.

3 Buttonwood, “Material Concerns: Commodity Prices are Surging at a Very Early Stage of the Cycle,” The Economist, Jan. 15, 2011, p. 82.

4 Ibid.5 Lu, Sinan, and Du, Mingyan, Surveillance Report for Sovereign Credit

Rating the United States of America, November 2010, p. 8.

RELATIvE CERTAINTIES RELATIvE UNCERTAINTIES

Increasing U.S. inflation starting in 2012• Will a combination of U.S. deficits and debt unleash a •disruptive impact on the economy or financial markets?

Devaluation of the U.S. dollar, reducing the •buying power of U.S.-centric firms

Can commercial properties secure refinancing in •2011-2014 and avoid a second foreclosure crisis?

Volatile and rising construction commodity •prices for 2011 and the first half of 2012

Will 2012 yield job growth that drives down •unemployment?

Lower U.S. financing cost during 2011 for •qualified utilities

Can industrial owners successfully mitigate •significant commodity price increases via better internal processes and material substitution?

Increasing financing cost in 2012 and 2013 in •response to inflation

How will regulation and energy-efficiency •requirements affect design, construction and life-cycle cost performance of utility assets?

Very slow job growth in 2011, resulting in •unemployment unlikely to fall below 8%

At what point will higher financing costs impact facility •size, geographic location and go/no-go decisions stran-gling utility demand for capital asset construction?

Increasing competition among U.S. firms for resources •of all types from high-growth economies of Brazil, China, India and the Middle East

ConclusionsThe old quip “a stitch in time saves nine” offers insight into the window of opportunity facing U.S. utility companies to

plan for and mitigate three risks:

U.S. inflation Devaluation of the U.S. dollar Commodity price increases

With these certainties are a host of relative uncertainties associated with the policy of quantitative easing. Utilities will be forced to navigate these challenges and search for real opportunities to control cost escalation.

w w w . r m e l . o r g 27


By Peter Castles, PuBliC involvement manager, HDr, inC. anD emily sieDsCHlag, PuBliC involvement sPeCialist, HDr, inC.

ChangeWinds of

Developers and electric utilities

building new wind generation and

transmission are learning how a

more sustained and coordinated

outreach effort can help smooth

the way for project delivery.

w w w . r m e l . o r g 29

hen it comes to developing new, large-scale energy infrastructure projects, utilities and

developers are facing a climate of increased public scrutiny, suspicion and even outright hostility. This is especially true for utility-scale wind generation projects and transmission facilities that are necessary to carry new sources of renewable energy to often-distant population centers.

Part of what fuels public emotion is the vast scale of these projects—with wind turbines towering above previously unfettered rural landscapes and new transmis-sion wires stretching across the horizon. And with nearly half of the states now having adopted renewable portfolio standards, more and more projects are getting pushed through the development pipeline, bringing inevitable impacts and conflicts with communities that feel little local control in the matter. These changes can make for some strong theater during public meetings and hearings, often resulting in lopsided, negative press.

Public fervor and frustration are also fed by the Internet, where web-surfing citizens can cherry-pick any number of “facts” or arguments that reinforce their existing doubts and fears. When it comes to issues of “wind and wires,” a cursory search online reveals a treasure trove of misinfor-mation, myths and outright falsehoods. Sure, the real story is out there somewhere, too, but it certainly isn’t easy to find among the clutter of criticism, anecdotes and diatribes.

Of course, there are many other factors contributing to today’s challenging project development environment. Regardless of the specific causes, it is how utilities and developers respond to these challenges that determines the outcome of proposed projects. That is where we are begin-ning to see some real—and very necessary—change.

difference-making at different StagesMore than ever before, wind and transmission

developers—both public and private—are adopting proactive, collaborative and responsive outreach approaches to help ensure project success and prevent risky and costly development delays (or worse, cancellations). Gone are the days of doing only what is required by the regulatory approval process. Those taking a more holistic, strategic and continuous approach to stakeholder engagement are finding it easier to foster and maintain project understanding, acceptance and support among affected communities.

In addition to understanding what motivates public resistance, developers of wind and wires projects are learning how to use proven and emerging best practices for outreach throughout all stages of the planning and development process.

This begins with predicting potential project impacts and opposition during the earliest stages of feasibility study. Once a formal project is proposed, development teams then begin planning a broader outreach program to reach communities and stakeholders. Finally, with development under way,

teams start acting to implement specific engagement measures during siting/routing, regulatory review and construction.

We will discuss some ways to approach each of these phases as well as look at key difference-makers and lessons from wind and transmission projects. Some of these insights are unique to wind and wires projects, while others have more general application.

Prediction = PreventionBefore there is an official project to speak of, development

teams remain reluctant to focus on outreach strategy. This is understandable—sometimes it’s just a matter of organi-zational policy; other times it comes down to finalizing the economics and feasibility. Whatever the reason, opportuni-ties are often lost at this critical early juncture, when teams should be defining how potential community issues and obstacles may affect the outcome of a project.

Once a proposed project starts to take shape after initial siting and definition of the project area, teams should start forecasting the possible impacts to landowners and communities, gauging where those impacts could cause potential opposition, and planning key messages and responses to mitigate concerns.

As early efforts are made to identify key landholders and stakeholders, this is also a good time to set up a master stakeholder database, preferably one that is sufficiently robust to allow project teams, via a secure web interface, to remotely input and access contact information, meeting notes, action items, red flag issues and other details.

If internal staff resources are lacking or overburdened, it is not too early to get an outreach specialist on board to help teams chart the way forward. Getting expert help involved sooner rather than later can be a difference-maker in terms of preventing negative consequences from developing. Teams that fail to mobilize outreach resources until problems are threat-ening the project may find it hard to rectify the situation, with the chances for successful project delivery diminishing.

Early Engagement Sets the ToneWhile it doesn’t make sense to conduct a broad (and costly)

public outreach effort before there is a defined project, meeting informally with a few key stakeholders is often a good place to start a productive dialogue. These conversations will happen eventually anyway, so why risk waiting until the rumor mill is churning and potential opposition is forming?

These early talks will help reveal what it is going to take to make the project clearly understood, build community acceptance, and get the project approved and built.

These early interactions also set the tone for the rest of project development. Even if there aren’t a lot of details to share with stakeholders at this stage, it may be worth taking the opportunity to simply get acquainted and listen. The earlier teams engage stakeholders, the sooner they will


be able to identify and address key concerns that might otherwise cause problems down the line (or even raise red flags about the viability of a particular site, parcel or route).

Teams should also take care not to exclude those who, at first glance, may be considered second-tier stakeholders, such as landholders just outside project boundaries. Just because they are not as directly impacted (or benefited, in the case of wind farms) doesn’t mean they can be safely ignored.

For example, the people who own small parcels within a wind farm footprint often don’t have enough land to host turbines, which means developers might not contact them until they have talked to the larger landowners. But if the small landholders start hearing about the project through the grapevine (and who is getting paid) and not from the developer, chances are they won’t be waving the flag for the project but, rather, waving their fists at the public meetings and hearings. Early miscues like this can create highly motivated opponents who then fight the project for the duration—even after it gets built (if it gets built).

Despite these kinds of clear risks, it may be difficult for some agencies or developers to understand why they would want to expend more effort and funds to engage stakeholders early on when it is clearly outside the require-ments of the regulatory process. The unfortunate reality is that the regulatory review process is an inadequate arena for building true stakeholder involvement, collaboration and support. Project developers today must look not only at what the process legally mandates but also at what projects logically require for successful delivery.

In the end, waiting to engage stakeholders until required by regulatory milestones is simply not worth the gamble, especially when millions in development costs will be at risk.

There are no do-overs. Once stakeholders or communities start to turn against a project, it is extremely difficult to recover.

When we are brought into projects midstream, we have found that options for effective outreach are much more limited. If little has been done to distribute accurate project information and provide engagement opportunities to the broader public, community members are more susceptible to opponents’ negative messages and misinformation. With a lot of emotion and distrust at play, choosing the type of communications and the appropriate meeting format is critical to future success.

Even late in the game, efforts to bring balance back to the public debate can still be effective through such tools as key messaging, media briefings, presentations to key groups and mobilizing project supporters to write letters and attend hear-ings. But when teams wait too long to ask for help, no amount of outreach can reverse the already-entrenched sentiment of an organized opposition.

The bottom line is that by taking the initiative early, utilities and developers can build the understanding, trust and alliances that will help projects survive the inevitable speed bumps in the marathon process of development and regulatory review.

Planning for Broader outreachAs stakeholder identification and early dialogue continue

during initial project development, a foundation for broader outreach will begin to emerge. As part of these early exchanges, development teams should look to cull insights that will help them craft the right approach for informing and engaging the communities at large.

This input can provide strategic insights about what level of collaboration is possible or expected, which communications tools are likely to be most effective and

A FEW MEDIA TIPSProject developers should tout project benefits and counter misleading or misinformed anti-project views via local media:

meet proactively with local reporters and editors, either informally or at editorial board briefings. Don’t always wait for them to come to you.

request the opportunity to pen a guest editorial.

offer to sit on a panel discussion hosted by an area newspaper.

encourage participating landowners and supporters to write letters to the editor.

immediately follow up on unbalanced or erroneous coverage, and set the record straight.

Tactics like these require sustained effort but can help turn media coverage in a more objective direction almost immediately.

The towering presence of wind turbines on rural landscapes often prompts resistance from nearby landowners and communities who fear that visual impacts and other concerns may affect their property values and quality of life.

w w w . r m e l . o r g 31

what issues may be most important to the community. By understanding the questions people are asking about the project, teams can start to gather the facts and craft the messages that will provide the right answers.

Community issues and preferences regarding project communications can be collected through a simple stake-holder survey card or questionnaire that collects input on key issues and concerns; preferred meeting formats, loca-tions and times; noticing methods; multicul-tural outreach needs; and other items.

All of this feedback will help teams develop a responsive strategic communica-tions and outreach plan, one that typically includes a combination of meetings, materials, messaging, media and other proven methods to educate, inform, engage and even help manage expectations.

These plans can be simple or complex, depending on the reach of the project and the characteristics of the affected communities. But they are all built around the common sense notion that providing useful knowledge to the public will help promote a clear and positive understanding of the project.

While there are countless ways to create outreach plans, the most effective plans are those that utilize a diverse set of tools and tactics applied consistently and constantly. Plans that get results have a realistic frame-work, sufficient funding and flexibility that allow teams to adjust strategy and tactics to changing priorities.

An effective outreach program doesn’t have to be all things to all people, but it does need to cast a wider net these days to carry credibility in the community.

Again, this means that utilities and developers should not rely solely on the regulatory-driven public process as their primary outreach venue. It simply provides too little opportunity for communities to understand the project and participate in its development.

goals Before ToolsThe outreach and communications tools that projects

utilize these days are increasingly varied and sophisticated. From newsletters to web sites, open houses to hearings, fact sheets to civic presentations, advisory groups to editorial board briefings, social media to podcasts, hotlines to ethnic outreach—the list keeps growing.

But tools are most effective when they are deployed to achieve specific goals. Good outreach planning clearly and simply connects the overall goals of the project to the specific outreach strategies and tactics that will help achieve

those goals. Project teams that go through the motions of implementing the standard outreach toolbox often don’t bother to ask, “How is this tool going to help us get there?”

The key is to take the time to create a plan that sets both goals and tactics; shows how tools will achieve results; and provides targets or mechanisms for measuring desired results, such as community acceptance, positive/balanced media, support at hearings and elected officials’ support.

To succeed, the plan must also be informed by a confident grasp of situation and context. So, as a matter of best practice, the strategies that utilities and developers create, the tools they use and the messages they impart must reflect an understanding of the community; respond to stakeholder interests, needs and preferences; and help realize the specific outcomes set as goals when preparing the plan.

Outreach for wind energy and transmission projects often varies in approach because of the obvious differences in project scope and reach. While the turbines of a wind farm are typically clustered in one area, affecting at most one or two rural communities, long-haul transmission projects typically pass by or through numerous communities and traverse several counties (or even states). The logistical (and financial) obstacles to conducting methodical grass-roots outreach in every community means that transmission development teams must rely more on broader outreach tools, such as regional public meetings and podcasts, project web sites, email blasts and media noticing.

Open house meetings staffed by technical experts and third-party resource special-ists are instrumental in helping communities understand the characteristics, ben-efits, and potential impacts of wind and transmission projects.


message managementOne outreach tool that should be part of any outreach

plan is key messaging. More and more, strategic messages, talking points and the effective use of facts and credible third-party resources are proving to be key difference-makers in the development and defense of energy projects.

Messaging helps ensure that project teams are speaking consistently and with a unified voice, whether in media interviews, informal discussions or at public hearings.

While some of these messages must address valid community concerns and debunk myths, the most important messages are those that clearly lay out the many important benefits of the project (such as system

reliability, energy security, local economic benefits and environmental benefits).

Simply put, a strong case must be made that demon-strates how these benefits outweigh the potential impacts. Peer-reviewed science, studies and evidence should also be referenced in talking points with media, elected officials, supporters and the general public.

Putting Plans into Action and Working the middle ground

Good outreach planning is worthless without smart execution, but putting plans into action is not just a simple matter of deploying tools. Communications strategies are also a key component.

For example, development teams can get bogged down in expending a lot of time and energy trying to win over those strongly opposed to a project. While the intentions behind these efforts are envi-able, the results are usually disappointing, with most opponents refusing to budge.

Once it becomes clear that a project opponent is unlikely to change position, regardless of how much

teams address the opponent’s concerns or make conces-sions, it is time to shift focus to the all-important “middle ground.” In other words, teams should look for reasoned voices in the community who can discuss the project from an objective standpoint.

The dialogue with critics should continue, of course, but not at the expense of these folks in the middle who are still on the fence and seeking information—information that can help them understand why the project is necessary and how it will provide benefits. As a common sense outreach strategy, working the middle is a simple and proven method for building public acceptance and support.

One of the best ways to reach people before they have made up their minds on a project is to host local workshops—usually right after project announcement—that feature not only project materials and staff, but also third-party resources and issue experts who lend outside credibility regarding issues such as health and safety, environmental impacts, property values and economic benefits. Often these third-party resources can be local or regional academics, scientists, right-of-way professionals and economists.

Consistency Breeds SuccessAs mentioned earlier, message consistency helps the

public and stakeholders know what they are dealing with. But equally important is who they are dealing with.

Ideally, the main point of contact for a project should consistently be the same person, whether a project manager or communications specialist. (On larger projects, it is sometimes necessary to have two or more contacts.) When people come to open house meetings,

TipS FoR TRAnSPAREnCy Transparency means communicating with affected landowners and communities before project areas or routes are identified, whenever possible.

Teams should refrain from showing lines on a map at public meetings until these affected landowners have been informed and engaged.

Teams should be open to making changes if through outreach they learn something that would justifiably affect the decisions they make.

Remember, once people determine you have not listened to them, they assume you never will.

Long-haul transmission projects typically affect numerous communities. Understanding community triggers and planning scenarios can prevent sit-ing a transmission line route near sensitive features and constraints such as schools, new housing developments, or parks and recreation areas.

w w w . r m e l . o r g 33

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Taking the time to understand com-

munity triggers, current community

layout and future community plan-

ning scenarios can prevent plan-

ning a transmission line route near

sensitive features and constraints

such as schools, new housing de-

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parks and recreation areas.

send emails or make phone calls, seeing or hearing from the same person they have spoken with in the past helps build a relationship of trust and familiarity.

Consistency is also important for the regulatory process as a steady outreach approach helps create a stronger record. During the transmission routing process, for example, docu-mentation demonstrating consistent outreach and the input obtained along the way helps show how and why a utility or developer is proposing a certain route. The ability to show who participated, when they participated, how they provided input and how their input was used within the routing process is critical in moving the project forward through permitting.

Throughout a consistent, well-planned outreach approach, utilities and developers will gain greater understanding of their communities. The key is the ability to be flexible and responsive to changing realities as a project evolves.

Are We done Yet?Now for the tough question: When is outreach “done”? Some think outreach is over when a project gets the

approvals it needs to be built. But smart development teams understand that outreach should continue, at some level, through construction and into operation. After all, approvals to build and operate facilities are never unconditional. Agencies can always delay construction and suspend operations, if given a good reason (or legal ruling). But communities that feel they are still being informed and engaged after ground is broken are more likely to accept the project and not search for ways to shut it down.

The simple awareness that construction and postcon-struction communications are important is yet another indication of the shift toward a more proactive, respon-sive and collaborative outreach model for utilities and developers alike. Granted, it has been a gradual shift, but one that seems irreversible.

Challenges remain, of course. Today’s public is often more sensitive about development in their communi-ties—and eminently more capable of derailing projects.

For wind and wires projects, in particular, successful project development is still made difficult by the fact

that wind energy, as a still-emerging industry,

and transmission, with its complex planning and regulatory process, elicit little clear under-standing among the general public.

That is why utilities and developers must always recognize the key role outreach plays in getting new projects built. Through all phases of development, they must continue to use and grow best practices that are proven difference-makers in helping win project acceptance and support.

Peter Castles is a senior Public Involvement Project Manager with 16 years of experience in conducting communications, outreach, and public/media relations programs

for local, state, federal, and commercial clients. He can be reached at [email protected].

Emily Siedschlag is a Public Involvement Specialist with a background in environmental science and a previous focus on National Environmental Policy Act (NEPA) permitting, she transitioned to public outreach on several large transmission line projects in the Midwest. She can be reached at [email protected].

SiTing anD RoUTing TRAnSPAREnCy

Creating a transparent siting or routing process from the beginning is crucial. Without it, comments such as these are likely to be heard when publicly unveiling project footprints or routing alternatives:

“ What are these lines on the map drawn right through (or around) my property? This looks like a done deal already and you haven’t even bothered to come talk to me!”

“ It seems you’ve known where these lines/turbines are going the entire time!”

“ Why bother asking us for input now if you already have these routes/sites all figured out?”

w w w . r m e l . o r g 35

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LA CYGNE STATION – JOINT OWNERSHIP: KCP&L, 50 PERCENT; WESTAR ENERGY, 50 PERCENT in-service date: Unit 1, 1973; Unit 2, 1977

capacity: Unit 1, 800 MW; Unit 2, 710 MW

unit type: Unit 1, Westinghouse Steam Turbine/B&W Boiler; Unit 2, GE Steam Turbine/B&W Boiler

fuel: Powder River Basin Coal

Introductionin the L ate 1990s, k ansa s cit Y power & Light undertook a ma jor controLs conversion at both of its La Cygne units to convert from the traditional benchboard controls to a computer-based distributed control system. Plant management understood that this conversion represented both a significant technical change and a very concerning psychological change for an operations and technical staff that was just starting to be widely exposed to computers in the workplace. As such, the controls team determined that high-fidelity plant simulators were necessary for the following critical functions of the controls conversion:

Control permissives checkout to ensure control logic correctly converted

Control tuning of critical loops to ensure proper unit control

Complete startup of unit(s) to ensure all controls function correctly

Complete shutdown of unit(s) to ensure all controls function correctly

Extensive tuning of irregular events such as unit runbacks on loss of major equipment

By Kenneth Luebbert, P.E., Principal Performance Engineer, Kansas City Power & Light

A Decade of Power Plant Simulation at KCP&L’S La CygNE StatioN


w w w . r m e l . o r g 37

In addition to the controls tuning, the high-fidelity simu-lators provided the following benefits to the plant staffing:

Platform for operators to familiarize themselves with computer screen-based human machine interfaces as opposed to the traditional benchboard interface

Platform for extensive operator training prior to unit conversion to DCS; operators can repeatedly perform operations that they may rarely have the opportunity to perform on the actual unit

Platform for technicians to familiarize themselves with the new DCS-based control processors

In short, the high-fidelity simulators were viewed as critical to the success of the controls conversion project.

High-Fidelity SimulatorsThe power plant simulators at La Cygne Station are

stimulated high-fidelity simulators, meaning they use the same control hardware with the same control consoles and screens and the same multifunction processors as the actual unit. Therefore, for a control operator, the simulator is nearly identical to the actual unit. The simulation logic resides on additional servers that are connected to the control system via an application programming interface. The control logic resides on multifunction processors that are identical to the processors used on the actual units. By sharing nearly identical control hardware with the actual units, the simulators provided an ideal situation for control hardware interconnectivity checkout. In addition, the simulators provided a realistic environment for technicians to perform critical functions such as control logic downloads, multifunc-tion processor changeouts and live control logic tuning.

Ongoing Usage and UpkeepOne of the main concerns that all utilities have when

purchasing unit simulators is that they will not be main-tained and used over the life of the unit(s). This has not been the case for the La Cygne simulators, which have been in continual use and have provided extensive value to the plant for the last decade. Their current uses include:

Training of new control operators and plant equipment operators

Refresher training for existing operators Platform for testing new control algorithms and unit

changes Platform for engineers to test and validate potential

capital upgrade projects Platform for unit operation training of personnel that

may not normally get unit operation training (such as engineers and maintenance personnel)

La Cygne maintains the relevancy of the simulator by providing continual upkeep. On a yearly interval, all of the control and unit modifications are loaded into the plant simulators, which are then tuned to ensure that they are still

in lock step with the unit. Furthermore, every four to five years, the simulators are upgraded to the latest version of the simulation software. In addition, the controls software on the simulators is maintained at the same revision as the controls software on the actual units.

Future The La Cygne power plant simulators will play a critical

role in the upcoming environmental plant upgrade. Both La Cygne units will be retrofitted with a an SCR, scrubber and baghouse to facilitate greatly reduced air emissions. In addition, both units will have a complete DCS replacement and upgrade. The simulators will be augmented with the SCR, scrubber and baghouse additions before the actual unit upgrades. In addition, the simulators will be converted to the same state-of-the-art control system that is chosen for the actual units approximately one year prior to the actual unit outages. This will allow for the simulators to once again provide a platform for testing and validating controls before the unit outage(s). Furthermore, as the simulator logic has been continually tuned to match to the actual unit transient response characteristics over the last 10 years, the simulator will provide a critical platform for tuning the state-of-the-art control system that is selected for the boiler and steam turbine portion of the plant.

From a training perspective, the simulators will allow for plant operators to train on the new units with the additional air quality control equipment and upgraded controls for approximately one year before the actual unit(s) transi-tioning. This should result in shorter outages and smoother postoutage operation. In addition, this should facilitate the familiarity of operations and technicians with the new HMIs and control logic.

ConclusionsLa Cygne’s unit simulators have provided a state-of-the-

art operator training platform for allowing plant operators, engineers, technicians and other staff to perform the same control actions and see the same results as the actual plant for the last decade. In addition, they have stood the test of time and are as valuable today as they were when they were installed. Furthermore, KCP&L is extending this value by providing a major update and augmentation of these simulators as part of the plant air quality capital upgrade project. This will ensure that the La Cygne simulators are an invaluable tool for the plant for the next decade as well.

Kenny Luebbert is a principal performance engineer with Kansas City Power & Light. Prior to this, he was lead instrumentation and controls engineer and lead mechanical engineer on the Iatan 2 Construction Project, one of the largest coal unit construction projects in the United States. Luebbert can be reached at [email protected].


memBer Listings

1 ABB, Inc.

2 ABCO Industrial Sales, Inc.

3 Access Energy Cooperative

4 ADA Environmental Solutions

5 Alexander Publications

6 Alstom Power

7 Altec Industries, Inc.

8 AMEC

9 American Coal Council

10 Arizona Electric Power Cooperative, Inc.

11 Arkansas River Power Authority

12 Asplundh Tree Expert Co.

13 Associated Electric Cooperative, Inc.

14 Atchison-Holt Electric Coop

15 ATCO Noise Management

16 Ayres Associates

17 Babcock & Wilcox Company

18 Babcock Power, Inc.

19 Barry Electric Cooperative

20 Barton County Electric Cooperative

21 Basin Electric Power Cooperative

22 Bechtel Power Corporation

23 Black & Veatch Corp.

24 Black Hills Corporation

25 Black Hills Electric Cooperative

26 Black River Electric Cooperative

27 Boilermakers Local #101

28 Boone Electric Cooperative

29 Border States Electric

30 Brand Energy & Infrastructure Services

31 Brooks Manufacturing Company

32 Burns & McDonnell

33 Butler Public Power District

34 C.I.Agent Solutions

35 Callaway Electric Cooperative

36 Carbon Power & Light, Inc.

37 Casey Industrial, Inc.

38 CBS Arc Safe

39 Central Electric Power Cooperative

40 Central Missouri Electric Cooperative

41 Central New Mexico Electric Cooperative, Inc.

42 Central Rural Electric Cooperative

43 CH2M Hill

44 Chariton Valley Electric Cooperative

45 Chimney Rock Public Power District

46 City of Alliance Electric Department

47 City of Aztec Electric Department

48 City of Boulder

49 City of Cody

50 City of Farmington

51 City of Fountain

52 City of Gillette

53 City of Imperial

54 City of Yuma

55 Co-Mo Electric Cooperative

56 CoBank

57 Colorado Energy Management, LLC

58 Colorado Powerline, Inc.

59 Colorado Rural Electric Association

60 Colorado Springs Utilities

61 Colorado State University

62 Commonwealth Associates, Inc.

63 Consert Inc.

64 Consolidated Electric Cooperative

65 Continental Divide Electric Cooperative

66 Cookson Hills Electric Cooperative

67 Corporate Risk Solutions, Inc.

68 County of Los Alamos Dept. of Public Utilities

69 CPS Energy

70 Crawford Electric Cooperative Inc.

71 Cuivre River Electric Coop Inc.

72 Davies Consulting, Inc.

73 Deloitte

74 Delta Montrose Electric Assn.

75 DIS-TRAN Packaged Substations, LLC

76 Dowdy Recruiting LLC

77 E & T Equipment, LLC

78 E3 Consulting

79 East Central Oklahoma Electric Coop

80 El Paso Electric Company

81 El Paso Natural Gas Company

82 Electric Power Research Institute

83 Electrical Consultants, Inc.

84 Emerson Process Management

85 The Empire District Electric Company

86 Empire Electric Association, Inc.

87 Energy & Resource Consulting Group

88 Energy Reps

89 Engineering, Procurement & Construction, LLC

90 ENOSERV, LLC

91 Equal Electric, Inc.

92 ESC engineering

93 Estes Park Light & Power Dept.

94 Evonik Energy Services LLC

95 Exponential Engineering Company

96 Farmers Electric Coop Inc. (MO)

97 Foothills Energy Services Inc.

98 Fort Collins Utilities

99 Foster Wheeler

100 Fuel Tech, Inc.

101 Gascosage Electric Cooperative

102 GE Energy

103 Glenwood Springs Electric System

104 Golder Associates, Inc.

105 Grand Island Utilities

106 Grand Valley Rural Power Lines, Inc.

107 Great Southwestern Construction, Inc.

108 Grundy Electric Cooperative

109 Gunnison County Electric Association, Inc.

110 Halcrow

111 Hamilton Associates, Inc.

112 Hamon Research - Cottrell

113 Harris Group, Inc.

114 Hartigan Power Equipment Company

115 Hawkeye Helicopter LLC

116 HDR, Inc.

117 Heartland Consumers Power District

118 Heartland Solutions, Inc.

119 High Energy, Inc. (HEI)

120 High Plains Power, Inc.

121 Highline Electric Assn.

122 Hitachi Power Systems America, Ltd

123 Holy Cross Energy

124 Homer Electric Association, Inc.

125 Honeywell Process Solutions

126 Howard Electric Cooperative

127 Howell-Oregon Electric Cooperative

128 HSB Solomon Associates, LLC

129 Hughes Brothers, Inc.

130 IBEW, Local Union 111

131 Independence Power & Light

132 Indian Electric Cooperative, Inc.

133 Intercounty Electric Coop Association

134 Intermountain Rural Electric Assn.

135 ION Consulting

136 Irwin Industries, Inc.

137 J.L. Hermon & Associates, Inc.

138 Jemez Mountains Electric Cooperative, Inc.

139 KAMO Power

140 Kansas City Board of Public Utilities

141 KD Johnson, Inc.

142 Kiamichi Electric Cooperative

143 Kiewit

144 Kit Carson Electric Cooperative

145 Kleinfelder

146 Klondyke Construction LLC

147 KVA Supply Co.

148 La Junta Municipal Utilities

149 La Plata Electric Association, Inc.

150 Laclede Electric Cooperative

151 Lake Region Electric Coop Inc.

152 Lamar Utilities Board

153 Laminated Wood Systems, Inc.

154 Lane-Scott Electric Cooperative, Inc.

155 Lauren Engineers & Constructors

156 Lewis Associates, Inc.

157 Lewis County Rural Electric Cooperative

158 Lincoln Electric System

159 Longmont Power and Communications

160 Loup River Public Power District

161 Loveland Water & Power

162 Luminate, LLC

163 M & A Electric Power Cooperative

164 Macon Electric Cooperative

165 Marsulex Environmental Technologies

166 Merrick & Company

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memBer Listings cont’d

167 Missouri River Energy Services

168 Missouri Rural Electric Cooperative

169 Morgan County Rural Electric Assn.

170 Mountain Parks Electric, Inc.

171 Mountain States Utility Sales

172 Mountain View Electric Assn.

173 Mycoff, Fry & Prouse LLC

174 Navigant Consulting

175 Navopache Electric Cooperative, Inc.

176 Nebraska Public Power District

177 NEI Electric Power Engineering, Inc.

178 New-Mac Electric Cooperative

179 NMPP Energy

180 Nooter/Eriksen, Inc.

181 Norris Public Power District

182 North Central Missouri Electric Cooperative

183 North Platte Light & Power

184 Northeast Community College

185 Northeast Missouri Electric Power Cooperative

186 Northeast Oklahoma Electric Coop Inc.

187 Northwest Rural Public Power District

188 NV Energy

189 NW Electric Power Cooperative

190 Occupational Safety Councils of America

191 Omaha Public Power District

192 Omnicon Technical Sales

193 Osage Valley Electric Cooperative

194 Osmose Utilities Services, Inc.

195 Otero County Electric Cooperative

196 Ozark Border Electric Cooperative

197 Ozark Electric Cooperative

198 Ozarks Electric Cooperative Corp

199 PacifiCorp

200 Panhandle Rural Electric Membership Assn.

201 PAR Electrical Contractors, Inc.

202 PCS Mobile

203 Peak Power Engineering, Inc.

204 Pemiscot-Dunklin Electric Cooperative

205 Peterson Co.

206 Pike Electric, Inc.

207 Pioneer Electric Cooperative, Inc.

208 Pipefitters Local Union #208

209 Platte River Power Authority

210 Platte-Clay Electric Cooperative

211 PNM Resources

212 Poudre Valley Rural Electric Assn.

213 Power & Industrial Services Corp

214 POWER Engineers, Inc.

215 Power Equipment Specialists, Inc.

216 Power Pole Inspections

217 Power Product Services

218 PowerQuip

219 Provo City Power

220 Quanta Services

221 R.W. Beck, An SAIC Company

222 Ralls County Electric Cooperative

223 Raton Public Service

224 REC Associates

225 Reliability Management Group (RMG)

226 Reliable Power Consultants, Inc.

227 Rocky Mountain Generation Cooperative, Inc.

228 S&C Electric Company

229 Sabre Tubular Structures

230 Sac Osage Electric Cooperative

231 Safety One Inc.

232 San Luis Valley Rural Electric Cooperative

233 San Miguel Power Assn.

234 Sangre De Cristo Electric Assn.

235 Sargent & Lundy

236 Scientech

237 Se-Ma-No Electric Cooperative

238 Sega, Inc.

239 SEMO Electric Cooperative

240 SENER Engineering and Systems, Inc.

241 The Shaw Group

242 Sho-Me Power Electric Cooperative

243 Siemens Energy Inc.

244 Sierra Electric Cooperative, Inc.

245 Sierra Southwest Cooperative Services, Inc.

246 SNC-Lavalin Constructors Inc.

247 The Socorro Electric Cooperative, Inc.

248 South Central PPD

249 Southeast Colorado Power Assn.

250 Southeast Community College

251 Southern Iowa Electric Cooperative

252 Southern Pioneer Electric Company

253 Southwest Electric Cooperative

254 Southwest Generation

255 Southwest Transmission Cooperative, Inc.

256 Southwire Company

257 SPIDAWeb LLC

258 Springfield Municipal Light & Power

259 SRP

260 Stanley Consultants, Inc.

261 Stuart C. Irby Company

262 Sturgeon Electric Co., Inc.

263 Sulphur Springs Valley Electric Cooperative

264 Sunflower Electric Power Corporation

265 T & R Electric Supply Co., Inc.

266 Technically Speaking, Inc.

267 Thomas & Betts Steel Structures Division

268 Three Rivers Electric Cooperative

269 TIC - The Industrial Company

270 Total-Western, Inc.

271 Towill, Inc.

272 Trachte, Inc.

273 Transformer Technologies

274 Trees Inc

275 Tri-County Electric Cooperative

276 Tri-State Generation & Transmission Assn.

277 Trimble

278 Trinidad Municipal Light & Power

279 UC Synergetic

280 Ulteig Engineers, Inc.

281 UniSource

282 United Electric Cooperative

283 United Power, Inc.

284 University of Colorado

285 University of Idaho Utility Executive Course College of Business and Economics

286 URS Corporation

287 Utility Telecom Consulting Group, Inc.

288 Valmont Newmark, Valmont Industries, Inc.

289 Verdigris Valley Electric Coop Inc.

290 Victaulic

291 Wärtsilä North America, Inc.

292 Waukesha Electric Systems

293 Webster Electric Cooperative

294 West Central Electric Cooperative (MO)

295 West Plains Engineering, Inc.

296 Westar Energy

297 Western Area Power Administration

298 Western Cultural Resource Management, Inc. (WCRM, Inc.)

299 Western Line Constructors Chapter, Inc. NECA

300 Western Nebraska Community College

301 Western United Electric Supply

302 Westwood Professional Services

303 Wheat Belt Public Power District

304 Wheatland Electric Cooperative

305 Wheatland Rural Electric Assn.

306 White River Electric Assn., Inc.

307 White River Valley Electric Cooperative

308 William W. Rutherford & Associates

309 WorleyParsons Group, Inc.

310 Wyoming Rural Electric Association

311 Wyrulec Company

312 Xcel Energy

313 Y-W Electric Association, Inc.

314 Yampa Valley Electric Association, Inc.

315 Zachry Holdings, Inc.

w w w . r m e l . o r g 41

AdmissionThe UEC Summit is designed for experienced man-agers and executives. Utility industry leaders are invited to apply online at www.uidaho.edu/uec/summit.

DetailsDates: June 20-23, 2011Location: The Coeur d’Alene Resort, Coeur d’Alene, IdahoPhone: 208.885.6265E-mail: [email protected]: www.uiuec.org

The UEC Summit runs concurrently with the third week of the Utility Executive Course. (The 58th annual Utility Executive Course is June 6-23, 2011, on the University of Idaho campus in Moscow, Idaho.) Summit and UEC participants will join faculty, Advisory Committee, and staff on Thursday evening for a final banquet and dinner cruise on beautiful Lake Coeur d’Alene.

TraditionandInnovation—TheBestofBothThe UEC Summit is an industry-driven executive education program de-signed specifically for utility leaders to provide comprehensive analysis of the industry’s top challenges and opportunities. The intensive three-day format combines some of the utility industry’s best leaders with a world-class faculty, competency-based curriculum, and abundant opportunities for network building.

JUNE20-23,2011Coeurd’Alene,Idaho


On Jan. 26, 2008, Bonneville Power Adminis-tration’s Big Eddy substation lost transforma-tion near the northern terminus of the 3100

MW DC Intertie. Western control center operators subsequently observed oscillation, and after they reduced power on the DC Intertie by 500 MW, the oscillations appeared to have ceased.

What the control centers couldn’t detect is that the oscillations only had been reduced by 50 percent, which is below an observable level by dispatchers using traditional energy management systems.

However, in the California Independent System Operator’s control room as well as at Southern California Edison, the system oscillations could be detected, thanks to the use of synchrophasor data. A synchrophasor is a grid measurement taken by a piece of hardware that provides real-time information about the performance of electrical transmission systems. When the DC Intertie flow was reduced to 0 MW, the oscillations stopped.

A project is well under way to expand the use of synchrophasors to improve the reliability of

the bulk electric power grid that spans the West. Led by the Western

Electricity Coordinating Council, the

Western Interconnection Synchrophasor Program is installing 250 to 300 new or upgraded phasor measurement units. WISP is tying the PMUs together with a secure communications network and is deploying the software tools needed to manage an increasingly complex power grid.

“This is the largest electric transmission synchro-phasor project in the country, and it provides a jump-start the West needs in advancing this technology,” said Mark Maher, chief executive officer of WECC.

WECC is one of eight regional entities in North America, encompassing a geographic area equivalent to more than half the United States. It is responsible for promoting electric system reliability and providing a forum for coordinating the operating and planning activities of its member orga-nizations. WECC members, representing all segments of the electric industry, provide electricity in 14 Western states, two Canadian provinces and portions of one Mexican state.

WhAT IS A synChrophasor?Synchrophasors are precise grid measurements now available from monitors called phasor measurement units. PMU measurements are taken at high speed, typically 30 to 120 observations per second compared to one every 2 to 4 seconds using conventional technology. Each measure-ment is time-stamped accord-ing to a common time refer-ence. Time-stamping allows synchrophasors from different utilities to be time-aligned (or synchronized). Combined, they provide a precise and com-prehensive view of the entire interconnection. Synchropha-sors enable a better indication of grid stress and can be used to trigger corrective actions to maintain reliability.

( Source: North American Synchro- Phasor Initiative, www.NASPI.org)

B y D e s t o n s . n o k e s , I n D e p e n D e n t C o n s u lta n t, W e s t e r n e l e C t r I C I t y C o o r D I n a t I n g C o u n C I l

Grid reliability

WeCC’s synChrophasor proGram

is boostinG

w w w . r m e l . o r g 43

Synchrophasor technology also can provide the ability to see and manage the intermittent nature of renewable resources, and to deploy the ancillary services needed to solidify the changing nature of the West’s generation fleet. In addition, developing real-time controls to automati-cally take corrective actions will significantly increase the reliability of the interconnection and should release latent transmission capacity at very low cost.

“The promise of synchrophasor technology is huge—an immense opportunity,” said Vickie VanZandt, WISP’s program manager. “This project is helping us implement a better, more flexible and more resilient grid.”

Slated for completion in 2013, WISP started in 2009 when WECC received $53.9 million in funding from the Department of Energy. The funding, which was awarded under the American Recovery and Reinvestment Act’s Smart Grid Investment Grant initiative, matches dollars already committed by nine WISP partners in the West to extend and deploy synchrophasor technologies within their electrical systems. The total funding for WISP is $107.8 million.

The wide-scale, collaborative effort includes eight cost-share partners in addition to WECC: Bonneville Power Administration, California ISO/California Energy Commis-sion, Idaho Power Company, NV Energy, PacifiCorp, Pacific Gas & Electric, Southern California Edison and SRP.

Nine additional invited entities have agreed to participate: Alberta Electric System Operator, Arizona Public Service, BC Hydro, Los Angeles Department of Water and Power, NorthWestern Energy, Public Service of New Mexico, San Diego Gas & Electric, Tri-State Generation and Transmis-sion Assn., and Western Area Power Administration.

The Western Interconnection has an existing network of 137 PMUs installed over the last three decades based on the individual decisions of utilities, system operators and balancing authorities. The value has been to time-synchronize power system disturbance data, which can then be analyzed to improve generator, transmission and load modeling. It also can be used to understand abnormal power system behavior in the stability-limited Western Interconnection.

WISP is deploying 250 to 300 PMUs and is building the telecommunications network necessary to support a large-scale production synchrophasor system. The project also calls for the implementation of new synchrophasor applications for West-wide situational awareness, power system analysis and model validation. The synchrophasor technology then will be more available to integrate renew-able resources, improve operators’ situational awareness of the status and vulnerabilities of the system in real time, and develop and implement real-time controls.

Providing these situational awareness tools to system operators enables them to see power system vulnerabilities much better, and to minimize the risk of vulnerabilities evolving into a major disturbance or blackout.

The availability of synchrophasor data “is like going from an X-ray to an MRI of the grid,” said Terry Boston, chief executive officer of PJM. Specifically, WISP’s benefits include:

larGe-sCale outaGe avoidanCe: Improving wide-area situational awareness and wide-area controls can reduce significantly the frequency of large-scale, long-duration outages originating in the bulk power grid. Each outage that does not occur represents substantial savings to customers in terms of avoiding lost production and amenities. For large cities, a major outage typically has customer costs valued in the hundreds of millions of dollars or more.

inCreased transmission utilization: Currently, transmission facilities are not used to their full capacity in the Western Interconnection because grid operators lack sufficiently granular, time-synchronized measurements of the flow of electricity throughout the transmission system; and automatic controls do not currently benefit from these wide-area measure-ments. When the program is implemented, available transmission capacity will be based, in part, on these precise, real-time measurements rather than on slower, coarser measurements or simulation methods such as transmission path nomograms. This will increase the effective capacity of selected congested lines and increase transmission asset utilization, thus lowering energy costs to consumers.

inCreased utilization of intermittent reneWable Generation: An exciting component of WISP is improving the utilization of wind and other renewable generation. There is growing concern that transmission systems will not be able to absorb all the generation from wind, solar and other renewable generation, leading to a “spilling” of renewable generation to maintain reli-ability that would make renewable portfolio standards and greenhouse gas policy fulfillment more difficult and costly. Synchrophasor technology will improve the visibility of transmission, generation and load condi-tions. Therefore wind resources will be better used, increasing their capacity factors. Energy and Environ-mental Economics, Inc., a consulting firm retained by WECC, estimates the value of increased wind use conservatively at $323 million over 40 years.

BPA is investing $22.5 million to deploy PMUs on its system—many at wind sites.

“This technology will be very important for reliable and cost-effective integration of wind power in the Pacific Northwest,” said Dmitry Kosterev, principal planning engineer at the Bonneville Power Administration.


Benefit Minimum value

Large-scale outage avoidance $1,220,540,494

Increased transmission utilization on a major transmission path $34,748,816

Increased utilization of intermittent renewable generation $323,755,442

Reduced capacity costs for intermittent generation $307,735,069

BPA recently included a PMU requirement in its Generator Inter-connection Standards. Several new wind power plants are constructed and energized with PMUs installed as a part of a monitoring package. According to Kosterev, BPA has been successfully using PMU data for power plant model validation since 2001. The PMU data benefits include real-time monitoring of power plant performance, verification of compliance with WECC model validation criteria and timely detec-tion of control issues and failures.

reduCed CapaCity firminG Costs for intermittent Generation: Intermittent renewable resources typically have low, firm capacity values and as the penetration of these resources increases, the system must be augmented by firm capacity resources to maintain grid reli-ability. Since visibility of the intermittent resources is currently low, carrying a conservative amount of reserves is the current practice. The program will increase visibility of these resources, enabling a reduction in operating reserves.

CritiCal infrastruCture proteCtion and Cyber seCurity: The new, private network architecture is not only scalable, it can accommodate the anticipated enhanced levels of cyber security and North American Electric Reliability Corporation Critical Infrastruc-ture Protection controls.

WECC believes this project represents the only proposed plans for reli-able and secure wide-area control to enhance reliability and efficiency in the nation. BPA intends to deploy response-based stability controls by 2015 using synchrophasor data that will increase the stability limit of the California-Oregon Intertie, a major transmission path in the Western Interconnection.

WISP At-A-GlanceRecipient: Western Electricity Coordinating Council

States: AZ, CA, CO, ID, MT, NM, NV, OR, SD, TX and WA

NERC Region: Western Electricity Coordinating Council

Total Budget: $107,780,000

federal Share: $53,890,000

Key Partners: Bonneville Power Administration, California ISO/California Energy Commission, Idaho Power Company, NV Energy, PacifiCorp, Pacific Gas & Electric, Southern California Edison and Salt River Project

Project Type: Electric transmission systems

EquipmEnt 250-300 PMUs

50 PDCs

Transmission systems communication equipment

advancEdapplications Angle and frequency monitoring

Voltage and voltage stability monitoring

Post-mortem analysis

Oscillation energy and mode meter monitoring

Reactive reserves monitoring and device control

Model baselining, validation and improvement

Path loading and congestion management

targEtEdbEnEfits Deferred investment in

transmission capacity expansions

Reduced ancillary service cost

Reduced wide-scale blackouts

Increased electric service reliability

Improved use of intermittent renewable generation

w w w . r m e l . o r g 45

www.worleyparsons.com

Greg Kishiyama 303.928.4236 Hazen Burford 916.817.3920

Global resources. Delivered locally.

business solutions for utilities and the energy industry

for more than 100 years.

The Right Combination of Resources & Energy

Wisp’s eConomiC benefit

Energy and Environmental Economics, Inc. quantified the program benefits in the Western Interconnection. Its forecasts indicate the program has the potential to provide numerous economic benefits by improving reliability, operating effi-ciency, asset utilization, system planning and envi-ronmental impact. [Minimum forecast economic benefits associated with the program (present value more than 40 years using Year 2008 dollars).

Since fall 2009, a project team led by WECC has been engaged in planning and implementing the integrated synchrophasor network. Last year, the technical framework was developed for the wide area network PMU/phasor data concentrator integration, system infrastructure and software applications. Two WECC data center facilities are being expanded: one in Vancouver, WA, and the second in Loveland, CO.

Currently under way are the procurement and installation of PMUs, PDCs, network infrastructure and server hardware. In addition, the wide area network service provider and the application soft-ware selection will be completed by spring 2011.

In December, the team will begin testing phasor data communications, system integration and software application functionality. WISP’s full implementation phase will take place beginning in the summer of 2012, with training, business readiness and system cutover planning. The implementation phase is scheduled to end with the completion of the system cutover by March 2013.

“Synchrophasors are going to enable operators and reliability coordinators to view and operate the system as never before,” Maher explained. “They’ll get a real-time view of the system, which is a significant advance in our ability to fulfill our mission of assuring the reliability of the Western Interconnection.”

Deston S. Nokes, independent consultant for the Western Electricity Coordinating Council, has been a communications consultant and energy writer for PacifiCorp, BPA, North American Windpower magazine and others. He can be reached at [email protected].


Many factors are seemingly pushing the industry to natural gas-fueled generation. These include abundant domestic shale gas reserves; pairing of

simple-cycle and combined-cycle technologies for renewable energy backup generation; and regulatory changes.

While natural gas-fueled generation is reliable, cost-effective and environmentally acceptable, it is important as an industry to maintain a balanced portfolio. Utility owners have options for meeting their regulatory, economic and business requirements.

The Push To NaTural GasThe Environmental Protection Agency is proposing a suite

of air, water and waste regulations that will significantly impact power generation, particularly coal-fired generation assets. Black & Veatch’s analysis of the potential impact concludes that approximately 16 percent of the existing coal-fired generation fleet (more than 52,000 megawatts of generation) will be retired rather than face the cost of compliance with EPA’s pending air quality regulations.

In addition, it is difficult to predict what, if any, federal standards for greenhouse gas emissions or renewable portfolio standards will be addressed by the new Congress. The EPA has already issued regulations addressing permitting and will soon propose minimum limits for greenhouse gas emissions. It

remains to be seen whether Congress will impede their imple-mentation or whether these rules will stand up to judicial review.

Uncertainty about carbon emission limits, strong environ-mental opposition and hesitation from lending institutions to finance have brought the development of new coal-fired genera-tion to a virtual standstill. At the same time, the U.S. economy is showing signs of resurgence that will eventually return load growth, leaving utilities to grapple with meeting short- and long-term needs in the face of potential base load retirements.

These factors, coupled with the fact that proven domestic shale natural gas reserves have rapidly expanded since 2005 (with promises of sustainable and cheap natural gas for the next 15 to 20 years), seemingly are pushing the industry to the next great natural gas boom. After all, such clean and reliable forms of energy should face minimal resistance from commissions, permitting agencies and other stakeholder groups as long as gas prices remain low and the cost of electricity doesn’t increase too much.

KeeP The PorTfolio BalaNcedWhile the promise of cheap natural gas seems to be the

answer, particularly in the wake of pending coal generation retirements, fuel diversity still remains one of the most prominent components of a utility’s long-term plan.

Technology opTions:

You Have

THemBy samuel scupham, energy consulTanT , Black & VeaTch corp .

w w w . r m e l . o r g 47

There is no question that a portion of new load should be met with natural gas-fueled technologies, particularly when coupled with continued renewable deployment. However, additional fuel and technology implementations are needed to manage load growth, keep the nation’s energy mix diversified and reduce emissions – all while ensuring electric prices do not climb too rapidly or too much for consumers.

Achieving a sustainable and balanced energy mix requires cooperation among all key stakeholders as well as investment in emerging technologies. For several years now, industry leaders have collaborated with government agencies, research organizations and emerging companies to develop components to the nation’s clean energy solutions.

UTILITY-SCALE CARBON CAPTURE AND SEQUESTRATION: There are numerous studies and demonstration projects under way for developing carbon capture and sequestration capabili-ties. These projects cover all aspects of carbon management, including various capture methods, geologic sequestration, sequestration monitoring and the development of legal frame-works for liability. The layperson can be overwhelmed and discouraged by the thought that the fruit of these efforts is still approximately 10 years away. However, one important initiative to watch is round three of the Clean Coal Power Initiative.

The National Energy Technology Laboratory identified six utility-scale demonstrations of pre- and postcombustion capture and sequestration, which are scheduled to start between 2014 and 2016. Similarly, FutureGen is bringing Department of Energy funding to an alliance of coal producers and users to develop an oxy-fuel retrofit of a 200-MW unit at Meredosia Power Station in Illinois. Meanwhile, Tenaska Energy is pushing forward with a full-scale, amine-based capture system for its proposed new pulverized coal plant in Texas. The takeaway from these examples is that the period of talking about whether full-scale carbon dioxide capture is a dream or reality is passing. The fruition of these and other projects will provide answers and eliminate this uncertainty.

NUCLEAR: The Nuclear Regulatory Commission’s combined construction and operator license application process is currently evaluating several potential new, large-scale nuclear generation facil-ities. In addition federal loan guarantees may help move these first few projects forward. These projects will provide the industry with much-needed certainty regarding the licensing and new-build process in terms of cost and schedule for long-term development.

CLEAN ENERGY STANDARD: As an evolution to a strictly Renewable Portfolio

Standard, the concept of a “clean energy” standard was intro-duced in Congress in late 2010. It set a minimum percentage of energy that utilities would be required to obtain from clean energy sources, which in addition to traditional renewable (solar, wind, geothermal, biomass, qualified hydroelectric) also included nuclear, advanced coal (65 percent capture), waste-to-energy and coal-mined methane. Further, it gave credit to early retirement of fossil-fueled units. The bill proposed a minimum of 15 percent beginning in 2015, and, if enacted, would increase 5 percent every five years until reaching 50 percent in 2050.

Technological developments are also providing the industry with much-needed advancements, particularly as they relate to renewable development and reliability of supply when using intermittent resources.

SMART GRID: Numerous utilities have or are implementing Smart Grid pilot programs and full Smart Grid deployments nationwide. As technology and program implementations progress, utilities will be able to better plan and control both supply-side and demand-side resources. This enables a more optimized use of centralized and distributed generation supply, which will improve energy efficiency and conserva-tion. Smart Grid initiatives also engage customers on a real-time basis so that load can be managed more intelligently considering power supply requirements and end-use needs.

SMALL MODULAR REACTORS: The development of small modular reactors will provide utilities, co-operatives and municipal-owned utilities with a possibility of a clean and

*on 12/17/10, Basin electric announced an indefinite hold on completing the project.

**this project is not a part of the CCPi program, but has a similar scope & objectives.

Source: U.S. Department of Energy national Energy Technology Laboratory

Performer LocationCapture Technology

Capture Rate, Tonnes/yr

Start Date

PRECOMBUSTION CAPTURE

summit texas Clean energy odessa, tX selexol 3,000,000 2014

southern Company Kemper County, ms selexol 2,000,000 2014

Hydrogen energy California Kern County,Ca rectisol 2,000,000 2016

POST-COMBUSTION CAPTURE

Basin electric* Beulah, nD amine 500,000-1,000,000 2014

nrg energy thompsons, tX amine 500,000 2015

americanelectric Power new Haven, Wv

Chilled ammonia 1,500,000 2015

OXY-COMBUSTION CAPTURE

Futuregen 2.0** meredosia, il oxy-Combustion 1,000,000 2015


dependable energy resource. Multiple American technologies are expected to be offered in the 10- to 311-MW range within a 10- to 15-year horizon.

ENERGY STORAGE: Technologies are being ambitiously pursued for the firming of intermittent renewable resources. Utility-scale pumped storage hydro and compressed air energy storage are commercially available technologies that can modu-late the intermittent generation from solar and wind resources as well as improve transmission capacity utilization resulting from the high penetration rates of wind and solar. Deployment of energy storage can allow reduced sizing of new transmission to carry the intermittent generation, with excess electrical energy being stored during times of high generation within a transmis-sion region. Given the cost and environmental impacts on new transmission, this offers benefits to oversizing transmission facilities to accommodate the intermittent generation. In addition to load firming with large-scale energy storage technologies, flywheels and batteries are being applied for frequency regulation.

coNclusioNThere is no doubt that the U.S. power industry is at a

crossroads once again with no one clear path for the industry to follow. Environmental regulations, increasing integration of renewables and a seemingly abundant domestic supply of

natural gas are all factors that are pushing the industry to rely more and more on natural gas.

Yet even though gas reserves are indeed abundant, there are still numerous questions regarding our ability to develop and capitalize on the resource. Should these reserves be delayed in development or not developed altogether, utilities and their customers could repeat the pains of the early 2000s, thus compro-mising the next round of gas-fired plant capacity additions.

Moving forward, utility owners’ best bet is, in many ways, to do as they have always done: Focus on developing and main-taining a diverse fuel mix; partner with companies like Black & Veatch to get a full understanding of what technologies offer the best solutions for the utilities’ unique needs and to implement projects and programs; and invest in multiple technologies and fuels that balance economic and environmental needs. In a time where the only certainty is uncertainty, it is imperative to understand the options. And the good news is that technology options are available now, with more coming in the future.

Sam Scupham is the Service Area Leader for the Technology Assessment Group of Power Generation Services within Black & Veatch Energy providing technical and planning support for energy companies, investors, governmental agencies, and industrials. He can be reached at [email protected].

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Electrical Utility ConstructionOverhead DistributionUnderground DistributionTransmissionSubstationsEmergency RestorationAlternative Energy

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w w w . r m e l . o r g 49

rmeL 2011 caLendar

January 20, 2011introduction to the electric utility workshopDenver, co

February 3, 2011Basics of system operations workshopDenver, co

February 10-11, 2011smart grid conference - intelligent technologiespark city, Ut

February 25, 2011safety roundtable longmont, co

March 3, 2011power supply planning and projects conferenceDenver, co

March 4, 2011generation vital issues roundtableDenver, co

March 8, 2011transmission planning and operations conferenceDenver, co

March 9, 2011transmission vital issues roundtableDenver, co

March 10, 2011distribution overhead and underground operations and maintenance conferenceDenver, co

March 11, 2011distribution vital issues roundtableDenver, co

March 11, 2011rmeL foundation scholarship application deadline

March 15, 2011workforce roundtableDenver, co

March 29, 2011nerc audit Lessons Learned roundtableDenver, co

April 6-8, 2011distribution overhead and underground design and staking workshopDenver, co

April 14-15, 2011how to perform an arc flash calculation study, including dc arc flash workshopDenver, co

April 19-20, 2011health, safety and security conferenceDenver, co

April 20, 2011safety roundtableDenver, co

May 15-17, 2011spring management, engineering and operations conferenceloveland, co

June 1, 2011awards nomination deadline

June 16, 2011plant management conferencecouncil Bluffs, iA

June 17, 2011plant management roundtablecouncil Bluffs, iA

July 12, 2011rmeL golf tournamentwestminster, co

August 26, 2011safety roundtable Fort collins, co

September 11-13, 2011fall executive Leadership and management conventionsanta Ana pueblo, nm

September 29, 20112012 spring management, engineering and operations conference planning sessionDenver, co

October 11, 2011national electric safety code with 2012 updates workshopDenver, co

October 18, 2011renewable planning and operations conferenceDenver, co

november 18, 2011safety roundtablewestminster, co

2011 Calendar of Events

continuing eDUcAtion certificatescontinuing education certificates awarding professional Development

Hours are provided to attendees at all rmel education events. check the

event brochure for details on the number of hours offered at each event.


advertiser index

Alstom Power 16 www.alstom.com (970) 215-1805

AMEC 5 www.amec.com (770) 810-9698

Ames Construction 3 www.amesconstruction.com (952) 435-7106

Bechtel Power Corporation 23 www.bechtel.com (415) 768-1234

Black & Veatch Corp. 13 www.bv.com (913) 458-2000

Border States Electric 25 www.borderstateselectric.com (701) 293-5834

CH2M Hill Inside Back Cover www.ch2m.com (303) 771-0900

Colorado Powerline, Inc. 33 (303) 660-3784

DIS-TRAN Packaged Substations, LLC 27 www.distran.com (318) 448-0274

Empire Electric Association, Inc. 50 www.eea.coop (970) 565-4444

Exponential Engineering Company 25 www.exponentialengineering.com (970) 207-9648

Great Southwestern Construction, Inc. 14 www.gswc.us (303) 688-5816

HDR, Inc. 39 www.hdrinc.com (402) 399-1000

Harris Group, Inc. 35 www.harrisgroup.com (303) 291-0355

Hitachi Power Systems America, Ltd. 7 www.hitachipowersystems.us (908) 605-2800

Kiewit Back Cover www.kiewit.com (913) 928-7000

Kleinfelder 35 www.kleinfelder.com (480) 763-1200

Laminated Wood Systems, Inc. 45 www.lwsinc.com (402) 643-4708

Merrick & Company 14 www.merrick.com (303) 751-0741

Nebraska Public Power District 27 www.nppd.com (402) 564-8561

Pike Electric, Inc. 33 www.pike.com (336) 789-2171

Pioneer Electric Cooperative, Inc. 50 www.pioneerelectric.coop (620) 356-4111

POWER Engineers Inside Front Cover www.powereng.com (208) 788-3456

Power Product Services 41 www.powerproductservices.com (720) 859-4625

Sabre Tubular Structures 48 www.SabreTubularStructures.com (817) 852-1700

Sega, Inc. 20 www.segainc.com (913) 681-2881

Stanley Consultants, Inc. 33 www.stanleygroup.com (303) 799-6806

Sturgeon Electric Co. Inc. 48 www.myrgroup.com (303) 286-8000

T & R Electric Supply Co., Inc. 9 www.tr.com (800) 843-7994

TIC – The Industrial Company 17 www.ticinc.com (970) 879-2561

Trees Inc. 27 www.treesinc.com (866) 865-9617

Ulteig Engineers, Inc. 25 www.ulteig.com (701) 237-3211

University of Idaho Summit 41 www.uiueg.org (208) 885-6265

Westwood/ETG 35 www.westwoodps.com (952) 937-5150

WorleyParsons Group, Inc. 45 www.worleyparsons.com (303) 928-4226

Young & Franklin 15 www.yf.com (315) 457-3110

Zachry Holdings, Inc. 21 www.zhi.com (210) 588-5000

The Team That Delivers

atakl201101.005 © 2011 CH2M HILL

From Siting and Permitting to complete Engineering, Procurement,

Construction and Startup, our experienced team is ready to support all our

clients’ power needs.

Since 1946, CH2M HILL has been a global leader in engineering, construction

and operations. By implementing innovative approaches throughout our

diverse portfolio of industries, we ensure cost savings, social responsibility,

and a safer work environment - for every client, on every project, every time.

CH2M HILL provides full service engineering, procurement, construction,

operations & maintenance, consulting, environmental, and program

management capabilities that span the entire energy value chain, including:

Solar, Wind, Geothermal, Alternative/Waste Fuels, and Traditional Power

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We build cool projectswww.ch2m.com/power

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CH2M HILL has a unique culture that makes working with your people a pleasure...” — Robert Connell, Former Project Director - DDPS Major Development Projects, Origin Energy

rmel electric energy issue 1 2011

Documents

energy consultant

power industry

critical energy issuesissue

i t iet s

demand energy networks

electric utilities

mn salt lake city

independent consultant