Cost is king & reliability is expensive

POSTED BY: Todd Loggins

It’s exciting time to be in the electric utility industry with all of the technology advancements that are available today. The challenge, though, is how to filter through the many choices to make wise selections that ultimately meet the needs of our customers.

Cost is king

The first thing that we have to do is to understand what the needs of our customers are. No matter where you are or what type of utility you work for, the majority of our customers really have two basic interests above all else. Their first interest is cost: they want their utility bill to be as low as possible. I was recently at a conference where the main focus was on renewables and there was a representative of Wal-Mart there discussing their renewable investments and strategies. He commented that while Wal-Mart is investing a lot of money in renewables, at the end of the day it has to make sense financially because ‘cost is king’. That statement stuck with me because I believe it is true across our entire customer base. For all of our customers – be they residential, commercial, or large industrial -- cost is most important.

Reliability is expensive

The second thing that all of our customers want is reliability – they want us to keep the lights on all the time. At the same conference, a CEO of a rural electric co-op made the comment that “energy is cheap, but reliability is expensive”. I had never really thought about it from that perspective, but after reflecting on that statement I believe that he was spot on. Our challenge is how do we improve reliability by filtering through and deploying the right mix of today’s advanced technology without raising rates.

$14 million in cost savings over 10 years thanks to applications such as DVR & Volt/VAR

I believe the solution – and what has worked for us at Clinton Utilities Board (CUB) –  is to first focus on cost savings applications such as Dynamic Voltage Reduction (DVR) and Volt/VAR Optimization (VVO). Over the last 10 years, those 2 applications alone have reduced our power costs in excess of $14,000,000. We have used a portion of those cost savings to help offset the costs of reliability improvements through such advanced applications as Fault Location, Isolation, and Service Restoration (FLISR). Today, we have FLISR deployed across our entire distribution system.

For a single event, our goal is for no more than 500 customers to be affected. On average, that single event will result in less than 200 customers being left without power. That includes the complete loss of any one of our electric distribution substations, some of which serve more than 5,000 customers. I am not aware of another utility anywhere, especially in a rural environment such as ours, that has been able to achieve that level of grid automation. Furthermore, we have been able to achieve all of that without a single rate increase. That level of reliability improvement through automation would not have been possible without rate increases had we not first focused on cost savings.

While ‘cost is king’ and ‘reliability is expensive’, those don’t have to be mutually exclusive with today’s advanced technology applications.

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ABOUT THE AUTHOR

Todd Loggins

Technical Operations Supervisor, Clinton Utilities Board

Todd Loggins received his BS in Electrical Engineering from Tennessee Tech University and is a registered professional engineer in the State of Tennessee. He has worked in the electric utility industry for over 26 years, the last 24 of those with the Clinton Utilities Board (CUB) in Clinton, Tennessee. For the past 12 years, he has served as Technical Operations Supervisor for CUB. During his career, he has successfully managed numerous smart grid deployments that have resulted in improvements in operational efficiency and reliability while at the same time providing significant cost savings to CUB’s customers.

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