aging utility infrastructure - myths and realities

32
Aging Utility Infrastructure - Myths and Realities Presented by Dan O’Neill At the Chartwell Distribution Reliability Summit On March 9, 2007 In Atlanta, Georgia

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Aging Utility Infrastructure - Myths and Realities. Presented by Dan O’Neill At the Chartwell Distribution Reliability Summit On March 9, 2007 In Atlanta, Georgia. Agenda. The ‘problem’ as typically stated The myth of the ‘tsunami’ dispelled Age-based replacement is imprudent - PowerPoint PPT Presentation

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Page 1: Aging Utility Infrastructure - Myths and Realities

Aging Utility Infrastructure -Myths and RealitiesAging Utility Infrastructure -Myths and Realities

Presented by Dan O’Neill

At the Chartwell Distribution Reliability Summit

On March 9, 2007

In Atlanta, Georgia

Page 2: Aging Utility Infrastructure - Myths and Realities

2

AgendaAgenda

The ‘problem’ as typically stated

The myth of the ‘tsunami’ dispelled

Age-based replacement is imprudent

The real problems of aging infrastructure

How to address the problem

Observations and key questions

Page 3: Aging Utility Infrastructure - Myths and Realities

3

Most US utilities had a growth spurt in the 1960s-70s…Most US utilities had a growth spurt in the 1960s-70s…

… And as a result, many utilities have a ‘bubble’ of equipment of

that vintage, like the post-war baby boomer bubble in population

… And as a result, many utilities have a ‘bubble’ of equipment of

that vintage, like the post-war baby boomer bubble in population

Growth of Electricity Usage (GWh) in US 1960-2005

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

10-y

r M

ovA

vg G

row

th R

ates

Page 4: Aging Utility Infrastructure - Myths and Realities

4

…that caused a ‘bubble’ in some distribution installation, e.g., URD……that caused a ‘bubble’ in some distribution installation, e.g., URD…

• Most companies started ramping

up their URD in the 1960’s

• Some were responding to local

ordinances requiring URD for

residential developments of any

significant size

– E.g., NY in 1967: URD for

developments with 5 or more

• Housing growth is the key driver

– Often a good correlation

between feet installed and

customer growth

– Recessions in 1975 and in

early 1980’s are evident

– In 1990’s some were affected

by local or regional limits to

growth

URD Cable Installation History Company B

0.0

0.5

1.0

1.5

2.0

2.5

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Cab

le F

t. I

nst

alle

d P

er Y

ear

(Mil

lio

ns)

URD Cable Installation History Company A

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Cab

le F

t. I

nst

alle

d P

er Y

ear

(Mil

lio

ns)

Page 5: Aging Utility Infrastructure - Myths and Realities

5

…which could cause a ‘bubble’ of failures in the current era…which could cause a ‘bubble’ of failures in the current era

Scenario 1: “The egg thru the snake”

When the Weibull distribution has a shape value of 30 and a scale value of 25 years,

– the assumed rate of cable failures are tightly bunched around the 25-year point, and

– the profile of predicted cable failures follows the distribution of installations,

– with the peak failures shifted about 25 years in the future (the dispersion adds about three years: the 1973 peak in installations corresponds to a 2001 peak in failures)

Shape = 30Scale = 25 yrs

Predicted Cable Failures

0

20

40

60

80

100

120

19

75

19

79

19

83

19

87

19

91

19

95

19

99

20

03

20

07

20

11

20

15

20

19

20

23

20

27

20

31

Fa

ilure

s (0

00

s)

Assumed Rate of Cable Failures

0%

10%

20%

30%

40%

50%

1 5 9

13

17

21

25

29

33 37

41

45

49

Years Since Installation

Fai

lure

s

Cable Sections Left By Year Installed

0

5001,000

1,5002,000

2,5003,0003,500

4,000

4,5005,000

19

50

19

54

19

58

19

62

19

66

19

70

19

74

19

78

19

82

19

86

19

90

19

94

19

98

20

02

Sec

tio

ns

Typical data

Page 6: Aging Utility Infrastructure - Myths and Realities

6

AgendaAgenda

The ‘problem’ as typically stated

The myth of the ‘tsunami’ dispelled

Age-based replacement is imprudent

The real problems of aging infrastructure

How to address the problem

Observations and key questions

Page 7: Aging Utility Infrastructure - Myths and Realities

7

Wider failure distribution smoothes the installation profile… Wider failure distribution smoothes the installation profile…

Scenario 2: “Smoothing the profile”

When the Weibull shape value is reduced to 10,– the assumed rate of failures are more

dispersed around the 25-year point and– the profile of the predicted failures is a

smoothed version of the distribution of installations,

– with its peak failures shifted about 34 years into the future (from 1973 to 2007)

Predicted Cable Failures-Illustrative-

0

10

20

30

40

50

60

19

75

19

79

19

83

19

87

19

91

19

95

19

99

20

03

20

07

20

11

20

15

20

19

20

23

20

27

20

31

Fa

ilure

s (0

00

s)

Cable Sections Left By Year Installed-Illustrative-

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

19

50

19

54

19

58

19

62

19

66

19

70

19

74

19

78

19

82

19

86

19

90

19

94

19

98

20

02

Sec

tio

nsShape = 10

Scale = 25 yrs

Assumed Rate of Cable Failures-Illustrative-

0%

2%

4%

6%

8%

10%

12%

14%

16%

1 5 9

13

17

21

25

29

33 37

41

45

49

Years Since Installation

Fai

lure

s

Typical data

Page 8: Aging Utility Infrastructure - Myths and Realities

8

…With a wide distribution erasing the installation profile…With a wide distribution erasing the installation profile

Cable Sections Left By Year Installed

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

19

50

19

54

19

58

19

62

19

66

19

70

19

74

19

78

19

82

19

86

19

90

19

94

19

98

20

02

Sec

tio

ns

Assumed Rate of Cable Failures

0%1%1%2%2%3%3%4%4%5%

1 5 9

13

17

21

25

29

33 37

41

45

49

Years Since Installation

Fai

lure

s

Shape = 2.5Scale = 25 yrs

Peak in 2072 >>

Predicted Cable Failures

0

2

4

6

8

10

12

14

19

75

19

79

19

83

19

87

19

91

19

95

19

99

20

03

20

07

20

11

20

15

20

19

20

23

20

27

20

31

Fa

ilure

s (0

00

s)

Scenario 3: “The egg disappears”

When the Weibull shape value is reduced to 2.5, – the assumed rate of failures are widely

dispersed around the 25-year point and– the profile of predicted failures is virtually a

straight line after the first 25 years, – with its peak failures shifted almost 100 years

into the future

Typical data

Page 9: Aging Utility Infrastructure - Myths and Realities

9

The third scenario is born out by existing evidenceThe third scenario is born out by existing evidence

• For companies that have done little URD cable replacement, the trend is much like what is pictured in the third scenario:

– Failures increasing at a steady annual rate of about 5 percent, which, with compounding, means a doubling in about 14 years

• With an active replacement program, no such increase will occur, but:

– The replacement itself might need to grow at about 5 percent per year to keep up, until the failure-prone cable is substantially replaced

• The replacement program’s impact can be increased or diminished by how the cable to be replaced is selected:

– It needs to be, as much as possible, worst first

The myth that cable installed in the 1960-70’s had a ‘thirty-year’ life and

so will come ‘crashing down on us’ in the next ten years is just not true.

There is no ‘crashing wave’, only a ‘long swell’ until the worst is replaced

The myth that cable installed in the 1960-70’s had a ‘thirty-year’ life and

so will come ‘crashing down on us’ in the next ten years is just not true.

There is no ‘crashing wave’, only a ‘long swell’ until the worst is replaced

URD Cable Failures

0

1,000

2,000

3,000

4,000

5,000

6,000

19

82

19

85

19

88

19

91

19

94

19

97

20

00

20

03

Fa

ilu

res

Pe

r Y

ea

r

Company A

Company B

Page 10: Aging Utility Infrastructure - Myths and Realities

10

AgendaAgenda

The ‘problem’ as typically stated

The myth of the ‘tsunami’ dispelled

Age-based replacement is imprudent

The real problems of aging infrastructure

How to address the problem

Observations and key questions

Page 11: Aging Utility Infrastructure - Myths and Realities

11

Public cries to replace aging infrastructure are increasingPublic cries to replace aging infrastructure are increasing

July 15, 1999, Thursday

Metropolitan Desk

And yesterday, Mr. Giuliani continued his attacks on Con Edison's response as too passive. ''What Con Edison should be saying is here are the things that have to be done to make it virtually impossible for blackouts to take place,'' he said. ''We need more power. We need to purchase more power. We need more alternatives. We need a more modern infrastructure, meaning we have to improve the feeder cables so we have better material. We need to insulate them better.''

(emphasis added)

Page 12: Aging Utility Infrastructure - Myths and Realities

12

But if the public knew the facts about age & reliability…But if the public knew the facts about age & reliability…

Not cost-effectiveNot cost-effectiveReplacing infrastructure components based on age is one of the least cost-effective ways of improving service

Not method-efficientNot method-efficientThere are better indicators of deterioration than age, e.g., specific failure history, test results, defective types

Not best practiceNot best practiceOther industries have learned not to rely on age for reliability management, e.g., aerospace, automotive, even natural gas pipelines and LDC’s

Relying on age-based replacement for reliability is:

……they would say that age-based replacement is ‘they would say that age-based replacement is ‘imprudentimprudent’ ’ because it is usually a poor use of ratepayer fundsbecause it is usually a poor use of ratepayer funds

……they would say that age-based replacement is ‘they would say that age-based replacement is ‘imprudentimprudent’ ’ because it is usually a poor use of ratepayer fundsbecause it is usually a poor use of ratepayer funds

Page 13: Aging Utility Infrastructure - Myths and Realities

13

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0 5 10 15 20 25 30 35 40 45 50

Age of cable (years)

Ca

ble

fa

ilu

res

pe

r m

ile

Age-based replacement is almost always an inferior strategyAge-based replacement is almost always an inferior strategy

Because even though failure does increase with age, it does so Because even though failure does increase with age, it does so very graduallyvery gradually, and other methods provide a sharper pencil to , and other methods provide a sharper pencil to

select assets for replacement closer to ‘just in time’select assets for replacement closer to ‘just in time’

Because even though failure does increase with age, it does so Because even though failure does increase with age, it does so very graduallyvery gradually, and other methods provide a sharper pencil to , and other methods provide a sharper pencil to

select assets for replacement closer to ‘just in time’select assets for replacement closer to ‘just in time’

The failure rate The failure rate of 40-year old of 40-year old

cable is cable is about .45 per about .45 per mile, which is mile, which is higher than higher than

average, but the average, but the failure rate of failure rate of cable sections cable sections

that have failed, that have failed, say three times say three times in five years is in five years is

9.0 per mile*, or 9.0 per mile*, or 20 times higher!20 times higher!

The failure rate The failure rate of 40-year old of 40-year old

cable is cable is about .45 per about .45 per mile, which is mile, which is higher than higher than

average, but the average, but the failure rate of failure rate of cable sections cable sections

that have failed, that have failed, say three times say three times in five years is in five years is

9.0 per mile*, or 9.0 per mile*, or 20 times higher!20 times higher!

* E.g., 350 feet per section,

or 15 sections per mile

Page 14: Aging Utility Infrastructure - Myths and Realities

14

Replacement is only one of the asset management strategies…Replacement is only one of the asset management strategies…

Asset Management Strategies

• Improved standards for new construction

• Preventive maintenance

• Remediation of failure-prone conditions

• Replacement of failure-prone components

• Re-design for redundancy

• Reinforce for capacity

• Inspection and condition monitoring

• Mitigation of effects on customer satisfaction

• Rapid repair and restoration

…and it is usually not the most cost-effective, unless combined

with inspection and monitoring to replace the worst first

…and it is usually not the most cost-effective, unless combined

with inspection and monitoring to replace the worst first

Page 15: Aging Utility Infrastructure - Myths and Realities

15

There are better replacement criteria than age aloneThere are better replacement criteria than age alone

• Better method of selection

– Number of previous troubles – e.g., URD cable

– Inspection of condition – e.g., Poles. Crossarms

– Due to defective design or ‘vintage’

• (not necessarily the oldest)

• Better reason for selection to replace

– With a capacity upgrade – conductor, transformers

– To fix specific power quality problems or complaints

– With customer contribution for enhanced reliability

• Better timing of replacement

– With road moves or customer work

– To take advantage of a planned outage

– Upon failure or at condition of imminent failure

Why don’t we replace poles by just reading the age on the pole?

Because we have a better method – pole inspection – just

another example of why age-based replacement is imprudent.

Why don’t we replace poles by just reading the age on the pole?

Because we have a better method – pole inspection – just

another example of why age-based replacement is imprudent.

Most poles have a pole mark, with the date of installation

stamped on it. Right?

Page 16: Aging Utility Infrastructure - Myths and Realities

16

AgendaAgenda

The ‘problem’ as typically stated

The myth of the ‘tsunami’ dispelled

Age-based replacement is imprudent

The real problems of aging infrastructure

How to address the problem

Observations and key questions

Page 17: Aging Utility Infrastructure - Myths and Realities

17

Utilities should know the ‘trouble-prone’ groups of aging assetsUtilities should know the ‘trouble-prone’ groups of aging assets

• URD cable – especially HMW or unjacketed 170-mil XLPE concentric neutral from the 1960s’-70’s

• Circuit Breakers

– Medium voltage – Air-magnetic metal clad (especially outdoor)

– High voltage – Certain air blast models

– Oil breakers of inferior design

• Poles – as indicated by inspection

• Power transformers – certain designs, locations

• Transformers – CSPs, overloaded, submersed

• Crossarms – ‘chicken wing’ armless construction

• Transmission H-frames – wooden side braces

• Cutouts – Potted porcelain cutouts of the early 1990’s vintage by a certain manaufacturer

• Substation buss – cap-and-pin insulators, i.e. ‘brown glass’

• Pole-top – plastic ties, guards, etc. not protected from UV deterioration

• Arresters – silicon carbide gap-ype arresters

Page 18: Aging Utility Infrastructure - Myths and Realities

18

For some equipment, there are problems with early ‘vintages’For some equipment, there are problems with early ‘vintages’

Unjacketed 3-phase cable with worn concentric neutral around insulated conductors

• Typical progression of URD types:

– HMW unjacketed (1960’s)

– XLPE unjacketed (1970’s or later)

– XLPE jacketed (1970’s or later)

– TRXLPE jacketed (1980’s to now)

– EPR jacketed (1980’s to now)

• Virtually all is concentric neutral

• Original HMW was un-stranded

• Some went from DB to in-conduit

– Especially in rocky soil

– And some had a period of C-in-C

• Typical insulation by voltage:

– 12kV – 170 mil

– 34kV – 240 mil

* Glossary:

HMW – High Molecular Weight Polyethylene

XLPE – Cross-Link Polyethylene

TRXLPE – Tree-retardant XLPE

EPR – Ethylene Propylene Rubber

DB – Direct Buried

C-in-C – Cable in Conduit (cable pre-inserted)

For most companies, their URD problem is their 34 kV-class or,

for their 15kV-class, the 170-mil HMW unjacketed cable installed

in the 1960’s and 1970’s, if they have not already replaced it

For most companies, their URD problem is their 34 kV-class or,

for their 15kV-class, the 170-mil HMW unjacketed cable installed

in the 1960’s and 1970’s, if they have not already replaced it

Page 19: Aging Utility Infrastructure - Myths and Realities

19

AgendaAgenda

The ‘problem’ as typically stated

The myth of the ‘tsunami’ dispelled

Age-based replacement is imprudent

The real problems of aging infrastructure

How to address the problem

Observations and key questions

Page 20: Aging Utility Infrastructure - Myths and Realities

20

Left alone, aging asset failures can be an accelerating problemLeft alone, aging asset failures can be an accelerating problem

For example, in Company A’s URD cable:

• Outages were increasing at 5-6% per year, which means doubling every 12-14 years

• Repair costs were averaging tens of million$ per year, and growing at the same rate

• Customers were experiencing multiple interruptions, with some averaging 3-4 per year on their half-loop, not counting upstream outages from feeder lockouts, trees, etc.

• Replacement spending had been very little, and needed to ramp up to sufficient levels to arrest the growth in outages, and would have to grow to keep up with deterioration

Company A needed to fund a URD cable replacement program that would

arrest the growth of outages and maintain the level like Company B did

Company A needed to fund a URD cable replacement program that would

arrest the growth of outages and maintain the level like Company B did

* URD – Underground residential distribution – typical way of serving a post-1960’s residential subdivision, i.e., 300-5000 feet of usually single-phase, 12-34kV primary voltage cable, direct-buried (not in conduit), connecting 1-30 padmount transformers per half-loop, with 2-10 customers per transformer, so about 50 customers per half-loop (from riser to ‘normally open’ point)

URD Cable Failures

0

1,000

2,000

3,000

4,000

5,000

6,000

19

82

19

85

19

88

19

91

19

94

19

97

20

00

20

03

Fa

ilu

res

Pe

r Y

ea

r

Company A

Company B

Page 21: Aging Utility Infrastructure - Myths and Realities

21

HL&P addressed its URD problem effectivelyHL&P addressed its URD problem effectively

HL&P 15kV Failures

HL&P 35kV FailuresHL&P (CenterPoint Energy) had the same type of problem as many and addressed it with a combination of Lightning Arrestor (L/A) upgrade and a cable replacement program:

• Key program items– L/A change out program to limit “let-through current”

starting in the mid 1980’s– From 1981 to 2001 all replacement cable was jacketed

cable in conduit, but due to cost and no observed increase in reliability, the installation practice was shifted back to direct buried after 2001

• 35kV Cable– Adopted an aggressive 5 year replacement program (1987

to 1992), funded at $10 million per year, that replaced 95% of the original installed cable

• 15kV Cable– Active policy for the past 10 years of replacing half loops

with 2 or greater failures in a rolling 12 month period. 2005 funding level was $2.4million or a 19 mile replacement program (at $24/ft)

HL&P has leveled the exponential growth of failures, and stabilized failures at an acceptable level, where it has stayed for over a decade. Others can do the same

HL&P has leveled the exponential growth of failures, and stabilized failures at an acceptable level, where it has stayed for over a decade. Others can do the same

Page 22: Aging Utility Infrastructure - Myths and Realities

22

The solution involves four key questions about the replacement programThe solution involves four key questions about the replacement program

Measuring the right data?

Predicting the right future?

Predicting the right future?

Funded at the right level?

Funded at the right level?

Replacing the right assets?Replacing the right assets?

• Does the utility know:– What causes failures?– How to avoid them?– How much it costs?

• Does the utility know:– What will happen if programs stay as they are today?– Whether there will be a ‘crashing wave’ or a ‘long swell’?– How the future could be changed?

• Does the utility know:– Which cable segments or half-loops are most cost-effective to address?– Whether and when to inject, outsource, directionally bore, etc.?– How to ensure the field replaces what the model assumed they would?

• Does the utility know:– What level of funding would at least stabilize aging asset outages?– What funding would be needed to achieve customer satisfaction?– What funding is needed to at least break-even on repair costs?

Answering these four key questions will allow the utility to

optimally manage its aging infrastructure replacement programs

Answering these four key questions will allow the utility to

optimally manage its aging infrastructure replacement programs

Page 23: Aging Utility Infrastructure - Myths and Realities

23

Cable Failure

Improper Installation

Mechanical Damage

Mark-outs

Enforce Penalties

Temperature of cable

Manufacturer Defect

Insulation Breakdown

Dig In

Treeing

Rocky Soil

Enforce Trench

StandardsImproper Training

Insulation Thickness/Type

Cable Injection

Cable Replacement

Lightning

One Call

Upgrade to MOV

Arresters around open

New Construction

Jacket/casing missing/broke

Moisture in cable/joint

Rock Bruising

Corrosion Strength

Steam (Ducted)

LoadingVentilation(Ducted)

AddCapacity

Maintain Manholes

Capacity Planning

Thumping

Cathodic Protection

Maintain Cath Prot

Street Crossing

It is important to investigate causes of failure…It is important to investigate causes of failure…

Thermal Instability

Wet Manhole

…in order to know how to fix the problem…in order to know how to fix the problem

Page 24: Aging Utility Infrastructure - Myths and Realities

24

Minutes per outage

Growth rate of outages

Past outages per mile

Cost permile

The key to optimal replacement is high failure rate…The key to optimal replacement is high failure rate…

Future minutes per year avoided

Dollars spent

Future minutesavoided per yearFuture outages

avoided per year

Future outagesavoided per year

Past outagesper year

Bang per buck

Past outages per year Miles of line

to be replaced

1 $90,000

1.25 45001 min.$2.00

Miles of line to be replaced

Dollars spent

8x x x =

Where:

• $90,000 per mile = 5280 feet/mile x $17 per foot to replace• 8 outages/mile/year = 13 spans/mile x (3 outages per 400ft span in past 5 years)• 25% growth rate = 3 outages in past 5 years becomes 3 outages in next 4 years• 4500 minutes per outage = 50 customers per outage x 90 minutes per outage

The higher the failure rate... …the higher the bang per buck

Page 25: Aging Utility Infrastructure - Myths and Realities

25

…As well as ways to reduce the unit cost…As well as ways to reduce the unit cost

• Injection is sometimes a cost-effective option

– Guaranteed by some vendors for many years

– Typically half the cost per mile when used on the right

cable

– Not effective with blocking splices

– Does not solve problem of corroded neutral

– Not really an option for replacing individual segments, but

good for half-loops

• Volume can reduce unit cost

– Half-loops get better cost than individual segments

– But not worth it if failure rate of replaced cable drops faster

than unit cost when volume increases

• Use trenchless technology where possible

– Tunneling under driveways, through tree root systems,

etc.

• Take credit for saving O&M, if appropriate

– Repairing future failures can be made easier, e.g., conduit

Page 26: Aging Utility Infrastructure - Myths and Realities

26

It is crucial to identify and replace the ‘worst first’It is crucial to identify and replace the ‘worst first’

• E.g., most of utilities’ URD cable sections and half-loops has not failed in the last five years. Replacement of that cable would be unnecessary at this time

• A customer satisfaction-driven program would target those half-loops that experienced a high rate of failure, because every segment that fails in the half-loop causes outages to all customers behind that device (the fuse on the riser)

• The replacement program should then be further refined by replacing only those half-loops or sections in the half-loop that have not already been replaced, or that fit certain criteria, e.g., corroded neutral, voltage, etc. The goal is not to replace all of the assets,

but to replace enough of the right assets at the right time to affect the trend of failures

The goal is not to replace all of the assets, but to replace enough of the right assets at the right time to affect the trend of failures

49%

37%

7%3% 3%*

0%

10%

20%

30%

40%

50%

60%

De

vice

s0 1 2 3 4 or

greater

Failures

URD Failures

Distribution of Failure by Half-Loop

(2001-2005)

Possible target of replacement

program

Page 27: Aging Utility Infrastructure - Myths and Realities

27

With the right approach, an optimal program can solve the problemWith the right approach, an optimal program can solve the problem

Based on the number of miles of cable that fit the criteria of the half-loop program:

• A program of 2x miles of URD cable replacement, beginning in 2007 and rising by y% per year, would stabilize failures at a normal 2007 level

• 2005 was a hot year, like 1999, so a normal 2006 would be less

• An x-mile program would leave failures rising, although at half the rate

Without a replacement (or injection) program, or with

a minimal program, Company A’s URD failures would

continue to double every 12-25 years

Without a replacement (or injection) program, or with

a minimal program, Company A’s URD failures would

continue to double every 12-25 years

Company A URD Cable Failures

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

Fai

lure

s P

er Y

ear

Actual '82-'05

Projected '82-'16

Repl x mi +y% per yr

Repl 2x mi +y% per yr

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Elsewhere*, we have shown how to choose the right level of replacementElsewhere*, we have shown how to choose the right level of replacement

From the viewpoint of a prudent company (and its regulator), there are three tests of a replacement program of this type:

1) Trending – What are the trends in spending and outages of this type?• If spending is down while outages are up, more spending is needed

• If spending is level and outages are level, spending may be adequate (but see below)

• Obviously, there are issues in adjustment for weather, costs, productivity, etc.

2) Benchmarking – What are other companies doing in spending and performance?• If other comparable companies are spending more or getting better results, shouldn’t you?

• Obviously, there are reasons why some companies may differ for good reason

3) Modeling – When the process is modeled, what does it indicate the required level of spending should be to maintain performance or improve it to what customers expect?• This is the kind of modeling we have demonstrated above

• There is customer satisfaction data to suggest that the threshold may be around three outages per year – including outages caused by devices upstream of the URD half-loop

• Compared to the other two tests, this one is the most useful if the modeling is done right

A ‘prudent’ replacement program should be designed

with these tests in mind, especially the third

A ‘prudent’ replacement program should be designed

with these tests in mind, especially the third

* See “The Reliability Conundrum – What Is the Right and Prudent Level of Spending on Service?”, Public Utilities Fortnightly, March 2004, by Daniel E. O’Neill

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AgendaAgenda

The typical problem

A comparison of URD programs

The myth of the ‘tsunami’ dispelled

How to address the problem

Observations and key questions

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What we have learnedWhat we have learned

Measuring the right data

Predicting the right future

Predicting the right future

Funded at the right level

Funded at the right level

Replacing the right assets

Replacing the right assets

• Capturing the right information during installation and failures, e.g., date installed, insulation type, location and protection device operated, etc. that will enhance the data mining and prioritization process going forward

• Modeled correctly in terms of installation history, failure rate, and replacement/retirement

• No ‘tsunami’, just growth at a compounded rate

• Replacing based upon centralized selection criteria that include failure history, design/model, projected number of customers affected and restoration time, etc.

• Based on trending, benchmarking, and modeling • As a ‘stake in the ground’, at least determine the amount of funding

needed to stabilize failures at current levels, then determine what it would take to achieve customer satisfaction

Answering these four key questions will allow the utility to

optimally manage its aging infrastructure programs

Answering these four key questions will allow the utility to

optimally manage its aging infrastructure programs

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Observations and Key QuestionsObservations and Key Questions

Observations

• Replacement program – Utilities need to implement an enhanced replacement program for aging infrastructure assets, keyed to replacing the ‘worst first’

• Asset selection – Utilities need to select assets with a high rate and impact of failure

• Without such a replacement program, asset failures will continue to double, often in a decade or so, with consequences for repair cost, increased multiple interruptions to the same customers, possible lengthy outages during major events, and accumulation of the inevitable replacement cost

• There is no ‘tsunami’, only a long, high swell, in the sense that failures and costs will continue to rise at about 3-10% per year, doubling in a decade or so. But a replacement program can stabilize the failures, or even reduce them

Key Questions

• Is the current level of failures acceptable, or should the utility aspire to reduce them further?

• Can the utility execute an enhanced replacement program effectively with its current processes?

• Are their other opportunities to reduce and refine the selection process e.g.: life extension, better inspection and maintenance, etc.?

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Questions?Questions?