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Page 1: Nhathongminhvn september 11:2015

Sep|Oct|2015

volume 93|5

www.elp.com

The Business of Power for Utility Executives

Plant Ops: Fly, Don’t Drive

Keeping Up with the Amazons

Absolute PowerWashington D.C. Leaders Making Rules for Utilities

1509ELP_C1 1 10/8/15 9:08 AM

Page 3: Nhathongminhvn september 11:2015

Go to http://uaelp.hotims.com for more information.

Owned and Produced by: Offi cial Publication: Co-located with: Host Utility:

Electric Light & Power Executive ConferenceFebruary 8, 2016 • Hyatt Regency Orlando • Orlando, Florida

w w w . e l p c o n f e r e n c e . c o m

Register Todaywww.elpconference.com

Only $395 until Nov. 12!

1509ELP_1 1 10/8/15 7:54 AM

Page 4: Nhathongminhvn september 11:2015

The business of power for utility executives

2 | ElEctriclight&PowEr Sep|Oct|2015

Sep|Oct|2015

volume 93|5

Events 4

Commentary 5

COLUMNS

Customer Service: Utility Style 6

AMP can be Win-Win

by Penni McLean-Conner,

Eversource Energy

Economic Inquiry 7

A Synopsis of Changes

in the Clean Power Plan

by Tanya Bodell,

Energyzt

SECTIONS

Feature New OSHA 8

Reporting Requirements

by Stephen Cockerham,

Husch Blackwell

Finance Clean Power Plan Only one 10

of Fed Issues Facing Utilities

by Rod Walton,

Senior Editor

Generation Coal Share of U.S. 14

Power Generation Falls

by Barry Cassell,

GenerationHub

Future of Plant Operations: 16

Fly, Don’t Drive

by Rosco Backus,

Versify Solutions

Renewables/Sustainability Energy Storage as Consumer Product: 18

Following Path of Rooftop Solar?

by Jessica Harrison,

DNV GL

Solar Power’s Future Looks Bright 20

by Teresa Hansen,

Chief Editor

Customers 21 Utilities Knock, Knock

Knocking on Changes’s Door

by Gadi Solotorevsky,

cVidya

24 Keeping up With the Amazons:

How Data Analytics Helps

by Micah DeHenau,

Vertex

26 Virtual Assistant Drives Self-Service

Adoption at TXU Energy

by Jeff Camp,

TXU Energy

and Dave Parkinson,

Interactions LLC

27 Fall, a Time for Change

by Rod Litke,

CS Week

T&D Operations 28 Utilities on Front Lines

of Environmental Stewardship

by Linda Blair,

ITC Holdings Corp.

30 Benchmarking in Action:

Comparing Costs of HVDC

by Steven J. Morris,

UMS Group Inc.

Energy Efficiency & Demand Response 32 Future of Demand Response:

A Practitioner’s View

by Ed Thomas,

Peak Load Management Alliance

34 Texas School District Slashes Costs

With Solar and Ice-based Storage

by Mark MacCracken,

CALMAC Manufacturing Corp.

Fight the Good FIght

36 Companies Must Battle

Against Data Theft

by Jay Mecredy,

Courion Corp.

8

10

34

28

16

21

1509ELP_2 2 10/8/15 7:54 AM

Page 5: Nhathongminhvn september 11:2015

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©2015 S&C Electric Company 1048-A1502

Go to http://uaelp.hotims.com for more information.

1509ELP_3 3 10/8/15 7:54 AM

Page 6: Nhathongminhvn september 11:2015

E V E N T S

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Feb. 9-11, 2016 : Orange County Convention Center, Orlando, Florida

ElEctriclight&PowEr is the official print publication of

Feb. 8, 2016 : Hyatt Regency Orlando, Florida

ElEctriclight&PowEr is the official print publication of

April 25 - 29, 2016 : Phoenix

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items for educational classroom use please contact Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 USA 978-750-8400. Periodicals Class postage paid at

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4 | ElEctriclight&PowEr Sep|Oct|2015

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1509ELP_4 4 10/8/15 7:54 AM

Page 7: Nhathongminhvn september 11:2015

Sep|Oct|2015 ElEctriclight&PowEr | 5

Commentary

Teresa Hansen, editor in chief

Taking the Road Less Traveled

As I’ve mentioned before, I live in a small town—about 20,000 people—that owns and

operates the electric and water utilities. Until recently, all residential electric and water

meters were analog and some were more than 50 years old. City officials knew that many

of these meters were not accurate, that it was losing a lot of water through leaks and

substantial revenue through inaccurate electric and water meter readings. In addition, a

number of the residential meters were still self-read. Because most of the city’s operating

revenue comes from its utility operations, officials decided to make the move to smart

meters to reduce revenue and water losses, improve efficiency and eventually pass along time-of-use rates,

which it is already paying to its power supplier. They were and still are convinced this was the right thing to

do and I am, too.

It’s unfortunate, however, that they failed to include the city’s residents in their plans. They thought one or

two short articles in the local newspaper about their plans to move to smart meters was adequate communication.

They didn’t let people know beforehand when they were coming out to change their meters, nor did they let

them know when their new smart meters had been installed. And, even when they began to get wind of the

fact that some customers were complaining about higher bills, were worried about the health effects of smart

meters and were beginning to organize through social media, they remained mostly unconcerned. They acted

as if those people’s concerns were unjustified and didn’t need to be addressed.

Because my husband is a member of the city council, I know firsthand city leaders have since learned

differently. They are beginning to understand that they could have been better communicators, that social media

is a powerful platform for unhappy customers, that transparency is not a bad thing and that customer education

is important.

The latest information from the U.S. Energy Information Administration (EIA) says that approximately 52

million smart meters have been installed in the U.S. Some 46 million are residential, which accounts for more

than 45 percent of all U.S. residences. My little town is not the first to go down this road. Many municipalities,

cooperatives and investor-owned utilities have experienced struggles and unhappy customers during smart

meter rollouts. They’ve learned lessons and developed best practices.

So, how did this happen to my town? The vendor that provided the smart meters has been through similar

experiences with many previous customers. Why didn’t that company warn city leaders and inform them about

the importance of customer education? Why didn’t our city’s leaders already know what could happen? Plenty

has been written and published on the pitfalls of smart meter rollouts.

As the wife of a councilman who can no longer go to dinner or a movie or even a friend’s house without

having to hear about someone’s electric bill, I am a little miffed. I’d like to interject my knowledge and opinion

during these discussions, but learned early on most people don’t want to hear facts; this is an emotional issue

with many.

Our city leaders recently conducted a “town hall” type meeting for customers to voice their concerns. In

addition, the city manager has issued a letter explaining how smart meters work, why the city chose to install

them and how the utilities department is helping those with high bills determine the reason. This is the right

thing to do, but these actions and explanations will be much less impactful now than they would have been if

the city had taken these actions early on.

Successful utilities will be those utilities that value their customers and treat them like they matter. While

many customers don’t have a choice over their electricity provider now, they will someday and they will

remember how they’ve been treated by their utility. So, even if it’s more work and worry up front, in the end, it

pays to take the road less traveled by many utilities and inform and educate your customers about your plans.

1509ELP_5 5 10/8/15 7:54 AM

Page 8: Nhathongminhvn september 11:2015

Customer Service: Utility StyleC O L U M N

6 | ElEctriclight&PowEr Sep|Oct|2015

A u t h o r

Penni McLean-Conner

is the chief customer

officer at Eversource

Energy, the largest

energy delivery

company in New

England. A registered

professional engineer,

McLean-Conner is

active in the utility

industry and serves

on several boards of

directors including CS

Week and the American

Council for an Energy

Efficient Economy. Her

latest book, “Energy

Effciency: Principles and

Practices,” is available

at www.pennwellbooks.

com. Reach her at

penelope.conner@

eversource.com.

While there has been a lot of

discussion and exploration of arrears

or debt management programs,

these programs are still relatively

unavailable for utility customers.

In fact, a review of the most recent

American Gas Association/Edison

Electric Institute Data Source

reveals only 10 utilities offer arrears

management programs (AMPs).

This trend may be changing. Charles

Harak, senior attorney for the National

Consumer Law Center, is a nationally

recognized low-income advocate, and

author of the report “Helping Low-

Income Utility Customers Manage

Overdue Bills Through Arrears

Management Programs” published in

September 2013. Harak later noted that

there has been a “noticeable increase in

requests by utilities and others for more

information on AMP programs since

we issued our AMP report in 2013. The

Maine Legislature in 2014 adopted a law

requiring its public service commission

to adopt an AMP. As information about

their success becomes available, more

utilities and regulators are interested in

exploring AMPs for their customers.

The reason for the interest is that arrears

management programs can provide a

win-win solution for customers, utilities

and regulatory agencies.”

Arrears management programs offer

financial assistance for low-income

customers with overdue utility bills. The

basic concept is that customers enrolled

in an AMP who make the required

affordable payments, are rewarded by

having their arrears forgiven. The best

programs are comprehensive and offer

customers training, budget counseling,

payment plans, arrears forgiveness,

energy efficiency and links to other

financial grants and assistance.

In this series of articles I will

explore arrears management programs.

This first article looks at the business

case for implementing an AMP and

explores the consumer and utility

benefits. Future articles will review the

AMP framework and best practices.

Consumer Benefits

Customers participating in arrears

management programs receive clear

benefits. Those participants gain the

protection against service disconnections

while on the program and can gain a

fresh start by successfully completing

an AMP with arrears that are totally

canceled.

The ultimate goal of these programs

is to move customers from needing

assistance to self-sufficiency. These

programs have demonstrated success

in moving customers from a cycle of

building arrears, being disconnected and

experiencing write-offs, to customers

who can successfully manage and pay

for their energy usage. Their ability to

pay is enhanced through the programs

by providing budget counseling,

implementing energy efficiency measures

and ensuring fuel assistance is secured.

Participating customers can improve

their overall credit ratings and better

manage other bills. The relationship

with the utility changes from one

that is threatening disconnection to

working with the customers as a partner.

Harak’s research additionally showed

the participating customers are more

likely to continue to pay more after

participating in the program than they

did previously.

Utility Benefits

Utilities gain several benefits, too. The

costs associated with collection activities

on these accounts are diminished as

field visits and disconnections are

avoided. In addition, AMP customers

are paying more towards their bills.

Harak’s research provides results from

two utilities. The data revealed that in all

cases AMP customers, when compared

to a group of customers not on AMP,

paid more toward their bill. Write-offs

are correspondingly reduced, because

the dollars billed are being recovered

through a combination of the customer

payments and forgiveness.

Utilities that have successfully

implemented AMPs have worked with

regulators to design regulatory recovery

and reporting for the program. The AMP

costs are allowed to be recovered as part

of rate filings.

Utilities transform the relationship

with the customer into one that is

new and positive. The best AMPs are

comprehensive and provide participating

customers with energy efficiency advice

and services that bring down their total

energy usage. In addition, the program

encourages ongoing communication

from the utility to customers about not

only their progress in reducing arrears

but also with counseling in situations

where customers are struggling to

maintain their AMP plan.

Utilities looking to make a

transformative change in working with

credit-challenged customers should take

a hard look at AMPs. These programs

combined with discounted rates and

energy efficiency programs provide a

holistic approach for credit-challenged

customers. Utilities will often find that

regulators are interested in discussing

AMPs, as these programs help them

fulfill their mandate of assisting those

customers in the greatest need.

For customers, this comprehensive

approach helps them achieve self-

sufficiency. For the utility, this approach

avoids costly field work and can result in

reduced write-offs.

For more information, please review Charlie Harak’s

entire report at: http://www.nclc.org/images/pdf/

energy_utility_telecom/consumer_protection_and_regu-

latory_issues/amp_report_final_sept13.pdf

For more information on the Maine legislation link to: http://

www.mainelegislature.org/legis/bills/getDoc.asp?id=40898

Arrears Management can be a Win-Winby Penni McLean-Conner, Eversource Energy

1509ELP_6 6 10/8/15 7:54 AM

Page 9: Nhathongminhvn september 11:2015

Economic Inquiry C O L U M N

Sep|Oct|2015 ElEctriclight&PowEr | 7

Tanya Bodell is the

executive director of

Energyzt, a global

collaboration of energy

experts who create

value for investors

in energy through

actionable insights.

Visit www.energyzt.com.

Reach her at: tanya.

[email protected]

On Aug. 3, 2015, the U.S.

Environmental Protection

Agency (EPA) issued

the Clean Power Plan

Final Rule to regulate

carbon emissions from

the electricity industry.

Although the general

framework is consistent

with the proposed rule,

the final rule incorporates

concerns expressed in more

than 4 million comments, multiple

lawsuits, Congressional inquiry and

letters from other agencies. Changes

address key critiques concerning

reliability, implementation timelines

and jurisdiction. A brief summary of

major changes embedded in the final

rule is provided below.

Reliability Rules

The proposed rule was criticized for

ignoring potential impacts on system

reliability. Well after the proposed rule

was issued, concerns were raised by

the North American Electric Reliability

Corp. (NERC), Federal Energy

Regulatory Commission (FERC),

Congress and other government

groups. The final rule explicitly

addresses concerns about reliability

in multiple ways. State plans are to be

reviewed for reliability and must show

how potential reliability issues will be

mitigated. A reliability safety valve has

been included to allow states a 90-day

period to exceed carbon limits during

emergencies. Lastly, as described

in more detail below, the initial

deadlines and targets have been relaxed

significantly to create a “glide path”

vs. the original “cliff” with respect to

compliance in order to allow additional

time for required infrastructure

investment to come online.

Requirements

Relaxed

Another key criticism

of the original proposal

was the compliance cliff. As drafted,

states would have only one year in

which to submit a plan by mid-2016

or request a one-year extension. States

submitting regional plans could obtain

a two-year extension. Nearly 80 percent

of the targeted reductions were required

to be realized by 2020, however, with

the remainder achieved within 10

years. Given that much of the requisite

infrastructure investment would require

siting permits, environmental impact

studies and interconnection to existing

electric infrastructure, proposed

compliance requirements were

considered by some to be impossible

to meet. The final rule relaxes the

schedule in multiple ways. First, the

deadline has been shifted to September

2016 for state plan submissions from

June. Second, individual states may

request up to a two-year extension.

Third, targets have been relaxed so that

the 2020 cliff is now a more gradual

decline. Mandatory reductions begin

in 2022 with three stages to phase in of

the “best system of emission reduction”

(BSER) through 2029.

Reductions Removed

The third major change has to do with

the way the EPA calculated emission

targets for each state. The proposed

plan included four building blocks

of BSER technologies, including: 1)

efficiency improvements at coal plants;

2) conversion from high-emitting fuel

sources to lower-emitting resources

(i.e., coal to gas); 3) replacement

of high-emitting resources to zero-

emitting sources (i.e., renewables or

nuclear); and 4) demand-side reductions

such as energy efficiency. Using these

four approaches and consistent rules of

thumb applied to each block, the EPA

established average carbon emissions

levels that could be achieved for each

state. In the Final Rule, the EPA dropped

demand-side reductions from the

calculation and modified the algorithm

for the remaining three to calculate

a final average emissions target that

helped some states and harmed others.

The EPA appears to have removed the

fourth block to defend against litigation

challenging its authority to promulgate

this regulation under the Clean Air Act.

Demand response is not a BSER that

can be adopted by power generators

whereas the other three arguably are

“inside the fence” of emitters.

Ready to Roll

The EPA has issued the Clean Power

Plan Final Rule, a complex regulation

that imposes requirements on new and

existing power generators to reduce

carbon emissions. The most significant

differences between the Final Rule

and the proposed rule are changes to

address reliability, modified timing and

interim targets, and removal of demand-

side response from the equation that

calculates state targets. The net effect

is a rule that may create less havoc

on the power sector from a technical

perspective. From a legal perspective,

however, the jury is still out.

A Synopsis of Changes in the Finalized Clean Power Plan

By Tanya Bodell, Energyzt

A u t h o r

1509ELP_7 7 10/8/15 7:54 AM

Page 10: Nhathongminhvn september 11:2015

8 | ElEctriclight&PowEr Sep|Oct|2015

Feature

The Occupational Safety and Health Administration

(OSHA) has required employers to report work-related

fatalities and hospitalizations of three or more employees

since 1971. Effective January 1, 2015, the reporting

requirements, currently codified at 29 C.F.R. § 1904.39, have

significantly expanded, allowing OSHA to more quickly and

effectively target occupational safety and health hazards.

The new requirements apply to all employers under OSHA’s

jurisdiction, although states with their own occupational safety

and health agencies might have different effective dates.

The New Rule

Under the new rule, employers are required to report:

• Each fatality within eight hours, if the death occurred

within 30 days of the work-related incident.

• Each inpatient hospitalization, amputation or loss of an

eye within 24 hours, for those losses occurring within 24

hours of the work-related incident.

The new rule expands the list of severe work-related

injuries that employers must report to OSHA. The agency

contends that incidents that previously were not reported,

such as amputations and hospitalizations of fewer than three

employees, are egregious events that should be reported.

OSHA anticipates 25,000 additional reports per year under

the new rule.

“OSHA will now receive crucial reports of fatalities and

severe work-related injuries and illnesses that will significantly

enhance the agency’s ability to target our resources, save lives

and prevent further injury and illness,” said David Michaels,

assistant secretary of labor for OSHA. “This new data will

enable the agency to identify the workplaces where workers

are at the greatest risk and target our compliance assistance

and enforcement resources accordingly.”

As predicted, since its implementation, the rule has

focused OSHA’s attention on industries and hazards that

had previously slipped through the regulatory cracks. For

example, the new reporting requirements identified an

unexpectedly high number of amputations at supermarkets.

In response, OSHA recently issued a safety fact sheet focused

on preventing injuries to food slicers and meat grinders.

Changes From the Old Rule

Under the old rule, employers had to report only fatalities and

inpatient hospitalizations of three or more employees from

a work-related incident. The new rule requires employers to

report the inpatient hospitalization of only one employee, but

the period of time an employer has to report a hospitalization

has increased from eight hours to 24.

The new rule also adds the requirement of reporting accidents

that result in an amputation or the loss of an eye. Additionally, the

new rule requires that a fatality, hospitalization, amputation

or loss of an eye be recorded in an employer’s OSHA injury

and illness records if work-related (and if the employer is

required to keep those records), even if it occurs outside of

the time frame required for reporting under the new rule.

Hospitalization is defined by the new rule as “a formal

admission to the inpatient service of a hospital or clinic for

care or treatment.” Under this definition, emergency room

By Stephen Cockerham, Husch Blackwell

Stephen Cockerham

is a labor and

employment attorney

on the Energy & Natural

Resources team at

Missouri-based legal

firm Husch Blackwell.

A u t h o r

OSHA Reporting Requirements

New

1509ELP_8 8 10/8/15 7:54 AM

Page 11: Nhathongminhvn september 11:2015

ElEctriclight&PowEr | 9Sep|Oct|2015

Featurevisits or admissions that are purely for observation or diagnostic

testing are not covered. “Amputation” is defined in the new rule as

“a traumatic loss of a limb or other external body part. Amputations

include a part, such as a limb or appendage with or without bone loss;

medical amputations resulting from irreparable damage; amputations

of body parts that have since been reattached.”

Employers reporting a fatality, inpatient hospitalization, amputation

or loss of an eye to OSHA must report the following information:

• Establishment name

• Location of the work-related incident

• Time of the work-related incident

• Type of reportable event (i.e., fatality, inpatient hospitalization,

amputation or loss of an eye)

• Number of employees who suffered the event

• Names of the employees who suffered the event

• Contact person and his or her phone number

• Brief description of the work-related incident

This, for the most part, is consistent with the old rule, but adds

the requirement to report the “type of reportable event.”

Exemptions

The reporting requirements discussed above apply to all employers

under OSHA’s jurisdiction, even if the employer is otherwise exempt

from OSHA’s routine recordkeeping requirements (employers with

10 or fewer employees).

The new rule also updates what industries are and are not exempt

from the requirement to routinely keep OSHA injury and illness records,

based on their low occupational injury and illness rates. The new list

of exempt industries is derived from injury and illness data from the

Bureau of Labor Statistics from 2007-2009 and the North American

Industry Classification System. The net result is that more industries

are now exempt from the routine recordkeeping requirements. Yet the

new rule retains the exemption for any establishment with 10 or fewer

employees, regardless of industry classification.

How to Report

Employers can report to OSHA by either:

• Calling the nearest local OSHA office during normal business hours

• Calling OSHA’s free and confidential number at 800-321-6742

• Using the new online form that will be available soon on OSHA’s

public website at https://www.osha.gov/report_online.

Issues and Concerns

As with the implementation of any new rule, the extended reporting

requirements come with an influx of new issues and concerns. To aid

in its application, OSHA will be issuing interpretation letters further

explaining the nuances of the new rule.

One concern is whether local OSHA offices will be overwhelmed

by an increased number of injury reports. OSHA estimated that it

will receive about 30 times as many reports under the new rule as it

has received under the old reporting requirements. In response to this

concern, OSHA claims that it will be able to respond in some manner

to all reports, just not always with an inspection. Rather, it will

determine on a case-by-case basis whether to launch an inspection.

Around 40 percent of the reports in the first half of 2015 prompted

OSHA investigations, said Michaels at an April meeting of the

advisory committee on construction safety and health. OSHA also has

stated that it will post reports of injuries or fatalities on its website.

Some businesses argue that because the increased injury reports

will inundate local OSHA offices, a 24-hour time limit for reporting

is unrealistic. For one thing, it is not always clear whether an injury

constitutes an amputation, and it may take time in a hospital to get

the full details on whether the injury

is actually an amputation or whether

it resulted from a work-related event.

Additionally, the incident may happen

at a remote facility and the person

responsible for reporting may not

learn of the hospitalization for some

time. Employers have struggled with

the question of whether an injury is

“work-related” under the old rule, and the instances requiring this

determination will inevitably increase with the new rule. In making

this determination, it is important to note that the work event or

exposure does not have to be the sole or main cause of an injury or

fatality, but only a contributing cause.

Penalties

The penalty for a willful violation of OSHA requirements can

range from $5,000 to $70,000 and is meant to “inflict pocket-book

deterrence.” A failure to report under the new rule, particularly for a

repeated violation, may result in a significant fine.

State Plans

Some 27 states and territories have adopted OSHA-approved state

plans. These state plans are required to contain standards at least

equivalent to OSHA’s standards.

Though it may seem straightforward and simple, in practice,

reporting and recording injuries and fatalities to OSHA often involves

analysis of incomplete or conflicting evidence. To limit liability, it

is especially important for employers to make sure the responsible

operations and employee health and safety professionals are made

familiar with the new reporting obligations and have a protocol in

place that will result in timely reporting.

The penalty for a willful violation of OSHA requirements can range from $5,000 to $70,000 and is meant to “inflict pocket-book deterrence.”

1509ELP_9 9 10/8/15 7:54 AM

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10 | ElEctriclight&PowEr Sep|Oct|2015

Finance

TBy ROD WALTON, Senior Editor

Historic might be the best way to describe the pace of legislative

and regulatory events focused on utilities in 2015. Plenty happened

that should dramatically affect the power industry for decades to

come.

First and foremost, of course, was the U.S. Environmental

Protection Agency’s (EPA’s) final release of its Clean Power Plan.

Years in the making, the set of targets compels states to decrease

power plants’ CO2 emissions an overall 32 percent below 2005 levels

by 2030.

The Clean Power Plan commanded so much attention that

relatively little notice was given to other congressional work affecting

the industry, perhaps because those are still pending. The Energy

Policy Modernization Act of 2015 and the Coal Combustion Residuals

Regulation Act of 2015 have gained some support but not yet (as of

press time) by both chambers nor President Obama’s signature.

Below is a breakdown of the possible impacts of those developments.

Clean Power Plan

The EPA’s final rule was one of those few front-page energy stories

that had nothing to do with the price of oil. The August release put all

utilities—and the states where they operate—on alert that they had

specific numbers to meet for carbon emissions. The trick now is how

or whether they can get there in the time allotted.

“Certainly the net complexity added by the rule is not a

good thing,” said Joe Nipper, who handles regulatory affairs and

communications for the American Public Power Association. “Our

industry is becoming increasingly complex…This rule adds multiple

layers of complexity, some that we can’t understand yet.”

Many states and utilities groups also are still digesting it and

determining their next steps; more than a dozen states are asking for

a delay and some of them filed federal lawsuits while it was still in

the draft stage last year. A Washington, D.C. federal court rejected

a request for an emergency stay of the new rule by 15 states and

Peabody Energy Corp.

A prominent opponent of the Clean Power Plan, surprisingly,

is environmental hero and former Vice President Al Gore’s former

counsel, Laurence Tribe. The Harvard law professor chimed in with the

“unconstitutional” tag in various comments and an op-ed piece in the

Wall Street Journal late last year. Earlier this year, Tribe stepped up his

rhetoric by saying the Clean Power Plan was “burning” the Constitution.

“The EPA is attempting an unconstitutional trifecta: Usurping

the prerogatives of the states, Congress and the federal courts all at

once,” he was quoted by multiple publications in March. “Burning the

Constitution should not become part of our national energy policy.”

Those skeptical of Tribe’s legal purity noted that he has worked

for Peabody Energy, which calls itself the world’s biggest private-

sector coal producer.

The APPA’s Nipper did not express outright opposition to the

Clean Power Plan, noting that the EPA made the rule more workable

in some ways, such as offering more time to meet mandates. The

APPA’s membership of municipally owned power generators has

about 47 million customers nationwide.

On the other hand, many states got hit harder, such as Montana,

North Dakota, South Dakota, Indiana and Kentucky, he noted.

“It’s no big surprise,” Nipper said. “They redid the formula…

and in redoing the formula, the states that have more coal generation

have a tougher target to meet.”

North Dakota, for instance, must reduce its emissions 45 percent

to 1,305 pounds per MWh by 2030, while Montana and Wyoming, all

major coal producers, must also shed CO2 by more than 40 percent

each, according to reports. South Dakota will have to reduce emissions

by more than 1,000 pounds CO2 per MWh, or close to 48 percent.

California, Rhode Island, Maine, Idaho and Connecticut are the

five states with the least amount of work to do on CO2 reductions.

Many power holding companies, such as Duke and AEP, already

have introduced plans to retire coal-fired generation, but they also are

trying to deal with the Clean Power Plan shortly after spending big

to meet the EPA’s rule on mercury and air toxics standards (MATS).

“They’re just coming off of meeting compliance with the

mercury and air toxics rule, and that was pretty expensive,” Nipper

said. “That was one of the fault lines, if you just retrofitted coal units

to meet the MATS rule.”

The MATS rule endured its own judicial slap down earlier this

summer when the U.S. Supreme Court voted 5-4 that the Obama

administration should have factored in the costs of compliance; the

EPA estimated those costs at close to $10 billion per year. While

some in the industry counted that as a “supreme” victory dismantling

MATS, the high court actually left the rule in place but sent it back to

the federal appellate level for reconsideration.

Meanwhile, the power utility industry already is moving

fast toward renewables and replacing coal with natural gas-fired

generation that can keep the grid humming if “the sun don’t shine or

the wind don’t blow.”

The Edison Electric Institute, which represents investor-owned

utilities, estimated that the industry reduced CO2 emissions by 15

percent below 2005 levels in 2014 alone. Solar Energy Industries

Clean Power Plan Rules, but Utility Industry Faces Plenty of Regulatory Edicts in 2015

California, Rhode Island, Maine, Idaho and Connecticut are the five states

with the least amount of work to do on CO2

reductions.

1509ELP_10 10 10/8/15 7:54 AM

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Finance

Sep|Oct|2015 ElEctriclight&PowEr | 11

Association predicted that 20,000 MW of solar capacity would be

installed in 2015 and 2016 combined.

“Our industry also is making significant investments in

renewables and in the grid infrastructure needed to deliver renewables

to customers,” according to an EEI statement this summer. “In fact,

utility-scale solar projects now amount to almost 60 percent of

installed solar capacity, and the amount of electricity produced from

wind doubled from 2010 to 2014.”

And midway through 2015 came a historic moment: the first time

that gas-fired generation topped coal-fired power. Environmentalists

might consider that a Pyrrhic victory, because natural gas produces only

half the carbon emissions of coal but is mined from shale plays using

hydraulic fracturing and producing vast amounts of polluted water.

The future is unknown. A Republican president and Congress

could be elected next year and try to undo some of the EPA edicts.

Yet many utilities feel that the die is cast and there’s major, expensive

work to be done.

“EPA’s Clean Power Plan is the most comprehensive, far-

reaching regulation ever promulgated by the federal government to

impact the electric power sector and will significantly change electric

utility operations well in the future,” the EEI statement read.

State plans are due by September 2016 although some can get

extensions of up to two years.

Energy Policy Modernization Act of 2015

A rare bipartisan bill sponsored by U.S. Sen. Lisa Murkowski,

the Republican from Alaska, and Democrat Maria Cantwell, from

Washington state, passed its Senate committee by an 18-4 vote. The

legislation deals with a broad array of energy issues, from oil and gas

to utility infrastructure.

Portions of the bill dealing with fossil fuels and alternative

energy production garnered some mainstream attention, but what

intrigues much of the utility industry most was the call for major

investment in the traditional grid infrastructure, cybersecurity and

smart grid sectors.

Among the utility-specific highlights are: a $500 million,

10-year research and development demonstration program on

grid-scale energy storage; a 10-year, $2 billion allocation focused

on demonstration projects integrating new technologies into the

grid; doubling the U.S. Department of Energy’s expenditures on

cybersecurity research and development, among other goals.

The Energy Policy Modernization Act has plenty of debate and

rewriting left, but AEP spokesman Melissa McHenry noted that the

last major update of U.S. energy policy was in 2007.

“The current energy renaissance in this country will only

reach full potential if supported by a national energy strategy that

leverages U.S. advantages,” McHenry said in a statement. The energy

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Finance

12 | ElEctriclight&PowEr Sep|Oct|2015

legislation developed by

Murkowski and Cantwell in

the Senate and by others in

the House of Representatives

“are significant first steps

in developing a diverse

supply of energy resources,

bolstering electric reliability

and carefully balancing

energy development with

environmental stewardship,”

she added.

The grid modernization

portion was lauded by Ed

Abbo, president and chief

technical officer at Redwood

City, California-based C3

Energy, a six-year-old startup

focused on application

software in smart grid

analytics, cloud computing

and data to improve power

delivery.

Abbo’s boss, C3 Energy

CEO Thomas Siebel, told

a House subcommittee on

energy and power that as

much as $2 trillion will be

invested globally to upgrade

the grid infrastructure

throughout this decade,

with half of that spent in the

U.S. A crucial part of that

upgrade will be the addition

of sensors needed in meters

and other smart grid devices,

Abbo echoed. Those sensors,

in turn, will cut down on the

costs of line loss, energy

inefficiencies and give

dramatic, informed power

back to both the utilities and

the customers, he said.

Utilities just need

financial encouragement

to make those investments.

Abbo predicted that the

grid modernization bill, if

approved, can do just that by

allowing companies to move

the costs of advanced analytics

and cloud-based computing

into the rate-paying structure.

Previously, many companies

have booked those new-era investments as operating expenses rather

than capital expenditure costs.

“That’s one of the obstacles or hurdles the bill will help remove,”

Abbo said. “The bill encourages regulators and utilities to treat

investments in advanced energy analytics and cloud-based (services)

as investments they can get rate recovery on.”

Real-time analytics and sensors can improve reliability, lead to

fewer outages and help consumers save money by giving them data

on rate costs and usage patterns, he added.

All in all, the modernization act can unlock $50 billion value

on both sides of the utility-customer equation, or $300 per meter per

year, in C3’s estimation.

“There’s no need for subsidies,” Abbo said. “These are

investments that pay off in net positives.”

The modernization act is no slam dunk, with some environmental

groups saying it does not include enough proactive moves on the clean

energy front. A letter by Clean Water Action, citing opposition from

groups such as itself and Sierra Club, applauded grid storage and water

conservation components of the 2015 bill, but found plenty to pick on.

“There are, however, several provisions in this bill that we

believe could cause detrimental effects to public health and our

environment,” the Clean Water Action letter read. “For example, there

is no need to exempt hydropower facilities from regulations that have

worked for a century. Some provisions could also have unintended

severe consequences for EPA public health protections. We are also

troubled by the lack of clean energy investments made by a bill that

claims to modernize our energy policy.”

Improving Coal Combustion Residuals Regulation Act

This piece of legislation, called H.R. 1734, passed the House of

Representatives around the same time as the Energy Policy Modernization

Act passed through its Senate committee. The coal combustion bill,

authored by West Virginia Republican Rep. David McKinley, has a slim-

or-none chance of either passing in the Senate or on President Obama’s

desk, according to some outside observers such as govtrack.us.

The bill deals with disposal of coal ash from power plants. It

was filed and debated in response to the EPA’s final rule on coal

combustion residuals which was published in the Federal Register

earlier this year. The stronger federal requirements on impoundment

and disposal were spurred by the December 2008 failure of a coal-ash

impoundment at the Tennessee Valley Authority’s Kingston coal-fired

plant. That mishap reportedly unleashed 5.4 million cubic yards of

fly ash to impact homes and seep into the Emory River in Tennessee,

according to reports.

Supporters of the House’s legislative response say that the

Improving Coal Combustion Residuals Regulation Act can save

approximately 316,000 jobs by letting the states design their own

coal-ash disposal programs as long as they meet EPA standards.

“While this legislative approach isn’t perfect, it’s better than

the EPA’s proposal which leaves too many opportunities for extreme

environmental groups to replace regulations based on sound science

with their agenda of shutting down the coal industry,” U.S. Rep.

Kevin Cramer, R-North Dakota, said in his official release.

State 2012

Historic*

2030 Final* Percent

change

South Dakota 2,229 1,167 47.6

Montana 2,481 1,305 47.4

North Dakota 2,368 1,305 44.9

Wyoming 2,331 1,299 44.3

Kansas 2,319 1,293 44.2

Illinois 2,208 1,245 43.6

Iowa 2,195 1,283 41.5

Wisconsin 1,996 1,176 41.1

Kentucky 2,166 1,286 40.6

Colorado 1,973 1,174 40.5

Minnesota 2,033 1,213 40.3

Nebraska 2,161 1,296 40.0

Tennessee 2,015 1,211 39.9

Michigan 1,928 1,169 39.4

Indiana 2,021 1,242 38.5

Ohio 1,900 1,190 37.4

Washington 1,566 983 37.2

Utah 1,874 1,179 37.1

Georgia 1,600 1,049 36.8

Virginia 1,477 934 36.8

West Virginia 2,064 1,305 36.8

Missouri 2,008 1,272 36.7

Maryland 2,031 1,287 36.6

Arkansas 1,779 1,130 36.5

New Mexico 1,798 1,146 36.3

North Carolina 1,780 1,136 36.2

South Carolina 1,791 1,156 35.5

Pennsylvania 1,682 1,095 34.9

Arizona 1,552 1,031 33.6

Texas 1,566 1,042 33.5

Alabama 1,518 1,018 32.9

Oklahoma 1,565 1,068 31.8

Louisiana 1,618 1,121 30.7

Delaware 1,254 916 27.0

Florida 1,247 919 26.3

New Jersey 1,091 812 25.6

New Hampshire 1,119 858 23.3

Nevada 1,102 855 22.4

Mississippi 1,185 945 20.3

Oregon 1,089 871 20.0

New York 1,140 918 19.5

Massachusetts 1,003 824 17.8

Rhode Island 918 771 16.0

California 963 828 14.0

Maine 873 779 10.8

Idaho 858 771 10.1

Connecticut 846 786 07.1

* CO2 rate (pounds per MWh)

Source: EPA Clean Power Plan state-specific fact sheets

Impact of EPA’s Clean Power Plan Rule: State by State

1509ELP_12 12 10/8/15 7:54 AM

Page 15: Nhathongminhvn september 11:2015

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Page 16: Nhathongminhvn september 11:2015

Generation

14 | ElEctriclight&PowEr Sep|Oct|2015

SA u t h o r

Barry Cassell is chief

analyst for Genera-

tionHub covering coal

and emission controls

issues, projects and

policy. He has covered

the coal and power

generation industry for

more than 26 years,

beginning in November

2011 at GenerationHub

and prior to that as

editor of SNL Energy’s

Coal Report. He was

formerly with Coal

Outlook for 15 years

as the publication’s

editor and contributing

writer, and prior to that

he was editor of Coal

& Synfuels Technology

and associate editor of

The Energy Report. He

has a bachelor’s degree

from Central Michigan

University. Reach him at

[email protected].

2015 Coal Share of U.S. Power Generation to Fall 8.2 Percent From 2014

By Barry Cassell, GenerationHubSlower growth in world coal demand, lower

international coal prices and higher coal output in other coal-

exporting countries have all led to a decline in U.S. coal

exports, said the U.S. Energy Information Administration

in its most recent monthly Short-Term Energy Outlook

published Sept. 9.

Lower mining costs, cheaper transportation costs

and favorable exchange rates will continue to provide an

advantage to mines in other major coal-exporting countries

compared with U.S. producers, EIA added. Coal exports for

the first half of 2015 are down 20 percent compared with the

same period in 2014, and U.S. steam coal exports fell by 21

percent, or 4.1 million short tons (MMst).

U.S. coal imports, which increased by more than 2

MMst in 2014 to 11 MMst, are expected to average near that

level in 2015 and 2016.

EIA said it expects a 7 percent decrease in total coal

consumption in 2015, with electric power sector consumption

falling 7 percent. Lower natural gas prices are the key factor

driving the decrease in coal consumption. Projected low

natural gas prices (power sector natural gas prices are 27

percent lower in 2015 compared with 2014) make it more

economical to run natural gas-fired generating units at higher

utilization rates.

The retirements of coal-fired power plants, many of

them done earlier this year, in response to the implementation

of the federal Mercury and Air Toxics Standards (MATS)

also reduces coal-fired capacity in the power sector in 2015.

Because retirements are occurring throughout 2015, however,

the full effect will not be evident until 2016.

Projected rising electricity demand and higher natural

gas prices next year are expected to contribute to higher

utilization rates among remaining coal-fired power plants.

Even with continued implementation of MATS, which the

U.S. Supreme Court in June sent back to the U.S. Court

of Appeals for the D.C. Circuit for further review, coal

consumption in the electric power sector is forecast to

increase by 1.5 percent in 2016.

A barrier to larger rebound in coal-fired generation in

2016 is expected growth in renewable-based generation,

EIA reported. Non-hydropower renewable-based electricity

generation is expected to grow by 12 percent in 2016, with

the largest growth (21 percent) occurring in the South.

Lower domestic coal consumption and exports

combined with a slight increase in coal imports are projected

to contribute to a decrease in production in all coal-producing

regions in 2015, with the largest percentage decline occurring

in the Appalachian region.

The annual average coal price to the electric power sector

increased from $2.34 per million British thermal units (MMBtu)

in 2013 to $2.36/MMBtu in 2014. EIA expects the delivered

coal price to average $2.27/MMBtu in both 2015 and 2016.

Nearly 9,800 MW of Coal Capacity Retired in First Half

Of 2015

The electricity industry retired nearly 9,800 MW of

conventional steam coal-fired capacity during the first six

months of this year. These retirements represent 3.3 percent

of the amount of operating steam coal capacity existing at the

end of 2014. The states with the largest amount of retired coal

capacity include Ohio (2,659 MW), Georgia (1,861 MW)

and Kentucky (1,409 MW). The industry plans to retire an

additional 3,133 MW of coal capacity this year and nearly

6,000 MW during 2016.

While the retirement of some coal-fired capacity has

contributed to the decline in coal-fired generation over the

past year, the relatively low cost of natural gas has been a

more significant driver in coal’s declining share and the

increase in the share generated by natural gas. During the first

half of 2015, coal accounted for 34 percent of total generation

compared with 40 percent during the same period last year,

while natural gas accounted for 30 percent, up from 25percent

during the first half of 2014. For all of 2015, EIA expects the

annual amount of coal generation will be 8.2 percent lower

than in 2014, and the annual level of natural gas generation

will rise by 14.5 percent.

A longer version of this article was originally published

in GenerationHub on Sept. 9.

U.S. Coal ConsumptionFigure 1

1509ELP_14 14 10/8/15 7:55 AM

Page 17: Nhathongminhvn september 11:2015

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Page 18: Nhathongminhvn september 11:2015

Generation

16 | ElEctriclight&PowEr Sep|Oct|2015

NA u t h o r

For over 26 years,

Rosco Backus worked

at or for major U.S.

utilities, including

Duke Energy, where

he managed a diverse

portfolio of generation

assets. Today, Rosco

works at Versify Solu-

tions, a platform

provider of integrated

analytics software

to power generators.

Reach him at Rosco at

[email protected].

Navigating the Future of Plant Operations: Fly, Don’t Drive

By Rosco Backus, Versify SolutionsNot only is this not your father’s Oldsmobile…we’re not

driving anymore.

For nearly 30 years I worked at power plants for one of

the world’s largest electric utilities and merchant generators,

running assets across multiple ISOs for everything from coal-

fired power plants, to gas plants, to solar and wind farms.

Let me say, times are different. I believe our industry is

at a tipping point in why and how we use emerging analytics

tools to run power plants as part of a larger business.

Where Are we Going?

Power generators have a growing

mandate to increase the reliability

and performance of their fleet,

reduce spending and increase

revenues and margins. In the

old energy era, things were

predictable, centralized and all

about compartmentalized control

of assets and information to ensure

the reliable flow of electrons,

without too much regard for other external factors.

The new energy era will be dynamic, distributed and all

about variable assets and integrated information flows to manage

and deliver not only electrons from all sorts of energy sources,

but also a host of energy-related products and services, and with

a much keener eye towards accountability, both operational and

financial.

As a result, plant operations will be fundamentally

different as well – it’s no longer just about generation, trading

or compliance—it’s about all of these things, working together.

There are positive and compelling business reasons to look for

ways to improve plant operations in the new energy era: deliver

new forms of energy to market, outpace the competition and

drive higher margins. And there are “negative” reasons as

well: minimize outages, ensure compliance, reduce risk and

avoid market and regulatory penalties.

In both cases, there is the same imperative: plant

operators who have been doing the same things for the last

40-plus years—driving the same car if you will—are on the

cusp of finding new ways to ‘get there.’

… And how did we get here?

Power plant operations are not just a discipline or a

function, they’re a phenomenon with thousands of moving

parts and equipment, as well as an entire network of people

and processes, working together. In the regulated world, it’s

about “operational efficiency” and being a good steward of

ratepayer-funded assets. In the non-regulated world of merchant

generators, effective plant operations is all about matching

output with demand, at the highest price, in real time.

And like your father’s Oldsmobile, there has always been

the constant need to check things—temperature, fluids, pressure,

water levels and emissions. There probably are hundreds of

gauges on that dashboard. To do their job well going forward,

the “drivers’—control room operators, dispatchers and systems

operators—will need new tools to be more actively engaged than

their predecessors, even as a large

percentage of such workers retire

within the next five years (more on

that in a moment).

With the increasing growth

of renewables, this phenomenon

of disparate moving parts will

only get more complex. When

driving your car before, if you tap

the brake and it pulls to the right so

you know you’ve got a problem.

Maybe it’s a tire, the alignment or

a tie rod—very solvable. Today, we’ve got something more

akin to the Jetsons, where part of your vehicle looks like the

car you know, but then another part is something very new

and different—like wings on an aircraft! This may sound

cool, but it’s also much harder to troubleshoot and maintain.

Why the Differences Today Will Require Changes Tomorrow

Even as the definition of a “power plant” is changing, plant

operators will have to change how they manage their assets,

not only to generate reliable power but also to meet emerging

requirements driven by policy and the market. They cannot do

this without access to more and better information, faster. And

yet most plants today carry the burden of legacy everything:

• Legacy systems with too many screens and too many

information silos

• Legacy processes, as in “we’ve been doing it this way

for 40 years”

• Legacy people, a good thing in most ways except that an

aging workforce will soon limit access to expertise

When it comes to gathering information, however,

manual processing simply will not work, especially as data

collection, analysis and reporting times shrink from hours

to minutes. Tomorrow’s operators must identify problems

before they happen to avoid severe consequences such as

penalties, blackouts and customer wrath.

1509ELP_16 16 10/8/15 7:55 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 17

Generation

Consider one power plant where I worked, with over 1,300

MW spread out over 500 acres. Even then, we had thousands of key

performance indicators. Today that plant is part of a portfolio with coal,

solar, wind, combined-cycle and simple-cycle gas plants, all working

together and balancing each other out. This updated plant, as well as

the entire portfolio, calls for an updated approach to plant operations.

This means checking more stuff, more often and more accurately.

Yet now as before, engineers go back and forth on the job, they enter

their reports and the status of those assets, often on a paper report with no

real digital log or trending system to prevent errors. To keep pushing our

vehicle analogy and comparing yesterday to today, it’s the difference

between jury-rigging the timing on your car and knowing that if you

are a little sloppy, it’ll still run, versus ignoring the engine warning light

on your main rocket booster as you get ready to launch … um, bad idea.

As one vice president of commercial ops tells me, “For 95 percent

of utilities, people in the plants are so disconnected from the business”

that they cannot track key metrics to business impacts: things like

turbine outages, capacity factors, curtailments and operating reserves.

The stakes for plant operators are much higher in today’s environment

than they were 30, 20 or even 10 years ago. The mantra, “Be safe, do

what we tell you and everything will be fine,” is giving way to “You

must run it like a business…avoid catastrophes and make money too.”

Coincidental with this new imperative are all the old problems

and some new ones: an aging workforce, distributed energy, dynamic

markets, ever increasing regulations and the shift to being more

customer-focused and accountable. Furthermore, as power providers

age out in their workforce, they also are trying to do more with less. I

estimate that for many critical plant operations functions, there is up

to 60 percent less staff than there was in the 1970s, doing more work

for longer hours. Something has to give.

Calling all Drivers

Plant operators are migrating from being drivers to being flyers, and

pilots, too. Utilities will need new and more technology to deal with

the changes quickly moving towards them—that means standing

still is not an option. It’s also important to note that your technology

choices and the choice to “go digital” in your plant operations will

not only determine how efficient and effective you can become, it will

also contribute to attracting and retaining the right talent.

Consider these examples: I walk in a restaurant today and the

waiter uploads my order from a handheld. In the 1990s, overnight

delivery drivers were using palm-sized computers to synch orders

and deliveries. My 14-year old manages her entire schedule, does

homework and communicates halfway across the world, all from her

smart phone. Mobility, cloud and wireless, all at scale—that’s the

world we live in, right? But in the last six months, I’ve been to more

than a half-dozen large, well-known utilities, where paper-based

“processing” still prevails. Utilities can catch up, as technology

advancements and the next-generation work force go hand in hand.

Stop Driving, Start Flying

Most power plants are still reactive. For example, one plant I saw

in my travels needed a boiler feed pump, which cost the operation

about $10,000 per hour when down. By luck, one guy heard about the

problem, told another guy, who just happened to know that the missing

part was sitting in a nearby warehouse (they were getting ready to

place a very expensive overnight order). The digital-age answer to

this challenge is pretty simple: put barcodes on all equipment, log

the data and automate the inventory management for all the plant’s

moving parts. I call it “digital common sense.” In other words, why

drive when you can fly?

Another recent case comes to mind: In another plant I toured, the

operations manager was scheduling outages with the asset manager on

the commercial side, where different individuals were trying to figure out

and interact with markets. The operator was planning on taking a piece

of equipment offline for one full day, which would make generation 100

MW short in the day-ahead market. The message was clear: “don’t bid

us into the market for this power.” So now the traders knew. Then, 3

hours after market closed the maintenance manager called and said that

expected part—a feed pump—was not going to make it any time soon.

Now the 24-hour contract that required the trader to buy 100

MW in the market to bring the position up needed to be extended

so that the utility could avoid a potentially very costly exposure to

the real-time market and/or penalties. In this case, the utility has

integrated analytics tools and a platform that can deliver a real-time,

auto-updated, single source of truth to enable the operations manager,

asset manager, traders and the maintenance manager to work together

to solve the problem. And management can track it too. That is flying

vs. driving in the digital age for utilities.

Getting Ready to Fly

As we reflect on the power industry of the future, it’s time to lift

our eyes and answer the question, “When it comes to data collection,

information analysis and situational awareness, is there a better way?”

Related to that question, here’s digital-age, plant operator “pilot

checklist” of things plant operators should know and/or do:

1. Understand going digital is mandatory

2. Recognize things are different—your markets, your talent (less people)

and your risk profile—making situational awareness harder than ever.

3. Develop more and better cross-function communication—materials

handling, maintenance and the control room cannot operate alone.

4. Build or buy information and communications management

systems to deliver automation at scale for transparency,

transparency…and more transparency.

A “features and functionality” menu (below) lists what new

digital-age tools should do to help address these new realities. The

right functionality in high-performance plant ops systems would mean you could do things like:

• Consolidate information across system types to avoid costly

integration

• Standardize and automate data collection, work flows and reporting

• Rank and prioritize dispatch based on real-time market dynamics

• Codify time-consuming manual work into automated processes

• Communicate outward to optimize assets in conjunction with other parties

• Manage assets and events in real time while remaining compliant

As for me, I like to fly!

1509ELP_17 17 10/8/15 7:55 AM

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Renewables/Sustainability

18 | ElEctriclight&PowEr Sep|Oct|2015

IEnergy Storage as Consumer Product: Will Storage Follow the Path of Rooftop Solar?

Innovative financing, declining costs of equipment and

installation and supportive policies have all contributed to a

rapid uptake in photovoltaic (PV) solar across the U.S. and

the emergence of PV as a consumer product. In addition, new

private sector investment and innovative financing, dropping

costs and emerging policies are supporting a growing market

for energy storage. Energy storage, therefore, should follow

suit to also become a consumer product.

The first consumer storage products are already entering

the marketplace. Tesla’s Powerwall home battery, offered in a

10 kWh ($3,500 plus installation) size for back-up applications

and 7 kWh size ($3,000 plus installation) for daily use, will ship

soon. SimpliPhi is also offering commercial and residential

units in 2.6 kWh ($5,395 plus installation) and 3.4 kWh ($6,945

plus installation) sizes. In addition, Orison has announced a

concept for 2 kWh batteries that plug into standard wall outlets

with expected availability in 2016. The units will be offered

in a panel ($1,600) or a tower ($1,995) format with expansion

batteries ($1,100 each). They come with LED lamps, wireless

controls, smart-phone connection and an added Bluetooth

speaker and induction phone charger for the tower.

Consumers appear to be interested in home storage

devices. In the days following its launch, over 38,000 orders

were in for Tesla’s Powerwall. Desire for clean energy,

increased resiliency and energy bill management are driving

market demand for home energy products like energy storage.

Furthermore, current and planned policy initiatives will likely

push the market demand. California’s investor-owned utilities

will be moving residential customers to default time-of-use

pricing by 2019, increasing the economic benefit of load-

shifting capability to a larger pool of people. The California

Public Utility Commission energy storage target outlines 200

MW of customer storage (though not all will be independent

battery units). In New York, Consolidated Edison and the

New York State Energy Research and Development Authority

launched incentives for demand management resources,

including energy storage.

At today’s costs, however, mass adoption of home energy

storage product remains a tough proposition. Prices need

to drop to justify storage as a means for PV shifting, back-

up power or energy bill management. (A reservation for

the Powerwall doesn’t require putting money down). Total

installed costs for storage are dropping and expected to drop

precipitously, similarly to expectations for PV.

It is likely, too, that more innovative financing for storage

and storage plus PV units will emerge. Larger commercial,

industrial and municipal customers are beginning to delve

into this area. For example, TIP Capital, which provides

leasing and financing options for commercial, industrial,

and municipal energy-related projects, has partnered with

Green Charge Networks to offer zero down energy storage

financing for Green Charge Network customers. LFC Capital

has partnered with ViZn Energy Systems to offer financing

for solar and storage investments. The program would use an

operating lease with ownership options after six and seven

years. In addition, SolarCity is offering financing options

to its customers for solar and storage products, including

options with no upfront costs. In the not so distant future

offerings that bundle solar and storage financing with home

mortgages are likely.

By Jessica Harrison, DNV GL

A u t h o r

Jessica Harrison is

the head of section

for energy strategy,

markets and policy

development at DNV GL.

Number of Households With Rooftop SolarFigure 1

Source: Adapted from USC 2014

Mill

ions

Will storage emerge as a consumer product? Yes. Will this market

emergence differ for storage than what it did for PV? Probably.

actual

high case projection

low case projected

1509ELP_18 18 10/8/15 7:55 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 19

Renewables/Sustainability

Will storage emerge as a consumer product? Yes. Will this

market emergence differ for storage than what it did for PV? Probably.

To start, the dispatchability of storage makes it readily available for

pairing with multiple resources, such as demand response and PV, or

it can be used on its own. In addition, energy storage has the potential

to serve multiple functions for a single installation, depending on how

the controls and priorities are established. These factors create a wide

playing field for energy storage.

The emerging concept of plug and play devices could

significantly reduce installation costs and make storage ubiquitous

throughout the household. A wide range of products might eventually

arise in the storage space—stand-alone, pluggable devices to larger

units paired with PV that serve as back-up power or demand response

management.

With the advent of improved aggregation and controls systems,

a growing potential for customer-cited, grid-supporting applications

exists. Through a process of prioritization and seamless switching,

customer storage devices could both meet customer needs and provide

grid resources, narrowing the economic hurdles for investment. For

this to occur, more policies and programs must be created to fairly

compensate customers and further investment for the aggregation and

control systems.

Finally, to support large-scale deployment of storage as a

consumer product, a sizable amount of storage standards work

still needs to be completed. The main gaps include safety,

reliability and commissioning and installation. A number of

efforts are underway today:

– Pacific Northwest National Laboratories has a program

focused on key installations.

– The Electric Power Research Institute’s Energy Storage

Integration Council has established a working group on standards.

– The National Electric Manufacturers Association has a

technical advisory committee on storage (TAG 120).

– UL Safety Testing has established a safety standard for storage

(UL 9540).

– Sandia National Labs initiated a standards inventory and roadmap.

– DNV GL is running an initiative named GRIDSTOR, which

will deliver an open-source, recommended practice for grid-

connected energy storage. It focuses on guidelines and methods

to evaluate, assess and test safety, operation and performance

of grid-connected energy storage while taking into account

worldwide-accepted regulations and best practices like ISO, IEC

and IEEE standards (e.g. IEC TC-120).

Ultimately, the various technologies, applications and types of

storage devices make energy storage products unique. Further work in

aggregation and controls and the rules for shared services will expand

the applications and economic viability of energy storage devices for

consumers. As it did for PV, the marketplace’s gradual increasing faith

in the engineering and controls along with increased understanding

of lifetime operations and maintenance costs for the technology will

help create new financing options. The synchronization of standards

also will support more common deployments of the technology.

Though on separate tracks, together solar-plus-storage offers a

powerful prospect for customers, policymakers and grid operators.

Energy storage is a key enabler for solar because it allows solar to

be dispatchable, enhancing the value to customers and mitigating

some of its biggest grid-integration challenges. In turn, solar is a

key enabler for energy storage, serving as a valuable application and

helping break some of the barriers in the market for consumer energy

devices. Both likely will see market expansion with continued policy

support and cost reductions.

Together, solar and storage can further drive volume up and

prices down.

Source: Adapted from Rocky Mountain Institute

The emerging concept of plug and play devices could sig-

nificantly reduce installation costs and make storage ubiq-

uitous throughout the household.

S Ad t d f R k M t i I tit t

Installed PV Cost ($/WDC) Battery Cost ($/kWh) Figure 2

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

0

$700

$600

$500

$400

$300

$200

$100

0

$900

$800

2010 2015 2020 2025 2013 2018 2023 2028

BNEF

EPA

Combined Averages

NREL

Black & Veatch

BNEF

Navigant

Averaged

EIA

1509ELP_19 19 10/8/15 7:55 AM

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Renewables/Sustainability

20 | ElEctriclight&PowEr Sep|Oct|2015

Solar Power’s Future Looks BrightSolar power is rising quickly and isn’t likely to fade for a while.

Decreasing prices of photovoltaic (PV) technology and energy

storage, some states’ aggressive renewable portfolio standards, tax

incentives, the Clean Power Plan and customers’ desire for clean

energy sources are fueling solar power’s growth. Several utilities in

the southwestern U.S., California, Hawaii and a few states along the

East Coast have experienced substantial solar PV growth. In most

states, however, its growth is still slow to nonexistent.

“For some utilities, this (integrating large

amounts of solar PV) is an urgent matter, but for

most it’s just now time to start thinking about it,”

said Julia Hamm, president and CEO of Solar

Electric Power Association (SEPA) during the

Solar Growth Engine session at the 2015 Edison Electric Institute’s

(EEI’s) Annual Convention in June.

Ten utilities in the U.S. interconnected 72 percent of all solar PV

last year, Hamm said. California utilities San Diego Gas & Electric

and Southern California Edison experienced the most solar PV growth

at 48 percent each. Hawaii is another state that has seen big growth in

rooftop solar installations. Rooftop solar now makes up more than 13

percent of Oahu, Hawaii’s total generation mix, she said.

“Technology curves are coming down so rapidly that the future

is here today,” Constance Lau, Hawaiian Electric Industries’ president

and CEO, said during the same EEI session. “On some islands,

payback for rooftop solar is three to four years.”

Some 50 U.S. utilities each connected more than 25 solar

installations per month in 2014, according to SEPA. These numbers

have increased in 2015.

Table 1 lists the four types of solar PV deployment

arrangements common in North America. While residential solar

installations are the most widely touted, these systems make up

only a small portion (20 percent) of the 20 GW in U.S. generation

capacity, according to the Solar Energy Industries Association

(SEIA). Utility-scale solar installations make up the largest portion

at about 60 percent.

“There is a lot of noise and talk around distributed solar

(rooftop), but the bulk of the PV is still utility scale,” James Hughes,

CEO of First Solar, a global solar energy solutions company with

more than 10 GW of installed capacity worldwide, said during the

EEI session. “It’s cost, cost, cost that triggers demand and puts us

above our competitors. It’s always cost.”

Expiration of the investment tax credit at utility-scale is

irrelevant because utility scale solar installation costs will continue

to drop, Hughes said.

“We are down to around six cents per kilowatt hour and expect to

get down to the three-cent range from utility scale PV,” he said. “And,

there is no risk of fuel price volatility like with natural gas.”

Environmental concerns are driving some of the increase in PV

uptake, however, economics is the driver at utility scale, Hughes said.

The Brattle Group released results of a study in July that was

sponsored by First Solar with support from EEI. The study reveals that

utility-scale PV is much more cost-effective than residential-

scale PV. The report, “Comparative Generation Costs of

Utility-scale and Residential-scale PV in Xcel Energy

Colorado’s Service Area,” compares equal amounts of

residential- and utility-scale PV solar deployed on utility

systems. The study found that the kWh costs of residential-

scale solar is approximately twice as high as utility-scale.

For customers in Xcel Energy Colorado’s service territory,

residential-scale costs averaged 16.7 cents/kWh and utility-

scale costs averaged 8.3 cents/kWh.

The Brattle Group study cited three reasons for the cost

discrepancy: a) lower total plant costs per installed kilowatt for

larger facilities; b) greater solar electric output from the same PV

capacity due to optimized panel orientation and tracking; and c)

other economies of scale and efficiencies associated with utility-scale

installations.

Another advantage of utility-scale, as well as community-scale

solar, is that it gives customers a choice for clean energy, Hughes said.

“About 75 percent of residential customers aren’t eligible for

rooftop solar, but many still want clean energy and you (the energy

provider) better give it to them.” he said. “Community solar is a way

to do that.”

Solar energy’s growth is expected to continue for several years

and its cost should continue to decline. Most experts, including those

who participated in EEI’s Solar Growth Engine session, believe

a number of electricity consumers also will become electricity

providers, whether through community or rooftop PV systems.

This shift is a dramatic change for not only traditional utilities,

but also for regulators who are challenged to keep up with customers’

wants and expectations.

“Innovators are changing customer offerings faster than the

regulators can and do change,” Hawaiian Electric Industries’ Lau

said.

The innovators Lau spoke about will continue to push regulators,

customers, utilities and technology providers to adjust as solar

becomes a bigger part of the generation mix.

Solar will be a dominant theme at EEI’s annual conventions for

at least the next five years, Hughes predicted.

By Teresa Hansen, Editor in Chief

Type of system Examples

Residential Rooftop solar PV on homes usually connected to the distribution grid

Utility scale Larger systems usually interconnected to the transmission grid

Community solar Centralized PV system owned by a group of residential customers

Commercial & Industrial Solar installed at C&I facility, such as big box stores, to meet facility’s needs and/

or sell back to grid.

Source: Data extracted from The Brattle Group’s study “Comparative Generation Costs of Utility-scale and Residential-scale PV in Xcel Energy

Colorado’s Service Area”

Table 1: Common Solar PV Deployment Arrangements

Environm

ake, howev

The Br

sp sored

ut

s

U

1509ELP_20 20 10/8/15 8:01 AM

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Customers

Sep|Oct|2015 ElEctriclight&PowEr | 21

Gadi Solotorevsky, Ph.D,

is the CTO of cVidya,

a supplier of revenue

analytics solutions for

utilities, communica-

tions and digital service

providers. He has

more than 15 years of

experience developing

and deploying revenue

analytics solutions

and methodologies. Dr.

Solotorevsky is one of

the founders and the

chair of the revenue

assurance modeling

team of the TM Forum.

He is also one of the

authors of the TM Forum

documents TR131 and

GB941 that are today

the de facto standard

in revenue assurance

best practices.

WWhen Bob Dylan wrote “The Times They Are a-Changin”

in 1963, it’s certain he did not have in mind what would

eventually take place in the electricity utilities market in 2015.

Given that he wrote the song in the hopes that it would be

an anthem for all types of change afoot, maybe he wouldn’t

mind it having a place in what is currently taking place in the

utilities market. All this provided, of course, that he’d be paid

royalties for its use.

So what is the change taking place, and, just as

importantly, what does it mean? Could this new dawn result

in substantial risks for both providers and consumers, along

with the potential for greater rewards?

The electricity market is becoming more complex and

segmented in the areas of production, transportation and

distribution of electricity. This, in turn, is opening up the

market to greater competition, resulting in a multitude of

companies competing against each other for customers who

have options when selecting a utility provider.

Concurrently, some utilities are witnessing a shortage

of supply, and struggle to provide electricity at all times

to all customers, especially during periods of peak energy

consumption. This means the cost of providing electricity

over certain thresholds can be high, as extra capacity must

often be purchased from third parties in order to keep up with

customers’ usage.

One answer to short supply and high cost is demand

response (DR), a concept by which electricity companies can

adjust prices according to demand. This can include raising

prices when customers are approaching their limits or charging

more in the evening during peak usage, while lowering charges

during the off-peak and morning hours or both. The ultimate

goal is for utilities to be able to provide clean energy at prices

that make sense for everyone. Several challenges to this

seemingly straightforward approach exist, however.

Admit the Waters Around You Have Grown

Utilities must be able to offer their customers attractive price

plans that also are good for business and allow providers to

intelligently control electricity usage. To accomplish this,

however, customers must opt-into DR and be willing to sign

a contract for dynamic pricing. Analytics are required for

utilities to be able to assess their customers’ requirements

and habits in relation to their own distribution capabilities, so

they can offer them the best possible plan.

Many utilities are currently losing large amounts of

revenue through “non-technical” losses, such as fraud

and revenue leakage. Causes of non-technical loss vary

from operational losses, such as meter manipulation and

energy tapping reading errors to financial losses caused by

missing or late payments, rating errors and undercharging

or overcharging. Any or all of these can lead to losses of up

to 20 percent, depending on a country’s maturity. In 2009,

Utilities Knock, Knock, Knocking on Change’s Door

By Gadi Solotorevsky, cVidya

A u t h o r

1509ELP_21 21 10/8/15 8:01 AM

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22 | ElEctriclight&PowEr Sep|Oct|2015

Customers

this translated into varied monetary losses, in some cases in excess

of $5 billion per year, according to Bloomberg. The ultimate goal,

therefore, is to reduce electricity usage during peak hours, when a loss

of just 10 percent can be significant.

The ability to detect fraud and leakage enables companies

to immediately reduce energy losses, requiring a lot of complex

analytics around the customer, to track their behavior and identify

fraud and leakage. For example, if a customer’s electricity usage

inexplicably drops, analytics can determine if this is a legitimate

fall because the customer is away on vacation, or due to more

nefarious circumstances, such as bypassing the system and syphoning

electricity from a neighbor. Utilities can therefore classify customers

by harnessing analytics to track their behavior over time, thereby

learning to identify fraud and leakage.

Many companies today only detect leakage physically, through

sending personnel into the field. This operation is expensive, however.

Some European companies perform more than 150,000 physical

inspections per year—resulting in enormous costs, and also limiting

the amount and type of leakage that can be detected.

You Better Start Swimmin’ or You’ll Sink Like a Stone

The utility market is moving inexorably toward widespread smart

meter adoption. Prior to smart meters, analog meters were seldom

read more frequently than once per quarter and only small amounts of

data were collected, meaning there was less data for utility companies

to analyze. Smart meters allow readings to be taken hourly, or even

every few minutes. Utilities now have vast amounts of information

with which to work, so deeper and more varied analytics are possible.

Smart meters are essential equipment for utilities of the future,

but they have not been universally welcomed with open arms. Counter-

movements aiming to forestall the adoption of smart meters exist. On

the customers’ side, arguments against smart meter adoption include

accusations of unreasonable bill increases, privacy infringements and

possible health ramifications.

As meter readings become more frequently and larger amounts

Where Revenue Assurance Enters the GameFigure 1

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www.generationhub.comGo to http://uaelp.hotims.com for more information.

1509ELP_22 22 10/8/15 8:01 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 23

Customers

of data are collected, consumers can take greater ownership over

their energy consumption and electricity charges no longer must

remain fixed. Pricing, therefore, will become more complex causing

confusion for both customers and electricity providers.

Utilities will be challenged to transition customers to smart

meters and the new price plans. Utilities are concerned about the risk

of bad press, as even a small error can result in many users reluctant

to sign on to smart meters. This is particularly significant with regards

to “bill shock”—customers being hit with surprise bill increases,

sometimes exceeding tens of thousands of dollars.

Bill shock can be caused by various issues and a number of bill

shock cases have been reported in the media over the last few years.

For example, in 2014 an article titled “Why Hydro One’s billing is

Under Attack” in Toronto’s The Star newspaper wrote about meter-

related issues at the utility. The article highlighted late billing and back-

billing, whereby customers did not receive bills for a number of months

(sometimes years), only to be hit with backdated and grossly inflated

bills based on estimates from outdated meter readings. Problematic

transformation projects also contribute to bill shock and have resulted

in more than three million UK energy consumers being overcharged

in 2014, including 16 percent of Scottish Power’s customers, due

to problems caused by the implementation of a new billing system,

according to a story in The Guardian. Other contributors to bill shock

include incorrect pricing, meter failure, clock accuracy and fraud.

The Line it is Drawn

Bill shock leads to a bad reputation for the utility. This, in turn, makes

customers more reluctant to adopt smart meters and can even drive

customers away and into the arms of the competition. In addition,

regulators can impose penalties on utilities, resulting in additional losses.

The causes and potential ramifications of bill shock are real

threats to the adoption of smart meters. The good news for utilities

is that the problems that cause bill shock can be detected and, if not

prevented, at least corrected effectively, preserving goodwill between

customers and their provider.

The correct solution, as illustrated in Figure 1, combines the

implementation of smart meters with customer education and suitable

demand response plans, tailored to individual customers’ requirements

through effective analytics. The result is “smart utilization.” Utilities

can then enjoy greater savings, thanks to appropriate demand response

plans, fraud mitigation, accurate meter readings and peak usage

regulation, resulting in reduced costs for the customer with accurate

and timely billing. More and more customers can then opt into smart

metering plans, resulting in an increased return-on-investment in

smart meter adoption.

There are significant positive ramifications for utility service

providers that implement analytics-based smart meters. For those

who do not employ analytics, as Dylan’s lyrics warn “…the first one

now will later be last, for the times they are a-changin.’”

Go to http://uaelp.hotims.com for more information.Go to http://uaelp.hotims.com for more information.

P O W E R - G E N . C O M

L A S V E G A S , N V

L A S V E G A S C O N V E N T I O N C E N T E R

D E C . 8 — 1 0 , 2 0 1 5

R E G I S T E R T O D AY

THE WORLD’S

LARGEST POWER GENERATION EVENT

OWNED & PRODUCED BY: PRESENTED BY:

SUPPORTED BY:

1509ELP_23 23 10/8/15 8:01 AM

Page 26: Nhathongminhvn september 11:2015

Customers

24 | ElEctriclight&PowEr Sep|Oct|2015

A u t h o r

For the last eight years,

Micah DeHenau has

managed advanced

analytics teams and

consulting engagements

in numerous industries

and has been focused

in utilities for the last

five. At Vertex, DeHenau

currently oversees a

team of senior analytics

practitioners, business

intelligence specialists,

Ph.D. statisticians and

analytics value engi-

neers. Prior to Vertex, he

developed and delivered

analytically driven

projects and programs

for many Fortune 500

companies including

AT&T and Comcast.

AA service outage hits. A high bill is delivered.

Customers flood the call center with a deluge of questions

and complaints. Costs rise, customers are unhappy.

What would happen if each of those calls could actually

yield valuable data? Through speech analytics technology

utilities can turn customer calls into a treasure trove of usable

data by tracking sentiment, word choice and overall satisfac-

tion. While customers might call in for a specific reason, they

usually bring up a number of topics on a single call. Truly

understanding and responding to the voice of the customer

will improve the customer experience when he or she does

call, but also will help reduce the number of calls when the

next outage or high bill hits.

Cutting-edge speech and predictive analytics, part of the

secret recipe that makes companies like Amazon and Netflix

so successful, can make utilities more customer friendly and, in

turn, improve the bottom line. Utilities have unique challenges

and opportunities when it comes to the customer experience.

Utilities want to reduce call volumes, increase self-ser-

vice, reduce bad debt, ensure regulatory compliance and, of

course, make their customers happier. The question is “how?”

Unlock Customer Insights Hidden in your Data

With Speech and Predictive Analytics

Utilities have recognized that analytics are an integral part

of their business, particularly for issues like load forecasting

and grid management. According to the Utility Analytics

Institute, in North America utility spending on data analytics

is expected to grow 29 percent year over year, totaling more

than $2 billion in 2016. Worldwide, the expected investment

is staggering, with Pike Research indicating that cumulative

spending on smart grid data analytics alone will reach

approximately $34 billion by 2020.

But now, more customer-oriented analytics are available

to utilities of all sizes, supporting the increased focus on cus-

tomer experience. Speech analytics allows utilities to unlock

data from conversations. Utilities can now analyze everything

the customer talked about, everything the agent talked about,

and how the agent represented the utility in that interaction

and adhered to corporate policies on how to speak with cus-

tomers. Correlations can be drawn from a conversation. If

certain things are said by an agent, how will the customer

respond and how can that information be used to improve

overall call center performance and customer satisfaction?

Speech analytics is used extensively in retail, telecom

and other industries to extract deeper meaning from every cus-

tomer interaction and develop strategies based on the insights

gained. Utilities are now beginning to adopt the technology

and uncover value that was previously hidden in their calls.

Predictive analytics can determine customer behavior

and help utilities answer questions, such as which custom-

ers are likely to enroll in self-service, sign-up for paperless

billing, be most interested in energy efficiency and conserva-

tion initiatives and pay their bills once in arrears. By harness-

ing data to predict customer behavior, utilities capitalize on

events before they happen.

How Well can you Understand your Customer?

The power of predictive analytics has been harnessed by

leading consumer-facing companies to help them know what

their customers want. For example, according to Netflix, 75

percent of the content consumed by customers is actually

suggested or recommended, suggesting that Netflix knows

its customers better than they know themselves.

Amazon, likewise, uses predictive analytics to antici-

pate its customers’ purchases, developing an algorithm that

analyzes shopping patterns and behaviors to ship products to

regional facilities before customers even buy them. Packages

are then on their way as soon as a customer hits the “place

your order” button.

The result is that companies like Netflix and Amazon con-

sistently rank high in customer satisfaction and loyalty, even

in a highly competitive marketplace. In fact, according to the

annual American Customer Satisfaction Index’s retail sector

report, Netflix has a customer satisfaction score of 79 percent.

Utilities, by contrast, historically had little incentive to

innovate in the same way. Utility customers are, however,

also Netflix and Amazon customers. They expect a similar

level of customer experience from their utility. It can be dif-

ficult to make a quick and easy business case for an invest-

ment in analytics but the savings can add up by reducing the

Keeping up With the Amazons: How Data Analytics can Improve Utility Customer Experience

By Micah DeHenau, Vertex

1509ELP_24 24 10/8/15 8:01 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 25

Customers

number of calls into the call center, providing electronic bills instead

of mailing paper ones, and reducing average handle time as well as

increasing first-call resolution.

Happier customers translate to a better bottom line. In a Bloom-

berg Businessweek research report, it was revealed that process com-

panies in the utilities and energy and resources sectors lead the pack

of global industries in expected big data investment returns, with utili-

ties being able to expect a 73 percent return in 2013.

Even in the case of an outage, when customers are the unhappi-

est, analytics provides opportunity. Many of those customers could

have been channeled to a website or automated phone system to

receive the answers they want, heading off calls before they’re ever

made and providing more information faster to more customers than

an agent could on the phone. Yet a recent 2014 study by Booz Allen

found that just 26 percent of utilities have a mobile app, reflecting the

ongoing hesitancy of many utilities to embrace technology that can

dramatically impact their bottom lines.

Analytics as a Service Reduces Resource Expenditure

Utilities have rightly been concerned with the cost and time involved

to implement new technology like advanced analytics, as well as the

skills needed to operate them. In the past, advanced analytics was a

costly process that could take years rather than months to implement,

diverting attention away from the core business or serving customers.

Today’s technology, however, can be up, running and deliver-

ing insight in as little as a couple of months. Standing up an orga-

nization’s analytics capabilities can be accomplished on a time- and

cost-efficient basis, particularly with analytics as a service. Instead of

having to build and support a team that understands and implements

analytics, organizations can rent them, thereby lowering the cost of

entry. This type of analytics on demand leaves utilities the ability to

focus on their customers.

The return on investment (ROI) is there. Analytics can create a

highly effective phone call that can prevent sending a technician to a

customer’s location to root out a problem. Its results are seen when a

customer’s needs are anticipated by automated voice prompts on the

telephone or through web interaction, preventing the need for a live

agent conversation. Moving the needle even slightly can result in a

significant ROI and improved customer experience.

For utilities dealing with an ever-increasing influx of data, the

sheer amount and variety of information can either be overwhelming

or overlooked. Analytics tools and services provide a way to spin that

raw data into a golden opportunity.

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1509ELP_25 25 10/8/15 8:01 AM

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Customers

26 | ElEctriclight&PowEr Sep|Oct|2015

A u t h o r

Jeff Camp is vice

president of contact

center operations at

TXU Energy and Dave

Parkinson is chief

operations officer at

Interactions LLC

IIn Texas, where there is a competitive retail electricity market,

85 percent of consumers can choose their service provider

from a group of more than 50 companies. The competition is

steep, but TXU Energy is the largest retail electricity provider

in Texas, powering more Texans than any other retailer in the

state. This has been achieved by offering a variety of innovative

energy efficiency products and programs, competitively priced

service plans, and great customer service. Customer service, in

particular, is central to the success of TXU Energy.

Telephone support is a primary service channel for TXU

Energy customers. More than 8.5 million customer service

calls are received each year. They range from simple requests,

such as reporting an outage or making a payment, to more

complex tasks, like selecting service plans, transferring

service or resolving a billing issue.

While TXU Energy had a good touch-tone, menu-

based system in place, company leaders recognized that

new technologies made an even better customer experience

possible. With that in mind, the company partnered with

Franklin, Massachusetts-based Interactions to create IVY,

the first and only full natural language virtual assistant

IVR system in the Texas utility market. Just one year after

deployment, IVY reached an important milestone: It began

resolving more calls than all of TXU Energy’s phone-based agents.

IVY: The new Voice of TXU Energy

IVY is not just a creatively branded interface. It’s a highly

conversational customer care virtual assistant capable of

handling complex but repetitive activities, just like a live agent.

IVY does not force customers to use rigid voice prompts

or to put themselves in predetermined boxes requiring them to

select 1, 2 or 3. It simply asks, “How may I help you?” and allows

customers to make requests in their natural speech patterns.

Because it is a virtual assistant rather than a menu-based IVR

system, it can handle a broader scope of responsibilities.

Among its expanded key features, IVY is able to

authenticate accounts, retrieve balances, accept payments,

make payment arrangements and enroll customers in

programs like TXU Energy Average Monthly Billing. It can

also help customers sign up for AutoPay, toggle between

languages in real time; update contact information, reconnect

service related to a disconnection for non-payment, accept

and provide information on service outages, and relay

updates on service orders.

TXU’s Customers Embrace IVY

The response to IVY by TXU Energy’s customers has

been tremendous. In 2013, the legacy solution serviced

approximately 3.4 million calls. In 2014, following the

introduction of IVY, that number jumped to more than 4.5

million calls. By the end of second quarter 2015, IVY was

resolving more calls than TXU Energy’s live agents.

Not only does the system allow for a wider array of self-

service tasks to be completed, but it also has reduced the time it

takes to complete self-service tasks by 35 percent compared to

the legacy system. This is possible because of IVY’s responsive

and conversational nature, which is capable of understanding

open-ended sentences, grammatically incorrect statements and

requests made even when there is background noise.

IVY eliminates another common frustration that

plagues customers. For calls that require an agent, it provides

a seamless handoff. This allows the agent to know who

the customer is immediately and where they were in the

dialogue, saving the customer from the hassle of sharing their

information again and reducing agent-handle time.

Most encouraging: TXU Energy has boosted its CSAT

(customer satisfaction) score by 11 percentage points since

the deployment of IVY from a respectable 82 percent through

the prior IVR system to an impressive 93 percent with virtual

assistant IVY.

Building the Business Case for new Technology

TXU Energy reached the projected three- to five-month

business-case run rate at an accelerated pace of only 40

days and agents are also no longer burdened with low-level,

repetitive activities.

Even though the system is now resolving more calls

than TXU Energy’s live agents, the adoption rate is still

increasing. IVY will never replace TXU Energy’s agents;

that isn’t the goal. IVY still triages the most important calls

to the agents, who are able to provide a more personalized,

attentive, concierge level of service.

Many customers prefer to leverage self-service channels

to quickly and easily get work done on their own terms. The

problem is many menu-based IVR systems simply don’t

facilitate the freedom needed to achieve this goal.

Times have changed and more businesses, whether it

be in the Texas utility market or elsewhere, are leveraging

customer service as an important differentiator. The

implementation of virtual assistant technology not only

offers TXU Energy customers quicker and easier self-service

options, but it has real, tangible business benefits that are

being felt across the call center operation, as well.

Virtual Assistant Drives Self-Service Adoption at TXU Energy

By Jeff Camp, TXU Energy, and Dave Parkinson, Interactions LLC

1509ELP_26 26 10/8/15 8:01 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 27

Customers

Complete information at your fingertips. www.csweek.org

Rod Litke, CEO, CS Week

For more information, please visit www.csweek.org

P h o e n i x | A p r i l 2 5 – 2 9 , 2 0 1 6

Fall, a Time for Change…Fall is a time of change for many of us. Farmers and ranchers prepare their land for winter.

Wildlife prepare in various ways for winter and even the Farmer’s Almanac forecasts winter

weather based on wildlife behavior. I’m curious and anxious to see the El Nino effect. Much of

the West, particularly California, could do with the wet winter that is forecasted. Here in Texas,

we also expect an El Nino winter, which means it will be wetter than normal.

Besides the change of season, fall also marks the beginning of football season, a time

many of us enjoy.

Here at CS Week, fall marks something big—the time when our planning committee,

executive advisory panel and CS Week board begin work on the educational content and

direction for our CS Week conference. The 2016 event will be held in Phoenix April 25-29.

I’m certain many of you are aware that we are combining the AGA EEI Customer Service

conference in with CS Week 2016, which promises to make the event even better.

CS Week groups and venues are front and center at the annual planning meetings. This

year we had much more information from our surveys than ever. Our survey results showed

that customer service is the primary interest of 89 percent of our respondents, followed by

75 percent of respondents who list CIS and billing as their primary interest. I’m especially

interested in and proud of the workshop-related survey results that reveal our attendees CS

Week workshop content and ensure our presenters remain at a high quality level.

It is not too early for you to start thinking about two dates that pop up sooner than

expected. Registration for CS Week opens in mid-November online at www.CSWEEK.org.

Also in response to your requests, the Call for 2016 Expanding Excellence Awards submissions

has already opened. Submissions are due no later than Jan. 4, 2016.

Watch for information available soon on greater outreach and year-round involvement in

CS Week’s Women in Utilities.

Stay tuned to our website and social media as

we update events, dates and opportunities

leading up to future CS Weeks. We are

excited to return to Phoenix and are

building toward an even greater

attendee experience—beyond

the classroom—including

the historical setting, the

food and the endless

networking opportunities.

1509ELP_27 27 10/8/15 8:01 AM

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28 | ElEctriclight&PowEr Sep|Oct|2015

MUtilities on the Front Lines of Environmental Stewardship

by Linda Blair, ITC Holdings Corp.

A u t h o r

Linda Blair is executive

vice president and chief

business unit officer at

ITC Holdings Corp.

More than many other industries, utility companies

exemplify environmental stewardship. Power lines,

particularly the high-voltage lines transmitting massive

amounts of electricity across huge swaths of land, must

coexist with the great outdoors.

Managing our country’s high-voltage power grid

carries far-ranging environmental responsibility spanning

the lifecycle of a transmission line. From planning and siting

processes through construction and maintenance activities,

utilities must ensure the safe and reliable delivery of power in

a responsible way that helps protect land, water and species.

ITC’s environmental stewardship activities are driven

by an ISO-14,001-based environmental management system

across our operations. These regulated standards provide a

framework for setting goals for environmental improvement;

developing policies, procedures and work practices to meet

those goals; evaluating performance, developing corrective

and preventive actions and performing management reviews.

Planning and Siting

When planning transmission projects, ITC includes

environmental assessments for wetlands, threatened and

endangered species and other sensitive habitats. By including

these factors at the front end in a transmission line route

analysis, ITC can adjust the placement of the line and

structures to avoid or limit the environmental impact.

For example, we discovered that the proposed route

for our 122-mile greenfield KETA line linking eastern and

western Kansas passed through a breeding ground for the

lesser prairie chicken. This medium-sized, gray-brown

species of grouse occurs in scattered populations in short-

grass prairie in the southwestern quarter of Kansas. In an

effort to preserve the bird’s

breeding grounds, ITC

developed an appropriate

environmental mitigation

and accommodation plan

i n cooperation with the

Kansas Department of

Wildlife and

Parks that included converting approximately 1,200 acres

of privately-owned land in south-central Kansas into lesser

prairie chicken habitat. The 345-kV KETA project entered

service in 2012, facilitating the integration of wind energy

throughout the region.

Line rebuild projects in rural wetlands can pose

particular environmental challenges. In west Michigan, we

needed to replace five 138 kV lines running through 4.5 miles

of wetlands on deteriorated wood H-frames. Before line work

could begin, crews had to reconstruct an old access road and

install three temporary bridges over waterways. The five

lines were consolidated onto three sets of double-circuit steel

monopoles, leaving room for a future sixth circuit. Because

wetlands regulations restrict the digging and installation of

foundations, caissons for the towers had to be sunk directly

into the ground using a hydraulic vibration process. The five

lines were returned to service in 2011.

Construction and Recycling

Rebuilding hundreds of miles of old transmission

infrastructure poses the challenge of how to properly handle

the retired components. ITC decommissioned and recycled

an estimated 6 million pounds of equipment from the electric

transmission network last year alone, including circuit

breakers, transformers and other metals. That’s equal to a

fleet of 280 school buses-worth of metal. We also recycled

more than 225,000 gallons of oil last year.

Wooden transmission poles are recyclable, too. ITC this

past summer donated 10 cedar poles from decommissioned

power structures to the Iowa Department of Transportation

(IDOT) to use as bat poles serving the habitat of the Indiana

long-eared bat, a federally endangered species. The poles

are being installed in two locations where the IDOT has

woodland and wetland mitigation projects.

Also this past summer, ITC partnered with the Huron

River Watershed Council, Southeast Michigan Osprey Watch,

Audubon Society and Ann Arbor Parks to increase the number

of osprey in the region. We repurposed decommissioned cedar

transmission poles into two osprey nest platforms, which were

installed in the watershed in July. ITC has active partnerships

with five watershed conservation groups in Michigan.

Proper handling of emissions from substation equipment

ITC collaborates with organizations in Iowa and Michigan to create natural transmission corridors featuring native plants.

1509ELP_28 28 10/8/15 8:01 AM

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T&D Operations

is another ITC focus. We voluntarily joined forces with the U.S.

Environmental Protection Agency (EPA) SF6 (sulfur hexafluoride)

Emission Reduction Partnership for Electric Power Systems in

2005. ITC joined the partnership to institute an industry standard for

reporting its emissions; to establish inventory tracking of its SF6 use;

and to work in collaboration with other industry partners and the EPA

to develop and improve gas handling and maintenance programs.

In recognition of these efforts, the EPA presented its SF6 Team

Leadership Award to ITC in 2012.

Operations and Maintenance

An ever-present reality to us as the country’s largest independent

transmission company is that trees and high-voltage power lines can

be a hazardous combination. To prevent events like the Northeast

Blackout of 2003, vegetation management needs to be a key

component of any utility’s operations and maintenance program.

Selective removal of incompatible species in urban, suburban and

rural transmission corridors is the cornerstone of our integrated

vegetation management program. These efforts make space for

grasses, wildflowers and low-growing shrubs to thrive.

Foresters and other trained field staff routinely inspect our

corridors, identify both appropriate and incompatible species on a

site-by-site basis and recommend suitable management methods

in the greenways. We favor the removal of incompatible trees over

trimming because trees that are trimmed can produce aggressive new

growth. This is especially hazardous during hot summer months when

transmission lines sag due to the energy load they carry.

In addition to the objective of maintaining safe and reliable

service, responsible vegetation management can result in diverse,

stable, natural greenways under and adjacent to transmission

corridors, with less environmental disturbance. For example, in

2010, ITC began partnering with Stony Creek Metropark, a 4,500-

acre, multi-use recreational park north of Detroit, to manage wildlife

habitat in ITC’s transmission corridor passing through the park. Our

vegetation management plan in the park focuses on the removal of

invasive woody and herbaceous species, and the re-establishment and

seeding of native prairie grasses and wildflowers. The Stony Creek

project is among 10 ITC environmental conservation efforts certified

by the Wildlife Habitat Council, which promotes and certifies habitat

conservation and management on corporate lands nationally through

partnerships and education.

ITC is lending similar support toward helping states address

declines in natural lands and habitats. To help Iowa address its

increasing loss of native prairie lands, ITC over-seeded three

electric transmission line corridors in the Cedar Rapids area in late

2014, covering about 42 acres. The plantings feature native grasses,

wildflowers and broadleaf native plants. Well-established prairie

grasses will help prevent various types of invasive trees from taking

root and potentially growing into the power lines.

Elsewhere in Iowa, we are working with the U.S. Fish and

Wildlife Service and other agencies on ways to deter eagles from

coming into accidental contact with transmission lines, by installing

bird diverters on lines.

Michigan also is dealing with a declining natural feature—

lakeplain prairie lands. We began partnering with The Nature

Conservancy in 2013 in a multi-year effort to restore these lands in

southeast Michigan, including some found along ITC transmission

line corridors. Restoration involves eliminating invasive plant species

that crowd out the original prairie and are detrimental to wildlife.

This effort helps restore ecosystem functions, improve and increase

habitat for rare insects, plants and animals and increase flora and fauna

diversity.

In our Facilities

Our commitment to the environment extends to our workplaces,

with waste reduction efforts underway at several ITC facilities. By

removing wood, cardboard, paper and plastic from the general waste

streams and recycling these materials, we have reduced the average

volume of material sent from our warehouses to landfills by 50

percent over the past two years. At two warehouses, we now compact

and send waste that cannot be recycled to energy recovery facilities,

converting what trash remains into electricity.

Additionally, employees at our corporate headquarters in Novi,

Michigan, have embraced their own waste reduction effort. An audit

conducted by our employee volunteer Green Team showed that about

55 percent of the waste generated onsite—much of which could be

recycled—was going to a landfill. The audit led to a program to

achieve zero landfill waste from the building by a goal year of 2016.

Among other efforts, our Green Team rolled out a program to make

recycling easier in the building and is studying food waste composting

and a waste-to-energy stream to achieve this goal.

Collaboration and Best Practices

As evidenced, the work of our industry carries great environmental

responsibility from multiple perspectives. Few companies and

industries operate as close to the landscape as we utilities do, so let’s

continue to exchange ideas as we all strive for the best approaches to

environmental stewardship.

An integrated vegetation management program begins with keeping trees away from power lines.

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TThe recent proliferation of utility-scale renewable energy

projects, driven by legislative mandates, has created a need to

transfer large amounts of electricity from distant rural areas,

often in the middle of the continent, to urban load centers

generally on the coasts. The long distances involved have

led to a resurgence in interest in high-voltage direct current

(HVDC) overhead transmission, a technology little used in

North America in the last 30-40 years.

A handful of 400 kV or bigger HVDC overhead

transmission lines were built in North America in the 1970s

and ‘80s, These included Nelson River, Quebec-New England,

Pacific DC Intertie, Path 27, and the CU Line. While HVDC

has been used in a number of undersea cable projects on the

continent, since 1986 no new HVDC overhead line has been

energized in North America.

That will soon change.

Over a dozen new projects are under development

or construction across North America. Most are intended

to transport hydro power or wind power from the North to

the South or the middle of the continent to the coasts. The

large amount of capacity needed and the long distance to be

travelled make HVDC a viable option for these projects.

In addition to the myriad challenges involved in building

any large-scale, high-voltage transmission project, HVDC

brings additional challenges as there is little recent experience

in building or operating these systems and few companies

have HVDC lines. Therefore, there is a desire by companies

building these systems to understand costs (and validate EPC

estimates) of both constructing and operating these systems

in order to ensure they are prudent and reasonable.

For one company developing a 500kV HVDC project

in North America, the answer to better comprehension of

what it would take to build and run the project was to use

benchmarking to understand comparative costs. This is an

approach which others would be advised to consider as it

can serve to validate to the board that costs are reasonable,

prove to regulators that costs are prudent, and assist asset

management in understanding the likely O&M costs.

A limited number of 400 kV+ HVDC overhead line

projects have been implemented in North America, although

a number of projects are planned. Given the lack of recent

North American systems and relatively small number

of HVDC projects implemented, comparative data for a

benchmarking exercise will have to be sourced globally,

as most of the existing 400-600 kV+ HVDC overhead line

projects have been built outside of North America.

Using data from other countries to benchmark brings

a host of challenges which includes normalizing the data

for currency fluctuations and wage rate differences, not to

mention inflation for different time periods. In addition, there

are significant differences in regulatory and environmental

regimes around the globe which can impact costs.

Benchmarking Construction Costs

For lines specifically, there are also a number of factors which

must be accounted for to ensure costs are comparable. The

projects being compared will vary in terms of capacity and

higher capacity lines translate into higher costs. Using linear

regression, a formula can be developed by which capacity of

all projects can be adjusted to an equivalent basis versus the

average. By applying the formula to the difference in capacity

from the average, an adjustment factor can be calculated. This

factor can then applied to the project’s cost per line mile to

determine an equivalent cost per mile (see Figure 1).

Different tower types can also be used for projects. As

guyed towers are less expensive than freestanding towers,

the projects being compared must be adjusted to factor in the

average cost difference between them to put the towers on an

equivalent cost-per-mile basis. There are other adjustments

which can be made to the comparative cost of overhead lines

such as return type, foundation type, conductor type, etc.

However, comparative data on these can be hard to gather

and the value may not be worth the additional cost and effort.

Benchmarking lines is always an easier task than stations

(regardless of AC or DC) because of the relative simplicity of

transmission lines vs substations. As discussed previously,

transmission lines mainly differ in just a few dimensions

(tower type, foundation type, conductor type/size/capacity,

etc). Substations are all unique with different numbers,

types and voltage levels of equipment. Therefore, accurate

T&D Operations

30 | ElEctriclight&PowEr Sep|Oct|2015

Benchmarking in Action:Comparing the Costs of HVDC

by Steven J. Morris, UMS Group Inc.

A u t h o r

Steven Morris is a Principal

of UMS Group Inc. and

its client sponsored

benchmarking and best

practice study leader. He

has 20 years of utility

industry experience and

has assisted numerous

utilities in benchmarking

generation, transmission,

distribution, and corporate

services functions.

Reach him at smorris@

umsgroup.com.

Example of Adjustments to Overhead Line CostsFigure 1

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T&D Operations

benchmarking requires decomposing the substations to be compared

into equivalent values (i.e., transformer capacity) and counts for

major equipment.

For HVDC projects, this decomposition is impossible to

achieve. There are only three vendors supplying converter stations.

Price is heavily driven by the competitive pressure on the companies

to procure projects at that specific time. Therefore, the same project

procured in a different period might be more or less competitively

bid. In addition, virtually all HVDC converter stations are procured

through turn-key contracts with strict confidentiality clauses. This

inhibits the ability to break station costs down into their constituent

components hindering analysis of cost drivers. However, there are

some normalization factors that can be used to assess stations. This

includes assessing on a cost per MW basis, as well as adjusting to

equivalent capacity (as with lines) (see figure 2).

From an overall project perspective, the benchmarking effort

should look at location-specific drivers of cost differences. The

most common of these is wage rates which can be used to normalize

labor costs. However, a look at a functional cost breakdown (i.e.,

permitting, ROW acquisition) can also be used to identify not only

where local differences are driving costs, but also where internal

efficiency (e.g., project management, engineering) exists.

Benchmarking Operations and Maintenance Costs

The above discussion has dealt with benchmarking construction

costs, but a company building a new HVDC project also needs to

understand what it’s going to cost to operate and maintain the system.

Typically, the converter station vendor will provide a recommended

maintenance schedule for the DC yard, but there are a number of

operating factors which impact maintenance that will not be known

until operating experience occurs. These include power transfer

levels, operating scheme, utilization rate, etc.

In addition, companies maintain their converter stations

differently. Some maintain them remotely, while others maintain

them locally. Some have dedicated DC staff, while others have

shared staff with their AC stations. Some have 24/7 on-site personnel,

while others only run one shift. The physical size of the facility and

amount/type of the equipment in the station also impact the amount

of maintenance required.

Another factor driving O&M costs is that not all projects face

the same reliability requirements. Commercial projects typically

don’t face strict system operator requirements for reliability,

different regulators have different requirements for inspection and

maintenance, and non-North American projects don’t have to meet

NERC CIPS requirements. These factors all impact the amount of

maintenance required and must all be taken into consideration when

benchmarking staffing levels and O&M costs (see Figure 3).

Outside of North America, it is common for utilities to contract

out maintenance of their HVDC converter stations. As many have

only one or two converter stations, they do not see the point in staffing

and training a small group just for HVDC. However, in North

America, most major maintenance is performed in house. Regardless,

availability of contract resources can impact staffing levels. Stations

that are located in areas where the skills needed for HVDC are simply

not available or in areas with heavy demand from other industries may

not be able to take advantage of contractors, even if they wished to.

The number of maintenance outages taken also differs by

company and can drive total O&M costs. Depending on the degree

of redundancy in critical systems and the loading scheduling, some

utilities may take outages biennially. However, most utilities with

HVDC typically take scheduled maintenance outages once or twice

a year. These outages can last from several days to several weeks,

depending on the complexity of the tasks to be completed and are a

key cost driver.

Newer stations have a high degree of remote, self-diagnostic

capabilities, requiring less on-site monitoring. Remote operations by

the control center allow for use of shared resources versus on-site

operations which require dedicated staff. However, on-site operators

are generally also able to perform minor maintenance, so there may

be a cost trade-off which must be factored into to comparisons.

Finally, companies building HVDC projects, particularly

those without existing HVDC assets, will face a learning curve on

maintenance. During the first couple of years of operation there will

likely be increased demand for O&M field personnel (e.g., support initial

equipment troubles, capital loading for project deficiency corrections

and warranty, etc.) that will decrease over time, supporting the release of

dedicated technical resources and increased sharing of resources.

Benchmarking can serve a useful purpose for companies

developing overhead HVDC projects. However, careful consideration

must be given to those exogenous factors which drive cost differences

to ensure that an apples-to-apples comparison is made.

Scatter Chart of Converter Station Cost vs. CapacityFigure 2

Equivalent Staffing Levels for Converter StationsFigure 3

1509ELP_31 31 10/8/15 8:01 AM

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Energy Efficiency & Demand Response

32 | ElEctriclight&PowEr Sep|Oct|2015

A u t h o r

Ed Thomas has been

executive director of

Peak Load Management

Alliance since 2013.

UUntil recently, demand response was mostly considered a

stopgap measure to be used during a peak load event. Recently,

however, utilities are beginning to see demand response as a

tool to be used in system planning and operations, especially

when it comes to integrating renewable energy.

Peak Load Management Alliance (PLMA) Board

Chairman Paul Tyno with Buffalo Energy Advisors, PLMA

Board Vice Chairman Rich Philip with Duke Energy,

and Extensible Energy President and CEO John Powers

participated in a PLMA Demand Response Dialogue in

early August. They discussed demand response’s move into

the mainstream and how utilities are incorporating demand

response into their operating and business processes.

“Many in the demand response community feel this is a

transformative time for demand response as we’ve known it,”

Tyno said. “I look at the future of demand response in terms

of dynamic load management and what a collective group of

customer-based assets could do, including a robust demand

response capability. What could those assets provide back to

the grid in a market that compensates them for the capability?

We’re at a very interesting point. I

think of demand response as a 24/7,

365-day resource proactively used

to manage versus an emergency-

only resource of last resort.”

Duke Energy looks at

demand response as a transmission

distribution planning tool, Philip

said. In some situations, localized demand response activities

are being used to address implications from the changing

generation mix coupled with transmission construction

constraints that can result in overloaded circuits.

“We are considering how demand management might

be able to make a difference for a lot more days of the year

than just the three or four “emergency” days that used to be

applied in the traditional generation planning context,” Philip

said. “In one circumstance, we might be able to impact how

many days certain lines may be exposed and, hopefully,

reduce that risk from 50 days at 85 degrees, or warmer, to

a lower contingency, something like 30 days at 88 degrees.”

Demand Response is Growing Up

“Demand response is becoming less of a safety net and

moving in the direction of becoming a mainstream resource,”

Tyno said

Philip added that he believes it may be a key building

block for where energy utility system planning is going in

the future.

“Just over the last several years, it’s pretty astounding

to see how the cost and capabilities of new control systems

have evolved. Ten years ago, the idea of behavioral demand

response was a nice concept, but today it’s been made real by

our automated metering infrastructure,” he said.

The emergence of AMI

technology deployments across the

country will enable utilities like Duke

Energy to explore a shorter-term type

of demand response in a more succinct

way. With that will come more

robust evaluation into the customer

experience to verify that their comfort is not impacted, Philip said.

As demand response becomes more automatic and can

be activated based on certain thresholds like temperature,

load and frequency levels, and does not require real-time

human decision-making, the more utilities will consider it

a deployable resource that operators will trust and use for

planning purposes, he said.

Powers looks at things a little differently.

“As an economist, I take the

valuation question a little more

literally. There is a lot of work still to

be done in some markets on how to

value demand response,” Powers said.

In areas where demand

response, especially fast-acting

demand response, is beginning to

play in ancillary services markets, its value is starting to be

recognized, he said.

Some examples of utilities operating in jurisdictions

where demand response programs are being monetized

include Pacific Gas & Electric service areas and others in

California, as well as Great River Energy in the Midwest.

Great River Energy has initiated a program with grid-

interactive water heaters. The program has shown a higher

valuation than many other programs because the utility has

been allowed to tap into the market for ancillary services,

The Future of Demand Response: The Practitioner’s View

By Ed Thomas, PLMA

Rich Philip, PLMA Board Vice Chairman, Duke Energy

Paul Tyno, Peak Load Management Alliance Board Chairman, Buffalo Energy Advisors

John Powers, President and CEO, Extensible Energy

1509ELP_32 32 10/8/15 8:02 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 33

Energy Efficiency & Demand Response

Powers said.

While customer satisfaction is essential to a successful demand

response program, utilities also must find a way to pay for the

program, he said.

DR and Renewable Energy

Renewable energy integration is also a driver in the future of

demand response.

Although controls and monitoring technologies are improving

and their costs are going down, more will be required to make demand

response a viable tool for renewable energy integration, Powers said.

“It will take a combination of technology, program design and

redesign of business models, in particular pricing and risk sharing,”

he said. “The problems presented by renewables integration are really

very different than those presented by peak shaving. We shouldn’t be

surprised that the solutions need to be different as well.”

Tyno believes demand response is becoming less of a safety net

and moving in the direction of becoming a mainstream resource. It

has the potential to work much better than it’s working now, but that

potential is not tapped by most programs today. For demand response

to be an effective tool for renewable integration, it must reach its

potential, he said.

“I go back to what the objectives of the programs were and what

the objectives under renewable integration will become,” Powers said.

“We all talk about demand response in terms of a few dimensions,

right? It’s how responsive the load is in terms of latency from when

the signal goes out to when it goes down and to the duration of the

impact or the frequency of the impact. Is it one way or two-way? Can

you actually increase load as well as decrease load? What about the

size of the impact depending on time of day or whether there are other

constraints? All those dimensions shift from an emergency program

or peak shaving program into a renewables integration program. A

utility can’t simply assume its demand-response tactics for peak

shaving will fit the bill for a renewables integration problem.

“If we’re willing to embrace some changes in technology

program redesign and pricing, then I think we can provide a

mainstream operational response to renewables integration. If

we’re just looking to say, ‘Let’s take our existing program and call

it renewables integration,’ I think we’ll miss huge opportunities,”

Powers said.

A Focus on the Customer

No matter how well planned or implemented, no demand

response program will be successful unless customers buy into it.

And, as customers become more educated, look for more sustainable

energy options and even opt to become energy providers, utility

demand response programs must evolve to be accepted.

If utilities take a customer-oriented perspective, things will start

to move faster, Tyno said.

“Customers, especially on the C&I (commercial and industrial)

side, are thinking in terms of optimization and taking more of a holistic

view on how they want to interact or function with the grid,” Tyno

said. “They’re looking for market signals to make investments. Those

investments might be in co-generation, renewables, storage, energy

efficiency, certainly demand response and demand-management

capabilities. That’s how you animate the market, by sending the right

price/investment signal down to the customer.”

Powers agreed.

“The increased penetration of renewables is having a bigger

impact on the grid than most of us have acknowledged so far,” he said.

“When you look at the prices of renewables and how rapidly they’re

dropping, it takes some people by surprise.”

In the most recent solar procurements in Texas and Nevada,

some power purchase agreements are coming in at four or five cents

per kWh, Powers said.

“That changes things a lot; the signals we’re sending to

customers are still that energy is expensive—but it’s not. Energy is

cheap, reliability is expensive and once we get that into price signals

that are going out to customers we will get a lot more responsive load

from customers,” he said.

Powers cited community solar as an example. Distributed

photovoltaic solar adds variability to the net system load and a well-

matched set of demand response options has the potential to offset or

remove some of that same variability.

“Community solar presents a special opportunity for utilities. I tell

people that rooftop solar is something that happens to utilities; community

solar is something that utilities can help make happen,” he said.

A utility can implement strategic siting and put a solar plant

somewhere on the grid where it will do the most good rather than

the most harm. It also can coordinate the output from that solar

plant around demand response customers with whom it has existing

relationships.

Appealing to customers is an important part of the equation.

Market research continues to suggest that most customers want more

renewables and they know little about demand response despite

utilities’ best efforts to educate them. Designing a demand-response

program that can tap into the popularity of renewables can pay off,

Powers said.

“We think that community solar presents a special opportunity

for utilities that are trying to accelerate that shift towards demand

response as a renewables integration strategy,” he said.

The way forward will be to align the benefits to both customers

and utilities with automatically enabled energy management where

demand response is a “behind the scenes activity” that happens in

ways that are often invisible to customers, Philip said.

“I really do think that’s the way forward,” he said. “Paying

incentives to people to do something that they would never dream of

doing otherwise is how demand response ‘grew up.’ We are getting

away from that.”

The markets should take that approach going forward, he said.

s

p

c

c

t

f

“...the signals we’re sending to customers are still that energy is expensive—but it’s not. Energy is cheap, reliability is expensive...” John Powers, Extensible Energy

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Energy Efficiency & Demand Response

34 | ElEctriclight&PowEr Sep|Oct|2015

A u t h o r

Mark M. MacCracken

is CEO of CALMAC

Manufacturing Corp.,

which claims to be the

largest manufacturer of

thermal energy storage

equipment in the

world, with over 4,000

installations in 37

countries. He also the

former board of direc-

tors’ chair for the U.S.

Green Building Council.

TThe Alamo Heights Independent School District

(AHISD) serves the Texas communities of Alamo Heights,

Terrell Hills, Olmos Park, and a portion of north San Antonio.

Originally established in 1909, AHISD has a rich history

that is deeply ingrained within the local community and has

evolved from a rural district to a suburban district. In 2010,

the 9.4 square mile district started an initiative to increase

sustainability and reduce utility costs.

Challenge

Facing reductions in budgets and the need for upgrades to

address a growing student population, the AHISD turned to

the community. In 2010, community voters approved a $44

million bond for the school district. These funds were then

earmarked to help improve technology in classrooms, expand

the High School’s Music Building, increase the number of

overall classrooms, implement technologies that would help

reduce operating costs and address the numerous needs listed

in the district’s bond proposal.

Solution

AHISD explored many options on how to implement the

newly obtained funds. The use of geothermal energy and tri-

generation were discussed, but ultimately the deployment of

solar generation and ice-based thermal energy storage was

decided upon.

AHISD installed a 500 kW solar system split between

two campuses—Alamo Heights High School and Woodridge

Elementary—through CPS Energy’s Solartricity program.

The system generates $235,000 annually, with all energy

being sold back to CPS Energy at 27 cents per kWh.

Separate from this program, the AHISD decided to

install another five solar arrays at four campuses and the

maintenance building. The energy produced by these arrays,

totaling 400 kW and generating 40,000 kWh of energy per

month, is used by the district to power daily operations.

Payback on all the arrays is between 12 and 14 years.

Although the renewable technology will prove beneficial for

both utility and school district, there was still a need to reduce

energy costs by lowering demand.

AHISD relies partially on the grid for electricity use and

the grid is mostly powered by fossil fuels. Fossil fuels are not

just a form of energy; they are a form of stored energy held in

reserves. Renewables on the other hand are energy that only

happens when they happen. So when renewables were added

to the schools, peak demand didn’t necessarily go down.

The sun didn’t always shine. The school ended up using the

grid as a backup source of generation when renewables were

unavailable. When a school is unable to generate enough

energy from solar, it draws from the grid, which usually

occurs during peak demand hours when the least efficient

power plants are running and electricity is most expensive.

As a strategy to reduce peak demand and complement

the solar installation, Brian Uhlrich of DBR Engineering

Consultants, recommended CALMAC’s IceBank® energy

storage tanks. They came online in 2012. The energy storage

system creates cooling in the form of ice at night and then

stores it within the energy storage tanks when demand is

low and energy prices are discounted. The next day during

peak demand hours, the ice is melted to cool students and

teachers inside of a building. Through third-party automated

control software, demand targets can be set and the ice will be

used once within 10 percent of the programmed target. This

provides a flat, more attractive load profile to the utility and

controls district energy costs.

Fine Arts Building

AHISD also identified that ice-based energy storage would help

with the expansion of the high school’s fine arts building, one

of the major projects that was included in the bond proposal.

Enrollment in AHISD’s music programs had tripled since the

opening of the music program. It was to the point that the

orchestra program students were using the foyer as a classroom,

making expansion a top priority.

Lowell Tacker, AIA, LEED AP, Principal with LPA,

Inc. was chosen to help bring the expansion of the fine arts

building to fruition. This addition and renovation project

added a building that could serve as a direct link between

the existing practice facility and auditorium. The extra square

footage that was added as a result of the project could be

Texas School District Slashes Operating Costs with Solar and Ice-based Energy Storage

By Mark MacCracken, CALMAC Manufacturing Corp.

1509ELP_34 34 10/8/15 8:02 AM

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Sep|Oct|2015 ElEctriclight&PowEr | 35

Energy Efficiency & Demand Response

cooled using cooling that was created at night and stored in the ice-

based energy storage tanks. This would allow the district to meet

the extra cooling demand of the new structure without upgrading to

bigger chillers to meet the new load.

“This was the first project that I’ve worked on involving a

thermal storage system,” said Lowell. “Given the size and usage of

the campus we felt a thermal storage system appropriate. The best

thing is we have actual usage data to back up the numbers. We added

over 40,000 square feet and the energy costs per square foot have

gone down considerably. For any project of this scale and usage,

there’s no reason not to use consider energy storage technology.”

Results

The decision to use the bond funds to target energy efficiency upgrades

and lower operating costs has proven itself extremely wise, as the

Alamo Heights district has roughly $422 less per student today from

traditional state funding than it did at the start of the projects in 2010.

The district is able to generate revenue through its solar program and

has reduced peak demand in buildings with energy storage.

Currently 240 kW of energy storage is being used. Energy

storage is responsible for providing air-conditioning to 325,442

square feet split between the five buildings on the high school

campus. AHISD has reduced peak demand energy consumption by

roughly 21 percent at Alamo Heights High School in its first year of

operation. This decrease in peak energy usage from the grid comes

despite the high school increasing the size of its fine arts building by

over 12,000 square feet.

“Despite fiscal pressure, we identified a need to become smarter

with our energy purchases in order to reduce operating costs and

reallocate them to other important areas. We had heard about energy

storage in the past, but the technology has exceeded expectations,” said

Mike Hagar, assistant superintendent for business and finance at AHISD.

Summary

Through community support, AHISD was able to make a big impact

to its energy future by implementing energy storage and renewable

energy technology. These chosen strategies have allowed the district

to generate revenue and reduce peak demand. The proactive actions

of the AHISD has set the foundation for a much more cost-effective

and sustainable future.

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1509ELP_35 35 10/8/15 8:02 AM

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S P E C I A L

36 | ElEctriclight&PowEr Sep|Oct|2015

Fight the Good Fight

A u t h o r

EJay Mecredy is product

manager at Courion

Corp. Courion is focused

on identity and access

management solutions.

Energy companies are a nearly irresistible target for

hackers and data thieves. They have their customers’ financial

data and employees’ healthcare information. They perform a

vital economic function. They operate large, complex and often

computer-controlled machinery. After an era of deregulation,

mergers, acquisitions and consolidation, they often have a

patchwork of IT systems and security applications with seams

and forgotten back doors to be exploited.

So is it surprising that the Department of Homeland

Security’s Computer Emergency Readiness Team investigated

79 hacking incidents at energy companies in 2014? Or that

hackers broke into 37 percent of energy companies in 2013-

14, according to ThreatTrack Security?

It shouldn’t be. What’s more surprising is that it doesn’t

happen more often. The energy industry is in the mainstream

of U.S. industries that are using outmoded, largely manual

methods of protecting their networks. Most energy companies

concentrate their security efforts on keeping intruders out of

the network while they are vulnerable to the most devastating

and hard-to-detect attack—an internal attack using legitimate

user privileges to steal or corrupt data.

Hackers are targeting energy companies with

increasingly clever tactics to trick network users into giving

up their credentials. With email addresses widely available on

the Internet, hackers can contact employees directly under the

guise of official business and present seemingly legitimate

reasons for replying with user names and passwords; or they

can get them to click on a malware attachment disguised to

look like a harmless document or image. Sometimes it can

be as easy for a hacker as exploiting a security hole in a Web

browser while the user is surfing the Web to seize credentials

and access privileged services.

Once a hacker is inside a power company network using

legitimate credentials he or she can sign into applications

and databases or request access to more resources.

In a large organization, IT can’t vet these requests

because they don’t know the sources. Once the

hacker has network access, it’s almost impossible to catch

them with the tools available to most IT professionals today.

The primary access protection device at most energy

companies is certification processes mandated by federal

regulations. IT extracts lists of users from database and

application access management systems, cleanses them,

and distributes them to business managers for certification,

usually as spreadsheets. If an employee has left or has a

privilege that isn’t necessary for their job, the manager

notifies IT to terminate the privileges.

By then, it’s usually too late. Hackers probe networks

and phish for credentials almost every hour of the day, but

most organizations only review their access privileges

quarterly or, at the most, monthly. Reviews based on manual

data extraction and cleansing are too slow and expensive

to conduct frequently, so most organizations do enough to

satisfy regulatory requirements and little more.

It is this lack of intelligent, automated access management

solution tools in most corporate infrastructures that puts IT at

a disadvantage against hackers. With the constant push toward

more open networks that encompass customers, vendors and

partners, data is constantly more exposed to hackers. In the

energy industry, the growing popularity of wireless meters

linked in mesh networks opens another door to the network,

as do employees at remote drill sites who send data back over

wireless links.

Focusing data security resources on keeping the wrong

people out of the networks is playing a losing game in this era

of increasing openness. Energy companies need data security

systems that help them identify hackers who are using

legitimate credentials. They are composed of three essential

elements: 1) automated data extraction to eliminate slow,

costly manual data extraction; 2) role-based management

that prescribes which access privileges employees need to do

their jobs and makes identifying suspicious privilege requests

easier; and 3) user data analytics for detecting suspicious

patterns of use.

Unified in a security framework that encompasses all vital

IT resources, these elements enable IT staff to answer questions

that identify high-risk individuals and groups, such as:

• Are there domain administrator accounts whose

passwords have been changed?

• Which non-sales system have sales people accessed?

• Is anyone accessing customer information without a

genuine need to know?

• Does this business unit have an abnormal number of

accounts with unnecessary entitlements?

Hackers and energy companies have one thing in

common: they both work constantly. Energy company IT

staffs need the tools to identify hackers who have stolen

legitimate access credentials to probe networks from the

inside. The tools are available now—Amazon.com has

been using comparable technology for years to track

customer preferences. Energy companies owe it to their

own customers—and employees, partners, vendors, etc.—to

adopt it now.

Energy Companies Must Fight the Internal Battle Against Data Theft

By Jay Mecredy, Courion Corp.

1509ELP_36 36 10/8/15 8:02 AM

Page 40: Nhathongminhvn september 11:2015

Go to http://uaelp.hotims.com for more information.

19.8 MW (7.9 MWh)

Jake Energy Storage Center

Renewable Energy Systems

11101 W. 120th Ave. | Suite 400

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1509ELP_C4 4 10/8/15 8:06 AM