Understanding Electric Utilities and De-Regulation

Cover......Page 1
Understanding Electric Utilities and De-Regulation, Second Edition......Page 5
Series Introduction......Page 7
Preface......Page 9
Contents......Page 13
1.1 INTRODUCTION......Page 17
1.2 ELECTRIC UTILITY FUNCTIONS AND SYSTEMS......Page 18
Four Key Functions......Page 19
Generation......Page 22
Transmission......Page 23
1.3 ELECTRIC UTILITY RESOURCES AND ORGANIZATION......Page 24
1.4 VERTICAL INTEGRATION AND MONOPOLY REGULATION......Page 25
Vertically Integrated Utilities......Page 28
Generation and Transmission versus Local Distribution Utilities......Page 29
Regulators......Page 30
1.5 ELECTRIC UTILITY BUSINESS FRAMEWORKS......Page 32
Investor-Owned Utilities......Page 33
Municipal Utilities......Page 34
Electric Membership Cooperatives (EMCs)......Page 35
National Utilities......Page 36
Administrations, Authorities, Agencies, and Government Utilities......Page 37
1.6 GOVERNMENT REGULATORY AGENCIES AND COMMISSIONS......Page 38
Laws and Major Rulings Governing De-regulation......Page 39
1.7 ELECTRICAL EQUIPMENT SUPPLIERS AND DEVELOPERS......Page 42
1.8 A COMPLEX INDUSTRY UNDERGOING MAJOR CHANGES......Page 43
2.1 INTRODUCTION......Page 44
The Original Double-Ended Competitive Concept......Page 46
De-Regulation: What Emerged......Page 48
How Things Work: An Overview......Page 50
2.3 NO COMPETITION AT THE RETAIL LEVEL......Page 51
2.4 COMPETITION AT THE WHOLESALE GENERATION LEVEL......Page 54
The Power Exchange (PX)......Page 55
Bi-Lateral Trades......Page 56
Middlemen......Page 57
2.5 INDEPENDENTLY OPERATED REGIONAL TRANSMISSION GRIDS......Page 59
Why Transmission Had to Be Integrated into a Regional Grid......Page 60
Why the Regional Grid Has to Have an Independent Operator......Page 61
Universal Transmission Access Makes the Wholesale Generation Market Competitive......Page 62
Market Power and Competition......Page 63
Why Regional Grids Were Easy to Implement – At Least in Theory......Page 64
Transmission Congestion and Other Transmission Limitations......Page 65
Congestion pricing......Page 68
Transmission expansion......Page 70
Merchant transmission......Page 73
2.6 THE ELECTRICITY DOESN’T CARE ALTHOUGH PEOPLE AND MONEY DO......Page 74
Dis-Aggregation of No-Longer Regulated Business Functions......Page 77
Dis-aggregation: The Mechanism......Page 79
2.8 AN INDUSTRY IN NEED OF FINE TUNING......Page 82
3.1 THREE INTERTWINED ASPECTS GREW SIMULTANEOUSLY......Page 85
3.2 GROWTH OF ELECTRICAL USAGE......Page 86
Moving Usage Beyond Lighting......Page 87
The Radio and a Change in Attitude about Electricity......Page 88
Electricity Application Continues to Grow in Diversity......Page 89
Cost of Usage Decreased over Time......Page 90
An Early Scientific Curiosity......Page 92
Practical Breakthroughs in the Victorian Era......Page 94
Competing Electricity Formats: Direct vs. Alternating Current Technologies......Page 96
Larger Power Systems......Page 97
Distributed Generation......Page 98
3.4 THE RISE OF THE ELECTRICAL UTILITY INDUSTRY......Page 99
The Birth of Electric Utilities......Page 101
Utility Regulation......Page 103
Expansion of the Urban and Suburban Utility Industry......Page 104
Municipally Financed Utilities......Page 105
Rural Electrification......Page 106
De-Regulation......Page 108
Downsizing: One trend of the ‘90s......Page 109
De-Regulation and Debacle......Page 110
Fraud and Frustration......Page 111
Aging Infrastructures......Page 112
Technology and Automation......Page 114
Fine Tuning De-Regulation’s Regulations......Page 115
FOR FURTHER READING......Page 116
4.1 INTRODUCTION......Page 117
Alternating Current......Page 118
Is Electricity Safe?......Page 121
Ranges for voltage......Page 122
Ranges for current......Page 123
Higher voltage has much more “clout” than low voltage......Page 124
Constant Voltage Systems......Page 126
Synchronous AC Generation......Page 127
Constant Frequency Power Systems......Page 128
Electrical Losses......Page 129
The Challenge of Moving Power Where the User Wants It......Page 130
4.4 KEY POINTS......Page 131
FOR FURTHER READING......Page 132
5.2 A FLEXIBLE FORM OF ENERGY......Page 133
Light......Page 136
Heat......Page 137
Mechanical Motion......Page 138
Electronic Circuits......Page 139
5.4 ELECTRICITY IS BOUGHT FOR END-USES......Page 140
Appliances Convert Electricity to End-Uses......Page 141
Electric Load......Page 142
Appliance Share......Page 143
Daily Appliance Usage......Page 144
Peak and Energy......Page 147
Availability and service interruptions......Page 148
Transient voltage interruptions......Page 149
Value of power quality......Page 151
Harmonics......Page 152
Customer Class and End-Use Distinctions......Page 153
Understanding Their Customers......Page 155
5.6 CONSERVATION, ENERGY EFFICIENCY, AND DEMAND-SIDE MANAGEMENT......Page 157
DSM Earned a Deservedly Poor Reputation......Page 159
Custom Power Equipment Extends DSM Capabilities to Improving Power Quality......Page 160
Demand response......Page 161
5.7 SUMMARY......Page 162
FOR FURTHER READING......Page 163
6.1 GENERATING ELECTRIC POWER......Page 164
Alternating Current Generators......Page 165
Three-Phase AC Generation......Page 167
Why three phases and not two or four?......Page 168
Central Station Generation......Page 169
Generation mix: Base, intermediate, and peaking units......Page 170
Contingency margin......Page 171
Synchronization of Generators......Page 172
Fossil-Fuel Powered Generators......Page 173
Steam turbine generators......Page 174
Fuel efficiency......Page 175
Gas turbines......Page 176
Combined-cycle generators and measures to improve efficiency......Page 177
Nuclear Power Generation......Page 178
Nuclear power safety and business risk......Page 180
Hydro-Electric Power Generation......Page 181
Co-Generation......Page 184
FOR FURTHER READING......Page 185
7.1 FREE FUEL AND LOW ENVIRONMENTAL IMPACT......Page 186
Dispatchable versus Non-Dispatchable Power......Page 187
7.2 Hydro Power......Page 188
7.3 WIND-DRIVEN POWER GENERATION......Page 190
Environmental impact of wind generation......Page 193
Potential for Solar Power......Page 195
Photovoltaic solar generation......Page 196
Advanced Solar “Cell” Systems......Page 198
STES system layout......Page 201
Features of a STES plant......Page 203
STES systems: good for some applications......Page 207
Solar Tower Generation Units......Page 208
Trash Burning......Page 210
Biomass Plants......Page 211
Ocean-Current Turbines......Page 212
7.6 ARE RENEWABLE RESOURCES PRACTICAL?......Page 213
FOR FURTHER READING......Page 214
8.1 DISTRIBUTED POWER GENERATION......Page 215
Hype Overshadows Promise......Page 216
Distributed and Dispersed Generation Avoid T&D Costs......Page 217
Past Prospects for a Big Future......Page 220
Competitive power......Page 222
Physics Favors Larger Generators......Page 223
CHP and Combined Cycle Generators: Using “Waste” Heat......Page 224
DG’s Future Role......Page 226
Fuel Cells......Page 227
Micro-Gas Turbine Generator (MGTs)......Page 231
Internal Combustion Distributed Generators......Page 233
Other Distributed Generation Methods......Page 235
8.3 DISTRIBUTED POWER STORAGE......Page 236
Controller Technology: Key to Reliability Benefits......Page 238
A smooth transition for ride through......Page 239
Distributed Storage versus Distributed Generation......Page 240
8.4 SUMMARY......Page 241
FOR FURTHER READING......Page 242
9.1 INTRODUCTION......Page 243
9.2 T&D SYSTEM EQUIPMENT......Page 244
What Is Transmission and What Is Distribution Equipment?......Page 245
Voltage costs less to use than current......Page 253
Power is split into smaller portions as it gets closer to the user......Page 255
The Various Layers of a Power System......Page 257
The distribution substation level......Page 259
The distribution feeder level......Page 261
The Lateral Level......Page 263
The secondary and service level......Page 264
Design of overhead lateral and service circuits......Page 265
Design of underground lateral and service circuits......Page 267
Overhead and underground service transformers......Page 269
Urban Service Systems: Nearly Always All Underground......Page 270
9.4 SUMMARY......Page 271
FOR FURTHER READING......Page 272
10.1 INTRODUCTION......Page 273
10.2 WHY WERE ELECTRIC UTILITIES ORIGINALLY REGULATED?......Page 274
Regulatory Jurisdictions......Page 275
A privately owned power system is an option for some consumers......Page 277
A franchise guarantees utilities it will have customers......Page 278
Franchises tend to institutionalize the utility......Page 279
Monopoly Franchise from the Customer’s Perspective......Page 280
Guaranteed Rate of Return, and Regulated Prices (Rates)......Page 281
Least-Cost Operation......Page 282
Only qualified expenses go in the rate base......Page 283
Least-cost evaluation of expenses......Page 284
Rates and Rate Cases......Page 286
Certification of Need or Request for Capital Construction......Page 287
Mandated Operating and Business Practices......Page 288
Summary of Regulated Utility Structure and Functions......Page 289
Regulation originally reduced risk, as it was perceived by both business and government......Page 290
Background factor: The long-term technology trend of lower economies of scale in power generation......Page 291
Reason 2: Privatization......Page 292
Reason 3: Cost was expected to drop......Page 293
Reason 4: Regulation provided dis-incentives for innovation......Page 294
Competition and customer focus mean choice, not just low cost......Page 296
Create Competition......Page 298
Unbundling Energy from Delivery: A Summary......Page 299
“Unintended” functional and conceptual impacts......Page 300
Open Access, De-Regulation, and Competition......Page 301
The need for open access......Page 303
Transmission operation has proven most difficult to “get right” under de-regulation......Page 304
2. Purchasing Agency That Buys from Competitive Generators......Page 305
4. Wholesale And Retail Competition......Page 307
No Striving for System Synergism......Page 308
Shorter-Term Focus......Page 309
Stranded Assets......Page 310
10.6 INCREASED SERVICES FROM AND FINANCIAL PRESSURES ON LDCs......Page 311
Investor Psychology......Page 312
FOR FURTHER READING......Page 313
Wholesale and Retail......Page 314
A Completely New Concept: The Power Marketplace......Page 316
Power Exchange (PX)......Page 317
11.3 DO BUYERS SUBMIT BIDS?......Page 319
Advantages and Disadvantages of Each System......Page 320
Firm Power......Page 321
Reserve Capacity......Page 322
Grades of Interruptible or Firm Power......Page 323
11.5 HOW IS WHOLESALE POWER PRICED?......Page 324
Competitive Bidding......Page 325
Price Volatility......Page 326
11.6 SUMMARY......Page 328
12.1 INTRODUCTION......Page 329
An Old Concept: The Power Pool, or System Operator......Page 330
Delivery of power......Page 331
Primary and Ancillary Services......Page 332
Unbundling of Transmission Services......Page 334
Transportation of power......Page 335
Real power losses......Page 336
Energy imbalance......Page 337
Dynamic scheduling......Page 338
Reserve margin......Page 339
What Is Actually Bought and Sold, and How Is It Sold?......Page 341
Re-Selling Reserved Capability......Page 343
Purposes of Pricing......Page 344
There Are Many Different Opinions on How Transmission Pricing Should Be Done......Page 346
Displacement......Page 347
Distance......Page 349
Parallel flows......Page 350
For transmission services, price is a function of cost......Page 351
Postage stamp method......Page 352
MW-mile......Page 353
Rated system path......Page 354
Locationally-Based Pricing of Transmission Service......Page 355
Out-of-Merit Generation Dispatch......Page 356
Transmission Congestion: “Out of Market” Dispatch......Page 358
Marginal Pricing......Page 359
Conceptual Example of Congestion and LBMP......Page 360
The problem that mandatory congestion management creates......Page 365
Posting Congestion Prices......Page 366
Marginal Pricing......Page 367
Is the Complexity Worth Its Cost?......Page 369
Some Important Details......Page 370
12.6 SUMMARY OF KEY POINTS......Page 372
FOR FURTHER READING......Page 373
13.1 INTRODUCTION......Page 374
What Is Transmission and What Is Distribution?......Page 376
Closed distribution: Business as usual......Page 377
Direct Customer Access, or Retail Wheeling Seems Almost Inevitable......Page 378
Closed Distribution: Business Pretty Much As Normal......Page 379
13.2 OPEN ACCESS DISTRIBUTION......Page 380
Dis-aggregation and divestiture......Page 382
What happens to the "obligation to serve?"......Page 383
The concept of the distribution system’s "customer" changes......Page 384
Multiple Users of the Distribution System......Page 385
Distribution Reliability May Worsen – By Design......Page 386
Pricing and Billing: Much More Complicated......Page 388
Distribution’s Radial Nature Simplifies Much of the Pricing Controversy Seen at the Transmission Level......Page 389
Unbundling of Distribution Prices and Services......Page 390
Ancillary charges......Page 391
13.3 CHANGES IN DISTRIBUTION OPERATIONS......Page 392
Possible Competition for All but the Basic Delivery Service......Page 393
Changes in Planning and Engineering Priorities......Page 394
Designs and Procedures Will Improve Most......Page 397
Is an Intelligent Distribution System the Way to Go?......Page 398
What Does the Distribution System of the Future Look Like?......Page 400
FOR FURTHER READING......Page 401
14.1 INTRODUCTION......Page 402
Load Aggregators......Page 403
Emphasis on Services......Page 404
Energy and Energy Use Services......Page 405
The Power in the Power Industry......Page 408
Product distinction and market niches......Page 410
14.4 HOW DOES IT ALL WORK?......Page 413
FOR FURTHER READING......Page 415
15.1 INTRODUCTION......Page 416
15.2 AGING T&D INFRASTRUCTURES......Page 417
Increasing Problems with Age......Page 418
Run to Failure Operating Policy......Page 420
Why Now?......Page 423
Run to Failure and Financial Pressures......Page 424
Asset Management......Page 426
15.3 SUSTAINABLE-POINT ANALYSIS OF AGING INFRASTRUCTURES......Page 427
Characteristics of Sustainable Point Analysis Revealed......Page 429
Business Forecasting......Page 431
Managing Sustainable Lifetime......Page 433
Steady Trend of Increasing Emphasis on Reliability......Page 435
The digital economy and cultural dependence on electricity......Page 436
Frequency and Duration......Page 437
Reliability Indices......Page 438
Popular Reliability Indices Used by the Power Industry......Page 439
Analysis Using Reliability Indices......Page 441
What Is Typical Utility System Reliability?......Page 443
Design......Page 446
Operation......Page 447
FOR FURTHER READING......Page 450
16.1 INTRODUCTION......Page 451
Equipment Failures: The Trigger But Not the Cause of Most Blackouts......Page 452
Blackouts: A loss of system interconnection......Page 453
Useful Analogies to Electric Blackouts......Page 454
How Can Blackouts Be Prevented?......Page 456
16.3 SYNCHRONIZED OPERATION OF POWER SYSTEMS......Page 457
Synchronized Operation......Page 459
Stable Operation......Page 462
System Stability and Security......Page 463
When automatic protective equipment works correctly......Page 464
Automatic equipment does not work correctly......Page 465
System Security......Page 466
Impact of Loading......Page 467
16.4 WHY DO BLACKOUTS OCCUR?......Page 468
Steady Increase in Complexity......Page 469
The modern complexity challenge......Page 471
De-Regulation Magnifies Complexity......Page 472
De-regulation accelerates the trend in grid size growth......Page 473
Impact of the increase in the number of elements......Page 475
Increase in the number of goals......Page 476
16.5 SUMMARY AND CONCLUDING COMMENTS......Page 477
What Can Be Done to Prevent Blackouts?......Page 479
FOR FURTHER READING......Page 480
Glossary......Page 481