The electric utility industry is undergoing its most profound change since Thomas Edison and George Westinghouse battled over whether the American power system should be AC or DC. In essence, that technological choice shaped the industry we know today. Edison's low-voltage, DC system would have required many small generating stations and short distribution lines. The high-voltage Westinghouse AC system promoted development

of long-distance transmission networks that deliver electricity efficiently from large, remote power plants. The economies of scale

involved led directly to the emergence of today's vertically integrated utilities.

Now, the technological revolution based on silicon electronics is again forcing fundamental choices and threatening to reshape electric utilities. Through computerized control, the U.S. transmission system is able to handle greatly

increased numbers of bulk-power transactions. Some 40 percent of the electricity generated each year in this country is sold wholesale. At the same time, customers with sensitive electronic loads are demanding higher quality, more reliable power at the distribution level. An outage of less than one cycle of AC power, or a voltage sag of 25 percent for just two cycles, can cause a microprocessor to malfunction. The cost of a two-cycle outage at a large computer center can be as high as $600,000.

As a result of these technological developments and the regulatory changes accompanying them, competition is increasing rapidly throughout the industry. Success in this era of accelerating change will require taking advantage of new technologies and using them to turn competitive challenges into strategic opportunities.

Technology to Reduce Costs

Operation and maintenance (O&M) cost remains a major item in every utility cost structure. But, unless performed carefully, reductions in O&M costs could come at the expense of reliability. Fortunately, new technologies offer a means of reducing O&M cost while simultaneously improving reliability.

Reliability-centered maintenance (RCM) is a method of establishing maintenance intervals based on actual equipment performance data, rather than relying on manufacturers' specifications or past company practices. When properly applied, it balances the often-competing goals of cost containment and reliability enhancement.

RCM practices first evolved in the aircraft industry and then were adapted for use in nuclear and fossil power plants. Overall, implementing RCM usually produces a shift in maintenance schedules. Some become longer; others, shorter. The principal cost savings result from reduced unplanned maintenance for forced outages and increased overall system performance. RCM practices, for example, produced cost savings of 25 to 49 percent in the nuclear industry, depending on specific plant circumstances. A pilot RCM program has just been completed for electric substation equipment, and the results promise similar savings.

Even greater O&M cost reductions can be obtained with new sensor technologies that enable predictive maintenance. Recently, there has been an explosion of new, low-cost sensors that can be used to implement "just in time" maintenance on equipment that otherwise would soon fail. Currently entering the demonstration phase is a sensor technology for online monitoring of transformer oil to warn of abnormal conditions as they begin. A microelectronic fault gas analyzer directly inserts a small sensor at the end of a probe into the insulating oil. The analyzer detects the four key gases that are indicators of the most important types of developing problems that can lead to failure, such as partial discharges, arcing, paper insulation deterioration, and overheating. Prototypes of the sensor are now operating at three utilities; one of these is so impressed with the sensor's potential that it is negotiating for 40 additional units for systemwide application.

When equipment does fail, several new EPRI technologies can lower repair costs and reduce outage times. The perfluorocarbon tracer (PFT) system, for example, finds leaks in pipe-type transmission cables. PFT is an environmentally harmless compound with a chemical structure so rare it can easily be detected in air at concentrations of parts per quadrillion. The PFT is injected into the dielectric fluid of a cable while air samples are collected along the cable route by a repair crew with a portable gas detector that gives leak location accuracies of +/- two feet. Each application of the PFT leak locator can save tens of thousands of dollars compared to conventional methods, which often require extensive excavation.

Value-added Services

Retaining customers in a time of heightened competition requires a more service-driven appoach, particularly if a utility anticipates that it may not be able to provide the lowest-cost electricity under retail wheeling. When telecommunications companies were deregulated, they became more customer-oriented by developing value-added services, such as call

waiting and call forwarding.

Electric utilities can also provide more value-added services at the distribution level. The increasing use of digital technologies has heightened the impact of even brief outages and voltage dips on customers with sensitive loads. Many of these customers have responded by investing in uninterruptible power supplies (UPS) and other power conditioning equipment. Soon, utilities will have access to technology that will enable them to offer customers premium quality power at lower cost, in return for long-term contracts.

EPRI's Custom Power (em an array of high-voltage electronic controllers that can mitigate many voltage disturbances on the distribution system (em is more cost-effective and energy efficient than a UPS system. A typical Custom Power configuration (em appropriate, for example, to serve a new industrial park (em would use three thyristor-controlled devices: a solid-state breaker; a static condenser, or STATCON; and a dynamic voltage restorer, or DVR.

The solid-state circuit breaker has a response time of less than one cycle. By providing rapid switching between feeders, these breakers greatly reduce the incidence of power interruptions and voltage sags for critical loads. Meanwhile, the static condenser holds the line voltage for the customer steady during the initial disturbance and subsequent switching operation. The dynamic voltage restorer regulates voltage and cancels harmonics by rapidly changing series compensation. Field trials of these Custom Power devices are scheduled to begin within the next year.

Asset Management

With the coming of open access, transmission systems have become the focal point for many of the competitive forces now shaking the industry. Over the next few years, both the volume and complexity of wholesale power transactions involving these systems are expected to grow rapidly. Unfortunately, overhead transmission facilities that could ease the burden are becoming increasingly difficult to site. New technologies can enhance the value of existing transmission assets, while making the construction of underground facilities more feasible.

In particular, there is a pressing need for better control over the bulk-power system (em to alleviate bottlenecks, tame wayward loop flows, enhance system stability, and increase overall efficiency. In response to this need, EPRI has pioneered a high-tech Flexible AC Transmission System (FACTS), based on power electronics and designed to maximize power transfer over existing lines. Specifically, FACTS technology can increase or decrease power flow on particular transmission lines, enhance stability by counteracting transient disturbances almost instantly, and enable loading transmission lines closer to their thermal limits. On some lines, these power electronics controllers can increase available capacity by as much as 50 percent.

After more than a decade of research, FACTS is now entering utility service. The Slatt substation of the Bonneville Power Administration is currently demonstrating a modular thyristor-controlled series capacitor (TCSC) on a

2,500-megawatt (MW), 500- kilovolt (kV) transmission line. In April 1995, a Static Condenser (STATCON) will be commissioned at TVA's Sullivan substation, to provide reactive power compensation at the +100 Mvar level.

Another group of technologies is sharply reducing the cost of installing underground facilities, which represent up to 70 percent of total system costs. Low-impact boring technologies are making underground installation faster and less obtrusive, as well as less expensive. As a result, new

transmission facilities in many fast-growing areas may now actually be cheaper to install underground than overhead.

A major breakthrough in this area is the AccuNav guidance system for horizontal earth boring. Based on electronics developed for cruise missiles, this device rides along with the drill head and determines its location by sensing the earth's magnetic field. AccuNav and other guided boring technologies passed their most

difficult demonstration to date by traversing the Nacoochee Valley of northern Georgia last summer. The project installed a 2,500-foot, joint-free length of 115-kV cable through difficult terrain in an environmentally and historically sensitive area.

Market Management

Dramatic changes are taking place in the way electricity is marketed at both the wholesale and retail levels. To compete in this changing marketplace, forward-thinking utilities need new analytical tools and procedures to manage their own market participation. Among the analytical products that can facilitate participation in more complex wholesale markets is POWERCOACH, an EPRI software package that uses an expert system to analyze trading decisions in light of a utility's own risk preferences.

At the retail level, utilities must also find better ways to compete for customers. Successful competitors will offer differentiated products and services that enhance the value of the power they deliver. One way to differentiate power is through the premium reliability offered by Custom Power. Another key approach is to differentiate prices, particularly through real-time pricing (RTP).

The main challenge in establishing more competitive retail markets for electric power is to improve the way supply and demand are translated into price. During a critical period of peak demand on a hot summer afternoon, for example, the marginal cost of supplying power may increase 20 times or more. Trying to recover this cost through adjustments in fixed standard price structures or through demand-side management is usually "inefficient" in economic terms. One study suggests that the marginal cost of reducing load through RTP can be as low as one-tenth the cost of reducing that same load through interruptible service, because customers have greater latitude in choosing their own responses.

The largest controlled RTP experiment in the United States is currently underway at Georgia Power Co., with EPRI collaboration. This experiment has already revealed the power of RTP as a competitive tool that can be used to attract new retail customers. During the first 15 months of the Georgia Power Experiment, the new rate structure brought approximately $500 million of new investment into the state. On average, customers participating in the experiment have seen their average electricity cost decrease about 10 to 15 percent per

kilowatt-hour.

Clearly the electric power industry is moving into a period of unprecedented competition. The utilities who prove successful in this new era will be those that can cut costs and increase customer satisfaction. Achieving these seemingly conflicting goals requires the strategic use of newtechnology. t

Karl Stahlkopf is vice president of EPRI's Power Delivery Group.

Technology Applications CenterBegun in 1987 with 4,000 square feet, Georgia Power's TAC (em probably this country's first utility-owned technology center -- now cover 19,200 square feet. A part of The Southern Co., it aids manufacturers in most of Georgia and Alabama, southern Mississippi, and the Florida panhandle. Major industries served include textiles, pulp and paper, and metals and plastics production and fabrication.

Says TAC manager Gary Birdwell, "We help customers solve productivity, quality, and environmental problems with electrotechnologies like induction and microwave heating, IR and UV drying and curing, powder coating, and plasma cutting and welding."

Soon TAC will boast a new Center for Manufacturing Information Technologies. Its mission: to show customers how to use software and to structure computer systems that increase competitiveness. "We'll tackle anything that improves operations," says Birdwell, "from CAD [Computer-Aided Design], engineering, analysis, inventory and machine scheduling, to robotics."

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