The Importance of Equipment Maintenance and Replacement Strategies Addressing System-Reliability Issues in North American power grids is growing. The reliability of these grids typically comprises outages induced from weather, trees, animals and equipment deterioration. Vegetation management, automation (especially in distribution), insulation coordination and system hardening are common initiatives. However, none of these address equipment deterioration directly.

THE QUESTIONS

As the infrastructure is aging (the average age approaches 40 years, but some equipment categories have appreciable numbers exceeding 55 years), the question really is: How long will failure rates stay constant? If they go up because of worn-out equipment, how fast will they increase? Can we do something about this right now? For instance, can we maintain equipment more effectively, thereby extending its useful life? Can we apply life-extension kits?

The answer is, yes, we can do something about aging equipment right now. But the best course of action depends on the actual costs and benefits shown by the business case. What does it cost in terms of operations and maintenance (O&M) labor and materials, and what is the value in terms of deferred capital spending (replacements) and improved system reliability?

Similar questions can be raised for equipment replacements going forward. Should we spend more capital by proactively replacing certain equipment? If so, what equipment and at what rate? How does this affect O&M spending and system reliability? And, more challenging in light of the other previously mentioned alternative options to improve system reliability (such as tree trimming), what is the most cost-effective option or portfolio of options?

BASELINE ASSESSMENTS

Hydro Ottawa Ltd. (Ottawa, Ontario, Canada) has addressed these issues in a comprehensive fashion and is about to tie the results of a bottom-up system-needs assessment into its rate-case strategy. The key here is to forecast and quantify the system needs going forward. Such a baseline assessment shows both where and how much the “pain” is going to be in terms of reliability (Fig. 1) and spending, both capital and O&M, per equipment category. This provides direction for the planners to originate programs and execute options to address these issues. For instance, decreased reliability in a certain area could be addressed by:

• Equipment replacements at several rates as options

• Improved equipment maintenance

• Vegetation management

• Automation

• A host of other options.

Each goes in as a program, with its related options at a certain cost with benefits such as buying a certain amount of customer minutes interrupted (CMI) or health, safety and environment improvement.

Important to Hydro Ottawa, yet another case is the increasing failure rate of underground residential distribution cable. Such failures are annoying to customers, tough to repair, expensive to replace and difficult to predict. Although you can't predict exactly what segment will fail and when — a showstopper for many engineers, work schedulers and diagnostic academia — Hydro Ottawa has taken the stance that you can at least forecast failure rates (per segment) and its impact on system reliability. This helps you evaluate whether to do nothing or to repair (after each failure), replace (now or after X^th failure in segment) or inject (X segments per year) a cable.

Such evaluation provides true “what-does-this-buy-the-utility” information in terms of spending versus improvement, as opposed to just buying a replacement program without the insights and motivation of the analysis. In turn, management can then use the same information to secure an adequate amount of funding (avoiding having to sacrifice planned projects), which eventually can be further allocated if need be.

This holds true for other small-ticket but larger-volume items such as poles and distribution transformers. With increasing lead times and rising commodity costs, this is true for big-tickets items such as power transformers, too.

HOW TO COMPARE OPTIONS?

At this point, one wonders, what is it that the asset management programs and options each go into? The answer is both simple and hard. The simple answer is: It goes into a project prioritization tool. The difficulty lies in obtaining a tool with an understandable and meaningful output. There are plenty of commercial tools available. Hydro Ottawa purchased one in its quest to optimize spending. The utility soon found out that most of these tools simply rank and do not necessarily show what the project portfolio buys the company in terms of improvement (at least not information that could be fully grasped).

For this reason, Hydro Ottawa together with KEMA created a baseline assessment that drives a targeted O&M and capital program library. These libraries consist of all the asset management programs and options, and each of their impacts on Hydro Ottawa's key performance indicators (KPIs), such as the CMI reliability metric, benchmarked against the baseline. For example, doing all the asset management programs would buy zero CMI (as opposed to a negative number, which would indicate some of the programs have exaggerated impact numbers, or a positive number, which would indicate the programs and options are not thorough enough).

FORECAST FAILURE RATES

We all know that trending of failure rates leads to misguidance when a utility deals with appreciable amounts of aging infrastructure. A quick look at Fig. 2 reveals why. The majority of Hydro Ottawa's station switchgear, for instance, has not yet reached ages with elevated probabilities of failure (as set forth by the hazard function, the green line in Fig. 2). This explains why failure rates are low and rather constant up to now (less than 0.2%).

Yet, within 10 years, they are forecasted to perform at 1% failure rate, as can be seen from the baseline assessment result (the red population-failure-rate line) in Fig. 3. This means the do-nothing-different scenario would tell Hydro Ottawa to accrue capital funding for the reactive replacements (and take the corresponding decreasing system reliability for granted), or to plan for proactive replacements or take any other measure to extend useful life. These plans would find their way as programs and options into the Hydro Ottawa/KEMA optimizer.

Much of this boils down to: obtain the hazard functions. One can do this through elaborate condition assessments. Or, one can accept a little less accuracy and deal with the uncertainty by looking at certain populations over a longer period of time. One failure record (with equipment aging as the cause) per population suffices to generate the hazard function for initial forward projections.

This in itself will not generate enough evidence to start accruing capital for reactive replacements or to justify upfront proactive replacement programs. However, it is a start and management needs to be made aware. The next failure then either gives more credibility or fine-tunes the curve, depending on the outcome. Hydro Ottawa and KEMA have built a self-tuning engine that, at some point in time, will produce forecasts that are on the mark with sufficient accuracy to drive decisions.

NOW OPTIMIZATION

The next item of interest to Hydro Ottawa is the optimization. As stated, the goal was the ability to create and present an optimized project portfolio that showed what the spending actually bought the utility. What incremental improvements do we get if we increase spending? Inversely, where are we at risk and to what extent if we do not fund certain elements?

Interestingly, some of the optimization tools can select and create an optimized project portfolio to achieve certain KPI targets and generate the required funding. Then, imposing O&M or capital constraints, one can evaluate the effect on the targets being achieved or not, and the corresponding selected programs and options. Also, one can force certain projects through and evaluate the expense of other projects.

Some optimizers can evaluate sacrificing O&M to gain capital as shown in Fig. 4 (note that the system average interruption frequency index [SAIFI] was the target driving the budget tail end), such as the application of circuit-breaker life-extension kits (typically expensed) versus reactive replacements or proactive replacements (improving reliability and safety over reactive replacements). Similarly, inspection intervals and maintenance intervals can be evaluated, requiring input related to the effect of maintenance on the equipment or circuit reliability.

Hydro Ottawa and KEMA drove their optimizer to the limits with certain manual workarounds and initial assumptions, but were able to perform and evaluate all of the above. The results fed into Hydro Ottawa's planning and budgeting cycle and were useful to the utility's rate-case strategy.

The next steps in terms of improvement of this capability are clearly set out, and Hydro Ottawa is on its way to adopting leading practices in asset management.

More importantly, the utility is getting a handle on aging infrastructure and now knows what it takes to avoid out-of-hand outages, executives having to explain substation fires, operations scrambling for funding, sacrificing planned projects and having to place expensive emergency orders all the time.

THE LONG TERM

The single-biggest advantage of the baseline assessment driving targeted programs and quantifying incremental improvement is the visibility in required long-term funding. The optimization then truly generates the information needed for funding to go out and obtain these funds or, alternatively, understand and accept the risks. Up until recently, the inability of operations to create a compelling business case led to the acceptance of risk at the wrong levels in the organization. This needs to and certainly will change.

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Bill Bennett is director of distribution asset management at Hydro Ottawa, where he is accountable for distribution asset management, planning, design, stations construction/maintenance and system operation. In this role, Bennett manages the company's initiatives in the areas of safety, reliability, efficiency and productivity. He has more than 24 years of experience in the electricity industry. Prior to the creation of Hydro Ottawa, Bennett spearheaded Ottawa Hydro's introduction of change management in preparation for the new electricity industry market. He holds an honors BSEE degree from Queen's University and an MBA from the University of Ottawa. He is a member of the Professional Engineers of Ontario. billbennett@hydroottawa.com

Travis Lusney is a distribution engineer in the assets department of Hydro Ottawa, where he is responsible for assisting in the implementation of asset management programs through planning, designing and overall strategy. In this role, he generates reports and evaluations on system reliability, asset management program results and project management. Lusney recently entered the electricity industry in the area of power system capital planning, asset management and risk assessment. Lusney holds BSEE and MSEE degrees from Queen's University, where he served on the board of directors for Queen's University Engineering Society Services Inc. travislusney@hydroottawa.com

Dr. Gerard Cliteur is a senior principal consultant with KEMA and specializes in helping utilities improve business performance through technical consulting. He has 14 years of experience in equipment condition assessment and valuation, equipment modeling and design, failure analyses and expert witnessing, maintenance strategy improvement and asset management. Previously, he worked for Toshiba Corp. in Japan and for Endesa in Spain. With KEMA, he has performed consulting assignments for major North American and international utilities. Cliteur holds a MSEE from Eindhoven University of Technology and a Ph.D. from Kanazawa University. An IEEE member, he chairs the Asset Management Working Group. gerard.cliteur@kema.com