According to a study sponsored by the Electric Power Research Institute, the U.S. economy is losing between US$104 billion and $164 billion a year to power outages, and another $15 billion to $24 billion a year to power-quality issues. On average, vegetation typically causes 20% to 40% of all power outages at a power utility.
At the same time, the vegetation management budget is often the largest operations and maintenance expenditure line item for power utilities. And, coupled with the fact that most vegetation maintenance work is performed by outside contractors, it becomes an easy target for budget reductions to manage short-term earnings expectations.
History and Background
Electric utilities are under constant regulatory scrutiny in many areas, including service reliability and customer satisfaction. Traditionally, regulators have focused on long-term business planning, multi-year budgetary spending plans, storm restoration plans and results, and overall customer satisfaction. Since an effective utility vegetation management program also minimizes the risk of outages during major weather events, and with the number of major weather events having increased over the past decade, regulators across the United States are starting to impose performance requirements directly related to vegetation management cycles, spending levels and clearances.
In the aftermath of a string of destructive hurricanes that caused extensive power outages in 2004 and 2005 across Florida, the Florida Public Service Commission issued a mandate to all of the state's electric utilities to maintain line clearance on their distribution lines on a firm three-year cycle. Several of the state's utilities, including Tampa Electric, conducted an assessment of their current vegetation management program to understand the costs and benefits associated with implementing the new requirement.
After careful evaluation of the line clearance standards, the vegetation densities and growth patterns across the service territory, and the cost of compliance, Tampa Electric fully committed to enhancing its vegetation management program to meet the new mandate. In transitioning to the three-year requirement, the utility anticipated the completion of the first year by 2010.
To meet the new challenge, Tampa Electric had to take a hard look at its vegetation management program, including crew productivity, management practices and performance metrics. The utility also had to gain internal buy-in of its vegetation management program to protect the budget from potential reductions. Working with vendors to identify new techniques and technologies that could be deployed, the utility's line clearance group created a process to remove any obstacles that may negatively affect tree crew productivity. Tampa Electric added contract supervisors to reduce the supervisor-to-worker ratio, one-man crews to alleviate the demand work load and improve customer service, and specialized equipment to improve efficiency and safety.
In the past five years, Tampa Electric has focused on securing a stable level of funding and driving the cost effectiveness of its vegetation management program, which has resulted in significant improvements in productivity and reliability performance. One key improvement the company implemented was installing a new tracking system that provides the ability to track reactive crews and transition them to proactive maintenance work when opportunities arise. The utility also has implemented an integrated vegetation management program, which includes using strategic removal of danger trees and targeted use of herbicide to control vegetation around power lines.
A couple of years into the implementation of the new vegetation management program, Tampa Electric's line clearance leadership identified the need for a more robust decision-support model to better assess costs and benefits associated with the different vegetation maintenance cycles and spending levels. This type of modeling would allow Tampa Electric to better understand the potential reliability performance changes under different budget scenarios and evaluate the affect of the vegetation management program on the level of potential storm damage. Tampa Electric decided to implement the tree-trimming model (TTM) developed by Davies Consulting, in collaboration with several electric utilities, in the early 2000s.
In short order, TTM can develop scenarios based on budget assumptions and estimate the resulting reliability performance. The model also is used to estimate the minimum investment required to meet specific tree-related system average interruption duration index (SAIDI) or system average interruption frequency index (SAIFI) performance targets. This is particularly critical in an environment where many electric utilities are facing performance-based rates. In addition to prioritizing funding, TTM offers many benefits:
Applies actual utility-specific work management and reliability data
Provides an objective method for developing the optimal tree-trimming program and trimming schedules
Permits quick scenario analysis and budget-cut risk assessments
Supports resource-allocation discussions with senior management and regulators
Enables transparent decision making.
Several other major electric utilities are using the model effectively to determine the best allocation of vegetation management spending.
Over a 10-week period, Tampa Electric's line clearance and reliability teams worked with consultants to develop predictive reliability and trimming cost curves based on historical data, which are key inputs into the TTM. As part of the initial analysis, the company identified five key vegetation management program scenarios, including the baseline level of current spending, to evaluate using the new decision-support tool.
In addition to evaluating the preventive maintenance costs and day-to-day reliability associated with each scenario, the tool enables Tampa Electric to understand the potential impact of storms on the level of damage caused by trees and related restoration costs. The storm module of the TTM uses a formula that takes into account the years since the last trim on each circuit and projects the number of customer interruptions that would result from different wind speeds the circuit could experience and the probability of those wind speeds.
One of the most difficult challenges is gaining upper management support. TTM provides hard numbers that upper management is looking for, and with TTM's ability to provide analyses of tradeoffs, it becomes easier for management to determine whether the investment in vegetation management is worth the benefits. Since the vegetation management program is subject to budget cuts, it is crucial for the utility to establish a stable budget. TTM's ability to determine the bang for the buck, and produce reliability metrics and cost-per-mile tracking has given management confidence the program will provide value to the utility, which has led to stable program funding.
In 2006, Tampa Electric's vegetation management group presented various vegetation management options to the company's finance, regulatory and management as well as the projected cost impacts of each option. The information presented and TTM projection models have been used in several discussions related to funding needs for vegetation management and their subsequent return on investment.
By engaging foresters in the implementation process and providing them with the opportunity to participate in the development of assumptions, Tampa Electric was able to build confidence in the model's ability to accurately evaluate different options and provide relevant outputs. This approach created alignment across different stakeholders at the company and opened up additional communication channels across reliability, vegetation management and budget-allocation groups. In the past, circuit selection was based more on gut feelings and staff expertise rather than circuit history, cost or performance data. Approximately 80% of circuits selected for trimming by TTM are being trimmed.
Tampa Electric also was able to renegotiate contracts with tree-trimming vendors and solidify long-term relationships by providing them a stable level of business from year to year. The use of an outside consultant for the purpose of evaluating vegetation management practices and programs was a major change for he company. With so many unknowns (cost, staffing, etc.) related to the new mandates, as well as feasibility concerns, engaging an outside expert to provide guidance, expertise and software was instrumental to Tampa Electric's transition to the three-year cycle mandate.
Over the last five years, Tampa Electric has molded its vegetation management program into a reliability-based process. Using the results from the TTM analysis, the company established a more objective methodology for selecting circuits to trim and has been able to work with vegetation management contractors to leverage the stable budget and drive crew productivity, which has led to a decrease in cost per mile each year for the last three years. Tampa Electric's line clearance group is now beginning to look more closely at cost and performance data to verify and validate TTM as well as to improve the overall performance of the vegetation management program, thus balancing vision and goal setting.
Since implementing TTM, the number of miles trimmed each year has increased by almost 100%, while the budget has increased only 35%. In addition to reduced vegetation-related outages and customer complaints, cost per mile has been reduced by nearly $1,000/mile each year for the last three years.
These initial results have further solidified the path Tampa Electric's vegetation management program is taking and instilled confidence in the team that the improvements are creating value to the utility and its customers. Along with improving day-to-day results, the hope is the new vegetation management program will minimize damage from the next major storm. While the actual benefits of the new program in a major storm are hard to verify without experiencing an actual event, no one in Tampa Electric territory is rushing to find out.
Luke P. DiRuzza Jr. (firstname.lastname@example.org) is manager, line clearance and inspection at Tampa Electric. He oversees the utility's tree trimming and groundline pole inspection programs with a workforce of 350 contract employees, and handles all regulatory matters related to these programs. He holds a bachelor's degree in business administration and management from St. Leo College and a master's degree in management from Troy State. He has worked for Tampa Electric for 27 years.
John Webster (email@example.com) is a supervisor, line clearance and inspections, energy delivery for Tampa Electric and supports the vegetation management activities for T&D systems. While at Tampa Electric, his responsibilities have included contract administration of vegetation management vendors, and the planning, operation and maintenance of the vegetation management program. He holds a bachelor's degree in forestry from the University of Kentucky, and is an ISA certified arborist and utility specialist.
Miki Deric (firstname.lastname@example.org), president of Davies Consulting Inc., has led the development and expansion of the firm's energy practice for the past 10 years. He has extensive experience helping utilities develop and implement strategic plans, streamline business processes, improve decision-making capabilities, build business cases and implement sustainable change. Deric holds a BS degree in finance from Northern Arizona University and an MBA degree from Thunderbird - International School of Management.
Davies Consulting Inc. www.daviescon.com
Electric Power Research Institute www.epri.com
Florida Public Service Commission www.psc.state.fl.us
Tampa Electric Co. www.tampaelectric.com