ELECTRIC POWER UTILITY OPERATING ECONOMICS BASICS

It is important to operate an electrical distribution system economically because of the high costs of losses and the cost of system expansion. Today, there are numerous methods for monitoring and controlling the power flow through the distribution system.

These methods range from simple ammeter, voltmeter, wattmeter, and varmeter systems to complex supervisory control and data acquisition systems. A system can be designed to fit the needs and budget of any size facility.

Energy conservation
Energy conservation is the key to the economic operation of a power system, regardless of the methods that are used to monitor and control the energy flow through the system. Energy conservation begins with thorough and complete design practices. The system should be operated in such a manner as to keep losses to a minimum and to minimize any utility power factor or demand charges.

Power-factor correction
Power-factor correction, by the addition of capacitors at the facility service point, reduces power-factor charges from the serving utility. This, however, does not release any capacity of the load-side distribution system.

Power-factor correction, closer to the loads, reduces currents in the main feeder conductors. This reduces the system losses, reduces power-factor billing charges, releases circuit capacity, and improves voltage regulation. The release of circuit capacity may be used to avoid costly system expansion projects by allowing additional circuit loading.

Utility demand charge
Most utilities have a demand charge that is based on kilovolt-amperes and kilowatts, or kilovolt-ampere-hours and kilowatt-hours, which automatically includes power factor, and they charge a financial penalty for loads that operate below a specified minimum power factor.

The demand level is dependent upon the type of industrial plant or commercial facility. The system operator should develop the logic of that operation so that effective demand control can be practiced.

Demand charges normally are maintained at peak levels for finite time periods after a new peak is established. The cost of a single peaking event could have a recurring cost for as long as 12 months.

Lack of demand control can escalate one apparently small indiscretion into a very expensive event. The unnecessary operation of spare equipment that adds load to the system, even for a short time, should be avoided so as not to increase demand peaks.

The operator should be aware of the serving utility rate/demand structure in order to operate at peak effectiveness and to avoid any unnecessary demand charges.