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DEMCO creating smarter power grid -- 04.24.2009
 

 “The biggest buzz word in the electric utility business these days is the ‘smart grid,’ and to hear some people expound upon their vision for ‘smart’ infrastructure is to be misinformed that all Louisiana utility consumers have been abandoned along some technological back road when it comes to quality electric utility service,” observes DEMCO CEO and General Manager John Vranic after the Baton Rouge-based consumer-owned electric Co-op board of directors recently approved its $163 million 2008-2011 Work Plan.

“Only about 30-cents of every dollar a DEMCO member pays on their monthly utility bill goes to operational and maintenance expenses. The majority covers the cost of purchased power and generation fuel. In other words, that 30 cents covers the cost of poles, wires, salaries, insurance, taxes, depreciation, service vehicles, tools, safety equipment, right-of-way work, billing, accounting, administrative services, customer support and much, much more,” Vranic noted.

“Since DEMCO’s founding in 1938,” he continues, “and over the past 71 years, DEMCO has invested $373,785,469 in its electric plant. Every penny was carefully invested to establish and maintain a reliable and efficient power grid.”

“DEMCO didn’t just wake up today to the necessity of constantly upgrading a vast utility system to deliver 1.868 billion kilowatt hours of power in 2007 alone. DEMCO serves over 108,692 meters and 90,289 members across seven Louisiana parishes. As early as 1982, long before any other Louisiana electric utility was interested in energy efficiency, ‘carbon footprints,’ power plant productivity or load reduction, DEMCO was installing voluntary load management modules on air conditioning units across its system to reduce demand costs for energy purchased during peak seasonal usage,” Vranic, who has worked at DEMCO over 29 years, recalls.

Mike Landry, DEMCO’s Headquarters/Operations Superintendent, oversees eight transmission metering points and 34 substations of varying size and voltage that serves the Co-op’s 8,686 miles of distribution line and 226 miles of transmission line. That includes 6,246 miles of overhead construction and 2,214 miles of underground cable located across Ascension, East Baton Rouge, East Feliciana, Livingston, St. Helena, Tangipahoa and West Feliciana parishes.

“Reliability is our hot button—our number one goal,” comments Landry who explains that 230 kilovolt (kV) power is delivered at metering points on the DEMCO system before it moves along 69 kV transmission lines to substations where it is reduced to 14.2/24.9 kV and 7.62/13.2 kV primary voltage for delivery on the Co-op distribution system. Such high-tech facilities are not cheap.

“A single substation on a three-acre site with a transformer can cost $4 million, including the steel, switches, overhead and underground installations plus labor. And you can’t just build a substation and forget it. As an area grows economically, so does electricity use. DEMCO substation transformers range in size from 5 to 80 MVA and as energy demand increases, substations have to be upgraded with larger transformers,” Landry reports. “Transformers aren’t cheap and the global demand for all electrical equipment has grown dramatically. The same substation transformer that costs $600,000 in 2005-06 now costs $1.5 million. If you ordered it today, it would take a year to be delivered.”

“Still, there’s no avoiding upgrading facilities to keep pace with growing energy demand, whether you’re talking about massive substation transformers or pole-top 15 to 50 kV units that have also increased 50 percent in price. Just like the price of bread, every commodity on the global market has gone up,” Landry comments, but also warns, “The pay-back on wise grid investments comes in quality service and system reliability. There’s no advantage in upgrading a substation transformer if the distribution lines can’t handle the load, so those lines also need upgrading, as do pole-top transformers.”

Landry stresses that consumers once accepted 99.9 percent reliability as “good enough,” but not any more.

“Our members, and especially our commercial customers, expect ‘power to the nines’—that’s tacking six more nines after that 99.9 percent—people want premium power; as close to perfection as we can get,” Landry notes, which means not only uninterrupted power but improved power quality that deals with sensitive high-tech electronics, surge protection and regulators that raise the bar on power quality.

DEMCO Vice President of Finance Jimmie Varnado translates the demand for such reliability and quality control into dollars and cents.

“DEMCO submits a comprehensive three-year Work Plan to the Rural Utilities Administration on an annual basis that is reviewed by the Louisiana Public Service Commission. It accounts for every penny we spend and how it enhances service to our members,” Varnado explains. “The approved 2008-2011 $163 million Work Plan includes $37,382,341 for distribution system work; $22,062,712 for transmission system upgrades and $103,147,724 for general system benefits, such as the automated meter reading system; consumer telecommunications and on-line outage reporting; streamlining operations by equipping vehicles with lap-tops and GPS units for rapid outage response and smoother field operations; and upgrading on-line bill payment and administrative services.”

Some of the benefits from this work plan will be physical and noticeable, such as new substations in areas with extreme growth or upgrading transformers, overhead lines and facilities across parts of the DEMCO system. Since each work plan deals with a different area of the DEMCO system where the need is greatest, work varies in nature and scope from area to area. For example, right-of-way work may be intensified in a region where trees and other vegetative growth could cause outages.

Meanwhile, system upgrades will be performed during the three-year plan in other areas. The current work plan focuses on Galvez, Diversion Canal, White Hall, River Pine, Live Oak, Lockhart Crossing, Walker North-447, and Magnolia Bridge Road areas as well as other locations.

“You can’t easily measure the benefits from many enhances to an electric grid on a dollar-for-dollar basis,” Varnado adds. “Take the example of DEMCO’s load management program which uses modules on air conditioning units to reduce compressor cycling during seasonal peak demand periods. The customer seldom notices when the system operates, but the 17,000 units we’ve installed across our system since 1983 have saved our consumers over $18 million by reducing higher peak power demand. ALL of our consumers benefited whether they were part of the load management system or not. We’re hoping to achieve fifty percent participation system-wide in our load management system and pass the additional savings on to all our members.”

CEO and General Manager John Vranic stresses that upgrades and enhancements to the DEMCO utility system pays major benefits to ALL DEMCO members whether the current work plan is in their backyard or not.

“RUS sets an industry standard for acceptable outage time at five hours per consumer, but DEMCO’s goal is much lower.  This can be achieved by making wise investments in our utility grid. To meet that goal we invest in equipment such as two mobile substations with 20 mVA and 10 mVA capacity that can be moved where needed during a restoration following a storm like Hurricane Gustav,” Vranic reports.

“We’ve always been building a ‘smart grid’ and are currently about half-way to completing our Automated Meter Reading (AMR) system. When completed, DEMCO will have the capacity to monitor consumer power use and be alerted whenever a member experiences a power outage. Consumers will also be able to get real-time data about what’s going on with their own energy use to make informed choices about energy efficiency in their homes, businesses or shops,” the DEMCO CEO explained.

Vranic also noted, “After Katrina and Gustav, the DEMCO board doubled the number of phone lines into the Co-op office from 46 to 92 and has invested in on-line outage reporting and consumer advisory systems to better alert our members as to how recovery work is going after a major hurricane or ice storm.”

“We tend to notice the extremes we encounter in our daily lives, but DEMCO’s board, management and employees are focused on the long-term goal of reliability and meeting the changing energy needs of our members and their communities with affordable electricity,” Vranic stressed.

DEMCO Vice President of Marketing and Member Services Turk Tynes noted that many efforts by the Co-op board, management and 225+ employees may go unnoticed by the membership, but will pay off in household savings. “The determined efforts of the DEMCO board to hold down our members’ wholesale power price over the past decade are estimated to have saved a typical DEMCO family about $2,000 a year in electricity costs, based on our competitor’s rates over the same period. That translates into economic growth in our service areas.”

“We’ve enhanced our strategically located offices in Ascension Parish, Central, Denham Springs, Greensburg, Livingston, St. Francisville and Zachary,” Tynes said, adding, “DEMCO was very pleased that it was able to fully recover from the greatest natural disaster to ever hit the Baton Rouge area following Hurricane Gustav in only 13 days. All of our 225+ employees really appreciated the cooperation and support demonstrated by our members.”

“There are really no ‘smart grids’,” according to CEO and General Manager John Vranic. “There are only smart investments, good planning, constant effort, quality control and professional employees. While our performance after Hurricane Gustav was one of our finest moments at DEMCO, it is also history and we’re looking to the future.”

“That future includes an annual three percent growth rate in power demand along with extreme population growth and construction in the Ascension and Livingston parish areas that DEMCO serves. A reliable supply of affordable electricity in these areas will be essential to maintaining that economic boom we’ve experienced,” Vranic concluded. “DEMCO’s goal is and has always been simple—to provide reliable, quality service at an affordable rate.”

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