A number of years ago I had a neighbour that prided himself in always being able to get a great bargain. We often debated what his mindset was actually called – he referred to himself as thrifty and I merely thought he was cheap. Semantics aside, he spent significant time seeking out second hand building products, vehicles that were a “too good to be true” deal, and tools from dubious-sounding manufacturers. He would frequently drop by to exchange notes about his latest acquisition and remind me in no uncertain terms that I had spent too much for a similar item.
On some occasions he may have had a point. I’m sure there were times that he found himself on the better end of the transaction, and the free lawnmower he brought back to life did seem to last quite a while. However, he did spend far more time working to repair broken equipment and dealing with the down time (think non-productive) that goes along with it. He would often borrow my tools when his didn’t perform as hoped (I know, the nerve of the guy!) and spend hours tinkering on his vehicles which always seemed to have one problem or another. It wasn’t that he couldn’t afford to buy more reliable or newer things. He just always focused on the initial price of something and believed he was saving money.
His lean ways did have negative impacts. When I asked him what it cost to buy parts, spend his valuable time on repairs and the missed opportunities of being continually late to work, he shrugged it off with a “that’s life” attitude. But the costs were real.
In the electrical energy sector, it’s generally pretty easy to follow the revenue stream, at least at a high level. Power is generated and transmitted through a series of stations and lines to reach a set of consumers who pay for the power at a unit rate. The generating company needs to invest in equipment to harness some sort of fuel energy (flowing water, coal, gas, wind, etc.) and the transmitter, if a different company, likewise invests in facilities to move the power from the generation site to the customers. All in all, a pretty straightforward business model.
Throughout the process of moving electrons to market, there are only a couple of things that are really important to the customers. First, make sure the access to electricity is reliable. They may be preparing their morning coffee or running a business, but in either case the power needs to be continually available or everything stops. And it can be a serious problem when it does stop. Using US Department of Energy calculations, the cost to the ultimate customers for a six hour 100 MW outage is in the order of $20-30M or higher, which officially makes it a big deal.
The second important factor for electric power customers – keep the rates reasonable. The cost of service is tallied up by adding the individual costs along the production and delivery supply chain, such as capital construction costs, fuel and operating costs, interest charges, etc. Once again, this is a relatively simple formula. When these costs increase over what is either expected or reasonable, everyone in the chain feels the financial pain.
OK, so no rocket science so far, you may well be thinking. So what is he really trying to tell me, you may also be thinking (I have been known to ramble)?
If a substation transformer fails or an underground cable faults, the direct and immediate impacts include customers being out of power and revenue from electricity sales grinding to a halt. Money needs to be spent on repairs and new materials to restore the power flow, and one expects this to occur every now and then when the transformer or cable is at or near the end of its design life. However, all too often this happens with newly installed equipment which has been carelessly installed or rushed to meet a deadline.
At Allteck I am privileged to be surrounded by industry professionals, people that are extremely proud of their work who put their personal stamp of approval on everything they build, supply, maintain and repair. For them, it’s personal and they are only willing to provide their very best workmanship. As a result, I’m very proud of our record for meeting in-service dates and customer project budgets. When I tell a customer that they are getting what they paid for, I mean it. Unlike my former neighbour, you won’t have to spend a lot of time or money fixing what we have done.
There are also other ways of providing value to the end customer. Currently, the North American transmission grid loses 6-8% of the electricity between the generator and final customer. Some of that is a function of physics, where current loss occurs from impedance. However, if you were running a car manufacturing plant this is the equivalent of 6 out of every 100 vehicles produced falling off the end of the production line and crashing into a heap. You would quickly look for ways to reduce that number. With advanced line and substation materials and technology available, and rapidly becoming mainstream, that 6-8% loss can indeed be cut and money is saved for everyone. Installing something that I know is benefiting the power grid and all of us as customers is a significant source of pride.