Beckwith Electric Co.

Rev. 5, 09/26/00

Economic Evaluation Model

Introduction
Utilities all over the country are doing economic evaluations on newly installed
equipment to help determine overall bottom line effectiveness and to determine
payback and return on investment for their shareholders. Recently, the quality of
delivered power at the customer has been all the rage and Volt/VAr Management
Systems have risen to the forefront. One progressive, forward-thinking Utility
Company, utilizing an Autodaptive Volt/VAr Management System, performed
such an economic evaluation of their new system and their example yielded the
following results.
In any evaluation some assumptions must be made when all variables are not
quantifiable. In this particular case, the following assumptions were made.
1. Total system losses = 8%
2. All losses are not reduced by the installation of distribution pole
top capacitor banks. Estimation was made that portion of the
total losses that were effected by the installation of the ACCs
was 1% of the total 8%. Seemingly conservative.
3. The utility has been using ACCs for many applications and has
consistently addressed the power factor problem. It was
estimated that they have already saved approximately 75% of
the available savings or % of the total losses. The estimated
additional savings that could be attributed to the further changeout of equipment to the Volt/VAr Management System would be
the remaining %.
Given these basic assumptions, they looked at four categories of savings; losses,
reduced maintenance, deferred capital expenditure, and operating cost.
Losses Savings

Annual Load =
35,000 GWHr/yr.
Total System Losses @ 8% =
2800 GWHr/yr.
At $0.05/KWHr, the losses =
$140,000,000/yr
Working on the second assumption, 1% of the total 8% an effective
real losses probability =
$17,500,000/yr
Working on the third assumption, 3/4 already saved $13,125,000,
and 1/4 still yet to save with further changeout of equipment =
$4,375,000

Beckwith Electric Co.

Rev. 5, 09/26/00

Maintenance Reduction Savings

There are approximately 400 LTC Transformers installed at this Utility and their
maintenance interval is 15 months based on the number of tap changer
operations. Therefore,

Maintenance Costs = 4 man-days @ $43.75/Hr. =

cycle/transformer
Total Annualized Maintenance Costs =
Estimated reduction in Tap Change Operations =
Estimated Annualized Maintenance Savings =

$1400/maint.
$448,000/yr
50% to 75%
$225,000

Deferred Capital Expenditure Savings

In this calculation estimate we make the assumption that 5% of the upgrade or
replacement of existing power transformers is the result of utilizing the
Autodaptive Volt/VAr Management System.

Estimated Time Value of Money Annualized = 8%

5% of the 400 transformers @ $300,00 net ea. =

$480,000/yr

We also make the assumption additional Generation will be required for new load
growth at 5%/yr, and that % of the losses associated with the new generation
would be saved as a result of utilizing the Autodaptive Volt/VAr Management
System. Therefore:

5% load growth at an estimated cost of new generation @

$800/KW multiplied by % =
$400,000/yr.
Total Deferred Capital Expense Savings =
$880,000

Operating Costs Savings

The Utility estimated their annual cost of engineering and field personnel time for
cap bank control setting changes for seasonal and system changes is
approximately $500/control. Since the ACC needs no adjustments but rather
adapts itself to seasonal and system changes, a subsequent operating cost
reduction per unit would be realized after initial installation.

Beckwith Electric Co.

Rev. 5, 09/26/00

Investment Consideration
The Utility considered investment in a new project to continue the controls
upgrades. Project costs considerations broke out as follows:

Install 400 ATCs =

$900,000
Replace 1000 old cap bank controls with new ACCs = $600,000
Install 150 additional new distribution
cap banks with ACCs (labor incl.) =
$1,020,000
Total Project Costs =
$2,520,000

Overall economic impact analysis and return on investment (ROI) study showed;
if the Utilitys new project were implemented, the annual savings of the new
project, plus the other annual savings combined, would bear the following
annualized saving results.

Total savings from losses =

Total Reduction in Maintenance Costs =
Total Deferred Capital Expenditure =
Total Operating Costs Savings (assuming 1000
new ACCs installed in the new project) =
Total Annualized Savings =

$4,375,000
$225,000
$880,000
$500,000
$5,980,000

With annualized expected savings of $5,980,000 and New Project costs of

$2,520,000 a very respectable ROI of less than 1 year could be realized.
Of course these calculations will vary from Utility to Utility depending upon their
costs, their previous VAr management strategy, and their overall system
configuration. Nonetheless, annualized savings as well as a relatively short ROI
for new investment can be achieved.
As is readily apparent, the majority of the overall savings (from all categories) is
associated with the installation of the ACC control on the distribution pole top cap
banks. It should be noted that the ACCs can be/are, without a doubt, standalone devices. The utilization of the full system, however, will definitely optimize
the Volt/VAr management results.

Beckwith Electric Co.

Rev. 5, 09/26/00

Summary
The first priority of any Volt/VAr Management System is to provide quality power
at the customers end. This quality is effected by both the method of voltage
control on the tap changers and regulators, and by the VAr flow on the
distribution system. The Autodaptive Volt/VAr Management System can quantify
this measurement of power quality by monitoring and controlling the Voltage
Regulation Quality Factor (VRQF).
The second priority is the control of the VAr flow through the distribution system
as limited by the number of distribution line capacitors and substation bus
capacitors available. This can be accomplished if the full implementation of the
system is employed including the ATCs and/or ARCs.
A third priority would be to accomplish priorities 1 and 2 above while reducing the
total number of tap changes (LTC and Line Regulator) and thereby reduce the
field maintenance associated with these devices. It should be noted that field
testing of all these controls (ACC, ATC, and ARC) has shown a significant
reduction in the number of tap changes as compared to the number of tap
changes provided by conventional controls. Generally, 50% to 75% in the
number of tap changes is typical. In some recorded field data we have seen tap
changer operations reduced by as much as a 32 : 1 ratio when integrating the full
system.
Undoubtedly, the foundation for the Autodaptive Volt/VAr System that controls
distribution voltages and VAr flows, is the Autodaptive Capacitor Control provided
the feeder and/or substation has adequate compensation in the way of
capacitance. Adding the Autodaptive regulating controllers (ATC and ARC)
further completes the system and reduces the number of LTC and Line Regulator
tap changes. All of this is done to improve and maintain a better Voltage
Regulation Quality Factor (VRQF) and a desirable voltage profile that is delivered
to the customer
The individual components of the system have demonstrated their ability to work
well as stand-alone devices, as well as working in conjunction with other
suppliers equipment. They have demonstrated their ability to operate/coordinate
with several other Autodaptive controllers on the same circuit or together on
multiple circuits. The ATC however interacts only with the ACCs on the circuits
and as such must be included in the complete Autodaptive Volt/VAr
Management System in order to realize the maximum benefits.
Understanding the devices have the ability to adapt/change the setpoints which
the deviations are being compared to, based on other fundamental criteria being
measured in the circuit, and we begin to see how this approach makes a little
more sense.

Beckwith Electric Co.

Rev. 5, 09/26/00

Knowing the devices have the capability to capture and collect historical
operating information that is used for systems planning and analysis, we begin to
see the possibilities.
Learning we are able to have multiple devices working together in a system,
communicating to each other but not having the headaches normally associated
with communications in the traditional sense, one begins to see that thinking
outside the box is really in order.
When the sum total of all these advancements are coupled with tried and true
field data that backs up the story, and the economic justifications begin saving
real dollars, one begins to really understand how the system works. It becomes
readily apparent the system is a very Pro-active rather than Re-active system
that continually adjusts and fine tunes itself to operate at its most efficient level
possible.
The long and the short of it says whether using these devices as stand-alone
components or in a system, the savings is there to be made, all that need be
done is to use the technology available.