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Municipal Utilities Had Lowest Frequency, Duration of Outages in 2015

Posted By IAMU, Thursday, September 15, 2016


Provided by the American Public Power Association

From the September 15, 2016 issue of Public Power Daily
Originally published September 14, 2016

By Jeannine Anderson
News Editor

In 2015, compared to investor-owned utilities and rural electric cooperatives, municipal utility customers “experienced the lowest instances of power outages in both frequency and duration, averaging one outage and about two hours of interrupted service,” the Energy Information Administration said Sept. 12 in the EIA’s Today in Energy publication.

“Our data backs the results of this EIA analysis,” said Alex Hofmann, director of energy and environmental services for the American Public Power Association. “Whether they are classified as rural or urban, municipal utilities prioritize service restoration and reliability.”

Interruptions in electricity service “vary by frequency and duration throughout the country across the many electric distribution systems that serve roughly 145 million customers in the United States,” the EIA noted in the Sept. 12 report, EIA Data Show Average Frequency and Duration of Electric Power Outages. While some customers have backup generators, most are simply without electricity when outages occur, the agency noted.

The reliability of electricity supply systems “is typically measured by considering the duration, frequency, and scale of service interruptions,” and many of the standards in reporting these metrics were developed by the Institute of Electrical and Electronics Engineers, the EIA said. Most utilities use the IEEE standards when they report outage data, but some have developed other approaches, said the agency, which is part of the Department of Energy.

For utilities following the IEEE standard, aggregate yearly outage frequency and duration indices (SAIFI and SAIDI, respectively) are reported to the EIA and they include any interruption that lasts longer than five minutes.

When reporting to the EIA, utilities designate whether their reported indices exclude major events, which can represent outages caused by significant snowstorms, hurricanes, floods, or heat waves. Not all utilities are consistent in what they consider major events, though most use the IEEE definition, the EIA said. For instance, a significant snow storm “may be considered a major event by a utility in Virginia, but not by a utility in Maine,” the agency said. “Major events are relatively rare, but they can result in longer outages.”

With major events factored in, investor-owned utilities' customers “averaged slightly more than three hours without electric service, while co-op customers averaged nearly five hours without power,” the EIA said. Co-op customers, on average, “experienced about twice as many outages as customers of investor-owned and municipal utilities.”

The report noted that factors such as weather, population density, and tree density affect utilities' ability to maintain service.

“For example, co-ops are generally suppliers to rural homes with more powerline miles and trees per customer, increasing the likelihood that distribution lines will be affected by storms,” the EIA said. “Municipalities are more likely to serve customers living in higher-density urban areas, which have fewer powerline miles per customer and, in some locations, underground distribution lines.”

Tags:  APPA  Public Power Daily 

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Report: Why Competitive Pay is Vital to Public Power

Posted By IAMU, Wednesday, September 14, 2016


Provided by the American Public Power Association

A new report from APPA examines why public power utilities can't pay employees as much as cooperatives and investor-owned utilities do.  Given this disparity, many qualified candidates may not choose to work for public power utilities.  The report suggests how you can communicate the need for competitive pay to governing bodies and the public, and quantify the many advantages public power utilities offer.

Read the report here.

Tags:  APPA 

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Iowa Regulators Clear Path for $3.6 Billion Wind Project

Posted By IAMU, Wednesday, August 31, 2016


From the August 31, 2016 issue of Public Power Daily
By Paul Ciampoli - APPA News Director

The Iowa Utilities Board on Aug. 26 issued an order approving a settlement related to what the IUB said is the largest renewable energy project in the state.

At issue is MidAmerican Energy Company’s proposed Wind XI project, a $3.6 billion proposed project that will allow the investor-owned utility to build up to 2,000 megawatts of new wind electric generation in Iowa.

The Iowa utility regulators said that the utility is eligible for advance ratemaking principles. “The settlement as a whole will reduce MidAmerican’s reliance on fossil-fueled generation and position MidAmerican to meet ongoing and future environmental mandates in a manner that is more likely to benefit its ratepayers,” the IUB said in a news release.

The IUB said that the settlement’s benefits to retail customers will help ensure that the utility’s current and future customers continue to enjoy adequate service and facilities at just and reasonable rates.

In the settlement agreement, the ratemaking principles approved set the cost cap for the Wind XI project at $1.792 million per MW including allowance for funds used during construction.

For the return on equity, the settlement agreement provides an allowed return on the common equity portion of Wind XI that will be included in Iowa electric rate base at 11 percent.

MidAmerican filed its Wind XI request for advanced ratemaking principles with the IUB on April 14 and asked for expedited review to take full advantage of the federal production tax credit.

Alliant Energy also pursuing major wind expansion in Iowa


In July, Alliant Energy said it will
invest approximately $1 billion to expand its wind energy operations in Iowa.

Specifically, Alliant Energy said its Iowa utility, Interstate Power and Light, is seeking regulatory approval to expand its Whispering Willow Wind Farm in Franklin County, Iowa, and possibly develop wind energy in other areas of the state.
The five-year project will be for up to 500 MW.

The company is seeking approval now to maximize the value of renewable energy tax credits to benefit its customers, Alliant Energy said.

Tags:  APPA  IUB  Wind Energy 

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Five Myths About Pay That are Killing Your Utility

Posted By IAMU, Thursday, August 11, 2016


Provided by the American Public Power Association

By Carl Mycoff, Managing Director, Mycoff, Fry & Prouse LLC

When I was in high school, drivers’ education was a required course. The course included an Ohio State Police video showing the impact of crashes, to frighten adolescent drivers. I still remember what I learned from it — the most important part of a car is the driver.

A critical component of finding the right drivers for your utility is proper compensation.

Public power decision makers are constantly evaluating the costs and benefits of capital investments and equipment. However, hiring the right drivers is often based on emotion or politics. Utilities that take a logical, measured approach to hiring and pay experience better performance. It isn’t just about money — it’s really about the allocation of limited resources.

In my 45 years of recruiting, I’ve heard so many reasons why public power utilities should not pay competitively. Here are the top five myths and reasons to dispel them.

Myth: A public power utility can’t pay competitively because it’s a government or not-for-profit agency.

Public power utilities are not-for-profit entities, but it is wrong to think that they do not create a return for their communities. Public power utilities often offer lower rates and put revenues directly back into the community.

If the utility is a city department, there’s the myth that utility employees should be paid comparably to other city employees. But there are two huge flaws in this logic.

First, a city is largely a consortium of cost-based services for which the citizens have no competing offering. The utility is a revenue-based service providing net income. The public power utility has a ready competitor in the form of the neighboring investor-owned utility — not to mention new technologies such as rooftop solar power and home energy storage. The utility also often has the ability to generate additional revenue through innovative business, such as wholesale power market transactions and ancillary services.

Second, the supply of personnel with city administration skills matches the demand for those services at market compensation levels. But market compensation for utility experience is on a different curve. For example, municipally owned hospitals do not pay surgeons and anesthesiologists on the same level as city managers or other city administrators. The consequence is obvious. The citizens of Green Bay own the Green Bay Packers but I’m am certain the quarterback, Aaron Rogers, does not have his pay measured by how much the city administrators earn.

Personnel costs represent about 20 percent of a utility’s total costs. Increasing pay by 10 percent for all employees would result in only a 2 percent impact on the typical utility bill — a small price to pay to keep the lights on.

Myth: A public power utility is a monopoly and not subject to competition.

I hear the argument time and time again — consumers don’t have the option to choose a utility because most utility service territory is a monopoly. But consumers can choose where they live!

Being a “monopoly” does not make the utility immune to the marketplace.

Successful utilities don’t get much attention, but failures always make the news — outages, equipment failures, or dramatic rate increases. Customers that are unhappy with community-owned utilities can storm the castle with pitchforks and torches and elect new politicians.

Public power is not insulated from competition for intellectual capital, either. Many public power utilities can tell you how their prized lineworkers, engineers, accountants, marketing personnel and seasoned leaders are recruited away by cooperative or investor-owned utilities. Utility employees are a limited resource — and they can and will work in competing sectors.

Myth: Public power is too small to compete with neighboring utilities.

In the 1980s, investor-owned utilities, faced with the certainty of deregulation, abandoned the practice of abundant hiring and training. The resource pool of trained utility personnel declined dramatically as a result. In fact, about 60 percent of utility personnel today are baby boomers headed to retirement. To meet the demand for trained personnel, public power, cooperatives, and investor-owned utilities all compete for now even more limited human resources.

Increased demand for a limited resource will force its price to increase. Failure to recruit and retain properly trained personnel has obvious consequences. For community leaders faced with the need to provide a vital service at the lowest possible cost (and with a return that offsets other costs), paying for top talent is a no-brainer.

Myth: Competitive pay is politically unacceptable in my community.

Public power serves affluent as well as poor communities. Affluent and growing communities have an abundance of customers with high loads that provide high-paying jobs. Disadvantaged communities are usually experiencing declining loads and populations.

Affluent and growing communities must select utility leaders and staff who will ensure a trajectory of increasing loads and high-paying jobs or face an undesirable turnaround decline. As a recruiter, I’ve worked with clients that have enjoyed growth and success only to have poor business decisions made by unqualified utility leaders result in dramatic rate increases, financial distress, poor customer service, safety related incidents, and/or declining reliability. The lucky communities see those same villagers storming the castle demanding change. The unlucky ones see an exodus of load, resulting in the loss of high-paying jobs and declining payments-in-lieu of taxes.

Poor and declining communities have an even more difficult situation. Leaders that are courageous and act to improve the situation face criticism for hiring qualified leaders and staff at compensation levels that are among the highest in the community. Critics wonder why the community would hire a highly paid utility leader rather than put the money into schools. Other leaders succumb to the temptation to kick the can down the road and avoid that criticism.

Therein lies one of public power’s biggest challenges. It is governed by individuals facing a two or four-year election cycle while administering an industry with a 15- to 30-year planning cycle.

A well-run utility requires well-paid employees.

Myth: Tax-exempt bonds are the reason public power borrowing costs are low.

Public power utilities finance large capital investments with municipal bonds. It is true that tax-exemption for municipal bonds reduces borrowing costs for public power utilities. But, it is also true that accelerated depreciation, tax-exempt private activity bonds, investment and production tax credits, and reduced tax rates on dividends and capital gains reduce the cost of capital for investor-owned utilities by a roughly comparable amount.

Where public power utilities really stand out is in the quality of debt issued. These high bond ratings result in lower interest rates. A key factor in determining a utility’s bond rating is the strength – including tenure and experience – of its management team. Likewise, reliability – also driven by experience and expertise at all levels – is hugely important.

Yet another reason to hire wisely and pay well.

Tags:  APPA 

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APPA Cyber and Physical Webinar Series Starts August 17

Posted By IAMU, Monday, August 1, 2016

Cyber and Physical Security webinar series starts August 17!

*All webinars run from 1 - 2:30 p.m. CST*

Learn more and register!

This three-part webinar series is designed to update utility managers on three security issues relevant to the current cyber and physical security threat landscape and will focus on: 1) the legal aspects of threat information sharing, 2) enterprise risk management through the use of a risk dashboard and 3) learning from the experts who were on the ground in Ukraine to understand the cyber kill chain concept that uses good cyber hygiene practices to stop even sophisticated attackers from disrupting your control systems.

· Information Sharing and Recent Cybersecurity Legislation Aug.17

· Utilizing Dashboards for More Effective Cyber & Physical Security Risk Management for Public Power Aug. 30

· The Industrial Control System (ICS) Cyber Kill Chain and Lessons Learned from Ukraine Sept. 13

Who Should Attend

Utility security professionals, senior managers, supervisors, and executives from public power utilities of all sizes.

Webinar #1

Information Sharing and Recent Cybersecurity Legislation- Aug. 17

Cybersecurity information sharing opportunities are evolving, as the private sector and the federal government have developed private and public-private partnerships that are leading to improved access to timely cyber threat data. The President has issued several Executive Orders on cybersecurity information sharing and the Department of Homeland Security, Department of Energy, National American Electric Reliability Corporation, the FBI, and other entities have established increasingly robust information sharing programs. And, late last year Congress passed the Cybersecurity Act of 2015 and included energy security provisions in the FAST Act. In this webinar, the speakers will discuss each of these initiatives or enactments, and explain how they can help electric utilities.

Registration Fees

Click here to register for the Cyber and Physical Security webinar series

· Individual webinars: $99 for APPA members; $199 for nonmembers

· The entire 3-part webinar series:$225 for APPA members; $550 for nonmembers

Questions? Contact Ana Mejia at 202/467- 2976 or AMejia@PublicPower.org

Tags:  APPA  Cyber Security 

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