Guidelines for the development of comprehensive marketing policies for municipal electricity undertakings, with particular emphasis on load management.

Abstract

It is expected that South Africa will have to construct as much generating

capacity in the next five years as has been constructed over the past 50

years. Industrialization and urbanization dictates that the larger portion

of this increase will be required in the supply areas under the control

of Municipal Electricity Undertakings, which means that these undertakings

will have to anticipate rapid growth in their infrastructures. This will

put a tremendous strain on their resources of revenue, materials and labour,

and it is obvious that comprehensive and co-ordinated policies are required

to be developed to enable these undertakings to deliver the electrical

energy to the final consumers at the lowest possible cost.

The Electricity Undertaking is a business organization with unusually

difficult managerial problems in all its functional areas. Its personnel

are adversely affected by the vast area of supply and by the resulting

difficulty of direct supervision and control. The capital cost of electrical

equipment is high, and there may be a tendency to reduce the initial cost

by ignoring the long term costs associated with the selection of equipment.

Electricity pricing is very difficult, as electricity is not a uniform

product. The consumption patterns of the consumers causes severe peaking

of loads to occur, resulting in very low utilization )f the capital equipment

involved, and which can threaten to overload existing networks. These

problems are compounded by the fact that the undertaking is a monopoly

and as such is not driven by the free-market motivating forces, such as

a profit motive and the constant need to improve to meet competition.

There is thus no motive to seek optimum solutions to the many problems.

It is shown that the Load Factor is an indication of the efficient use

of scarce resources, and that it is similar to measurements of profitability,

such as Return-on-Investment, etc. It is therefore possible to replace

the missing drive for profit and product improvement by the need to constantly

improve the load factor. By making this the main objective of the undertaking

many of the stated problems are put in their correct perspective. Maintenance

becomes important, as power failures adversely affect the load factor.

More care is exercised in equipment selection, as long term energy losses

are taken into account. Electricity pricing and its effect on consumer

consumption patterns becomes important. The concerted effort to improve

the load factor is referred to as load management.

Due to the tremendous increase in electricity consumption which is expected

over the next decade it is certain that load management will play an ever

increasing role. Load Management is defined as the sustained attempt

at modifying the load curve. Soft load management refers to pricing policies

and incentive schemes designed to induce users to shift their loads .out

of the peak periods. Hard load management physically switches customer

loads.

This thesis examines the results obtainable from various methods of load

management including off-peak incentive tariffs, on-peak-reduction rebates,

the use of current limiters, peak load reduction by means of voltage reduction

and remote control of water heater cylinders.

It is shown that whereas Sasolburg saves around R7S0 000.00 p.a. and Randburg

saves over Rl,5-million p.a.,other towns such as Pretoria and Pietermaritzburg

find their geyser control systems ineffective, and are phasing them out.

It has hitherto not been possible to determine the actual savings which

would result from the installation of a geyser control system, or to determine

the optimum number of controlled geysers.

The result was that some undertakings would install a control system at

considerable expense which resulted in minimal savings, while other towns

forego the opportunity to save hundreds of thousands of rands in reduced

demand charges.

In this thesis, the author develops a feasibility study model which permits

the system load curve to be analysed and the viability of a geyser control

system to be determined. The model was tested against the controlled

and uncontrolled load curves of Somerset West, and was found to be accurate.

It was shown that a geyser control scheme is a very viable proposition

for those undertakings where the feasibility study shows a contribution

of more than 0,5 KVA per geyser towards peak load reduction.

This forms the basic guideline for the selection of an appropriate form

of load mangement, and guidelines are presented to develop supporting

policies in all fields of the undertakings' functions.

In order to facilitate correct decision-making and to assist in the development

of comprehensive policies, a database of concepts and models is presented

in the various fields and various misconceptions are dicussed.

The guidelines have been applied by several electricity undertakings.

By using the Feasibility Study Model it was shown that the proposed installation

of 4000 geyser control units at Oudtshoorn, at a cost of over RI-million,

was not viable. The Feasibility Study Model permits the savings to be

calculated for different numbers of geysers and it was shown that the

system saturates at about 1500 controlled geysers. By reduci ng the number

of controlled geysers to around 1500 the installation cost will be reduced

by about R500 000.00 and the system will show a net operating savings , "

of RI05 540.00 in the first year, increasing as ESCOM increases its tariffs.

The application of these principles conceivably prevented the needless

expenditure of RI-million on a system that would have run at an operating

loss of over R17 000.00 p.a.

The feasibility study model was applied to the Stanger load curve to determine

the correct selection of load management. The results indicate excellent

response to geyser control, and showed that a system controlling 2500

geysers, costing R498 500.00 would show a gross savings of R297 000.00

in the first year, rising to RSI0 000.00 within 5 years if ESCOM increases

its tariff by 10% p.a. Based on these results and recommendations the

Department of Finance gave ad hoc approval to the Borough of Stanger for

the additional expenditure in the current financial year to install the

control equipment.

The guidelines indicated a similar result for Tongaat, where the gross

savings would be R360 000.00 in the first year, increasing to R637 680.00

within 5 years if ESCOM increases its tariff by 10% p.a. The estimated

cost of the control equipment is R493 649.00.

In complete contrast, the feasibility studies for geyser control undertaken

on the Ballito load curve showed a contribution of less than 0,5 KVA per

geyser, which indicated that the alternative forms of load management

should be implemented.

The results are contained in the case studies.