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Focused Business Plans - Operations Management

Overview

Key Initiatives

Management Initiatives

Customer Service

Export of Knowledge


Overview

Operations encompasses the operation and maintenance of all the Corporation's capital facilities and the provision of service to NB Power customers. As such, Operations is charged with responsibility for managing the Corporation's resources in the most efficient and effective manner possible.

As previously discussed, the next five year period will not require major investments in new generation, transmission, or distribution facilities. The 1995 Load Forecast dictates an operating strategy designed to ensure that the Corporation's currently deployed resources are used to meet customer requirements. Some issues must be addressed to ensure existing facilities are effectively used.


Key Initiatives

Generation Operation and Maintenance

NB Power's strategy for generating facilities over the next five years will focus on operating and maintaining existing plants as efficiently as possible. This strategy will be achieved through regionalization of generation plants, changes to the organizational structure, continued review of existing maintenance programs, and more efficient use of existing resources, thereby decreasing external resources required for operation and maintenance of facilities.

Development and implementation of an on-line heat rate monitoring program at selected NB Power generating stations is scheduled to be in-service by April 1996. This program will allow operators to run existing plants more efficiently as improved heat rates produce more thermal energy per unit of fuel.

Comprehensive life extension maintenance activities are continuing at the Grand Falls Generating Station. To date, three of the station's four turbine generators have been refurbished. The one remaining generator is scheduled to be refurbished during the summer of 1996. This upgrade will increase the output of the plant in addition to extending its useful life.

Canadian Gypsum Company Inc. (CGC) recently constructed an $11 million gypsum processing plant at Belledune. NB Power entered into a multi-year contract with CGC to provide synthetic gypsum from the Belledune and Dalhousie stations for the manufacture of gypsum wallboard. The amount of gypsum supplied by these plants will be dependent upon the sulphur content of coal and Orimulsion® used at these stations and the operation of the units. NB Power began supplying CGC with gypsum in late 1995. This agreement reduces landfill costs of generation by-products and provides for the re-cycling of what was previously considered a waste product.

Fly-ash, another generation by-product of Belledune, can be used to strengthen concrete; a tender will be issued for the sale of fly-ash. The tendering and sale of vanadium ash, a by-product of generation activities at the Coleson Cove and Dalhousie stations, will continue.

Nuclear

As indicated in the NB Power - Operations section, maintaining a high capacity factor at Point Lepreau is critical to NB Power's operations. In addition to capacity factor, the Nuclear Division has been reviewing other key performance areas including safety, environment, regulation and the station's operating costs. Delayed by the 1995 outage, performance measures and targets will be established in these key areas during 1996.

Annual maintenance requirements were adjusted to take maximum advantage of the extended outage for SLAR As a result, no maintenance outage is planned for 1996. The station has developed a maintenance strategy that would see planned maintenance outages continue on a two year cycle.

In 1995, the Nuclear Division started the development and implementation of an innovative training methodology called Systematic Approach to Training (SAT). This program requires that the activities of all Work Groups be examined to identify the normal and abnormal job requirements. Training needs are then matched, delivered and assessed for effectiveness on an ongoing basis. The target for completion of this project is 1998. This comprehensive approach to training is now demanded by nuclear regulators worldwide.

The Atomic Energy Control Board (AECB) is implementing a program of re-authorizing licensed Control Room Operators and Shift Supervisors. A training program is under development to ensure that NB Power staff maintain their AECB authorization. The station cannot operate without authorized personnel. In addition, staff will continue consultation with the AECB to better define priorities and schedules to address licensing and analysis issues to ensure maximum gains from these efforts.

Point Lepreau's operating license is due for renewal in 1996, this will expand workloads in the Safety and Licensing area. In addition, the World Association of Nuclear Operators will be conducting an audit of plant operations. This audit was originally scheduled for 1995 but was deferred due to the SLAR outage.

A program is underway at Point Lepreau to identify any station components or systems that may have the potential to limit the station's life. These are then being systematically studied to determine the optimum maintenance and/or replacement strategy. The purpose of this program is to help ensure that the full service life of Point Lepreau is attained.

Current business improvement plans include a review of the Preventative Maintenance Program, Maintenance Management System and a reduced dependence on consultants. Any suggested changes will be accompanied by a business case that identifies associated benefits.

Transmission System Operation and Maintenance

Transmission facilities maintenance is carried out regularly and encompasses both planned and unplanned activities. Priorities are established through regular inspection of the facilities, using aerial patrols, and through the monitoring of system performance and analysis of abnormal conditions. The Corporation uses a computerized preventive maintenance program to co-ordinate all maintenance activities.

The 69 kV transmission system is the oldest of NB Power's transmission facilities. In 1988, the Corporation commenced an upgrade program to improve reliability and extend the life of 69 kV lines built prior to 1965. To date, approximately 1,800 kilometres of line have been refurbished. Over the next five years, NB Power is committed to upgrading the remaining 600 kilometres of older 69 kV facilities.

Similar to the 69 kV upgrade program, 138 kV and 230 kV transmission lines are in need of upgrading. In 1995 NB Power implemented a five-year program to refurbish the 138 kV and 230 kV system.

NB Power also commenced a refurbishing program on its older terminal stations in 1995. An engineering review of long-term requirements will be performed on each station. Specific areas of concern include obsolete air blast circuit breakers, insulator replacements and civil maintenance work. Projects were initiated at several sites during 1995/96.

Right-of-way maintenance cost along transmission lines is rapidly becoming a significant operational issue for NB Power. Costs for cutting and clearing trees and brush along NB Power lines are expected to double in the next five years. Alternative methods are being evaluated to address economic solutions for this problem.

Distribution System Operation and Maintenance

To assist in providing more effective and efficient service on the distribution system, NB Power has begun implementation of a series of cost reduction initiatives. Commonly used materials such as transformers, water heaters and poles will be shipped directly to field operating centers as opposed to storing them at the Central Stores in Fredericton. These items represent 40-50% of total inventory for the distribution system. Engineering resources will be established in the field, allowing efficiencies in detailing the Corporation's systems, interfaces with NBTel and studying loads in order to reduce losses.


Management Initiatives

Business Process Improvements

Work will continue on the three major initiatives already identified as follows:

Renegotiation of the NB Power/NBTel Joint Use Agreement

NB Power and NBTel have had a formal joint use agreement governing facilities and operations common to both utilities since 1946. The current agreement was developed in 1967. NB Power and NBTel have both identified the need to review the agreement to allow for continued savings and cost effective ways to complete job requirements.

The objective of reviewing this agreement is to achieve a new agreement which includes all aspects of joint ventures, which is clearly understood by employees and which recognizes changes to the financial and regulatory climate since 1967. Discussions with NBTel commenced in 1995 and it is anticipated that a formal agreement will be reached in 1996/97.

Fuel Management Practices Review

In 1994/95 NB Power incurred $237 million in fuel and purchased power expenses. This represents over 23% of all corporate expenditures. In 1996 a detailed review of the Corporation's fuel management practices is scheduled. This review will study all aspects of fuel practices, including procurement, inventory, type of fuel purchase, operational and maintenance issues. In addition to internal resources, external consulting expertise will be utilized to assist in the review.

SAP Information Technology Project

Initiated in 1995 and scheduled to be implemented in April 1996, the SAP project has been designed to increase the efficiency and improve the quality of management information used by NB Power. Areas included in the project include financial accounting, cost management and materials management. Details of this initiative are contained in the NB Power-Technology and Focused Business Plans-Technology sections of this plan.

Regionalization

Completion of the second phase of the Customer Service Division regionalization project in June 1995 enables NB Power to now concentrate on streamlined processes and take advantage of increased efficiencies. In addition, the implementation of the SAP management systems will facilitate the transition of several corporate functions to regional centres. Further initiatives designed to improve efficiencies include:

  • Establishment of a Single Account Management Centre which will centralize all regional collection services in the Central Region. This centre is scheduled to be in place by March 1996. The target of the Single Account Management Centre is to reduce NB Power's bad debt write-offs by $1 million by the end of fiscal year 1996/97. In 1994/95, write-offs constituted .25% of in-province revenues. During the past five years, write-offs have averaged .224% of in-province revenues.
  • Consultation with Services New Brunswick (SNB) to allow NB Power payments to be taken at SNB centres as they open throughout the province. This move may allow NB Power to further reduce costs. SNB includes payment centres where a variety of government services as well as private sector services are available. In addition, several electronic delivery system (kiosks) are available and more are planned. SNB currently has offices in Woodstock, Caraquet, Saint John and Moncton.
  • Rationalization of construction and maintenance activities. Construction activities are planned to be coordinated from Fredericton while maintenance work is planned to be scheduled from Fredericton and Chatham. To house the Chatham maintenance site, NB Power's Chatham Generating Station facility, which was retired in 1993, has been renovated.

Consultation with Industrial and Wholesale Customers

As detailed in the NB Power - Operations Management section, NB Power has spent considerable time meeting with its larger customers during the past year. Based on the feedback obtained, NB Power is committed to continue co-operative efforts with these customers and further discussions will be held in 1996.

Competition and Deregulation

Extensive changes in the electricity industry throughout the world were identified in the Background Material on Delivery of Service. The issue of privatization and competition among Canadian electric utilities has become a topic of increased discussion in the 1990s. The possible introduction of competition and deregulation to the Canadian electric utility industry would have a significant impact on NB Power. The Corporation has undertaken an initiative in early 1996 to comprehensively explore the potential changes to its structure, operations and business marketing that could result from such a development.

NB Power has requested two external firms with expertise in the deregulated market place to examine the implications of deregulation from a corporate, operational and public policy perspective. The mandate of these studies is to review all potential deregulation scenarios under which NB Power may operate during the upcoming years.

An internal task force has also been established to examine the economic and technical challenges which could result from deregulation. The task force is extensively reviewing NB Power's current business operations and identifying sources of revenues, costs and profits by specific activities. Specific responsibilities of the task force include:

  • Examining the economic, technological and public policy trends facing NB Power and the provincial electricity system.
  • Reviewing the current business operations of NB Power and identifying sources of revenue, costs and benefits of specific activity areas.
  • Reviewing alternative deregulated competitive models.
  • Making recommendations on the corporate action appropriate to meet the competitive challenges ahead.

The work being performed by the internal and external groups is similar to studies being undertaken in other Canadian jurisdictions both for utilities and provincial governments. By taking a proactive stance on the issue of competition and deregulation, NB Power is positioning itself to take advantage of opportunities and respond to challenges.


Customer Service

NB Power is committed to continuous improvements in customer service. Although customers have historically been very satisfied with the level of service provided by NB Power, a renewed emphasis is being placed on meeting customer needs. The transition of electric utility monopolies in Canada toward deregulation and competition more than ever reinforces that customers are NB Power's most valuable asset.

To ensure NB Power has the resources to satisfy customer requirements, a training project is being established to provide customer service staff with specific training on policies, rates, procedures, responses to commonly asked questions, etc. The initial phase of this training project will be the preparation of documentation and reference material.

The 1995 CEA survey indicated that NB Power's customer service satisfaction rating was very similar to the National Average. The following initiatives are intended to further improve customer service in areas considered important by utility customers:

Reliability of Supply

Since NB Power's customers are generally satisfied with reliability of supply, the Corporation is targeting to maintain its 5 year average of 4.37 hours as measured by SAIDI. Any geographic areas with particularly poor performance, however, will be targeted for system analysis.

Speed in Restoration of Power

In 1996, NB Power is targeting to maintain its five year average of 1.50 hours as measured by the CAIDI index. As detailed in the NB Power - Operations section, weather and other conditions difficult to control can significantly impact restoration of power statistics.

Concern for Public Safety

As outlined in the Focused Business Plan - People Management section, NB Power has a series of programs, both corporate-wide and within the Health and Safety group, to address this area.

Quality of Customer Service

Quality of service initiatives outlined in the Corporation's customer service plans should improve NB Power's already high ratings in this area.

Ensuring Future Supply

As outlined in the Focused Business Plan - Facilities Management section, NB Power has a series of plans and initiatives in place to ensure an adequate future supply.

Encourages More Efficient use of Electricity

NB Power will continue its energy and conservation management efforts during the 1996/97 fiscal year. With the completion of its IRP in 1995, NB Power will develop a detailed energy efficiency and conservation strategy as a means to meet the future requirements of its customers. Possible options for this strategy are discussed in the Focused Business Plans - Facilities Management section of this document.

Environmental Responsibility

The programs and actions designed to improve the Corporation's performance in this area, are outlined in the Focused Business Plans - Environmental Management section of this document.

Leadership Role in Economic Development

One of NB Power's key corporate objectives is to maintain competitive rates thereby contributing to the economic development of the province of New Brunswick.

Efficient Management

The primary output of the business planning process and the business improvement initiative is an increase in the efficiency and effectiveness of the Corporation.

Social and Community Involvement

NB Power employees are very active, and are encouraged to be active in social and community affairs.

Keep Customers and the Public Informed

NB Power commenced a process in 1994 that will improve the manner in which the Corporation interacts with its stakeholders. In particular, the annual publication of its five year Business Plan facilitates public input to both long-range and short-term decision making.

The Price of Electricity

As emphasized throughout this plan, the primary focus of the Corporation will be on cost reductions and appropriate management initiatives designed to reduce the need for rate increases. Additionally, demand-side management initiatives as outlined in the Focused Business Plans - Facilities Management section will assist in reducing the overall cost of power.


Export of Knowledge

Nuclear staff will continue to support the generation of revenue for the Corporation by selling services, expertise and operating practices/documentation to other plant operators. Current contracts include commissioning a nuclear facility in Romania and the training of Korean nuclear operators. A memorandum of understanding with the Chinese is expected to provide support for training and plant commissioning.

Following the implementation of NB Power's SAP project, the Corporation is also reviewing marketing opportunities for system technology skills gained from the project.

The Corporation is presently reviewing the possibility of expanding the provision of these services in the future and increasing marketing activities of its skills base. All such exports of knowledge and skills have been and will continue to be based on a consideration of cost recovery, safety of NB Power's domestic operations, availability of these skills to the domestic market, and the political stability and human rights record of the countries involved. Consideration will be given to the establishment of a separate entity to conduct these services, if the activity level warrants this.



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