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Improving Hydro Plant Performance

A performance measures program implemented for the 31 federally owned hydroelectric projects on the Columbia River and its tributaries in the Pacific Northwest is enhancing plant reliability and increasing revenue. As part of the program, employees at the projects receive monetary incentives based on success in meeting or exceeding targets set at the beginning of each year.

By Charles R. Krahenbuhl

With a median age of more than 45 years, the generating units in the powerhouses of the Federal Columbia River Power System (FCRPS) face significant maintenance issues. This system consists of 31 federally owned multipurpose dams on the Columbia River and its tributaries.

To plan and manage major system upgrades, as well as routine O&M, the federal agencies that operate these projects developed an integrated business management approach in 1999. This approach has improved unit availability and reduced forced outages, resulting in lower maintenance costs and improved system reliability. As part of this new management approach, the agencies implemented an incentive program that provides monetary reward to employees at the projects when they meet or exceed targets set at the beginning of the year.

Background on the Federal Columbia River Power System

The FCRPS is a unique collaboration among the Bonneville Power Administration (BPA), U.S. Army Corps of Engineers, and U.S. Department of the Interior’s Bureau of Reclamation. Together, these three agencies maximize use of the Columbia River by generating electricity; protecting fish and wildlife; reducing flood damage; providing irrigation, navigation, and recreation; and sustaining cultural resources.

Powerhouses associated with the 31 dams on the Columbia River and its tributaries have a total capacity of 22,000 MW and provide about 60 percent of the region’s hydro capacity. Water storage at these projects totals 55.3 million acre-feet, much of which helps reduce flood damage. The dams also supply water to irrigate more than a million acres of land in Washington, Oregon, Idaho, and Montana. And the Columbia-Snake Inland Waterway, a major river navigation route, provides shipping access from the Pacific Ocean to Lewiston, Idaho, located 465 miles inland.

All of these dams and associated powerhouses were completed before 1977. The oldest, 27.7-MW Minidoka on the Snake River, began operating in 1909. The newest project, 49-MW Lost Creek on the Rogue River, went into service in 1977. The median age of the generating units in the FCRPS is more than 45 years. As might be expected, maintenance demands have increased sharply over the past decade.

The FCRPS operates in a very different world than that faced by planners of its first hydro projects. Competitive power markets have been developing since the late 1970s, when federal legislation opened the door to independent power production. Laws and policies regulating wholesale generation continued to unravel through the 1980s.

In 1992, Congress adopted the Energy Policy Act, which spurred greater competition in wholesale power markets. The act also contained provisions that allowed the Corps and Reclamation to enter into agreements under which BPA directly funds power-related operations and maintenance (O&M) and capital investments at FCRPS dams. These direct-funding agreements opened the door to an integrated, business-like approach to system management and are contributing to overall performance improvements.

Against this backdrop, the federal agencies are planning and managing major system upgrades, as well as routine O&M. Serious challenges are present, but the agencies have a growing store of tools to deal with them.

One of the most important tools, an integrated business management approach developed in 1999, has produced tangible results for the FCRPS. System-wide unit availability was 88 percent in 2001, compared with 82 percent in 1995. In 2006, availability was 85 percent, despite significant rebuild activities taking place as part of the capital improvement program. In addition, the forced outage factor has dropped to 2.46 percent from 6 percent, resulting in lower maintenance costs and improved system reliability. The system is in shape to produce power more reliably and operate more efficiently, and it will get even better as powerhouses are rehabilitated and O&M practices are improved.

Examples of improved O&M are evident throughout the FCRPS. The agencies are applying enterprise asset management techniques via a MAX- IMO┬«-based computerized maintenance management system and hydroAMP (hydro asset management partnership) equipment condition assessment.1 Two additional approaches are saving money and adding value. These involve communication among agencies – including a weekly system-wide operations conference call – and increased coordination, such as deploying technical experts to projects regardless of their agency affiliation.

Establishing an integrated business management approach

In the late 1990s, the FCRPS agencies realized a methodical, collaborative approach was needed to restore the system and maximize its enormous potential. In 1998, a multi-agency team began to craft a solution. The team consisted of representatives from the three agencies, Energy Northwest (operator of the only nuclear plant in the FCRPS), and a consulting engineering firm. The team assessed the condition of the FCRPS generating assets and compared their performance to other hydro plants in North America. The team identified work needed to restore reliability and enhance revenues, as well as ways to improve O&M practices and business processes.

The result was The Asset Management Strategy for the Federal Columbia River Power System, released in June 1999. This strategy was intended to guide activities and investments in a targeted, business-like way. The agencies adopted the asset management strategy as their blueprint to renew and revitalize the FCRPS.

Using this strategy has brought significant and constructive changes to management of the rehabilitation and operation of the FCRPS. In addition, the collaboration that went into developing the strategy has nurtured a spirit of cooperation among the FCRPS agencies. A culture has formed that results in much greater effort being made to plan and manage the system collectively and to arrive at shared objectives. Multi-agency teams plan and implement solutions that become standard operating procedure in today’s FCRPS.


The 1,090-MW Bonneville project on the Snake River in Washington is one of 31 federally owned multipurpose dams with hydroelectric generating facilities on the Columbia River and its tributaries. A performance measures program implemented for these dams has improved unit availability and reduced forced outages.
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The asset management strategy laid out a four-step business management process: strategic planning, asset planning, resource management, and performance assessment. The agencies are using this process to plan and execute projects, such as capital improvements and O&M effectiveness improvements, as well as to evaluate their success.

Strategic planning

This initial phase usually consists of several months of reviewing business corporate goals, status, market, and plant conditions. During this phase, the FCRPS agencies work together to develop broad annual goals and performance expectations. These goals and expectations are then shaped into a business strategy for the entire system, with individual action items for each plant.

Asset planning

Next, the agencies consider the role of individual hydro plants, then define their contribution toward meeting FCRPS goals. The agencies conduct cost/benefit analyses to establish budgets sufficient to correct deficiencies or enhance efficiencies in the FCRPS. Examples of work needed to correct deficiencies include excitation system upgrades and stator rewinds. Work needed to enhance efficiency might include analysis of the workforce for O&M effectiveness.

Resource management

This is the action phase of the strategy. At this point, project prioritization, resource allocation, and program implementation take place. The actual investment of dollars is made during this phase. These investments can be small capital improvements accomplished by plant personnel or multi-year plant renovations via joint contract ventures. All expenditures are tracked and compared against the plans, with course corrections and adjustments made as needed.

Performance assessment

In the final phase, the agencies track progress toward meeting the performance goals and conduct lessons-learned exercises and benchmarking.The FRCPS has benchmarked its plants using the services of HJA Consulting in Atlanta, Ga., now owned by Navigant Consulting. The agencies also are members of the Electric Utility Cost Group(EUCG), which assists its member companies in achieving excellence by providing benchmark information on cost, performance, and best practices. The results from these assessments are used to refine the strategic planning effort in a continuous improvement and adaptive management framework.

Mapping the hydro strategy

As part of the strategic planning step of the process, the team developed a FCRPS hydro strategy map. This map is intended to depict the “yellow brick road” for maximizing value to the region, yet it also clearly defines the road base, curbing, guardrail, and direction signs for the FCRPS and its participating agencies. The map emphasizes three tenets needed to maximize value to the region – power reliability, low cost power, and trusted stewardship. It also features three perspectives: stakeholder, internal, and people/culture. These six considerations work together to guide strategy for the FCRPS.

After this map was developed, the FCRPS agencies conducted a partnership survey to measure understanding of the process, its components, and where the members felt effective application of effort would give the greatest improvements. Results of this survey indicated that knowledge of asset planning, the second step in the process, was conceptual at best. However, respondents recognized that this was the area where the most mutual benefit would result, in terms of a cohesive approach to extracting value from the system while assuring a proper level of long-term stewardship. They concluded that asset planning was an area where exploration was the most appropriate and timely. The other processes were relatively well understood and applied. Asset planning improvement would better guide activities and application of resources.

Details on the performance measurement program

The asset management strategy for the FCRPS contains an adaptive management process that allows participants to develop performance expectations, action plans for achieving expected performance, and processes for tracking results. Many initial performance indicators were quite basic and operational, while others were too advanced for the available mechanisms. An example of a rudimentary indicator was a role call of individual plants on a weekly coordination call. An advanced measure included the attempt to determine immediately the fiscal and physical effects of a forced generator outage without transmission or marketing results. Because of the adaptability resulting from the partnership, an overall performance measurement program has evolved.

This program recognizes three levels of goals and measures: strategic, tactical, and operational. Examples of each level are:


Figure 1: By assigning a weight to various performance indicators at hydro projects, agencies operating the dams associated with the Federal Columbia River Power System can tie monetary awards to success in meeting or exceeding targets set at the beginning of each year.
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The performance measurement program recognizes the three entities that form any power system: the power system as a whole; the individual generating plants; and the multiple agencies, organizations, offices, and processes. Each entity may have strategic, tactical, or operational goals, as well as measures and targets. Coordinating these goals and objectives for a large power system can be interesting and challenging. The processes for managing funds and personnel were already at an advanced level. However, asset management enablers – generation resources availability scheduling in concert with water availability, work management, equipment condition assessment, and risk and reliability analysis – were not. Nor was there universal understanding of the most effective and efficient processes to lead the three entities to the “yellow brick road.”

When the performance measures group was chartered in 1999, emphasis was placed on fiscal management. This emphasis was understandable, considering the newly broken ground of the direct-funding agreements. Historically, the operating agencies’ financial framework involved comparing historical cost control methods to net revenue. However, to begin the business-centric path forward, this topic required a different emphasis.

At first, the agencies reverted to principles relied on before the direct-funding agreements. These focused on cost controls based on appropriations from Congress, rather than on net revenue from power sales. Up to that point, local managers and supervisors were measured on cost control, such as reduced overtime use. However, this view does not recognize that returning a generator to service provides thousands of dollars in revenue, compared with the hundreds of dollars spent for overtime labor. The value of the generation frequently surprised local managers and supervisors.

These performance indicators, both expense and capital, formed the shell of the performance measurement program. Both use execution of funds as a fundamental measure, but the commitment of funds to particular activities provide indication of program direction and success.

One goal was to increase emphasis on work execution, instead of the traditional funds execution. Having indicators for expense tracking, with incentives that emphasized saving while accomplishing critical work, reinforced the new culture. In the capital program, where funds availability is highly dependent on use of funds on hand, the target and incentive helped cement the management and technical team members into a cohesive unit.

The next emphasis was improving understanding of the resources available for generation in relation to the fuel available. Raw capacity data was available through Generation Availability Data System (GADS), a database of generator availability and outage causes developed by the North American Electric Reliability Corporation (NERC). However, matching that capability to system demands, outages, and schedules was basic at best. Personnel attempted to match bi-yearly maintenance outage schedules with anticipated river flows, but a consistent approach was not present.

The agencies’ water management personnel evaluated 50 to 60 water years and compared to certain indicating characteristics for the upcoming water year. This work became a fundamental building block for measurement tools, target, and monitoring. The result is the heavy load hour (HLH) concept where the plant capacity plan is developed. The plant, working with dispatchers and schedulers, maximizes availability when needed. HLHs are those when the most generation will be needed. Available generation projections are tempered at each plant by the expectation of available water based on the water year history and current weather forecasts.

Structuring an incentive program

To enhance the FCRPS performance measures program, the agencies developed an incentive program for field and direct support staff. When the direct funding program was negotiated between the agencies, the possible use of incentives was provided by BPA’s business improvement plan. The plant owners, the Corps and Reclamation, agreed that incentives should be considered as tools in the toolbox to enhance success.

The incentive is a monetary award that is determined at the beginning of each year. The incentive funds are budgeted in the year of payout after the action year. The maximum award available is the sum of all individual incentives placed on measures at their “stretch,” or maximum, target level. The award is segmented into a specific number of shares, which can then be further segmented into quarters. The amount each member receives depends on his or her contributions to meeting or exceeding targets.

The incentive payment has been funded each year to about $1,200 per full time equivalent (FTE), should all stretch targets be obtained.

The agencies determine weighting of the various indicators each year, with those that are maturing and being institutionalized weighted less than those that are driving overall strategy or those that require significant emphasis. Figure 1 shows the weighting of each indicator. Each year, the intent behind each indicator, its ultimate place in the program, and what individuals can do to better the chance of success are shared in joint review meetings and through presentations to plant staff. Typically, the plant managers give these presentations to reinforce their commitment to the program. This communication is especially important for crafts and other individuals who are not frequently involved in FCRPS management or performance oversight. Performance status is shared throughout the agencies monthly, and periodic meetings are held to review results and determine course corrections.

To assure objectivity – i.e., to assure measures are challenging but obtainable, that program developers are not swayed by effects on incentive payments, etc. – there is separation between the performance measures staff and incentive distribution processes. Early in the program, performance measure staff focused on the intent and effect of the measure on the power system requirements in the new business-centric focus. They quickly recognized that high integrity to the performance system must be assured, independent of the resulting incentive payment. This has helped most members of the three agencies “buy in” to the concept that the incentive component is objectively managed.

The incentive program is improving capacity and the FCRPS value to the region. Incentives help clarify, educate, and guide staff on the path toward higher performance. Of particular importance, evolution of the HLH target recognized that over-scheduling maintenance outages was as detrimental as under-scheduling. Each results in unneeded and costly purchases in the marketplace with volatile prices. A range of available HLH capacity is compared to the plan. The plan is updated quarterly, stressing the incentive to highlight scheduling importance. This effort has resulted in valuable marketing information and has improved overall maintenance outage scheduling, as well as coordination between plant operation, maintenance, and regulatory personnel.

The incentive program also was used to plot the direction and importance for assessing equipment condition and determining maintenance needs. This incentive raised the bar for the crafts, as it focused directly on maintenance practices, scheduling, and reliability and availability of the generating equipment. It challenged management as well, stressing a clear connection between O&M strategy and allocations.

Results of the incentive program

The incentive component of the performance measures program has proven to be effective in improved integration of common expectations across the FCRPS. The incentives typically are used to emphasize products, processes, or practices leading to overall performance that is deemed important to the value to the region.

Members strive to meet the indicators locally within their group’s control. But they also recognize the interdependence between the craft worker repairing a generator under a tight schedule, the contracting staff member obtaining repair parts, or even the management person justifying the annual O&M budget. Just as the three agencies have formed a partnership for the good of the power system, the vertical organization within each operating agency has taken on a more collaborative approach focusing on the power system and that yellow brick road of maximizing value to the region. The incentive component plays a small but valuable part, focusing attention, direction, and ownership toward the ideal. n

Mr. Krahenbuhl may be reached at U.S. Army Corps of Engineers, North 201 Third Avenue, Walla Walla, WA 99362; (1) 509-527-7102; E-mail: charles.r. krahenbuhl@us.army.mil.

Note

1http://operations.usace.army.mil/hydro/pdfs/bmp-HydroAMP.pdf

Acknowledgments

The author acknowledges the sources used to develop this article, including FCRPS and individual federal agency publications. He especially wishes to acknowledge the dedicated service of members of the subcommittees, including the O&M, Capital, and Performance Measures Subcommittees of the Joint Operating Committee and the Strategic Directions Group.


Charlie Krahenbuhl, P.E., now retired, was chief of the environmental and business management branch of the U.S. Army Corps of Engineers’ Walla Walla District. He was co-chair of the Performance Measures Subcommittee for the Federal Columbia River Power System.


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