The decade-old Utilities Service Alliance serves as a model for managing outages
By David Wagman
The Omaha Public Power District is nearing the end of a 90-day, $417 million outage at its 500 MW Fort Calhoun nuclear station near Omaha. During the outage, which began in early September, some 1,800 contractors have been replacing two steam generators and an output transformer, among other tasks.
“It’s a huge outage,” says Ross Ridenoure, vice president and Chief Nuclear Officer for OPPD. Estimates are the project will require around five times the number of contractors as a more conventional refueling outage.
The outage will see OPPD draw not only on the skills of its employees and contractors, but on personnel from other power plants whose operators are part of a decade-old cooperative called the Utilities Service Alliance (USA), which embraces nearly half of the country’s nuclear power plant operators.
 Fort Calhoun nuclear station, operated by Omaha Public Power District. Photo courtesy OPPD. |
Based in Overland Park, Kan., USA is an alliance of 14 nuclear power plants at sites across the United States and Canada owned by different corporations that have joined together to reduce operating and maintenance costs and improve plant performance. There are a total of 33 reactors generating over 30,500 megawatts of electricity in the Alliance.
One benefit of alliance membership is the option to share personnel during refueling and maintenance outages. For example, in August two managers from the Palo Verde Nuclear Generating Station’s Steam Generator & Reactor Head Replacement Project in Arizona joined the Fort Calhoun 2006 outage team. Nuclear officers involved in USA say that personnel coming from other nuclear plants can be as much as twice as productive as contractors.
That’s because outage plants get someone who is skilled at doing the job every day, said Carl Parry, USA president and CEO. What’s more, the shared employees return to their home plant with hands-on experience they can use in their own power plant. A related benefit is the reduced expense that comes from contributing staff to another plant’s outage team. Over a three-year period, TXU, operator of the Comanche Peak Steam Electric station in Texas, offset more than $360,000 in payroll expense by loaning workers to other plants. Utilities that are in an outage take on the labor costs for their borrowed workers. This past spring, Comanche Peak sent 15 employees to meet a request made by a fellow USA member plant, said D. Bruce Wallace, Operating System Manager at Comanche Peak, 80 miles southwest of Dallas.
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The alliance not only involves sharing employees, but tools as well. Wallace recalled watching an 18-wheeler roll through his plant’s gates one day, loaded with scaffolding on loan from the Callaway nuclear station in Missouri. Comanche Peak used the scaffold during its outage at no cost, paying only for the shipping (which was at a 30 to 40 percent discount thanks to a separate contract negotiated by the alliance).
The alliance also bought and shares a reactor vessel head inspection device. This purchase came after corrosion was detected in a reactor vessel head at First Energy’s Davis Besse station in Ohio in 2002. (First Energy is not a USA member.) The idea is that as each plant has an outage, the robot (along with its operators who are based at PG&E’s Diablo Canyon plant in California) are deployed to conduct the inspection. Participating plants include Wolf Creek, Callaway, Comanche Peak, South Texas and Diablo Canyon. Savings average $130,000 per outage when compared against the cost of outsourcing this task, members said.
“It’s as if my neighbor owns a fertilizer spreader and I borrow that equipment,” said Mike Blevins, senior vice president and Chief Nuclear Officer (CNO) with TXU.
One area where that is paying off is in a license renewable collaboration project. The focus currently is on Phoenix and its nearby Palo Verde station, operated by Arizona Public Service. Over the next six to seven years personnel from USA member plants will work onsite to relicense Palo Verde. When they have finished their work they will move on to another member’s relicensing project.
USA also is presenting a generally united response to the Nuclear Regulatory Commission on issues related to relicensing. Its potential for influence is substantial. Out of 27 nuclear plant operators in the United States, the nuclear group counts 13 of them as members with 15 plants and 31,000 MW of generating capacity.
“The shared manpower means the experience stays in the group,” said Blevins. “We get the same benefits as a fleet operator.” Blevins said the NRC has recognized the alliance’s license renewal effort s one of the industry’s most efficient.
“Our members represent about half of the nuclear industry,” said Carl Parry, USA president and CEO.
That’s a far cry from when the alliance was first formed a decade ago.
“Some folks didn’t give USA much of a chance for success,” said OPPD’s Ross Ridenoure, who also serves as USA chairman.
The alliance traces its history to August 1994 when single nuclear plant operators got together to talk about how deregulation, which was spreading across the country at the time, might affect their operations. Within a few months, the alliance had seven charter members whose representatives negotiated an operating memorandum of understanding. Those seven plants were Wolf Creek, Fermi 2, Cooper, WNP-2 (now Columbia), Fort Calhoun, Clinton and Palisades. In September 1999 four additional members were added: Diablo Canyon, South Texas Project, Comanche Peak and Callaway. Susquehanna, D.C. Cook and Palo Verde joined in 2002, followed in 2004 by San Onofre. In 2005 the alliance went international, adding Ontario Power Generation’s Darlington and Pickering stations.
Altogether, the alliance has 14 utility members with 31 reactors, including five boiling water reactors, 16 pressurized water reactors and 10 Canadian deuterium (CANDU) plants.
The alliance has thrived in part because it taps the independent nature of most power plant operation while offering the benefits of skill sharing and bulk purchasing power.
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“It doesn’t pay if you don’t play,” Parry said. Between 2001 and 2006 members saved an estimated $5.2 million by making use of around 70 volume-based contracts negotiated with suppliers. Members who buy a service covered under one of the contracts are entitled to a rebate on their purchases. The size of the rebate goes up with the dollar value of the purchase. So a member who buys $2 million of equipment or services through a contract is eligible for a 5 percent rebate. Buy $15 million worth of equipment or services and the rebate rises to 20 percent.
The contracts are written so the entire utility can take advantage of the cooperative buying agreements, not just the individual nuclear generating station. One of USA’s most beneficial contracts covers office supplies and shipping supply deals, said Ridenoure. These contracts offer 30 to 50 percent rebates to members.
Ridenoure said that in 2005 the Fort Calhoun station saved nearly $400,000 in computer-related expenses and almost $200,000 related to shared personnel. The station saved another $860,000 through contract buying incentives and rebates. Altogether, the station saved more than $2.1 million during 2005 through the alliance. Membership dues for the year totaled $122,300.
USA worked with the U.S. Department of Justice to establish two “safe harbors” under which the alliance may legally operate. First, USA may represent no more than 35 percent of the nuclear industry. Second, the total value of joint purchases may not exceed 20 percent of the total gross revenues of the participating utilities. So far, the alliance has operated within those boundaries.
“We’re not a fleet, we’re an alliance,” said Ridenoure. Power plants are operated independently and participating utilities may choose which activities and services they want to take part in. “It’s a menu-driven approach,” he said.
One difficulty in having an alliance organization is making group decisions on a variety of issues.
“Gaining consensus is a function of influence and less a matter of ‘go do this,’” Ridenoure said. “I have to sell it to other members and they all have to agree with the direction we’re taking.”
Members make no effort to coordinate their outages. At one time trying to coordinate outages seemed to make sense, said TXU’s Mike Blevins. But regulatory and legal issues seemed likely to arise if, say, one power plant ended up delaying another power plant’s outage.
Under current operations, a member will place a request anywhere from three to six months in advance of its outage, listing the specific disciplines and tools it may need. Other plants try to fill the order depending on their own work requirements. (A sample of some of the tool requests made so far this year is in the accompanying table.)
“We’re committed to this industry, period,” said president and CEO Carl Parry. He said the alliance is also committed to reaching out to the supplier community. “We need them and we want them to understand what’s expected of us as operators. We want them as partners.”