By Patrick Stiff and Mark Scherluebbe
Editor’s Note: This article was published in EY’s Utilities Unbundled publication and that it has been reprinted with WEC Energy Group’s permission.
Wisconsin Energy was already one of North America’s largest electric and natural gas delivery companies but as far back as the early 2000s, its aging infrastructure made executives feel vulnerable. To position the company for the future, they invested US$3b in new power plants with a total capacity of 2,800 megawatts, US$1.3b to upgrade existing power plants and US$2.7b to upgrade the distribution system. Their Power the Future campaign began in 2003 with the installation of two natural-gas-fueled combined-cycle units to replace the 80+ year-old coal plant at Port Washington, WI and two new coal-fueled super-critical generating units at Oak Creek in Milwaukee County. All the new units had advanced emissions controls.
Just a decade later, and despite the acquisition of Integrys Energy Group, executives at the newly named WEC Energy Group (WEC) concluded that the generation portfolio that they had believed would keep the 4.4 million-customer utility commercially, economically, and environmentally viable until 2020-2030 needed an upgrade. With concern about greenhouse gases rising, low gas prices undermining the economics of their coal units, and demand for energy weaker than previously forecast, the only way to grow the company would be from within, by raising WEC’s operational game.
HEADING TOWARD THE TOP
In the Top Quartile by 2020 (TQ-20) campaign, WEC executives set an ambitious goal to raise the company to the top quartile of US utilities in power plant operations, diagnostics, and planning and maintenance by 2020.
“TQ-20 is really an effort for us to get a firm grip on the things that we can do that can make us more attractive in the market by controlling our operation and maintenance (O&M) expenses, and increase the overall availability of our generating units” explains Patrick Stiff, VP of Coal Generation and Biomass for We Energies, in the Milwaukee-headquartered utility, and subsidiary of WEC.
Fulfilling TQ-20 would require a deeper understanding of how the business operated, stronger benchmarking, experts to analyze the new data and most importantly, a deep commitment to change, according to Stiff. The company planned to take advantage of the new power of machine-to-machine connectivity and remote sensors to understand how every element of the operation’s generation fleet performs. They hoped to take this new trove of data and analyze it to find opportunities to improve performance and uptime, reduce cost and raise overall business efficiency.
The TQ-20 plan entailed:
- Better benchmarks. The TQ-20 team looked at a variety of sources, including the Electric Power Research Institute, the Palo Alto-based US electric power industry research center, for ideas of how We Energies could improve. “In many cases, we thought we were best practice. When we looked at what others were doing we saw many opportunities to learn, in addition to what we already were doing well, that could cause us to be better positioned to control our costs,” Stiff says. The new benchmarks gave them a number of fresh insights they continue to find helpful. “These days, we’re comparing ourselves to industry benchmarks such as planned outage factor (POF), equivalent availability factor (EAF) and equivalent forced outage factor (EFOF). We previously didn’t pay much attention to comparing ourselves to peer benchmarks around these,” he says.
- More experts. The team identified strong external and internal experts to analyze operations considering this additional new data, to try to understand where the systems and processes could be optimized.
We Energies specifically sought out experts to develop advanced work planning processes that helped the company utilize its field crews more effectively. They also monitored We Energies’ coal fleet in Wisconsin, offering diagnostics whenever they saw an opportunity for improvement. Finally, they helped them implement EPRI’s System and Equipment Reliability Prioritization (SERP), which We Energies executives believe will enable the company to achieve significant improvements in reliability and cost management.
The internal experts – a select group of junior, middle and senior managers – not only helped analyze the fleet’s operations, but played a crucial role in educating staff about the advantages of the new operational methods.
In Stiff’s view, their outreach, especially form the executive level, made a tremendous difference to the employees’ degree of acceptance to the new processes, procedures and tools being implemented. “I really believe that our being out in the power plants in front of large groups talking about the initiative on a regular basis has been critical to our success in terms of having people be informed,” he says.
But actions mattered too: one key aspect was a promise to let a staff reduction that is a part of the overall TQ-20 plan occur entirely by attrition. This has helped ensure that the employees’ incentives stay aligned with the company’s interests, according to Stiff.
A CHANGED GAME
Two years later, TQ-20 is starting to take hold. Stiff says that after visiting many top-quartile utilities, they have made significant structural advances. “One of the things we learned in best practice visits, watching what top quartile companies were doing, was that they were paying extremely close attention to the condition of their equipment,” Stiff explains.
AN EQUIPMENT REGISTRAR
Top quartile companies created a central location to track the condition of all their equipment. Creating their own central tracking center will help We Energies make more strategic maintenance decisions and reduce outages. New metrics revealed a relatively large commitment to planned outages, and Stiff knew that driving outage days down through better management would be a significant opportunity for greater efficiency and effectiveness. Most leading companies have planned outages rates around 7 percent. “Historically we had been in the high teens or as high as 20 percent in a couple of years recently,” Stiff recalls.
“We are committed to staying the course here and seeing all the things that we’ve envisioned to take place be implemented.”
Over the next three or four years, he hopes to “compress the amount of time that we have units out of service for planned work, get more work done, and get the right work done during those outages such that our availability goes up.”
A new attitude to maintenance Overall, the TQ-20 team realized they needed to be more strategic about their attitudes toward maintenance. A new data-driven understanding of the life cycle of machinery, including realtime insights into wear-and-tear, has given them more insight into what was wearing out so that maintenance can be scheduled more efficiently. These insights have also shown that repairing non-critical equipment can be inefficient and that it can be more cost effective to hold off on repairs and instead replace those components at the end of their useful life. Further, they found that best practice companies focus their time and efforts on the most critical equipment, a practice that yields greater system reliability and cost savings, and they made a strategic decision to follow suit.
Letting their expert partners monitor their real-time data also revealed many other opportunities. “We’ve been working with them for over a year now and they’ve been very instrumental and helpful to us in identifying conditions in our power plants before they become critical,” says Stiff.
“They’ve provided us many insights that we believe have saved us millions of dollars,” Stiff adds.
“Some of these items have been very specific. For example, during the coastdown for a planned outage of one of our turbines recently, one of our partner’s performance optimization center noticed a very small spike in the temperature on one of the turbine bearings. It didn’t alarm in the control room – it hadn’t reached a level that would trigger a local alarm. And those guys brought that to our attention. We looked at the information that they shared with us and decided that we would take a look at that bearing. When we opened up the bearing it had actually been partially wiped at the point of contact due to friction.”
Repairing that bearing early, before it had time to damage the whole turbine, saved the company money and assured unit reliability. “That’s one example of what they’ve been able to do for us, things that we otherwise wouldn’t have done for ourselves because we didn’t have the bandwidth to do it, we just didn’t have the folks to do it,” Stiff says.
Workforce management Not all the changes were mechanical. To handle maintenance more strategically, they decided to give the task of planning and scheduling to managers. “We went full circle and came back to having a planning and scheduling workforce that is solely management employees,” he says.
“We used to have a mix of represented employees and management employees doing that work, but we found that we had not given those employees the correct tools and the correct amount of time and room to do those jobs very effectively,” he says. Now, they are going back to the strategy used in the 1970s and 1980s when managers performed the planning and scheduling. “We believe long term that’s going to help us perform better, by giving them better tools such that they can perform at an even higher level” Stiff says. They also plan to track the scheduling data, which should yield ideas for even more scheduling opportunities.
A DETERMINATION TO WIN
This year, Stiff stepped back from day-to-day management of TQ-20 by assigning a manager to those duties, confident that his team is still on the right path. “We’re just starting to see people hit their stride in terms of making those jobs their own and making them work. So we’re really in this phase right now of starting to see a lot of things come together.” He receives weekly team updates and is very pleased with the continued focus and progress.
But he emphasizes that his short distance from the day-to-day campaign is not a sign that TQ-20 is any less important now.
“This is the single most important initiative going on in our business unit right now,” Stiff said. “We are committed to staying the course here and seeing all the things that we’ve envisioned to take place be implemented, adjusting where we need to and keeping our promises to our senior leadership team and to our employees that we’re going to make the changes that we need to make.”
Patrick Stiff is vice president of Coal Generation and Biomass at We Energies. Mark Scherluebbe is senior manager of Power & Utilities Advisory, Strategy, at EY.