Customer Services - Power Quality (PQ) Contracts Function

Contents

• Narrative
• Steps

Narrative

The purpose of the power quality contracts enterprise activity is to enable a mechanism whereby energy service providers could lock in long term contracts with large industrial customers by providing service guarantees based on the quality of electric power supplied over a period of time. In return for signing a long term contract, the customer receives favorable long term rates as well as power quality performance guarantees from the energy service provider. This assures the industrial customer that the energy service provider will be responsive to their problems over the duration of the contract.

Industrial customers are facing increasing energy costs and increasing competition. Energy service providers are facing increasing competitive threats from other ESPs in a deregulated environment. In order for industrial customers to lock in long term favorable rates and in order for ESPs to prevent customers from going elsewhere to obtain electric power, the concept of the power quality contract has emerged. In return for signing a long term contract whereby the industrial customer agrees to not seek power from other providers, the Energy Service Provider must guarantee a certain level of power quality and reliability. If the level of power quality and reliability is worse than an agreed upon level, the Energy Service Provider would owe penalty payments to the industrial customer. Therefore, the incentive exists for the Energy Service Provider to keep upgrading and improving the performance of the system.

In order to do this, the Energy Service Provider must install electric power monitoring instrumentation at the service entrance of each customer. In general these contracts would apply to large transmission customers where outages are rare, so the primary concern is the number and severity of voltage sags caused by faults on the system. These instruments generally must be able to capture RMS variations, call back to a central server when an event occurs, and be able to capture enough data such as current to be able to ascertain whether the event was caused by something on the Energy Service Provider system or inside the customer facility. This requires communication from the central server location to the monitoring instrument either by telephone, Internet, satellite or other.

In general, a database is maintained at the central server so that event analysis can be conducted as well as the calculation of a score or index for a particular customer or site. A base level is required and is generally done before the contract term is started. The baseline or target is continually updated usually on a yearly basis and is in effect a rolling average. A score is given for each event and then totaled on a yearly basis. If the score is above the target number, then payments are made to the customer based on previously agreed upon formula.

 

Steps