New Jersey Energy Master Plan Strategy Template JCP&L Power Factor Improvement Program

Transcription

1 New Jersey Energy Master Plan Strategy Template JCP&L Power Factor Improvement Program SUBMITTED BY Name of Organization: Jersey Central Power & Light Mailing Address: 300 Madison Ave., Morristown NJ Telephone #: (973) Contact Name: Larry Sweeney address: Objective Attain technically feasible electric efficiency and conservation gains of million MWhs by Eliminate transmission congestion by 2020 to equalize wholesale electricity Locational Marginal Prices. Strategy One of the key goals of the New Jersey Energy Master Plan is to attain efficiency and conservation gains of million MWH s by the year One of the initiatives an electric utility can undertake that has a direct impact on increasing the efficient use of power by its commercial and industrial customers is to require customers in these classes to maintain a higher power factor for the power they take from the Company. Increasing the customers power factor increases the efficiency and utilization of Company transmission (including reduced congestion costs) and distribution facilities and the generating facilities used to supply power under the BGS program. The Company already has a minimum power factor requirement of 87% in place for customers on the GP and GT tariff schedules. However increased efficiency gains can be achieved by increasing the minimum power factor level required of these customers, by subjecting a greater number of customers to maintain a minimum power factor level and by increasing the incentive to achieve a higher power factor among those customers subject to the minimum power factor level requirement. It is estimated that this initiative will generate load reductions by JCP&L customers of up to 3MW s and conserve some 18,000 mwh s per year for every 5% change in power factor for those customers subject to the program.the statewide load and energy reductions would approximate 3-4 times this amount. Responsible Party JCP&L s tariff (Section 5.05 Regulation of Power Factor) requires any GP and GT customer to maintain a power factor in the range of 87% to 100% coincident with the customer s maximum onpeak monthly demand, at the customer s expense. The Company recommends support of a system of incenting or encouraging aggressive

2 enforcement of this provision. In order for customers to be incented, JCP&L also recommends as part of this initiative that customers be made aware of financial gains to be realized and that financial assistance be provided to customers to install the necessary equipment to improve their power factor. It is recommended that the New Jersey Clean Energy Program provide partial funding for the cost of the equipment necessary for a customer to improve its power factor. The Company would also be willing to establish a leasing program for customers to finance a portion of the cost of the equipment. Through these modifications to the current enforcement provisions a win-win situation will be created among the Company, the JCP&L customer subject to the power factor provisions and the other customers on the Company s system that will improve efficiency and utilization of the electric system. Failure to comply in a specified period of time will require Company to invest in proper correcting power factor equipment at customer expense. The Company is proposing to increase the minimum allowed power factor above the current threshold of 87% to encourage continuous improvement and to increase the utilization and efficiency of the system. The recommendation is to increase the minimum level to 90% by 1/1/ 09 and to increase the minimum level to 95% by 1/1/12. This plan should be communicated clearly with affected customers to allow better planning for corrective investment and payback analysis. Those customers not meeting the new minimum levels will be subject to the same strict enforcement process to maintain the existing minimum power factor level of 87% and to the financial enhancements of the enforcement efforts outlined above. The current rate for KVAR demand is $.42 per KVAR per month. The recommendation is to increase this to the current level justifiable on a cost basis. Currently that amount would be approximately $.65 per KVAR, this increase in the charge should occur with the start of the Program or at such time to allow or incent customers to correct their power factor. Since the goal is to be revenue neutral with existing charges, the increased revenue the Company receives for the increased VAR charge would be used to decrease the BGS deferral as the increased revenue is received. Any incremental meter costs would be reflected through an increase the BGS deferral. Apply Power Factor Concept to a Greater Number of General Service Customers with Lower Power Factor Characteristics The recommendation is to expand power factor requirement to the secondary voltage class, the GS and GST tariff schedules (GS/GST). Most existing GS/GST customers do not have VAR metering capability. Therefore the Company will need to add VAR metering capability for these customers. The approximate number of GS/GST customers at various levels of demand is the following: 1000 kw and above to < 1000 kw to <750 kw to <500 kw to < 250 kw 2084

3 The Company recommends that VAR metering be installed on all customers with a maximum monthly demand in excess of 500 kw. Metering should be installed on all such customers over a six month period. The Company would phase-in the enforcement of the provision over a three year period. Education outreach to these smaller customers and on power factor benefits is essential for a better understanding of Company objectives and to show the linkage with the NJ Energy Master Plan in order to minimize any potential public perception issues. The customer education process would begin as meters are installed. The education process would include direct mailing to customers and several customer seminars. The expanded group of customers subject to power factor minimums and charges should be subject to the same program as described above for those currently subject to power factor tariff provisions. Once the meters installation process begins, the Company would review the list of customers that have a power factor less than 87% and rank list those customers by considering both the electrical size of customer and the extent to which the customer falls below the required 87% power factor The Company would contact customers based on the priority identified above and inform customers that they will need to meet the current standard within a three year time frame. Also inform the customer at this time that the minimum acceptable power factor level will increase with time as described above. The same enhanced financial program as explained above would be available to those customers. Provide on-going support to customers in non-compliance by providing consultant lists, etc. to assist customers with compliance. Assist customers with engineering and economic analyses, etc. as needed. The Company would impose strict enforcement on new construction/expansion projects for this group of customers. This would include, but not be limited to, strict corrective requirement during engineering design stage, construction progress monitoring and service contract with strong, enforceable language on power factor. Any incremental meter costs would be reflected through an increase the BGS deferral. Timeline of action The recommendation is to increase the minimum level to 90% by 1/1/ 09 and to increase the minimum level to 95% by 1/1/12.

4 Strategy outcome 1. Increase Company s equipment utilization and efficiency of the electric system by increasing customer power factors by -Continuing the enforcement of the current power factor provisions in JCP&L s tariffs -Raising the minimum level of the power factor acceptable in JCP&L s tariff -Making the minimum allowed power factor and VAR charge applicable to a greater number of JCP&L customers. -Increasing the charge for using reactive power -Educating JCP&L customers about the importance and benefits of maintaining a proper power factor. Perhaps providing funding for independent firms to assess the economic viability of improving power factor for customers (similar to a residential home energy audit). 2. Gain better understanding of customer issues regarding Company s goal to increase power factors and thereby efficiency by a greater number of smaller commercial and industrial customers 3. Determine level of increased efficiency and reduced Company costs associated with increasing customer power factors. This could be accomplished through a joint study with the Center for Energy, Economic and Environmental Policy. Implementation cost While there is no implementation cost (other than incremental metering costs which have been discussed elsewhere in this proposal) there would be revenue implications, as included above. Since the goal is to be revenue neutral with existing charges, the increased revenue the Company receives for the increased VAR charge would be used to decrease the BGS deferral as the increased revenue is received. Source of Funding Please see Implementation cost section. It is also recommended that the New Jersey Clean Energy Program provide partial funding for the cost of the equipment necessary for a customer to improve its power factor. The Company would also be willing to act as a facilitator for financial institutions to establish a leasing program for customers to finance a portion of the cost of the equipment. Funding sources Yes No Private sector funds Public sector funds Consumer/ratepayer Funds Indicators Indicators would include Power Factor as measured by JCP&L meter installations. Source Company meters.

5 A. Current state of indicator The historic ( ) power factor for the combined JCP&L GP/GT rate classes is approximately 85%. Comparable figures for the rate classes GS/GST do not exist at this time. B. Indicator Projection to % power factor for all customers subject to power factor billing, or, to the extent that a customer falls below that level, revenue from the customer is sufficient to insulate all other customers as well as the utility from having to bear the costs of providing service for that sub-standard power factor need.