Navigant Announces Coal-Fired Generation Operational Excellence Awards

Navigant’s Operational Excellence Awards are presented annually to those North American coal-fired generation plants that have demonstrated excellence in cost-efficient reliable plant performance over the preceding five-year period. The data used to select the winners derives from Navigant’s Generation Knowledge Service fossil database.

Electricity produced from coal combustion remains the foundation of the U.S. power generation system. According to the latest available data from the U.S. Energy Information Administration, coal-fired generation accounts for 30.7% of the nation’s installed capacity yet produces 45.9% of the electricity sold in the U.S., based on net summer capacity. The high reliability and affordable cost of electricity produced in large scale from coal has fueled the growth of the U.S. economy and has facilitated many technological advances, which in turn stimulates productivity.

To recognize the contribution of coal-fired electricity to our society, Navigant presents annual Operational Excellence Awards to three plants each year, based on average unit size:

  • Small plant: average unit size less than 200 MW
  • Medium plant: average unit size 200 MW to 500 MW
  • Large plant: average unit size greater than 500 MW

The slate of candidates is taken from those plants that have made continuous data submissions to Navigant’s Generation Knowledge Service (GKS) for the entire five-year evaluation period. Navigant’s GKS database contains detailed, unit-level cost and reliability data on more than 2,000 generating units representing more than 400 GW of capacity.

The award selection criteria are designed to identify plants that best demonstrate the following characteristics:

  • Efficient nonfuel operation and maintenance (NFOM) cost management
  • High availability
  • Improving reliability trend
  • Predictable reliability performance

Efficient NFOM Cost Management. Efficient NFOM is measured using Navigant’s Normalized Cost Index (NCI), which is the ratio of a plant’s actual NFOM cost to the predicted cost for the five-year evaluation period. The evaluation also ensures that there are no unusual circumstances affecting the evaluation (such as plants significantly altering their financial and/or operational status due to announced unit retirements). Additionally, NFOM costs include replacement capital to better provide an apples-to-apples comparison.

Predicted cost is based on a unit-level NFOM multivariate regression model that includes more than 500 coal units. The cost model utilizes anywhere from eight to 10 statistically significant independent variables, including unit size, boiler cycle technology, fuel characteristics (such as heat content and percent sulfur), scrubbed/unscrubbed, and utilization.

The model is very reliable, exhibiting an adjusted R-square value of anywhere from 88% to 92%. To determine the NCI value for any given plant, the actual NFOM plant level spend is divided by the sum of the individual unit-level predicted NFOM values. NCI values >1 suggest that the actual NFOM spend is greater than the predicted value, whereas values <1 suggest the actual NFOM spend is less than the predicted value. For each plant size category, the plant-level NCI values are ordered from lowest to highest to determine the plant rankings for efficient NFOM cost management.

High Availability. A plant-level equivalent availability factor (EAF) is calculated for the previous five-year period according to the NERC/GADS weighted (capacity-based) performance index pooling unit calculations specified in Appendix F of the GADS data reporting instructions. The plant-level EAF values are ordered from high to low within each plant size category to determine rankings for the availability component.

Improving Reliability Trend. This evaluation component seeks to reward plants demonstrating improvement in their reliability over the five-year evaluation period. Equivalent unplanned outage rate (EUOR) was chosen because it incorporates derates and both forced and maintenance outages and is based on actual demand similar to the equivalent forced outage rate (EFOR) calculation. A quarterly plant-level EUOR value is calculated and plotted over the five-year period. The slope of the simple regression line is used to quantify the rate of improvement or degradation in plant reliability. A negative slope indicates an improving trend in reliability, while a positive slope indicates a degrading trend in reliability. The regression slopes are then ordered from low to high in order to determine the plant rankings in the improving reliability category.

Predictable Reliability Performance. This component captures the negative impact that high-impact/low-probability (HILP) events have on overall plant performance. It is a subtle measure and is not weighted heavily in the overall rankings relative to the three previously listed components. The impact of this component is determined by measuring the amount of variability that exists in the quarterly EUOR data mentioned above. Higher measures of variability are usually associated with HILP-type events. The variability measure is ordered from low to high in order to determine the plant rankings for this category.

1. Winning plant. AmerenUE’s Labadie Energy Center, located in Labadie, Mo., was the winner of Navigant’s 2011 Operational Excellence Award in the Large Coal Plant category. Shown in the photo, from left to right, are: David Fox, director, Fossil Generation; David Strubberg, manager, Labadie Energy Center; Dale Probasco, managing director, Navigant; Steven Mooney, chief steward Local Union #148 at Labadie; and Mark Birk, vice president, Power Operations. Courtesy: Navigant Consulting Inc.

Combined Ranking Index

Each of the previous four measurements listed is then weighted according to overall importance (slight variances exist among the three award categories) as determined by the GKS client-based steering committee. For example, availability/reliability measures are weighted somewhat higher for the large plant category because these units typically have higher margins and are more strategically significant than units in the small plant category. Once weighting factors are assigned, an overall Combined Ranking Index is computed within each plant size category. Plants are then ranked with the two best-performing plants in each category selected as award recipients. For 2012, Navigant and the GKS Steering Committee have agreed to add worker safety to the plant selection criteria.

2011 Operational Excellence Award Recipients

Operational Excellence Award recipients for the 2006–2010 evaluation period were announced in early summer 2011 [year corrected 1/3/11]:

  • Small Coal Plant Category. Winner: Dominion Generation’s Mecklenburg plant, located in Clarksville, Va. Runner-up: Progress Energy’s Cape Fear plant, located near Moncure, N.C.
  • Medium Coal Plant Category. Winner: Mid-American Energy’s Neal Energy Center, located in Sergeant Bluff, Iowa. Runner-up: TVA’s Gallatin plant, located in Gallatin, Tenn.
  • Large Coal Plant Category. Winner: AmerenUE’s Labadie Energy Center, located in Labadie, Mo. (Figure 1). Runner-up: Luminant’s Monticello plant, located in Monticello, Texas.

These six plants averaged 91% EAF, 3.4% EFOR, and a NFOM spending efficiency of 26% less than the NFOM cost model predicted value for the five-year evaluation period.

Key Success Factors

In June 2011, Navigant held its annual Operational Excellence Award meeting for GKS subscribers. At this meeting, plant representatives highlighted the key factors that contributed to their success:

  • Keep the plant staff lean and individual productivity high while treating people well to maximize individual contributions and worth.
  • Recognize that for most units, major overhauls are the largest source of plant availability loss. Overhauls continue to challenge plant staff with regards to both scope and frequency (that is, increasing intervals).
  • Focus capital investment to eliminate large electrical load reductions.
  • Incorporate strong preventive maintenance and predictive maintenance programs, with a focus on being data-driven and moving toward condition-based decision-making.
  • Be process-driven, with ownership and accountability expected at every level of the organization.
  • Make personnel safety a top priority.
  • Embrace hands-on engineering rather than sitting behind a desk.
  • Implement an “Outage Control Center” process for all outages (planned maintenance and forced outages).
  • Implement a short-notice outage work process to take maximum advantage of forced and maintenance outages.
  • Recognize that the secret to success is the plant’s workforce and that people are the No. 1 asset.
  • Look for opportunities to move selected maintenance to operations when qualified people are present.
  • Incorporate an operations and maintenance continuous training program: “Perfect Practice Makes Perfect Performance.”
  • Accept nothing less than teamwork.
  • Take calculated risks with equipment (but never safety) to maximize spending efficiency.
  • Track daily department-level costs.
  • Maintain expertise in critical equipment and plant operations and bring long-term focus to the decision-making process, thus improving current operation and maintenance cycles.

Dale Probasco (dprobasco@ navigant.com) is a managing director and Bob Ruhlman (rruhlman@navigant.com) is an associate director in Navigant’s Energy Practice.