Aep Power Factor_ Stasmo Jan2006

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AEP Texas

Who We Are and What We Do

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American Electric Power

American Electric Power owns more than 36,000 megawatts of generating capacity in the United States and is the nation's largest electricity generator. AEP is also one of the largest electric utilities in the United States, with more than 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid.

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Continuing Confusion over Choice

Even though retail electric choice was introduced over four years ago (January 2002), there still is confusion about who AEP Texas is and its role in the retail market.

This “identity crisis” is made worse by confusion following the sale of CPL Retail Energy and WTU Retail Energy.

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Generation Wires REPSeparation of traditional investor-owned utility into three separate functions

Unbundling

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Role of the Retail Electric Provider

Sells electricity to the end-use customers. Bills the customers Orders connection of new service Orders disconnection of service for non-

payment

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Role of the Energy Delivery Company The energy delivery company, or “Wires”

company delivers electricity over its powerlines to the end-use customers on behalf of Retail Electric Providers (REPs).

The Wires Company also is responsible for:– Building new powerlines– Restoring power following outages– Reading electric meters– Service connection and disconnection as

ordered by the Retail Electric Provider (REP)

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Other Developments

In December 2002, AEP sold CPL Retail Energy and WTU Retail Energy to Centrica plc.

AEP also sold to Centrica the Central Power and Light and CPL name, as well as the West Texas Utilities and WTU name.

AEP Texas delivers the electricity over its powerlines in both South Texas and West Texas.

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– Includes AEP Texas and SWEPCO’s Texas operations

• AEP Texas includes Texas Central Company, which delivers electricity throughout the service territory of the former Central Power and Light Company, and Texas North Company, which deliver electricity throughout the service territory of the former West Texas Utilities Company.

• AEP and AEP Texas are no longer affiliated with CPL Retail Energy and WTU Retail Energy.

Texas

North Company

Texas Central Company

SWEPCO Texas

AEP Operations in Texas

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Questions about Fees or Services

Please call our AEP Texas Customer SolutionsCenter if you have a question or concern about the following issues:

• Fees such as those charged for a broken meter seal, denial of access to the meter or a service call fee

• Power Quality• Construction• Meter Installation• Tree Trimming• Outdoor Lighting

Call the AEP Texas Toll-Free Number (1-877-373-4858) for the service issues shown above.

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When to Call Your REP*

Billing Issues Payment Arrangements Deposits Meter Checks Connecting Service with Existing Meter Final Bills and Disconnection of Service Service Reconnection after Disconnection for

Non-payment of Bill* The phone number of your REP is located on your electric bill. Note: AEP Texas is no longer affiliated with CPL Retail Energy or WTU Retail Energy.

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To report a power outage, call AEP-Texas at 1-866-223-8508

To Report an Outage:

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Power Factor Billing

January 31, 2006

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Background

The PUCT adopted Standard Terms & Conditions that set a 95% power factor (PF) benchmark for consumers (Applies to all ERCOT TDSPS).

ERCOT Protocol Section 5, requires all TDSPs to maintain a 97% PF.

A significant cost in AEP’s annual budget has been for correcting the system PF because AEP did not have the metering in place to enforce the PF provision on customers with low power factors (other than Transmission Service customers).

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5.5.5 Power Factor If the Power Factor of Retail Customer's load is found to be less than 95% lagging as measured at Retail Customer's Meter, Company may require Retail Customer to arrange for the installation of appropriate equipment on Retail Customer's side of the Meter necessary to maintain a Power Factor of not less than 95% lagging as measured at Retail Customer's Meter, or, at Retail Customer's option, to reimburse Company for installing the necessary equipment on Company's Delivery System. This option applies only to customers with current leased facility agreements.

Until the proper equipment has been installed to correct the Power Factor problem, the Billing Demand associated with Retail Customer's use of Delivery Service, as calculated in the appropriate Rate Schedule in Section 6.1, RATE SCHEDULES, may be adjusted according to the following formula: 

Adjusted Billing Demand = (Billing Demand x .95)/Power Factor

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What is Power Factor?

Power factor involves the relationship between two types of power: Working Power and Reactive Power.

Most loads in electrical distribution systems are inductive, which means that they require an electromagnetic field to operate.

Inductive loads require two kinds of current:

Working Power – performs actual work of creating heat, light, motion, etc.

Reactive Power – sustains the electromagnetic field.

PF measures how effectively electrical power is being used.

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Examples of Electric Equipment and Their Power FactorExamples of Electric Equipment and Their Power Factor

Name of EquipmentName of Equipment Power Factor PercentPower Factor Percent

Lightly loaded induction motor

.20

Loaded induction motor .80

Incandescent lamps 1

Neon-lighting equipment .30 - .70

All types of resistance heating devices (e.g. toaster, space heater)

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Different types of electric equipment have different Power Factors and consequently different efficiencies and current requirements:

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1. Real Power or Working Power (kW) - Measured

2. Reactive Power (kVAR) - Measured

3. Apparent Power (kVA) - Calculated

Power Triangle

Working Power (kW)

Apparent Power (kVA)

Reactive Power (kVAR)

kVA = kW + kVAR2 22

Pythagorean Theorem: c = a + b2 2 2

c

ab

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Calculating Power Factor

kVAh = kWh2 + kVARh2

Metered kW x 0.95

PF

Power Factor =

kWhkVAh

Average PF over month

= kW billed

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Example 1: January 2006 Billing Monthly meter readings: 1,625 kW, 762,600 kWh, 846,600 kVARh

762,600 kWh2 + 846,600 kVARh2 = kVAh

kVAh = 1,139,425

762,600 kWh

PF = 1,139,425 kVAh = 66.9 %

1,625 KW x 0.95

.669 = 2,308 KW billed

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Places the cost burden more on

those customers causing the problem

rather than all rate payers.

Improves system efficiency by

reducing losses

Enhances system operation and reliability.

Increases system capacity capabilities.

Why Enforce Power Factor?

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Why only accounts over 700 kW?

ERCOT Protocol required metering upgrade to IDR for accounts over 700 kW. AEP took advantage of the meter change-outs to install metering capable of making the measurements needed for PF.

The 700 kW and above standard provides for a uniform, non-discriminatory application of the policy.

Correcting the PF on larger accounts will result in a more noticeable improvement in the system PF.

Technology is more readily available for correcting the PF of larger loads.

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AEPs’ Approach to Enforcement

Accounts will be assessed using monthly average PF rather than its coincidental on-peak PF. Generally, the average PF is slightly more forgiving, but the resulting adjustment to the customer’s billing demand still sends the proper pricing signal to motivate the customer to take corrective action.

Initiate communication of AEP’s intent to implement PF enforcement with affected market participants starting in July 2005.

Provide interim communications between July 2005 and the initiation of the enforcement to the affected market participants.

Begin enforcement with the January 2006 billing.

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Power Factor Correction

•Minimize operation of idling or lightly loaded motors.

•Replace standard motors as they burnout with energy efficient motors sized correctly.

•Install capacitors in the circuit .

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Recommendations

Work with a qualified electrical contractor or engineer to study your application.

•Different strategies of correction, static versus bulk.

•Inverters, variable speed drives, and solid state soft starters will affect design.

•Power factor can be affected by harmonics, which can only be addressed with filters.

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Open Discussion