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Issue 02 Journal
Inform | Communicate | Respond
Issue 02 - Spring 2014

Tait Communications logoTruck Rolls, TCO and How LMR Data Changes the Game for Utilities

Philip Mullins, Tait Solutions Marketing Manager, tells us what he sees as the biggest win for Utilities, as they move to digital radio networks

Philip Mullins comes to Tait as the former Executive Industry Consultant in IBM's Global Center of Excellence for Energy and Utilities. He served both internal and external clients as a trusted adviser on utility communications and was a leader in the development of IBM’s Global Intelligent Utility Network Communications Reference Architecture and Solution Offering.

Philip has over 32 years of experience in the communications technology and Energy and Utilities industry with deep subject matter expertise in radio based technologies including Analog and Digital Land Mobile Radio, Microwave, Analog and Digital Cellular, MESH and WiMAX. Over the past 10 years, Philip has focused on Smart Grid related communications, executing strategy and assessment engagements at leading US Utilities and developing intellectual capital assets that supported IBM's global solution delivery teams.

Ask any Utilities network operator what their greatest pain point is, and odds-on, they’ll say it is managing operating expenses. Predicting an operating budget a year in advance is difficult enough. Mix in aging infrastructure, some severe weather, unpredictably heat waves or cold spells and some unplanned maintenance and what you end up with is a fleet of trucks out there day after day, managing the grid, addressing faults, upgrading circuits and gather performance data.

Now consider an aging workforce that is slowly retiring, and with it goes hundreds of years of experience every year. This is not a prediction of things to come, this is the reality right now, and will continue over the next decade, when a full quarter of the industry will likely retire.

"… it makes great business sense to use your manpower and vehicles
in a smarter way, and take advantage of the data capability
that you already have."

Finally, think about that aging infrastructure and the grid modernization taking place; grid automation, smart metering, integrating renewables, charging electric vehicles. Every ounce of utility experience becomes more important as greater emphasis is placed on modernizing the grid.

Luckily, one of those pain points utilities are now addressing is their critical voice infrastructure. Obsolete analog land mobile radio infrastructure, dispatch consoles and the analog microwave that interconnects it must all be replaced. Utilities also have a growing number of choices: P25, TETRA and DMR are current digital Land Mobile Radio standards that provide greater interoperability, channel efficiency and a range of new capabilities. P25 and TETRA are tailored to the public safety industry, while DMR is tailored to the field service user, such as those in utilities, oil and gas, mining and transportation.

LMR replacement is not cut and dry any more either. What was once the dominant means of managing the field workforce, is now mostly automated, digitized and delivered over smart phones, tablets or laptops. The business value of LMR has decreased during business as usual conditions.

But as soon as a storm approaches, the LMR system is worth its weight in gold as it serves to protect the public, and coordinate a workforce that is rapidly assessing, isolating and restoring service in incredibly dangerous conditions. Most will agree that the LMR system is not optional, it’s essential.

So how do you drive up the value of the investment during business-as-usual conditions?

Consider this: A US electric distribution utility has 2000 capacity banks, distributed across its operation, to compensate for voltage loss associated with warm weather and/or planned state changes. Four times a year, each bank must be manually switched over, by guys in trucks. On average, a truck roll costs a utility $500.

2000 capacity banks
X four visits annually
X $500 per visit
= US$4million OPEX each year.

Imagine converting that $4 million OPEX per annum into CAPEX for infrastructure upgrades, or business efficiency assets. Simply by using the data capacity that already exists in a DMR Tier III voice network, these manual switchovers can be managed remotely, from your control centre. Of course this isn’t entirely without cost – each capacitor bank would need a data terminal installed to control the switchover. But at around US$1,000 each, the company in the example will have paid that cost in just two truck rolls. So after just six months, the CAPEX is repaid, and they begin to recoup OPEX.

Better still, you don’t need to invest $1000 on each of those capacity banks all at once. In fact, the business case to tackle the less-accessible banks first is really compelling, as the savings on those truck rolls are greater. By investing first in those banks with the highest savings, you can use those OPEX savings to fund rollout of terminals on other capacitor banks.

This is premised on $500 per truck roll being the average. Depending on your geography, distance travelled and weather, some of those banks may be costing twice that (or more) for every visit. Conservatively, you might have 10% of your cap banks in this category. Let’s take a look at those numbers:

200 hard-to-reach banks
x four visits annually
x $1000 per visit
= US$800,000 OPEX saving

200 hard-to-reach banks
x $1,000 data terminal each
= US$200,000 CAPEX investment

US$800,000 OPEX saving
- US$200,000 CAPEX investment
= US$600,000 CAPEX available to invest in 600 further data terminals.

So at the end of the second year, truck rolls to those first 200 banks have netted you US$600,000 net OPEX to spend, and those 600 new banks add at least an extra $1,200,000 to that. Converting those OPEX savings to CAPEX, you now have more than enough to complete the data terminal rollout to the remaining capacitor banks.

Of course, that’s not the end of the efficiency gains and cost saving those data terminals will reap for you. Other uses include SCADA applications, such as polling switches and reclosers, capturing voltage and current readings, providing remote diagnostics, and making configuration updates.

I’m not advocating a massive change in the way you do business here. But it makes great business sense to use your manpower and vehicles in a smarter way, and take advantage of the data capability that you already have. By substantially reducing your OPEX, you can free up that hard-to-get CAPEX for maintenance, repairs and upgrades to the infrastructure your community depends on. The decisions made in selecting your next Digital LMR may be one of the best decisions you have ever made.

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