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Guidelines for the development of comprehensive marketing policies for municipal electricity undertakings, with particular emphasis on load management.

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It is expected that South Africa will have to construct as much generating capacity in the next five years as has been constructed over the past 50 years. Industrialization and urbanization dictates that the larger portion of this increase will be required in the supply areas under the control of Municipal Electricity Undertakings, which means that these undertakings will have to anticipate rapid growth in their infrastructures. This will put a tremendous strain on their resources of revenue, materials and labour, and it is obvious that comprehensive and co-ordinated policies are required to be developed to enable these undertakings to deliver the electrical energy to the final consumers at the lowest possible cost. The Electricity Undertaking is a business organization with unusually difficult managerial problems in all its functional areas. Its personnel are adversely affected by the vast area of supply and by the resulting difficulty of direct supervision and control. The capital cost of electrical equipment is high, and there may be a tendency to reduce the initial cost by ignoring the long term costs associated with the selection of equipment. Electricity pricing is very difficult, as electricity is not a uniform product. The consumption patterns of the consumers causes severe peaking of loads to occur, resulting in very low utilization )f the capital equipment involved, and which can threaten to overload existing networks. These problems are compounded by the fact that the undertaking is a monopoly and as such is not driven by the free-market motivating forces, such as a profit motive and the constant need to improve to meet competition. There is thus no motive to seek optimum solutions to the many problems. It is shown that the Load Factor is an indication of the efficient use of scarce resources, and that it is similar to measurements of profitability, such as Return-on-Investment, etc. It is therefore possible to replace the missing drive for profit and product improvement by the need to constantly improve the load factor. By making this the main objective of the undertaking many of the stated problems are put in their correct perspective. Maintenance becomes important, as power failures adversely affect the load factor. More care is exercised in equipment selection, as long term energy losses are taken into account. Electricity pricing and its effect on consumer consumption patterns becomes important. The concerted effort to improve the load factor is referred to as load management. Due to the tremendous increase in electricity consumption which is expected over the next decade it is certain that load management will play an ever increasing role. Load Management is defined as the sustained attempt at modifying the load curve. Soft load management refers to pricing policies and incentive schemes designed to induce users to shift their loads .out of the peak periods. Hard load management physically switches customer loads. This thesis examines the results obtainable from various methods of load management including off-peak incentive tariffs, on-peak-reduction rebates, the use of current limiters, peak load reduction by means of voltage reduction and remote control of water heater cylinders. It is shown that whereas Sasolburg saves around R7S0 000.00 p.a. and Randburg saves over Rl,5-million p.a.,other towns such as Pretoria and Pietermaritzburg find their geyser control systems ineffective, and are phasing them out. It has hitherto not been possible to determine the actual savings which would result from the installation of a geyser control system, or to determine the optimum number of controlled geysers. The result was that some undertakings would install a control system at considerable expense which resulted in minimal savings, while other towns forego the opportunity to save hundreds of thousands of rands in reduced demand charges. In this thesis, the author develops a feasibility study model which permits the system load curve to be analysed and the viability of a geyser control system to be determined. The model was tested against the controlled and uncontrolled load curves of Somerset West, and was found to be accurate. It was shown that a geyser control scheme is a very viable proposition for those undertakings where the feasibility study shows a contribution of more than 0,5 KVA per geyser towards peak load reduction. This forms the basic guideline for the selection of an appropriate form of load mangement, and guidelines are presented to develop supporting policies in all fields of the undertakings' functions. In order to facilitate correct decision-making and to assist in the development of comprehensive policies, a database of concepts and models is presented in the various fields and various misconceptions are dicussed. The guidelines have been applied by several electricity undertakings. By using the Feasibility Study Model it was shown that the proposed installation of 4000 geyser control units at Oudtshoorn, at a cost of over RI-million, was not viable. The Feasibility Study Model permits the savings to be calculated for different numbers of geysers and it was shown that the system saturates at about 1500 controlled geysers. By reduci ng the number of controlled geysers to around 1500 the installation cost will be reduced by about R500 000.00 and the system will show a net operating savings , " of RI05 540.00 in the first year, increasing as ESCOM increases its tariffs. The application of these principles conceivably prevented the needless expenditure of RI-million on a system that would have run at an operating loss of over R17 000.00 p.a. The feasibility study model was applied to the Stanger load curve to determine the correct selection of load management. The results indicate excellent response to geyser control, and showed that a system controlling 2500 geysers, costing R498 500.00 would show a gross savings of R297 000.00 in the first year, rising to RSI0 000.00 within 5 years if ESCOM increases its tariff by 10% p.a. Based on these results and recommendations the Department of Finance gave ad hoc approval to the Borough of Stanger for the additional expenditure in the current financial year to install the control equipment. The guidelines indicated a similar result for Tongaat, where the gross savings would be R360 000.00 in the first year, increasing to R637 680.00 within 5 years if ESCOM increases its tariff by 10% p.a. The estimated cost of the control equipment is R493 649.00. In complete contrast, the feasibility studies for geyser control undertaken on the Ballito load curve showed a contribution of less than 0,5 KVA per geyser, which indicated that the alternative forms of load management should be implemented. The results are contained in the case studies.


Thesis (DBA)-University of Durban-Westville, 1986.


Loading and unloading., Materials handling., Marketing--Management., Theses--Business administration.