Neutral Corrosion & Novinium Warranty

Dear Informed Frog-

I have been asked to pursue something in writing concerning the 50% neutral corrosion and Novinium’s warranty. I respectfully request to have this from Novinium by quitting time this Friday, January 25, 2013. Thank you in advance for your cooperation in this matter and feel free to call me with questions or problems.

Signed,

Corrosion Concern in Colorado

Dear Concerned-

Short Answer

Go to …

http://www.novinium.com/Warranty.aspx

… and search for the word “corrosion” … you won’t find it! The warranty is purposely silent on neutral corrosion.

Less Short Answer

To understand why the short answer is so short, it is really useful to understand the purpose of the neutral and the consequences of various levels of neutral corrosion on the performance and reliability of the cable. To this end, view the recording of the September 2012 Webinar or read the webinar’s companion paper, “Neutral Corrosion – Significance, Causes & Mitigation”  prepared and presented by some of the cable experts at the Insulated Conductors Committee of the IEEE that created IEEE 1617™, the IEEE "Guide for the Detection, Mitigation, and Control of Concentric Neutral Corrosion in Medium Voltage Underground Cables."

Based upon IEEE 1617 and the aforementioned webinar many circuit owners have chosen 50% corrosion as their cutoff point for rejuvenation. But you get to make that determination yourself. You need only to communicate your wishes to the Novinium masters that proide your services. If you would like to discuss your choice with an expert … you can find them at Novinium. As you will learn in the webinar the 50% rule-of-thumb is a “glass half-full” proposition, because the rate of corrosion in direct buried cables declines over time. The pessimistic “glass half empty” perspective is not supported by observation.

Even if you have the occasional neutral corrosion in excess of 50%, don’t despair. The corrosion can be pinpointed and repaired, generally at a fraction of the cost of replacement. The webinar explains that option too.

Neutral on neutrals,

Thermo

A Cable Too Long

Dear Felicitous Frog,

I am currently reviewing a URD circuit with a cable segment that is 6,200' per our one-line and GIS.  It is our regular #2 db [direct buried] cable.  I am considering the installation of pull-boxes to break up the many long segments prior to attempting injection. What is the practical limit to TDR [time-domain reflectometer] testing?

What is the practical injection limit?   I assume in the best case that there at least a construction splice every 2000 feet, but there may be more that have to be replaced. 

Curious about cable  

Dear Curious- 

For background on how TDRs work, check out my October 1, 2011 post, “Reflections on a TDR”. A TDR sends a radar-like pulse down a cable. Like radar, a portion of the pulse is reflected when it “hits” objects along the cable path. Objects are anything that has a modestly different impedance (resistance, capacitance, and/or inductance) from that of the cable. Splices, cable ends, and neutral corrosion are generally identifiable. These objects are often called impedance anomalies, because the impedance varies locally from that of the cable.

There are two phenomena that reduce the acuity of the TDR – attenuation and dispersion. In the image nearby I illustrate the practical effects of attenuation and dispersion. As a wave travels along a cable its amplitude decays because no cable is without loss. When a male bullfrog croaks into a pipe, the volume decreases with distance because the sound wave amplitude attenuates. The attenuation is due to the imperfections in the molecular collisions. A portion of the sound waves are converted to heat. The same thing happens in the cable as electrons bounce among the cloud of conductor d-orbitals.

The second effect is dispersion and it too is the result of imperfections. Instead of loosing energy, dispersion smears energy because the rate that the signal moves through the cable is not uniform through its cross section. Skin effects and twisted stranding act to disperse the wave. Copper tape neutrals have a particularly nasty dispersion.

Simply recognizing these two effects helps the skilled operator interpret the observed wave shapes. Longer cables and those with more splices or corrosion will have shorter and more dispersed reflections.

Tactics to Improve Acuity

Of course the operator can use the TDR from both ends of the cable. This tactic effectively doubles the TDR’s resolution.

The next choice in the operator’s toolbox is to increase the pulse width. At the expense of resolving smaller or closely spaced impedance anomalies, wider pulse widths are the brute-force way to overcome both attenuation and dispersion.

A third choice is to divide and conquer.  Each construction or repair splice that is excavated provides an opportunity to TDR the two subsegments of cable from the splice in each direction.

Every cable is different, but more than likely the TDR should be able to identify all of the splices on a 6,200-foot run of No.2 URD cable employing just one or two of the aforementioned tactics.

Injection Length Limits

At Novinium, we know no bounds. We have a variety of patented injection paradigms to address long cable lengths. The preferred method for such a cable is sustained pressure rejuvenation (SPR). With SPR subsegments of cable are injected from termination-to-splice and from splice-to-splice. As you suggest, the longest run would likely be 2000 feet, the typical length of a cable reel. We have a model that allows us to predict injection times with great precision. Assuming your No.2 cable has round strands and 175 mils of XLPE insulation, a 2000-foot run utilizing SPR would require about 46 hours of injection time. We have treated cable subsegments that are several miles long and we have additional tools available for the most challenging circumstances.

With SPR the cable subsegments are typically deenergized during the injection process. If having the circuit deenergized for several days is not palatable, Novinium has still more tools at its disposable including flow-though splice technology that supports SPR. Of course, your suggestion of creating shorter subsegments by installing intermediate pull-boxes is another choice that can reduce the injection time.

Flow through really long runs of cable using older approaches is problematic. The challenges and the solution for really long cables, like submarine cables, are included in U.S. Patent 7,976,747 and in the paper, “Advances in Chemical Rejuvenation of Submarine Cables” presented at the Jicable conference in Versailles France in June 2007. To review this paper click here.

In short, we have many tools to address every conceivable situation. Talk to our crack field engineering team to explore all the options, or write back to me with more details and constraints. Check out our senior field Engineer Norm Keitges splashing in Puget Sound. He must have thought for a moment that he was a frog, because we generally frown on humans swimming on the job.

Bending boundaries,

T. B. Frog

Flash Point Matters

Dear Ms. Yorker-

That’s a really interesting question and a great learning opportunity. I touched upon this subject in two previous posts in 2010 and 2011, but 2012 is a new year so let’s take a fresh and more comprehensive look.

Before we dive out of the frying pan and into the fire, I want to comment on the quip, “… unbreakable from a lineman’s viewpoint.” Linemen take great pride on being able to break anything, and as we shall see later, the fallibility of equipment, the inevitability of equipment failure (whether or not that failure is encouraged by rough handling of burley line-personnel), the certainty that fluid will one day be released into the confined volume of your pad-mounted transformer, are precisely why this issue is so important.

Let’s reproduce a table of closed cup flash points from the November 2, 2011 post, because the values are very important. The materials with a red background are defined as flammable liquids by OSHA 29 CFR 1910.1200(c) and DOT 49 CFR 173.115-120.

It’s also important to understand what a closed cup flash point represents. Referring to ASTM D93-10 (Standard Test Method for Flash Point by Pensky-Martens Closed Cup Tester), a sample of fluid is placed in a closed metal cup at a temperature well below its flash point. The fluid and the air/vapor space above the fluid are well mixed as the temperature of the cup and its contents are uniformly increased at a prescribed rate of 5 to 6°C (9 to 11°F) per minute. A small shutter is opened at each 1°C increment, and an ignition source is lowered quickly (0.5 seconds) into the vapor space of the test cup. The ignition source lingers in its lowered position for 1 second. It is then quickly raised and the shutter is closed. This process is repeated until the vapor-air mixture flashes. The ignition source might be a propane flame or a spark. The temperature of the ignition source has zero impact on the flash point. That’s right, it does not matter what the temperature of an arc is – it may be 35,000°F or 35 million. It’s the temperature of the fluid that determines whether an ignition occurs.

Here’s why that is the case. I think everybody is familiar with the “fire triangle,” I illustrate nearby. In order for a fire or explosion to occur, there must be three things: A source of ignition, fuel, and oxygen. Part of Ms. Yorker’s point is that in medium and high voltage environments, sources of ignition are common. Of course, oxygen is also ubiquitous and hence the only thing that is missing to create a fire or explosion is the fuel. But just having fuel is still not enough! As we discussed previously, a spill of fluid (fuel) is inevitable, despite Herculean engineering and procedural efforts to prevent that event. For now, let’s assume the spill does occur from a tank failure, a failure of one of the fittings, the tubing, or an injection elbow. What happens next?  Check out Frogograph 1 nearby. The fluid will flow to the lowest point of the transformer enclosure. There may be a puddle or perhaps just fluid-wetted soil.  In Frogograph 1, the temperature at the bottom of the transformer is lower than the flash point. The flash point is indicated by the red “FP” arrow. Because the temperature is well below the flash point, there will not be enough fluid evaporation to reach the lower explosive limit (LEL). I’m perfectly safe standing there drinking my coffee.

The situation changes in Frogograph 2 as the temperature just exceeds the flash point. Now in addition to the blue liquid layer, there are three other possible strata, labeled <LEL, Goldilocks, and >UEL. Let’s start from the bottom – the UEL is the upper explosive limit. All flammable fluids require a threshold amount of oxygen to burn. As a practical matter, this light green stratum is very, very shallow and since the likely sources of ignition are higher within the enclosure, its presence is largely irrelevant. Now let’s jump to the uppermost stratum left clear in the illustrations.  In this stratum there may be some molecules of evaporated fluid, but there simply is not enough to ignite in a self-propagating chain reaction. It’s the red stratum, the “Goldilocks” zone, where there is just enough (not too much and not too little) fuel (vaporized fluid) and just enough (not too much and not too little) oxygen to support combustion. Because the transformer enclosure is not well ventilated and because the flammable vapors are heavier than air, these strata form at the bottom as illustrated. When a fluid vaporizes, its volume increases about 1000-fold, so even a small spill has the potential to create a large Goldilocks stratum. The rate of fluid evaporation is related to the difference between the temperature at the bottom of the enclosure and the flash point. The higher the flash point, the lower the rate of evaporation will be. There are three things that mitigate an increase in depth of the Goldilocks zone. Gravity will draw the spilled fluid into the soil. Secondly, enclosures are not air-tight and hence restrained convection will remove some of the vapor. Thirdly, my favorite law of thermodynamics, the 2^nd law or entropy, helps disperse the spill. Both liquid and vapor diffuse through air and soil acting to reduce the concentration of the fluid vapors. The Goldilocks stratum is checked by these three phenomena. For a given spill, the depth of the Goldilocks stratum will be determined by the difference between the temperature at the bottom of the enclosure and the flash point.

In Frogograph 3 the temperature is well above the flash point and the Goldilocks stratum is much larger. In this illustration, we imagine that the neutral bleed wire to the elbow does not make an adequate electrical connection and discharges occur at that point. As the Goldilocks stratum enlarges it eventually reaches this discharge and the Goldilocks volume ignites. Because the transformer provides mechanical confinement an explosion occurs and the lid is blown open violently.  That is precisely what happened in the photograph nearby to an Ohio circuit owner. Fortunately, no tadpoles were playing nearby.

Now go back to the flash point table above. Does the temperature in your transformer enclosures ever exceed 55°F (13°C)? Unless you are on the North Slope of Alaska, the answer is probably yes. If Alaska Airlines asks if they can store one gallon of jet fuel A in each of your enclosures, would you say yes? The jet fuel would be safer than the low flash point injection fluids.

How many fires and explosions would be too many on your system? Some may be stammering, “But, … but, we have never had a fire or explosion with the flammable rejuvenation fluid we have used in the past.” Lucky you … others have! As a standards engineer you should demand that all suppliers provide a complete accounting of all fires and explosions its process and fluid have ever experienced. If a vendor is unwilling to comply with this most reasonable request, you can disqualify that supplier. Let me preemptively supply the Novinium list … boring as it may be.

A partial compilation of fires and explosions suffered by circuit owners utilizing flammable rejuvenation fluid can be found at …

http://www.novinium.com/pdf/papers/Rejuvenation_Hazards_Analysis.pdf

... in Addendum C of the Rejuvenation Hazards Analysis, beginning at section 2.3.3. Specific examples are illustrated at 2.3.3.1.3b, 2.3.3.1.3.1.2c, 2.3.3.2.1c, and 2.3.3.2.2c. There are many more.

Thankfully, most of us have never been in a head-on auto accident, but we take comfort in the PPE designed into our cars, namely the seat belts and air-bags. We pay more for these features on our cars, not because we have had a serious accident, but because we wish to avoid the terrible consequences of such an event should it occur. Even better than seat belts and air bags, imagine a system that eliminated the risk of collision altogether.

Such a system is available to circuit owners enjoying the capital efficiency of rejuvenation. My final illustration in this post is the “Hierarchy of Control” nearby. The upside-down pyramid illustrates that the most effective way to deal with safety risks is to eliminate them. At Novinium we embrace this hierarchy and you should too. Eliminate known risks, substitute safer materials and processes for those that are less safe. Apply concentrated engineering effort to prevent occurrences and mitigate the impact when unfortunate and inevitable incidents do occur. Implement, but depend the least on administrative, behavior-based, and PPE controls.

With flash points greater than 142°F for Novinium’s Perfico™ 011 fluid and Ultrinium ™ 732 fluids (both of which enjoy patented methods including U.S. patents 7,658,808, 7,700,871 and 8,101,034 together with their foreign equivalents), fires are extraordinarily unlikely. But we don’t stop there. With our improved unsustained pressure rejuvenation (iUPR) we eliminate the 60 to 90 day soak period employed by the two-decade-old approach altogether. That’s about a 60-fold reduction in the exposure to a leak in the first place. With our patented sustained pressure rejuvenation (SPR) process (U.S. patents 7,615,247 and 8,205,326 and foreign equivalents) and associated injection adaptors (U.S. patents 7,195,504, 7,538,274 and 7,683,260 and foreign equivalents), the possibility of a leak is entirely eliminated. There’s more – a lot more. To understand how technology has vastly improved the safety performance of rejuvenation technology, see …

So here is the bottom line in my longest ever post.  Flash points and the impact they have on safety are in the public domain.  What will you say on the witness stand in defense of your firm when somebody or some frog is hurt by using the least safe technology?  To help you on the stand, cut out the handy cheat-sheet below and check all that apply.

Better safe than sorry,

Thermonuclear Bull Frog

The Color of Capital

Dear Gregarious Green One,

My firm uses Ultrinium™ and Sustained Pressure Rejuvenation to treat cables after they fail. The ability to capitalize single section injection with Novinium technology means we can earn a regulated rate of return on the capital thus expended. I read your four-part blog, “The Color on Money” and was wondering if you could do a similar analysis to help us quantify the benefit of our approach.

Considering Capital in Colorado

Dear CCC-

I am pleased that you appreciated my “Color of Money” posts. Click on I, II, III, and IV to review that work. Many of the concepts in the “Color of Money” apply to the “Color of Capital.” In fact, Parts II and III are prerequisites if you need a primer on depreciation and the time value of money respectively.

The ability to capitalize single sections of injected cable is available only from Novinium. In FERCs (Federal Energy Regulatory Commission) Letter order dated January 18, 2000, John Delaware, the Chief Accountant, wrote to the petitioner, Georgia Power:

“You indicate that CableCURE is used to rehabilitate entire segments of your underground distribution system (e.g. entire residential subdivisions as opposed to individual runs of cable between two terminal points).”

The only way you can capitalize CableCURE is if the entire subdivision is rejuvenated. The letter order is attached to this post for the interested reader. Novinium’s technology has no such limitation. The Letter Order promulgated by FERC’s Chief Accountant on September 4, 2008 and associated submittal information removes that limitation and can be accessed by clicking here. All of the above discussion is also true for RUS-funded circuit owners. Click here is view the RUS order of April 3, 2009.

That takes care of the regulators; now the analysis. We will compare two cases. All of the inputs are shown on the worksheet nearby. Parenthetical references to the worksheet cell designations appear in the following text.

Case 1

The cable fails, is repaired and put back in service. In our model the user can indicate how many faults are tolerated before the cable is replaced, together with an estimate of the time between faults. For this example, we assume the cable will fault twice over a two year period before it is replaced. The capital cost to replace is a modest $33.00/ft (Cell B7) and the O&M cost of a fault is $13.72/ft (Cell D13) in today’s dollars. That’s $4,500 (Cell B11 + Cell B12) divided by as assumed segment length of 328 ft (Cell B13).

Case 2

The cable fails, is repaired and injected in a single integrated operation. In our model the bundled unit capital is $20.06/ft (Cell D23). The model user can change any of the costs inputs and an assumption of the post-treatment reliability. For this example, the post-treatment failure rate is assumed to be 2% (Cell B26), which is about twice Novinium’s actual post-failure experience of about 1%.  To put this 1% failure rate in perspective consider that it is three-times higher than Novinium’s non-post-failure experience of about 0.34%. This higher-than-typical post-treatment failure rate is inherent in post-failure treatment. The post-injection fault is assumed to occur two years (Cell B27) after injection. Again the model user can adjust any of these assumptions.

Other Assumptions

Warranty remittances of $10/ft (Cell B23) are negative capital expenditures, that is, the remittances are subtracted from the subsequent replacement capital. Upon post-injection failure, the book value is written off, terminating the ratemaking-allowed return and providing a lump sum tax benefit of the book value. Cash flows are calculated for two rehabilitation cycles, up to 100 years. This approach allows residual values to be properly ignored as de minimis. Finally, replacement is assumed to have a zero-percent failure rate. At least one major investor owned utility has reported that new installations suffer a 0.6% “infant mortality” failure rate, and hence this assumption results in a slight understatement of the incremental value of Novinium^® post-failure rejuvenation.

Bottom Line

The cumulative net present values (NPVs) for the two cases are plotted nearby. Since the revenue or sale of electricity is the same in all cases, those revenues are ignored and only capital and O&M costs are depicted. This cost-only analysis is why all of the NPV values are negative. Nonetheless, the higher the cumulative NPV value is on the graph, the more advantageous to the circuit owner.

The blue line is for Case 1, and in the short run it is the superior choice. The problem is that once a cable begins to fail, it will re-fail. Sooner or later the ratepayers will be very upset with deteriorating reliability. Capital inefficient replacement is executed after the second fault (Cell B14) and the NPV plummets.

The orange line is for Case 2, and it represents an investment in reliability. The initial cost is about twice as great, but because the investment is capital, the circuit owner begins to earn a regulated rate of return. In the end, the incremental NPV advantage of Novinium post-failure rejuvenation is $18.42/ft. If your replacement cost is higher, say $44/ft, the difference becomes $21.15/ft. If in Case 1, the cable is allowed to fault a total of three times, the difference rises to $24.56/ft. Even if the cable is replaced after a single fault, the best alternative to rejuvenation, rejuvenation still enjoys an $11.45/ft advantage.

If you would like to run this model on your specific circumstances and execute “what if” scenarios, contact us at novinium.com/Contac.aspx.

Always conserving capital,

T. B. Frog

70-20120322_FERC_Letter_of_Approval.pdf (78.87 kb)

P1816

Dear Thermo,

What is this swanky “reliability” event that Novinium is sponsoring on the Seattle waterfront in conjunction with the ICC meeting on March 26, 2012?

News in Jersey

Dear Jersey-

First I wish to object to prejudiced policy promulgated by local health authorities. Amphibians are prohibited from attending the March 26^th event to which you refer. Not that I would have any interest in the menu, I won’t eat anything unless it is still moving. The human proclivity to eat long-dead stuff is abhorrent. Forget the food; denying me access to the content is what frustrates my flippers.

IEEE P1816™ is a soon-to-be-approved, “Guide for Preparation Techniques of Extruded Dielectric, Shielded Cable Rated 2.5 kV through 46 kV and the Installation of Mating Accessories.” P1816 starts where most accessory installation instructions end. It defines the best practices for accessory installation that will lead to the highest level of reliability. The P1816 Guide was assembled by circuit owners, component manufacturers, and reliability masters like my Novinium colleagues. On March 26^th, humans who have a stake in reliability will gather to kick-off a multi-part series of webinars that will delve into the details of high-reliability craftsmanship.

Regular attendees of the Insulated Conductors Committee (ICC) will recognize the speaker’s names as authorities on the subject of reliability. Vern Buckholz, an expert on neutral corrosion, Glenn Luzzi of Richards Manufacturing, and expert on cable accessories of all types, Harry Orton an expert on sources of reliability problems, Mike Smalley of WE Energies, a P1816 Co-chair, and Bill Taylor of 3M, an expert on splices and terminations, are just some of the proficient people who will be introducing the topic and setting the stage for a year of informative webinars designed specifically to spread the gospel of reliable craftsmanship. The webinars will be designed for the craft-folk that largely determine the post installation reliability of underground cable components. Management and engineers should plan on attending too, because there will be revelations for all.

Select attendees will also be given access to Novinium’s state-of-the-art eLearning “Cable Prep Course” based upon P1816 at knovinium.com and a companion field guide. If you have not been invited to this invitation-only event, contact your Novinium sales professional at novinium.com/Contact.aspx. To see the agenda click here.

Unable to attend myself, but there in spirit,

T. B. Frog

The Color of Money – Part III

In my post of February 27^th, The Color of Money – Part I, I provided the big picture answer to Cap’s query. In yesterday’s follow-up post we delved into the details of depreciation. Today we will deliberate discounting – muse over money’s time-value. Please dust off your Frogonomics 201 textbook, The Time Value of Money, and Turn to Chapter 3. Consider the common amphibious aphorism used to explain why future cash flows must be discounted, to wit: “A frog in the hand is worth two in the pond.”

A dollar earned or saved today has a greater value than a dollar earned or saved in a future time period for two reasons. First, inflation – we all experience its pernicious penalty. In cell B6 illustrated nearby, the annual replacement inflation is assumed to be 2.4%. The inflation of replacement is due primarily to the increasing cost of labor, secondly to the increasing cost of the commodities that make up a new cable, but thirdly both increases are mitigated by increases in the productivity of the people and tools performing replacement. Inflation then, is the composite of these three effects. Notwithstanding claims by the Federal Reserve Chairman, nobody can predict what future inflation will be, but that shortcoming is not as onerous as one might expect.

For individual large and stable firms, such as most utilities, the spread or difference between the discount factor in cell B3 and the inflation rate in cell B6 is quite stable. If inflation increases, discount factors increase too. The 5.9% spread in the example is typical for the power distribution industry in North America.

The second component of the discount factor involves a dispassionate assessment of the future financial risk – taking into account the financial expectations of the firm’s capital sources. The capital sources might include public debt and equity markets, they might include the ratepayers of a cooperative, or they might be taxpayers of a government-owned distribution firm. With the exception of some improperly functioning government entities, no capital source makes an investment without an expectation of a return. Further, the greater the perceived risk of the investment, the greater the expected return.

In yesterday’s post on depreciation, we also touched upon the rate of return on capital, and here again there is a generally stable historical spread between the rate of return and the discount factor.  Thus modelers must generally move these three values together for any sensitivity analysis. Inflation is less than the discount factor, which in turn is less than the rate of return.  The spreads are fairly stable for individual firms and are typically about 6% and 1% respectively. Check with your finance folks to determine the discount factor, inflation, and rate of return. Let this frog know of any values that differ substantially from the norms.

In my next post in this series we will examine the remaining assumptions required to compare two rejuvenation options.

For me, every day is a Leap Day,

Thermonuclear Frog

The Color of Money – Part II

In yesterday’s post, The Color of Money – Part I, I gave the big picture answer to Cap’s query. Today we will dive into the first of three sets of details that impact the answer, namely depreciation. In subsequent posts we will examine discounting and other assumptions. I had to pull out my green eyeshades to properly address depreciation. In the foreground of each of the graphs in yesterday’s post, a table of assumptions was provided.  In the illustration below I zoom in on the second table to shed light upon the details.

Depreciation is the allocation of capital cost over an accounting life of an asset. The accounting life and the actual life are not the same thing. Accounting life generally considers the actual life together with regulatory requirements and generally accepted accounting principles (GAAP). The accounting life for new cable is usually 40 years, so 40-years is the model assumption for “Replacement asset life” in cell B8.

There are a variety of ways in which the original capital cost of, say, a new cable might be spread over its accounting life of 40 years. The simplest method is called straight-line depreciation and it allocates an equal amount of depreciation expense for each of the 40 years of anticipated life. In our example, the replacement cost of $33.00 per foot in cell B7 would be spread over 40 years, and hence the annual straight-line depreciation would be 82.5¢ (i.e. $33 ÷ 40 yrs). There are other depreciation methods that accelerate expenses into the earlier years of the asset life. In my example, the double declining balance (DDB) method is used for tax purposes in cell B9. Wikipedia does a nice job of defining the concepts of depreciation, so the interested reader should visit …

http://en.wikipedia.org/wiki/Depreciation. 

Now for a not-so-secret secret – investor owned utilities keep at least two sets of books! One set of books is kept for the taxing authorities and the second set of books is kept for regulatory authorities. Often a third set of books is kept for internal purposes, but that has no impact on our analysis, because all we care about is actual cash flow.

In my next post in this series we will dive into discounting, but for now let’s agree that accelerated savings are good – a dollar saved today is worth more than a dollar saved tomorrow. That’s why for the tax books, the accountants use the most aggressive depreciation allowed by the tax authorities. For our example, I used DDB that switches to straight-line when straight-line becomes more favorable. The “2” in cell B9 represents the “Double” in “Double Declining Balance.”  The switch to straight line is controlled by a “True/False” switch in cell J9, which is not shown for brevity. If one has a depreciation expense of $100 and an “Incremental Income Tax Rate” of 32%, one would enjoy a $32 tax benefit. This is so because the $100 expense offsets $100 of revenue on which no taxes need be paid.

Now to the second set of books.  As long as the “Rate of Return on Capital” in cell B5 is greater than the “Discount Factor” in cell B3, it is to the circuit owner’s advantage to use the slowest depreciation method allowed by the regulators. In the long run the rate of return must be greater than the discount factor or investments by the circuit owner would make no sense. The FERC (Federal Energy Regulatory Commission) promulgates a Uniform System of Accounts (USoA) to regulate how capital assets are depreciated. For the example provided in this model, regulatory depreciation is straight line, indicated by a “1” in cell B10.

What if your firm is not an investor owned utility? What if your firm does not pay any income taxes? At first glance it appears that publically owned utilities should set both their incremental income tax rate and rate of return on capital to zero. That would ignore the stakeholders of public utilities have the same expectation of economic return as their investor owned neighbors. If the publically owned entity did not provide a return in the form of lower electrical rates or direct payments to a governmental unit, there would be a strong case to privatize the utility. This frog would argue that the same values used by neighboring investor-owned utilities should be utilized for this analysis, but check with the green-eyeshade guys upstairs.

Using GAAP (generally accepted amphibian practices),

T. B. Frog

The Color of Money – Part I

Dear Gregarious Green One,

My firm purchases rejuvenation services from both Novinium and UTILX. While we have a preference for the mastery displayed by your team and your inherently safer process and fluids, it is difficult for us to settle on Novinium as our sole vendor, because the UTILX price is lower. Can you help me understand your value?

Capital Concern

Dear Cap-

I’ll bet that you thought my FrogBlog tagline, ”It’s easy to be green™” focuses upon the environmental benefits of using Earth-friendly cable rejuvenation technology. Others might believe that the tag line is a play on the lyrics to that other famous frog’s song, “It’s Not Easy Being Green.” This frog is a master of the triple entendre. It’s easy to be green, while you are saving some green, and … I am not above poking fun at Kermit! Notice in the image nearby how nicely my complexion matches the color of money! That’s money that you earn when you employ superior technology.

We can provide a lower price by lowering the quality of the products and services we deliver to more closely match those of the two-decade-old approach, but we will not compromise on safety. For example, we will not use flammable fluids. But hey, there is no need to compromise safety or performance. The value of the longer post-injection reliable life and the longer warranty periods enjoyed by the patented Novinium processes and fluids can be calculated. Let’s consider two general cases.

In the first case, compare the 20-year life expectancy, warranted by the other guys, versus the 25 years enjoyed by the improved unsustained pressure rejuvenation (iUPR) process together with Ultrinium™ 732 fluid. At first glance 25-year life extension suggests a 25% increase in value, but there are the matters of the time value of money, regulated rates of return on capital, and distortions caused by the tax code. In the graph nearby I show the difference in net present value (NPV) between the two choices as a function of the post-injection reliable life. The actual value waxes and wanes depending upon the life of the cable, but for the most common case, where the life meets the expectations, iUPR enjoys more than a 10% value advantage. For other cases the value may be higher or lower, but it is generally positive.

In the second case, compare the 20-year life expectancy, warranted by the other guys, versus the 40 years guaranteed by the sustained pressure rejuvenation (SPR) process together with Ultrinium™ 732 fluid. Doubling the life extension does not double the value, because of the aforementioned time value of money, regulated rates of return, and tax code considerations. In the second graph I show the difference in net present value (NPV) between the two choices as a function of the post-injection reliable life. The actual value varies depending upon the life of the cable, but for the most common case, where the life meets the expectations, SPR has about a 16% value advantage. For other cases the value may be higher or lower, but it is always positive. For cases where the post-injection life is greater than 3 years, but the cable fails within the warranty period, the SPR/Ultrinium 732 fluid combination provides up to a 32% value advantage.

In subsequent posts, this frog will again crack open her Frogonomics 101 textbook and explain each of the factors that influence this dispassionate economic analysis. Friends of Frog (FoF) may request a copy of the MS Excel worksheet so that they can adjust the parameters of the model to calculate their unique incremental value of using state-of-the-art technology.

Always in the green,

Thermo B. Frog

O-ring Evolution

Dear Erudite Amphibian,

If an O-ring equipped probe of an injection elbow were to break-off or otherwise fail, can we replace it with a standard probe?

Wondering in Washington

Dear Wondering-

The absolute best choice is to replace the damaged probe with an identical probe. Novinium would be happy to provide these probes to you with only a modest markup. If the Novinium masters of reliability are in town, just give them a call as they likely will have spares on their truck. This frog realizes that your question is probably targeting the case when there are none of these O-ring equipped probes nearby and you desire to put the cable back in service. To answer that question it is useful to explain how the O-ring-equipped probe evolved.

In the illustration nearby, I point at a fully evolved O-ring on a probe pin.  In this 2011 incarnation the O-ring is seated in a composite sleeve molded into the elbow throat. The very first injection elbows were invented by my colleague, Glen Bertini and his associate at Dow Corning, Dan Meyer, about 25 years ago.  I wish I had a picture to show you, but I don’t believe any exist of that dinosaur.  The very first injection elbow, used from 1987 to 1989, was a standard elbow with a capacitive test point.  Bertini and Meyer drilled and taped a hole through the capacitive test point and screwed an insulating nylon cap into the hole.  The elbow worked flawlessly, but was properly considered unreliable for long term operation and hence the elbow was treated as a tool.  After the injection was complete the modified elbow was swapped for an unmodified elbow of the same size. There was no O-ring in either elbow.  CableCURE^® 2-2614 fluid, which was (and remains) predominately phenylmethyldimethoxysilane (PMDMS) and has a flash point of about 66°C flooded the bushing on 100% of the applications.  There were no adverse consequences observed.

The next improvement in the injection elbow was the introduction of a dedicated interference fit injection port.  The collaboration between Bertini and Meyer of Dow Corning and Alan Borgstrom of Elastimold yielded two U.S. patents, 4,946,393 and 5,082,449 in 1989 and 1990.  This advancement meant that the injection elbow could be left in place indefinitely … only the injection cap had to be swapped. There still was no O-ring, hundreds of thousands of feet of cable were injected, and there was precisely one problem. Sometime in late 1989 a bushing failed because the CableCURE 2-2614 fluid had dissolved a plastic component within the bushing. Elastimold and Dow Corning immediately tested the fluid and bushing component compatibility and found no issues that detracted from the elbow-bushing compliance to IEEE 386™.  See Elastimold test reports 102-17-9011 and 101-17-9010, both dated January 1990.

168 1990 (102-17-9011) - IEEE 386 15kV with fluid.pdf (135.13 kb)

274 1990 (101-17-9010) - IEEE 386 25kV with fluid.pdf (134.51 kb)

It turns out the single bushing that failed was an anomaly – not a large production bushing. None-the-less, Dow Corning and Elastimold decided that even though incompatible bushings would be a rarity, it would be prudent to add a seal to the system to minimize the probability of adverse fluid interactions within the bushing.  An O-ring was added to the probe in about 1991.  The rubber O-ring was not seated in a rigid collar and hence a small deflection of the probe pin would allow a leak. This problem was minor, however, because when the elbow was seated on the bushing it was held in a perfectly centered position.

Two years later in about 1993, UTILX^® Corporation, after licensing CableCURE technology from Dow Corning, unveiled another Bertini inovation (U.S. Patent 5,372,841), which was called CableCURE^® XL fluid. While XL fluid brought significant dielectric performance gains, it suffered from a much lower flash point and it wasn’t too long before the imperfection of the O-ring seal lead to fires when a fluid-filled elbow was switched.  Over the course of the next decade, the seal was changed several times to improve its robustness.

Novinium fluids are not flammable. See my November 2, 2011 post “Fluid Flammability” for more on this subject. If you are using a flammable fluid from another supplier, this frog would highly recommend using only O-ring probes.  With Novinium fluids the risk is minimal.  There is a low risk that fluid will get into the bushing after the injection has been completed, and that risk decreases as time-since-injection advances.  There is an even lower risk that Novinium fluids in the bushing will create any safety or reliability issues.

In 2012 Novinium and our component manufacturing partner will be introducing an entirely new injection device suitable for both unsustained pressure rejuvenation (UPR) and sustained pressure rejuvenation (SPR).  It will be inherently leak-free. When the new injection device becomes commercially available, switch to it and your question will become moot.

Evolving to be safer, faster and better,

Thermo