Bathtub Curve

You should understand that SMUDs projected capital work over the next several years is significant -- SMUD will be upgrading key transmission infrastructure, much more so than was done over the last seven years.

I spent some moments at work looking at where we are buying some of our equipment. The control center is primed to get a new digital mapboard, and the dozens of new 46" monitors were all built in...China. I noticed some 954 MCM ASCR transmission cable at a substation on Friday, built in Tempe, AZ. And for the first time, several of our bulk 115/21kV transformers and many distribution pad mounted transformers are now being manufactured in China.

This isn't anything new. Over decades SMUD has purchased dozens of 224MVA transformers from South Korea and from Italy, two hydro turbines from Japan, digital relays from England, the list goes on. Truthfully, I expect the majority of our physical (and software) property to be made elsewhere in the coming decades.

I like to think that I have a manufacturing job in the U.S. -- granted I'm an engineer and not a lineman or factory worker, but I do manufacture electricity, a [more or less] locally made product. It seems odd, then, to say this while the stuff used to produce that electricity is more and more outsourced.

One of the biggest hurdles for SMUD is notional reliability. It isn't just that our network is "rusting away," but rather the grid isn't built up to modern standards for reliability. To redesign our substations providing a larger degree of operating flexibility will cost hundreds of millions over the next few decades, while we have yet to seriously address the substantial cost of equipment replacement that will rear itself over that same timeframe. The average age of SMUDs bulk transformers is 34 years. This really should be reduced, in my opinion, to something nearer the 25 year range. Transformers and oil filled cables installed in the 1970's or even earlier are going to fail at an accelerated rate based on the bathtub curve:


This isn't something our Smart Grid can address. Our expenditures in our more smarter smart grid are only in addition to these physical costs that are coming. Not to mention, many of these supposed pie-in-the-sky ideas also suggest that the distribution networks themselves will need substantial improvement to accommodate our more smarter smart grid.

To me, this all implies that SMUD specifically and utilities in general are going to substantially raise rates in excess of inflation over the next twenty years to address all these changes. I am entering my protection engineering career just at the beginning of the wearout period for a substantial volume of SMUDs physical infrastructure. To top it off, I have to think that Chinese made electrical equipment, if it's anything like everything else that nation produces, will further push that failure rate even higher. Sounds like I'll have a job for life.