Project Management Institute

Bad Creek Pumped-Storage Hydro Station

success by many measures

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BAD CREEK PUMPED-STORAGE HYDRO STATION Success by Many Measures

John Snyder and Bill Caligan, Duke Power Company

Editor ‘s Note:

This is a story of successes!

A long tradition of successes of a major utility company has created an en environment for a modern project management success, An enlightened management created the culture, for success by expecting excellence. A project manager and cadre capitalized on the opportunity to create a project-wide team effort. The work force responded to perform in an excellent manner.

What are the elements of such a success? First, it is necessary to understand the tradition. Second, it is necessary to understand the nature of the project. Then, it is possible to understand the plan of action, the setbacks, and the recoveries —and to see how teamwork made it all happen.

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Old Catawba, a tiny hydroelectric station on the Catawba River near Fort Mill, S. C., produced its first power in June 1904. From that humble beginning, Duke Power Co. has grown into the nation's seventh-largest investor-owned electric utility.

The chief engineer for that 6,600 -kilowatt plant was William States Lee Jr., grandfather and namesake of Duke's current chairman and president, Bill Lee.

Bill Lee has earned international acclaim for his engineering and management skills. He was among the first experts called for advice after the accident at Three Mile Island. In 1979, he helped found the Institute of Nuclear Power Operations and served as its chairman for three years. In 1989, he was elected first president of the World Association of Nuclear Operators, established to ensure the safe, reliable operation of the world's 400 commercial reactors.

With some 19,000 employees, Duke Power serves 1.6 million customers in the piedmont region of North and South Carolina. More than 4.5 million people live in Duke's 20,000 -square-mile service area.

Duke today operates three nuclear stations, eight coal-fired stations and 26 hydroelectric stations. With all units up and running. these plants can produce about 15.5 million kilowatts of electric power Nuclear units account for about 45 percent of the total capacity; coal-fired units, about 41 percent; hydro, about 9 percent. Combustion turbines anti purchases from other utilities account for the rest.

That is the company's capacity. To decide which plants to run, Duke considers such other factors as plant efficiency, start-up time and fuel cost.

In 1989, Duke supplied its customers with more than 66 billion kilowatt-hours of electric power. About 63 percent came from nuclear, 35 percent from coal and 2 percent from hydro.

In 1989, Duke's seven nuclear units ran at an average capacity of 77 percent, well ahead of the national average of 65 percent. The Electric Light & Power magazine has rated the company's coal-fired units as the nation's most efficient for 15 straight years.

Duke revenues totaled more than $3.6 billion from the sale of electricity in 1989. In recent years, it has also become more aggressive in pursuing unregulated business. Non-utility subsidiaries include:

  • Duke Energy Corp., formed to develop generating stations outside the Duke service area;
  • Duke/Fluor Daniel, a joint venture specializing in the design, construction and operation of coal-fired power plants;
  • Duke Engineering & Services, which markets engineering and technical services in energy-related fields; and
  • Crescent Resources, Inc., a real-estate developer.

Duke Power also owns the Nantahala Power Co., a small utility with 47,000 customers in western North Carolina.

DUKE‘S DO-IT-YOURSELF TRADITION

Between 1905 and 1924, the Duke interests owned several power companies, each created to generate and sell electric power, As most utilities do today, these companies relied on general contractors to build most of their generating capacity.

In 1924 the men at the top, James B. Duke and William States Lee, decided to build their own plants, using their own labor. This decision came in the midst of a fierce legal battle with a contractor at one of the hydroelectric projects. Duke and Lee concluded they could build better plants at less cost by acting as their own general contractor. They formed a construction department, headed by Lee's brother, Carl Lee, The company's experience has supported this decision. It consistently builds power plants at less cost per kilowatt than other utilities.

Duke's plants are of unsurpassed quality. They consistently lead the nation in reliability and operating efficiency.

In the early years, Duke used hydro power to meet the base load-the minimum demand customers placed on the system. The company's few small steam plants were brought on line in times of peak demand. Because of the Carolinas’ limited water supply, Duke over the years moved more and more toward large steam-electric plants to meet its base load.

Between 1924 and 1976, Duke's construction forces built 34 coal-fired units at eight stations, with a combined generating capacity of nearly 10 million kilowatts. (Some of these units have been retired.) In the 1960s, the company began to turn to nuclear energy as a way of producing the steam needed to generate electricity.

Also during the 1960s, Duke built its first hydro station since the 1920s—the Cowans Ford Hydroelectric Station, rated at 350,000 kilowatts. One reason for this resurgence was that hydroplanes could be brought on-line quickly. This made hydro plants ideally suited for meeting peak demands, just the opposite of their use back in the 1920s. Also, the dams needed for hydro stations created large bodies of water, which Duke needed to operate its growing system of steam-electric plants.

In the early 1970s, Duke completed another conventional hydrostation, rated at 157,500 kilowatts. Then the company completed its first pumped-storage station, the Jocassee Hydroelectric Station, rated at 612,000 kilowatts.

From the mid-1970s through the mid-1980s, Duke focused on building nuclear power plants. Between 1973 and 1986, company forces completed seven units at the company's three nuclear stations. Their combined generating capacity was about 7 million kilowatts.

A nuclear plant takes about 15 years to design and build. Capital costs are enormous. Plant design, procurement, construction, quality assurance, operation and maintenance are subject to strict regulation.

Nuclear regulations change frequently, and the licensing process is lengthy and unpredictable. In this environment, Duke reassessed its commitment to nuclear energy and, in the early 1980s, canceled two three-unit plants, Even though some preliminary work was underway at Bad Creek, it was apparent that the 1990s would see a much reduced construction program.

In 1979, with the McGuire, Catawba and Cherokee Nuclear Stations under construction, the company had nearly 8,000 construction employees, By the end of 1986, with Cherokee canceled and the other two plants operating, its construction payroll was down to 4,300 employees, The reduction would have been even greater had the company not decided to use former construction workers in plant maintenance and modifications.

A merger of two departments in 1985 consolidated the maintenance work force and combined it with the construction organization. The next year this new organization was named the Construction and Maintenance Department (CMD). Today, the operating stations handle much of their own day-to-clay maintenance. CMD supports the stations as needed on a daily basis and provides most of the work force for outages and station modifications-times when CMD‘s skills can be put to the best use.

To help keep its workload level, CMD also builds industrial and commercial facilities and provides consulting services for both internal and external clients. CMD‘s primary mission today, however, is to complete the Bad Creek Project and support the operating power stations, The depar--ment has one division dedicated to maintaining hydrostations. Three other divisions, each with about 1,000 employees, support the operating stations within their assigned areas. The Bad Creek construction organization is yet another division of CMD, with a support staff of about 50 employees in the Corporate office in Charlotte, NC.

The vice president in charge of CMD, Jim Grogan, reports to executive vice president, Warren Owen. Owen has overall responsibility for Duke's power generation and reports directly to the company's president and chairman, Bill Lee.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

August 1990

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