Economics of Long-Distance Energy Transmission

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					                     .                       t |                t .                                    protection, and transmission line costs
              Economics                  o      Long-Distance                                          in 1945 were not much higher than after
                                                                                                       World War I. There has been a tendency
                            Enery              ransmission                                             to use larger conductor sizes and to use
                                                                                                       higher current densities than in the early
                                                                                                       days of high-voltage transmission. The
                           R. E. PIERCE            E. E. GEORGE                                        cost of terminal equipment such as oil
                            FELLOW AIEE               FELLOW AIEE                                     circuit breakers, transformers and syn-
                                                                                                      chronous condensers has increased and is
                                                                                                      responsible for some increase in the over-
 THE economic location of steam-elec-              or typical conditions, but the results             all cost of electric transmission.
     tric generating stations is receiving         give an indication of the need for basic              Transmission cost may be placed on a
intensified study, not only because of the         studies in each particular situation and           mileage basis. A study made in 1945
 tremendously increasing demand for                give a fair approximation of the answer            by one of the authors developed a cost
 electric energy, but because of changes           for average conditions.                            of firm high-voltage transmission ex-
 that have taken place and are still occur-           The study of any particular problem             pressed by the formula
 ring in the relative effect of certain pri-       involves many fields of engineering and
 mary controlling factors. These include           it is therefore expedient to analyze only                per       a                 +(0.47 Xmiles)
changes in the relative effects of location        the basic considerations in this paper,                                                      100
and cost of alternate fuel supplies, cost          which is devoted chiefly to the trans-
of transporting alternate fuels, and cost          mission of fuel energy. This paper con-               In 1947 Crary and Johnson2 presented
of transmission of electric energy.                cerns itself entirely with the straightaway        data from which can be developed a
   It has been rather usual practice to            hauling of large amounts of energy over            similar formula for transmission cost:
locate plants at adequate natural water            long distances.                                    mills per kilowatt-hour = 0.30±
supplies and adjacent to fuel sources or                                                                                             (0.47 Xmiles)
transportation, with transmission of the           Electric Transmission                                                                   100
energy electrically to the load. If the
transmission of electric energy produced              For a long time it has been generally             These formulas show substantial agree-
from fuel involved distances in the order          considered that the high-voltage trans-            ment in spite of independent assumptions
of 200 miles, the economics of this prac-          mission line is the preferred means of             as to line loading, losses, voltage, fixed
tice was questionable. Even the eco-               carrying energy. This is largely due to            charges, and so forth. Both of these
nomics of transmitting electric energy pro-        its flexibility in distribution and con-           formulas are for 50 per cent load factor
duced from water power for distances of            version rather than any inherent eco-              and 1945 price levels in the United States.
200 to 300 miles was not too favorable             nomic superiority in transmitting large              The unit cost is substantially independ-
unless the amounts of power to be trans-           blocks of energy on a straightaway basis.          ent of transmission voltage, and of the
mitted were relatively large and com-                 Analysis shows that the major factor            amount of power transmitted, provided
peting fuel costs relatively high.                 affecting a comparison of costs of high-           both are high. All figures for electric
   This paper presents comparative sum-            voltage transmission between 1915 and              transmission in this paper (and in the
maries of the cost of transmission of              1945 has been a doubling of permissible            Crary and Johnson paper2) assume op-
energy in the form of coal, gas, oil, and          line loading under ordinary operating              timum loads and voltages for various dis-
electricity. Relative costs of the three           conditions. Technical improvements in              tances (200,000 kw or more on long
fuels near their sources are shown in              telemetering, automatic load control)              hauls).
Figure 7 for the period 1922 to date,              high-speed protection and reclosing, ex-             Figure 1 shows estimated costs of
illustrating the extent to which the               citation, lightning protection, and the
relationship between*fuel cot has
               btenfe costs na                     close co-o         nf
                                                   clscoodaonOtns fco h            cornve             Paper and distribution committee AIRE trans-
                                                                                                      mission48-195, recommended by the and approved
changed within the last few years.                 permitted loadings of high-voltage lines           by the AIEE technical program committee for
                                                                                                      presentation at the AIEE Pacific general meeting,
From these data it is apparent that                close to the stable limits set by steady-          Spokane, Wash., August 24-27, 1948. Manuscript
consideration must be given, in the                state conditions. These increases in               submitted June 7, 1948; made available for printing
economic choice of steam power plant               operating capacities have in large measure         R.E. PIERCE is consulting electrical engineer, and
location, to present day costs of fulel at         offset the increase in investment costs            E. E. GEORGE is electrical engineer with Ebasco
the nearest sources and present day                during the last 30 years.1                         Services, Incorporated, New York, N. Y.
costs of transmission of the fuels versus             Basic transmission line designs have            The authors wish to asckrno°wledgeOrtheasitanche
the cost of transmitting electricity. The          not changed materially in the last 30              preparation of this paper, particularly S. B. Flagg.
                                                                                                      mechanical engineer and E. P. Kramer, rate con-
problem iS analyzed only under average             years, except for improved lightning               sultant, in the assembly of basic data.

1948, VOLUME 67                          Pierce, George-Long-Distance Energy Transmission                                                             1089

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                       COSTS OF ELECTRIC TRANSMISSION                                                          RAILROAD RATES ON COAL
                          OPTIMUM LOADS AND VOLTAGES
                                                                                                                       -SEPT. 1947
       ___0___             SEPT. 1947 PRICE LEVEL                                                                   -- SEPT. 1944

                                                           3.69              l
                                                                                                     3.690* Bosed
                                                                                                    | h ] |
                                                                                                                      on dota from Senate
                                                                                                               Document 82, First Session,
                                                                                                                     l9fh   Congress

                                                                                            2-:oX ~ ~ ~ ~ L.O - -

                                                                                                                       RALRA MILE

                      0         300       400           500            600       700   50     100       20          300         40           500        600     700
                                AIRLINE MILES                                                                       RIRA         IE

   Figurec1. Costs of electric transmission             plant, but there is frequently evidence                     Figure 2. Railroad rates on coal
                                                        that the company contemplating con-
electric transmission, including fixed
                                                        struction of a large base load power plant           Soefthrasaeinlncdbtuk
                                                        might do better to seek special contract             ande barghe comettesaeion.f Raesedb tuner
charges, losses, operation and main-                    rates, or construt its own pipe line,                fav blre conditiionsm         ae unper
tenance, as ofSeptember 1947 price levels,              because the published class tariff may               taonrunde teonaverage line, while raes
for 50 and 90 per cent load factors.                    be based on low-load factor operation                tonundert
The increase in costs of transmission                   for a mulltiplicity of customers with low            under unfavorable conditions might well
between 1945 and 1947 was estimated at                  diversity. As a lower limit of gas and               be $.50 to $1.50 a ton higher.
about 35 per cent. Expressed by for-                    oil pipe-line charges for very high-load                Due to the spread in rates it is impera-
mulas, these costs are                                  factor, large-scale, long-haul operation,            tive to analyze local conditions for the
  For50 per cent load factor                            the estimates for large pipe lines given             final answer in any particular case in
mills per kilowatt-hour-=0.54+                 herein are fairly representativ7e. These                      which the freight rate on coal as deter-
                           (0.63 Xmiles)       estimates assume private ownership and                        mined from Figure 2 seems to be com-
                               100             operation and maximum continuous use.                         p
                                                 In coprsno arosmtoso                                        mitting energy.
   For 90 per cent load factor                    comnpartisonegof ua loa aethods is
                                                                              m                                No summary of costs of hauling coal
                                                 trnpotngeegyanulladfctri                                    by ship or barge iS developed herein, but
mills per kilowatt-hour =0.30+                 important, because fixed charges are                          thr is frqetyke.optto e
                               (0.35 Xmiles) greater than operating expenses, except                         twehalncolbwtradsbti
                                            100 pssibyinthe ase o rai haus. I the                            tute haul by rail for the             inland river and
                                                 us pulse.oltaif fcmo
                                                    of-                                                      coastal routes. Such                  situations also
Competitive Meanis of Transmitting                      carriers, the tariffs are assumed to be              nesitedaldnlys
   Energy                                               sufficiently independent of load factor to           ncsiaedtie                  nlss
                                                        permit comparison on an energy basis in              Transportation of Gas
  Ordinarily, one thinks of hauling                     the charts shown in this paper.
coal by rail and transmitting power elec-                                                                      Figure 3 is a diagram of pipe line
trically as the most typical competitive                Transportation of Coal                               charges for natural gas. Since there are
methods. However, this is only a qjmall                                                                      few common carriers for this service, the
part of the picture. In a number of                        Figure 2 shows a scatter diagram of               costs of transportation have been ob-
economic studies for electric and gas                   freight rates of coal, with dollars per net          tamned by taking the wholesale industrial
utility systems, oil refining companies,                ton plotted against railroad miles between           schedules of the gas utilities4 and sub-
chemical companies, and transportation                  mine and destination. The indivridual                tracting an estimated average cost of
systems, various methods of transporting                rates plotted are for September 19443                production and gathering at the sending
energy have been studied and compared                   but the solid straight line drawn to ap-             end. For this analysis, $.08 per thousand
including the following,                                proximate the average relation between               cubic feet has been assumed as the sending
       1. Coalrail
2. Coal by ship
               by                                      ~~~~~~freight
                                                                 rates and mileage includes in-              end cost and has been deducted from the
                                                        creases up to September 1947 but does                delivered cost to arrive at the cost of
3. Gas by pipe line                                     not include the increases authorized late            tranlsmission. There is a wide spread
4. Oil by pipe line                                     in 1947 and early in 1948. For this                  in these rates. This might be expected
6. Oil b
7. Elcticit
                                                        particular commodity there is a wide
                                                        discrepancy in cost of transportation per
                                                                                                             since rates for both tariff and special
                                                                                                             contract types of services are included.
                                                        ton. The spread in rates for any particu-            MNost of the tariff rates are for inter-
   In some cases the published class                    lar mileage is not due in any great degree           ruptible service, requiring oil standby
tariffs of common carriers may be as-                   to the geographic location and consequent            service.
sumed to accurately represent the cost of               difference in territorial level of freight              Because most of the gas utilities are
transporting fuel in moderate quantities                rates,, except possibly in mountainous               engaged in retail operations as well as
and at commercial load factors to a power               areas, such as Virginia and XVZest Virginia.         pipe line operation, there is no assurance

1090                                      -Pierce, George-Long-Distance Energy Transmission                                            AIEE TRANSACTIONS

   Authorized licensed use limited to: UNIVERSIDADE DE SAO PAULO. Downloaded on March 18,2010 at 13:31:50 EDT from IEEE Xplore. Restrictions apply.
that the customers' rates reflect the por-               unless tanker haul is geographically fea-              Comparative Costs of Transporting
tion of the total cost assignable to bulk                sible.                                                   Energy
pipe line operation. Some of the rates                      The handling of oil by rail in tank cars
are probably promotional and some of                     is somewhat of a retail operation as com-               Before making comparisons between
them are based on long-term supply                       pared with pipe-line delivery. It is                  transportation of energy by various
contracts which cannot be renewed                        generally limited to points where there               means, it should be pointed out that com-
without increase in cost. However, the                   are no pipe lines and where there is in-              parison between transmission costs only
long-haul contract rates for interruptible               sufficient traffic to justify a pipe line.            for gas, oil, and coal are likely to be mis-
service to utilities check fairly well with                 The hauling of oil by tanker is much               leading because there is so much differ-
the estimated cost for a large gas line                  cheaper than other means but is limited                ence in the costs of these fuels at their
under private operation, handling gas at                 by geography to river and coastal ter-                 sources. This is particularly true unde
maximum capacity at 100 per cent load                    minals. Probably the best summary of                  present conditions.6 In the past, it was
factor (marked by an X on Figure 3).                     costs of transporting oil is that given in            usual to assume that there was no choice
Apparently interruptible rates are nearly                the pamphlet "Economics of the Petro-                 of fuels, or that a definite selection had
independent of load factor.                              leum Industry," by Joseph E. Pogue of                 already been made, and that the only
                                                         the Chase National Bank. Two per-                     comparison necessary was between trans-
Transportation of Oil                                    tinent quotations follow.                             portation of the particular fuel and elec-
                                                                                                               tric transmission. The picture is very
   Figure 4 shows a similar diagram of                     "For liquids available in sufficient volume         much different now from that 10 or 15
pipe-line tariffs on crude oil,5 with dollars           with a concentrated market, the pipe line              years ago. Gas and oil are now trans-
per barrel plotted against airline mileage              trafnsportation. While capital costs are               ported by pipe line in large quantities for
between the gathering station and des-                  substantial, rights-of-way are not expensive,          distances over 1,000 miles. Mechaniza-
tination. There is comparatively small                  the operation of the system is automatic to            tion of coal mining in the future may
spread between the rates for any given                  a high degree, movement is continuous, and             offset increasing labor costs. Fuel oil is
mileage, and th averagelineisthere
   mileage,the average line is therefore                there is no problem of two-way traffic or re-          no longer a by-product derived from
                                                        turn movement of empty facilities. Be-
fairly indicative. Most of the rates                    cause of these advantages and the technical            crude oil in a ratio fixed by the natural
selected for the graph are those involving              proficiency of modern pumping systems, the             chemical composition of the oil. Develop-
only one pipe-line company for each                     average cost of pipe line transportation               ments in petroleum chemistry now pro-
delivery, since this is more representative             probably does not exceed four mills per ton-           vide considerable flexibility in the per-
of competitive conditions. Some of the                  mile, which contrasts with an average cost
ofpimpetlite oandtions. omemon
pipe line companies are common ciers
           om          a            carriers
                                                        of movement by rail of approximately eight
                                                        mills per ton-mile. Thus no natural com-
                                                                                                               centages ftevrosrfnr products.
                                                                                                               Thereforeofthe future price of crude oil is
                                                                                                                            the various refinery rdcs
without refineries or other operations and              petition can persist between oil pipe lines            likely to be highly susceptible to technical
of necessity they establish tariffs propor-             and the railroads."                                    and economic factors in the whole petro-
tional to their actual cost of pipe line                   "Because of automatic loading and bulk,             leum industry. The low cost of trans-
operation. The load factor applying to                  the oil tanker represents the ultimate iof             porting oil and gas by pipe line as com-
typical pipe-line operation is unknown.
    typial ipe-ineopertio iS              nknwn.transportation           efficiency, exceeding that
                                                        the pipe line. Comparative costs per ton-
                                                                                                               pared with the cost of hauling coal by
An estimated cost, based on published                   mile are approximately 8.3 mills by rail,              rail together with the current progress in
data, for the Big Inch Lines at full                    3.2 mills by pipe line, and 1.25 mills by tank         converting coal to gas or oil may still
capacity and 100 per cent load factor,                  vessel. In consequence the tanker com-                 further upset economic relations between
assurmng private operation is shown by     a            petes with the pipe line and diverts as much           the three fuels in the next few years.
                                                        traffic as the geographic pattern permits."
the X on Figure 4. In many pipe lines,                                                                            It should likewise be kept in mind that
crude oil and lighter refinery products are                The costs quoted previously refer to                the present activity in construction of gas
handled interchangeably, but ordinary                   conditions in 1939, but present-day                    and oil pipe lines is likely, within the next
fuel oil for power plant use is too viscous             tariffs for 300- to 500-mile pipe-line haul            few years, to greatly increase the number
for long haul by pipe line. Therefore oil               are still around 3 or 4 mills per ton-mile.            of localities which have these fuels avail-
for power plant or ship fuel requires a                 By using terminal storage tanks, oil                   able in quantity at competitive prices.
terminal refinery near the power plant,                 tariffs are made on a volume or weight
                                                        basis, nearly independent of load factor.                    Figure 4. Pipe line rates on crude oil
      Figure 3. Pipe line rates     on gas
                                                                                 -.oo               _
                                                                                                              PIPE   LINE RATES   ON   CRUDE   OIL
                               PIELINE RATES ON GASSET14
                             P       SEPT 947                                             -         SEPT. 19471947

     _ __ X 0 tXD5FECLcoNTRA                                   I_ 1" I I, I_I. I CONTRACT
                             _~     TA_



        s°X; *j y--+; 1~~~~~~~~~~~~
            200      400      600
                                                      1000     1200    1400         0l        200       400            600
                                                                                                                         AIRLINE MILES
                                                                                                                                       800       1Q00   1200    1400

1948, VOLUME 67                                 Pierce, George-Long-Distance Energy Transmission                                                               1091

  Authorized licensed use limited to: UNIVERSIDADE DE SAO PAULO. Downloaded on March 18,2010 at 13:31:50 EDT from IEEE Xplore. Restrictions apply.
   Comparisons between coal, gas, oil, and                      Transmission line costs are almost                   1922 to date. Values plotted in this
electric transmission are made easy by                       exactly inversely proportional to load fac-             figure   are the average yearly realized
using the following nominal conversion                       tor, whereas the charges for pipe line                  prices of bituminous coal at the mines,7'-
factors and efficiencies.                                    transportation as shown by Figures 3 and                fuel oil at the refineries in the south Texas
1 barrel of oil = 6,250,000 Btu = 500 kilo-                  4 are largely independent of load factor,               oil fields10"1 and natural gas at the
   watt-hours                                                being based on use of storage, substitute               wells.9"2"3 Coal and gas annual figures
1,000 cubic feet of gas 1,000,000 Btu=                       fuel or curtailment of service.                         are averages for the entire United States,
   80 kilowatt-hours                                            It should be noted that the cost of                  compiled by the Department of Interior.
 1 totnofcurol =25000,000 Btu 2,000 kilo-                    transmitting energy by gas pipe line is                 Oil figures are from the Petroleum
1 kilowatt-hour = 12,500 Btu (modern steam                   two or three times as high as the cost of               Almanac. The values for the third
   plant)                                                    transmitting energy by oil pipe line.                   quarter of 1947 are estimates, based on
                                                                Figure 6 is the same as Figure 5 except              spot prices. Old contract prices, which
  Figure 5 shows costs for transporting                      that total costs are shown on a capacity                largely determine realized prices are still
energy by various means with mais per                        basis instead of an energy basis.                       considerably lower, but in a rapidly rising
kilowatt-hour plotted against airline                          Figure 6 facilitates comparisons with                 market, spot prices are considered more
miles. It is assumed that pipe-line miles                    hydro power. There is no choice of                      indicative of new contracts.
                                                                                                                       From Figure 7 it will be seen that the
                                                             means of transmission when using hydro
tamuthepcostsmlllscents kllowatt-hourBtu, the
               in per per million by                         power. Such simple and tangible expres-
                                                              sions for transmission cost easily demon-
                                                                                                                     prices of coal and gas, at the sources, were
                                                                                                                     about equal, on an energy basis, prior to
eight.                                                        strate that so-called "cheap power" is not             1934. Since that time, the price of coal
     All data for transportation of fuel are                  cheap if it has to be transmitted elec-                has risen very rapidly and coal now costs
commercial rates, using the average lines                     trically to a distant market. The slope                about three times as much as gas for the
of Figures 2, 3, and 4. The average for                       of the electric transmission cost lines in             same amount of energy. In those areas
gas has been taken as halfway between                         Figure 5 and Figure 6 gives directly the               which were not too far distant from both
maximum and minimum rates of Figure 3.                        difference in cost of transmission for                 coal and gas sources, the two fuels were
The electric transmission costs are the                       different distances, and is approximately              competitive for a long time. This is no
same as those shown in Figure 1. These                        0.63 mill per kilowatt-hour per 100 miles              longer true, and as will be shown later, gas
electrical costs reflect a 35 per cent in-                    or $2.78 per kilowatt per year per 100                 can be carried by pipe line a considerable
crease in price level from 1945 to Septem-                    miles, both for 50 per cent load factor.               distance and still be competitive with coal
ber 1947, compared with approximately                         At lower load factors these unit cost                  near the mine. Under such conditions
15 per cent increase in freight rates, pipe                   differentials per 100 miles would be even              the choice of fuels can no longer be made
line tariffs, and so forth.                                   greater. It is readily apparent therefore              on an arbitrary or noucompetitive basis.
   Although Figure 5 is based on estimated                    that with the investment cost of a hydro                  Prior to 1945 fuel oil cost about twice as
averages, it answers in part the basic                        plant generally greater than for a similar             much as coal or gas on an energy basis.
question as to how electric transmission                      size steam plant, hydro power would be                 This explains why fuel oil was used only
compares with other means. At 50 per                          more costly than steam power by the time               for standby purposes, except in a few
cent load factor, the high-voltage trans-                     it was delivered a few hundred miles                   plants located a long way from the coal
mission line and the coal car are generally                   away. In areas of low fuel cost, hydro                 and gas fields and yet cheaply accessible
competitive for short distances only.                         power transmitted even shorter distances               by tanker from the California, Texas,
   The situation for base load plants is                      would be more expensive than steam                     Mexico or Venezuelan oil fields. Today
highly competitive. Load factors of 90                        power.                                                 the spot price of crude oil is about three
per cent or more are involved. At 90                                                                                 times the cost of coal and about nine
per cent load factor (base load operation)                    Costs of Fuels at Sources                              times the cost of gas, thus making it very
electric transmission may well be as cheap                                                                           expensive for standby service if such serv-
as coal for any distance, and as cheap as                       Figure 7 shoWs the relation between                  ice is required many hours in a year.
gas for distances up to 100 miles.                            prices of coal, gas and oil for the years              Present conditions in the oil industry are

      Figure 5. Costs of transporting energy-mills per kilowatt-hour                 Figure 6. Costs of transporting energy-dollars per kilowatt per yeas
      S.C                  COSTS OF TRANSPORTING ENERGY
                               OPTIMUM LOADS AND VOLTAGES
                                                                                     20.CCOSTS                           OF TRANSPORTING ENERGY
                                                                                                                                                                 ANY L.F.
                                                                                                                      OPTIMUM LOADS AND VOLTAGES
                           FIXED CHARGES PLUS OPERATING COST                                                    fIXED   CHARGES PLUS CAPITALIZED                90%LF
                                  See Text For Limitations
                                  4.0      SEPr. 194?
                                                                                 -1See        Tex                        ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OPERATING COS
                                                                                                                               For Limitaions
                                                                                                    cr                          ~~~~~~~~~SEPT.1947


            0100         200         300
                                                              500       600    70O       04          100       200            300
                                                                                                                                                        500    -600         700t

1092                                                Pierce, George-Long-Distance Energy                  Transmissionz                               AlI EE TRANSACTIONS

      Authorized licensed use limited to: UNIVERSIDADE DE SAO PAULO. Downloaded on March 18,2010 at 13:31:50 EDT from IEEE Xplore. Restrictions apply.
                      COMPARISON OF FUEL COSTS AT SOURCE                                           tC0
                                     SEPT. 1947
                    COAL (BITUMINOUS AND LIGNITE AT MINES -U.S. AVERAGE)                                                                   See               Text For Limitations
                    NATURAL GAS (AT WELLS - U.S. AVERAGE)
                    OIL (BUNKER C ON SHIPS - TEXAS GULF COAST)

                                                                    -   -   -   -   -   -

                                                                                                  n~~~~~~~~~~~~~~~~~~~~-- --------
                                                                                                        8__.0                                                                   ___

                                                                                                                                                           OIL FUEL PLUS FF         1EHU

R                                                                       X~~~/

                    1922 1930     1934                     1942         1946                 19              0                       200     400            600          800          1000   1200    1400
                                         YEARS                                                                                                                     MILES

Figure 7. Comparison of fuel costs at source               0.34 mill per kilowatt-hour, based on the                                                Figure 8. Costs of fuel plus transmission
                                                           cost of the alternate gas fuel. (See A on
     reprte tobe argly ue o sortgesof                      chart). In this comparison it is assumed                                                huigca yri o n itne(pt
      repotedto e lrge.y ue o shorage of                   that electric transmission is at 50 per cent                                            several hundreYd mniles).Y(
pipe line and refining capacity. These                     load factor, limited by the characteris-                                                6     lcrctasiso sgnrlymc
  shulimrv whnsfiin .te e                                  tics of the hydro project. Typical                                                                                                 m
                                                                                                                                                   mnoreEeexpternsivre than trasporl teingeergy by
comes available and when more foreign                      charges for pipe-line transportation of gas                                             gas or oil pipe line.
Oil fields have pipe lines completed to                    for utility service (interruptible contracts)                                           7. The cost of transmitting energy by gas
tidewater terminals,                                       have been considered to be applicable,                                                  pipe line is several times as high as by oil
   It therefore appears that the choice of                    Theoretically, a power plant mi.ght be                                               pipe line.
normal fuel and of standby fuel for a                      located at the fuel source, at the load, or                                             8. Tanker transportation of oil costs onlly
power p1ant julstifies extensive study for                 at any point in between.                                                                about half as much as pipe line transporta-
each particular project and that this situa-                  Practically, a low-load factor steam                                                 tion.
tion will continue for some time to come.                  plant should be located at the load (be-                                                9. The costs of fuel and its transportation
                                                              cuethe incremental cost of electric                                                  to load centers are usually the dominant
Delivered Costs of Energy                                   transmission is higher than other means of                                             hydro energy.
                                                                 tranmisson)excet fr ditanes uder                                                  10. Coal and gas are no longer competitive,
   Figure 8 shows a comparison of present                  200 miles with coal fuel from a moulth-of-                                              either close to both sources or several hun-
day "delivered costs" for the three fuels,                 mine plant. Such a plant (with coal                                                     dred miles away. Gas may be carried
coal, oil and gas. Delivered cost is                       delivered to the bunkers from mine                                                      several hundred miles and still compete with
intended to denote only the cost of the                    cars-no rail switching charges involved)                                                coal near the mine.
fuel itself and the cost of its transporta-                would have about a half mill saving to                                                  11. Fuel oil is now too high for use except
tion. This is obtained by combining the                    offset the incremental cost of electric                                                 for standby service, unless tanker haul is
information on 1947 fuel costs at the                      transmission. A high-load factor power                                                  hundred miles distant.
source, Figure 7, with that on cost of                     plant burning coal would have to be                                                     12 Amot-finsea pltisc-
transporting the respective fuels, Figure                  studied in detail to determine the best                                                 nomical if the plant load factor approaches
5.                                                         location. If feasible, mouth-of-mine loca-                                              base load conditions.
   The information on Figure 8, delivered                  tion would generally be most economical.                                                13. If gas or oil is to be used for fuel, a
fuel energy, and Figulre 1, transmission of                   For oil or gas fuels, pipe line transmis-                                            power plant location near the load will al-
electric energy, with certain adjustments                  sion is usually the most economical, re-                                                most always be most economical.
for differences in other production costs                  gardless of distance or load factor.
could be combined in several ways to                                                                                                               References
show comparative costs of electric energy                   Conclusions
produced from alternate sources and                                                                                                                i. PROBLEMS OF 220-KY POWER TRANSMISSION,
                                                                                                                                                   A. E.   SilVer. AIEE TRANSACTIONS, volume 38,
transmitted different ways and different 1. TeIihnica1 improvemrents inthe art have                                                                1919, pages 1037-1100.
distances to a given load center,           in large measure offset increases in cost of                                                           2. EcONOMICS OF LONG-DISTANCE A-C POWER
   As one example, assume that it is de- electric transmission.                                                                                    TRANSMISSION, S. B. Crary, I. B. Johnson. AIEE
sired to compare gas which could be trans- 2. Cost of electric transmission for opti-                                                              TASCIN,vlm 6 97 ae 029
ported by pipe line 300 miles to a large mum loads and voltages can be expressed as                                                                Web Unite      StaNOM es Seat Docmen fRstE
             withhydro pwer locted 100 a linear function of power and distance.
     load cener                                                                                                                                    session, seventy-ninth Congress, Government
 mie* m11e fro
        rmtelodcne.By suer- -'3. Costasofa fuel transportation energy and
              theloa cener.          sue    pressed         linear function of can be ex-                                                          4. GAS Office, Washington, D.Statistical Bureau,
                                                                                                                                                   Printing RATE
                                                                                                                                                                      SCHEnULES. C., August 1, 1945.
imposing on Figure 8 a line representing distance.                                                                                                 American Gas Association (New York, N. Y.).
the cost of electric transmission as shown 4. Elcti trn .sina o odfco
                                                    4. Eectlc
                                                           ranInlslo atlowtoa fator                                                                5. DIGEST OFNational LINE RATES ON C RUDE
                                                                                                                                                   PE;TROLEUM.        PIFE Petroleum Association
by the dashed line on the chart, it is is competitive with hauling coal by rail for                                                                (Washington, D. C.).
determined that, aside from differences in only short distances.                                                                                   6. PROGRESS IN THE TRANSFORMATION OF ENERGY,
                                        g P 5. Elctric trnsmissionat high oad fac-                                                                 N. Y.) Septemher 1947, volume 65, number 3,
penses, the hydro energy would be worth tors (base load plants) is competitive with                                                                pages 207-12.

1948, VOLUME 67                                   Pierce, George-Long-Distance Energy Transmission                                                                                                  1093

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7. MINERAL RESOURCES IN THE UNITED STATES,       based upon fixed and operating costs of                 in view of his long experience and interest
1930. Bureau of Mines, United States Depart-     facilities necessary to provide electrical              in this subject.
ment of Commerce, Washington. D. C.
                                                 transmission, and cost of hauling coal by                  The authors agree that pipe line tariffs
8. MINERALS YEARBOOK, 1945. Bureau of Mines,     freight, based upon existing tariff schedules,          and freight rates have been used as costs in
United States Department of Interior, Washington,
D. C.                                            may each be cost to the ultimate consumer,              the -absence of any better information.
                                                 but they are not strictly comparable costs
9. Preprints and press releases, Bureaui of Mines,                                                       However, while the paper calls attention to
United States Department of Interior, Washington.and certainly are not comparable when one               these instances, it might be noted that the
D. C.                                            considers the problems that may face the                figures for gas pipe lines and oil pipe lines,
10. THE PETROLEUM ALMANAC, 1946. National        common carriers of the country as a result              based on published tariffs, have been com-
Industrial Conference Board, New York, N. Y.     of continuing rises in cost of labor, materials         pared with estimated costs on modern pipe
I1. NATIONAL PETROLEUM NEWS. National            and supplies and in cost of railroad facilities.        lines now in operation or under construc-
Petroleum News Publishing Company, Cleveland,       Some of the conclusions of the authors,              tion. Most of the electric utilities inter-
Ohio.                                            therefore, can be accepted and others need              ested- in securing transportation of fuel are
12. MINERAL RESOURCES OF THE UNITED STATES,      considerable modification. It is particu-               more likely to depend upon concerns en-
1925 and 1929. Bureau of Mines, United States    larly important to point out that broad con-            gaged in this business than to enter the busi-
Department of Commerce. Washington, D. C.        clusions, based upon averages, are liable to            ness themselves. Therefore, tariffs rather
13. MINERALS YEARBOOK, 1939, 1943 and 1945.      lead to grave error, if they are not accom-             than costs would usually govern.
Bureau of Mines, United States Department of In- p       i
terior, Washington, D. C.                        panied by specific studies for each particular             It is felt that the figures of Sporn showing
                                                 project. As an illustration, Figure 8 of the            an average 1947 fuel cost per kilowatt-hour
                                                 paper, representing September 1947 data,                of 2.14 mills are not too far out of line with
                                                 shows a typical fuel cost in mills per kilo-            the data in our paper, considering that the
                                                 watt-hour for three fuels, one of them being            costs Sporn quotes are undoubtedly based
                                                 coal coming in by railroad in a range of                on contracts which would lag behind spot
                 LDiscussion                     distance from zero to 1,400 miles. For coal             prices in a rising market. Whether one
                                                 fuel, the figures vary from 2.8 mills for at-           buys coal or mines it himself, his fuel costs
Philip Spom (American Gas and Electric mine location to 6.7 mills for a distance of                      for an additional plant requiring new fuel
Service Corporation, New York, N. Y.)            1,400 miles. This is based upon an average              sources today will of necessity be much
The authors are to be complimented on the        performance of 12,500 Btu per kilowatt-                 higher than average figures for an existing
work that they have done on averyimpor
   work tha                   on a very impor-   hour. However, on an actual system the
                                                 wihe                                                    system.
                                                 weighted average data for the year 1947,                   Since the preparation of the paper in 1947,
taontmicand          soubject. Thenergy
tant and difficult subject. The relative
               difficult sources o energy,' where approximately 10,000,000,000 kilo-
economics of different
               f                     of                                           '
                                                 watt-hours were generated by coal burning
                                                                                                         there have been extensive changes in the
                                                                                                         prices of fuels. These changes do not con-
each transmitted by the best technical
means available, needs further discussion        capacity, with coal delivered distances up              tradict the general conclusions. However,
mands           neesu fsure
          availabe,                .             to 200 miles, and with plants having per-
                                                 formances running from 10,200 Btu to ap-
                                                                                                         in the comparison in the second paragraph
work needs tobednet on the deveiopment proximately 30,000 Btu per kilowatt-hour,
                                                                                                         under Costs of Fuels at Sources, the figures
        toenderldgeconomthe andelopent
work needs
owalttes ner. econshan ten                           the   following   weighted     averages   figures
                                                                                                         given would read about as follows if brought
                                                                                                         up to the third quarter of 1948:
tialities are. Thne authors have madle a             prvie.
contribution of note in that direction, but a        prevailed:
great deal more work still remains to be             Btu per kilowatt-hour,       13,689                 Approximate Costs of Power Plant Fuels at
done. The authors have, however, perhaps             Fuel cost per kilowatt-hour, 2.14 mills                                 Sources
under-estimated the remaining gaps. A                                                                                             -_-_
point, too, that needs to be remembered is                                                                           Gas $.10 per million Btu
that in their studies, costs and tariffs have        R. E. Pierce and E. E. George: The com-                         Coal $.20 per million Btu
been mixed. Thus, transmission line costs,           ments of Sporn are appreciated, especially                      Oil $.40 per million Btu

1094=                                       Pierce, George-Long-Distance Energy Transnzission                                AlIEE TRANSACTIONS

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