The arraignment

One morning for breakfast, our field operations manager and I were asked to attend a “prep meeting” with one of our major client’s CEO, his operations and management teams, and an additional three teams of experts representing two insurance carriers and a broker. At this meeting, we were asked to present an analysis of what went wrong with our joint client’s power system. Its main power transformer failed as a result of a flashover from free water droplets shutting down nearly half of its productive capacity, costing tens of thousands of dollars each day.

“Unplanned downtime!” Our client’s CEO wanted answers. Our client’s insurance companies wanted answers. All were looking to us as the technical experts who could provide those answers. I knew a significant amount of financial burden would be placed upon the outcome, so I made sure we came armed and dangerous with solid information.

Exhibit A

A 46-year old 69kV transformer mission critical to a section of our client’s operations.

The plaintiffs

• Insurer Carrier A was the actual insurer of the transformer. The company required annual oil testing of the transformer unit. Over the past decade, testing of the unit was sporadic at best. Various suppliers had been used and test data results were all over the board, making it increasingly difficult to trend the reliability of the unit. It was apparent that some maintenance had been performed on the unit, yet it was undocumented.
• Insurer Carrier B was concerned about determining who was actually at fault in order to assess liabilities since its responsibility was to cover business interruption.
• The Broker represented our client negotiating both the property and casualty coverage on the unit and the business continuation coverage, albeit from different carriers.

The evidence

• For the past two years, we performed quarterly testing on the unit at our recommendation. Previously, testing was conducted annually.
• In the second year of our involvement, Insurance Company A agreed to pay for quarterly testing.
• Every test result indicated extremely high moisture content, resulting in a moisture remediation alert being issued.
• Our client’s operations manager was unable to acquire the necessary maintenance funds to conduct either a field dry out or apply an online moisture system. (Our company manufactures and sells an online dryer unit, however, we always provide information on the three possible dry out scenarios our customers can choose based on needs and their unit ratings.)

The trial

Now, back to our prep meeting breakfast.

Our client, the CEO who we’ll call “Fred” for this purpose, called the meeting with his operations and maintenance management teams, his two insurance carriers and broker. We were actually invited by Insurer A.

“So, how did this happen?” Fred trumpeted.

We all knew that was coming. The point person from Insurance Company A laid out the facts (much like what is listed above but with much greater detail). At the end of his presentation, Fred looked at his director of maintenance and said: “So why did we not do the necessary maintenance on this unit if we had multiple warning signs?”

Why, indeed? Somewhere along the line there was a risk analysis gap. While I tried to explain that gap from an experiential standpoint, Fred was only interested in the bottom line. Who was at fault and why was it not prevented? If you could have seen the looks on the faces of Fred’s operations and management team members, you could most likely understand what impact this was having on their career tracks.

Probable cause

When it comes to a proactive plan for equipment maintenance, the transformer—the heart of the electrical system—is often neglected. Here are six reasons why:

1. Over-reliability of the majority of transformers built in the ‘70s and ‘80s. For the most part, transformers have lasted much longer than their normal useful life and we have come to rely on that fact. Unfortunately, there comes a point in time when even the best maintained units will have to be replaced.
2. Lack of knowledge and expertise. At one point, electrical engineers could and did become transformer experts, but the boomer drain is also a brain drain.
3. Out-of-sight/Out-of-mind. This factor, coupled with the first reason, has resulted in transformers being left out of the systems and the reliability equation, other than to catalog the data in an asset management program.
4. Newer isn’t necessarily better. While the overall ratings for transformers have not changed, the design specs have. Costs were driven out in this competitive market and many of those costs were the added security we received from older units. That safety net is gone. Newer units are failing at an earlier age than older units and expectations that they would last as long as the older unit they replaced have led to a false sense of security.
5. Cost and risk factors that require better reliability systems and capital project planning. Operations people are often reluctant to deliver bad news and the risks associated with failure are risks that require corporate action. These risk factors are often only considered after a failure. How the unit is being used, testing and maintenance protocols, end-of-life planning and condition monitoring all impact both operational and maintenance budget planning, but now need to be viewed over a longer period of time for asset planning.
6. Silo management. By allowing each site to manage these critical assets according to their understanding and expertise can keep an organization from looking at the whole problem and a more holistic long-term strategy. With multiple site planning comes the potential for better asset replacement planning using a rolling spare plan.

The verdict

Put intelligent transformer management, a reliability process, in place!
What does an intelligent transformer management program look like?

While there are a multitude of variations in how a program might look, there are some very common elements to the best ones:

1. Impact Assessment

Since not all transformers are critical units, not all risks are alike. But the impact assessment should categorize units by the associated costs of downtime, replacement cost, failure risk and safety risk. A catastrophic failure is a potential life risk and environmental risk that is too often overlooked. A good impact assessment starts with a series of simple questions: What happens if this unit goes down? How will it impact production? How long will it take to replace it?

A great deal of transformer manufacturing is overseas and lead times have stretched for the most critical units to as long as two years. Can you wait that long to get up and running? Most companies cannot.

2. Testing & Maintenance Plan

For want of a simple and inexpensive test, our client was unable to trend the condition of its most critical units. As a result, when it came time to do preventative maintenance, it had nothing to use as an alert. It all came down to what it could afford that month as part of a stretched maintenance budget. As simple as it sounds, most are amazed at how many organizations have overlooked this critical asset when it comes to reliability planning.

With more than seven million data inputs from transformer oil testing and billions of gallons of oil processed, we can testify to the positive impact of a well thought-out and documented plan that can eliminate unplanned outages and reduce overall replacement costs.

We believe in the “maximum life” principle of transformer management: A transformer with proper oil and electrical testing protocols, prescribed maintenance practices and appropriate application for the rating is a transformer that can last well beyond the manufacturer’s stated effective life.

3. Reaction Plan

Even the best practices implemented late in the lifecycle cannot prevent some failures. Across the board costs for down-line faults, lightning strikes and a general reduction in the robustness of transformer manufacturing are wrung out of the system. Any of these factors can result in a failure. With a solid, well-thought-out reaction plan in place, the cost of repairing or replacing a unit can be substantially reduced.

Case closed

I hope I never have to see the look on the face of another customer who thought a haphazard, lowest cost transformer testing program was a substitute for an intelligent transformer management program.

When Fred asks the question: “Why did this happen?” isn’t he really asking, “Why did YOU let this happen?”

Intelligent transformer management is good reliability planning. We can all agree that there is a tremendous push to maintain productivity in an increasingly tight capacity environment. With appropriate testing, maintenance, reaction and replacement planning, we can eliminate one of the most overlooked reliability risks in our productive systems.