In the past, plant operators dealt with a multitude of low-cost suppliers. There might be 300 for plant support work, another 100 for outage support plus 800-1000 miscellaneous parts/ materials/services vendors. Each of these required requests for proposal (RFP) to be developed and bids to be evaluated. Before deregulation, the performance risk was assumed by the rate payers and there was a guaranteed rate of return for the utilities. Today, all that is changing.

Today, the number of utilities establishing alliances or partnering arrangements is mushrooming. Dependence on a particular vendor or group of vendors allows the utility to improve the overall operations of their plants through cost reductions, risk sharing and other benefits.

The consolidation in the nuclear utility industry has led to the formation of multiple types of partnering arrangements. Some are between utilities and a single vendor, some are between a utility and a consortium of vendors, some are a group of utilities that have banded together to achieve volume discounts for services and components, and another is an arrangement in which a single company operates multiple plants for different owners.

Drivers

Driven by increasingly competitive operating environments and a growing shortage of qualified service people, utilities see partnering arrangements as a way to build long-term relationships that will not only enhance the performance of their plants but reduce their operating costs as well.

Although cost is an important factor, it is not always the main one. Nuclear and personnel safety always are of the highest importance but reducing outage lengths and enhancing plant performance also are key drivers. Improving the allocation of critical resources, reducing fixed costs, particularly in the areas of purchasing and engineering staff support, and better pre-outage planning are important benefits derived from partnership-type relationships. The concept is that a vendor with a vested interest in the operation of the plant and who shares in the risks and rewards will provide better service. In addition, utility and vendor teams that work together over a period of time develop a mutual understanding and work habits that result in smoother, safer, and more cost-effective performance.

Typical Workscopes

Full scope outage services including refueling, steam generator inspections and services, pump and motor services and RV head inspection and repair are a few of the workscopes usually covered by partnering arrangements.

However, fuel, mechanical components, plant modifications, valves, I&C/electrical systems and welding work also can be included. The initial length of an alliance tends to be between three and five years with options for continuation based upon performance.

Regular Evaluation is Essential

An evaluation mechanism with pre-established criteria for performance is a key feature of alliances. These criteria usually are in the areas of safety, long-term cost reduction goals, production targets, quality, schedule, radiation dose reduction and overall cost goals. The parties mutually agree to the goals and their evaluation at the beginning of the alliance and participate equally in the analysis.

Many partnering arrangements feature incentives, such as specific personnel safety and cost reduction goals, performance improvement criteria, adherence to established budgets or quality standards, established by both parties. Both share in the risks and the rewards, so each has an incentive to beat the established goals. Other types of performance measurements include industry plant ratings and rankings, safety standards, and cost of production.

Conclusion

An increasingly competitive marketplace will drive the need for low-cost operations and maximum output by all nuclear power plant operators. Thus, the trend towards partnering-type relationships will continue. These long-term relationships are a win-win situation for both parties.

There is a greater willingness to invest in resources for long-term continuous improvement that will decrease the risk and increase the reward for the utility, the vendor and the entire industry.