Reaping the Benefits of Alliance Contracts

From Power Engineering

As power producers face declining sales growth and hefty costs for new emission controls, tools for improving efficiency and lowering operating costs are paramount for utilities with large generation assets.

One option allows power producers to outsource their maintenance and outage services to third parties. These third-party agreements are known as alliance contracts, a unique long-term arrangement designed to help utilities achieve their goals for safety, quality, availability and outage rates at a low cost. They are complex pay-for-performance agreements that incentivize the service providers.

Power Engineering explored the structure, makeup and rationale behind these contracts in an interview with executives of Westar Energy and Day & Zimmermann NPS. D&Z is one of the nation’s leading power plant maintenance and modifications contractors. Westar Energy is the largest electric utility in Kansas, with 7,000 MW of generation capacity and nearly 700,000 customers.

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