Paper: Fuel Optimization

This paper describes the methods used by Southwestern Public Service Company (SPS) to optimize the use of approximately 90,000,000M ZF of natural gas and 2,000,000 tons of coal each year. The fuel that is purchased by SPS cams from five different suppliers and is covered by thirteen contracts, each contract containing one or rare take-or-pay constraints. Optimization is applied at tm levels: 1. Take-or-pay provisions of all contracts are met on monthly, annual or other basis as specified in the contracts. 2. Minute-by-minutes use of gas and coal is adjusted to provide the lowest instantaneous overall cost of generating the power demanded by SPS customers at that instant. The optimization methods used at both levels are described. Presented are the advantages and disadvantages of the techniques that are used. An assessment is made of the overall success of the optimization system.