Optimal Mine-Production Strategies that Minimize Global Adjustment Charges

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The mine complexes (underground mine and above ground mill) Goldcorp operates in Ontario draw largeamounts of power. Power billing for large industrial consumers ascribes a high cost to annual consumption ifelectricity is used on any of the top five overall 'calendar' demand hours for the entire province [17,19].Goldcorp wants to avoid the top demand hour on five different days where these five peaks are the highest forthe fiscal year. The site need only reduce the load long enough to ensure the peak demand hour is avoided.Idling the mine and switching from line power to expensive diesel generation causes major productiondisruptions. The site requires about six hours of reduced load to avoid the one-hour peak event. Thisshut-down practice also suspends all gold production. If the provincial load for the entire next year wereknown in advance, Goldcorp's problem would be easily solved by finding the top consumption calendar hoursand, for each of these hours, determine the optimal way to avoid high electricity costs by deciding how much toidle, what to idle, and what to replace with on-site diesel generation.However, the provincial peak-load hour is not known a whole year in advance, although provincial loadpredictions, which are fairly accurate up to 2-3 days in advance, can be made using publicly available weatherforecasts and the historical relationship between load and temperature at given hours [6].Idling the operation involves major lost opportunity and additional costs. Mine personnel want to minimize theexpected number of days that this power-management strategy is employed for ceasing mine production.Simultaneously, however, the site wants to strongly dissuade operation at any time during the top five peakhours. To make this trade-off optimally, the initial part of the evaluation will be to quantify the cost of runningin a top-five day against the cost of idling for a day and a focus on quantifying and appropriately adjusting theshut-down threshold. Goldcorp stands to improve revenue by approximately $1.8 M CAD through additionalproduction and avoid high annual "Global Adjustment" power costs in the order of $ 6 M CAD.