PERFORMANCE MEASURES SUMMARY OF CUSTOMER FEEDBACK ON JULY 2013 CONSULTATION. Transpower New Zealand Limited September 2013

Transcription

1 PERFORMANCE MEASURES SUMMARY OF CUSTOMER FEEDBACK ON JULY 2013 CONSULTATION Transpower New Zealand Limited September 2013 Performance Measures Transpower New Zealand Limited All rights reserved. i

2 Error! No text of specified style in document. Feedback on July 2013 consultation This feedback is drawn from discussions with customers at the July 2013 teleconference 1, discussions with the Major Energy Users Group (MEUG), and s from customers. The feedback is divided into three sets of issues: Availability measures Targets and proposed incentive regime Other issues Our responses are given in italics below each issue. 1 Availability measures Assets included in the HVDC availability measure (AP1) Customers commented that they would like to see voltage support assets that limit transfers across the HVDC link covered in the HVDC availability measure. From a customer s perspective, what matters is the overall ability to deliver South to North (or North to South) transfer. Both historically, and for RCP2, the effects of reduced HVDC transfer due to outages of associated equipment are implicitly included in the HVDC availability figure. The HVDC availability measure is not the same as the HVAC availability measure. The HVDC availability measure is an energy transfer capability measure rather than a measure around whether the poles are in service or not. The measure is based on the maximum amount of energy the HVDC could transfer at full loading 24 hours per day for the year less the reduction in energy transfer caused by derating the poles for equipment outages. Historic data for both HVDC and HVAC availability measures (AP1 and AP2) Customers were unsure whether historical data in our presentation matched the proposed definitions of AP1 and AP2. The HVDC availability data is the same, although it is only available for pole 2 as pole 3 was commissioned this year. The HVAC availability data matches the data for the AP2 measure that we proposed in July That is, it is the average availability for the selected AP2 circuits only, not all HVAC circuits. Final data will differ to the data we presented in July 2013 due to inclusion of additional circuits post customer consultation. (Refer below for further detail.) 1 The presentation made at the teleconference is available here. 2 Performance Measures Transpower New Zealand Limited. All rights reserved.

3 Changing circuits included in HVAC availability measure (AP2) during RCP2 Customers questioned whether the list of circuits included in the HVAC availability measure will change during the RCP2 period. This is because different assets will have greater or lesser potential to influence constraints depending on hydrology. We do not propose to change the list of circuits during RCP2 as we think it is more important to have a transparent method for calculating our revenue incentives during RCP2. Future developments of the availability measures could allow measures to calculate the actual effect of the circuits unavailability on market constraints and system losses at the actual time of the circuits not being in service. Major project outages and upgrades Customers made the following comments or asked questions about major project outages and upgrades: Availability targets should exclude major project outages so that historic comparisons are possible and maintenance planning improvement initiatives can be recognised. We will separate outages for major projects so that we can see the underlying planned and forced outage trends. How will Transpower take account of upgrade projects which may subsequently relieve constraints during the RCP2 period? The selected circuits should be reflective of likely future constraints in the RCP2 period so should take account of grid upgrades occurring before or during RCP2. How will Transpower take account of splash damage impacts on other circuits when project work is taking out circuits involved in an upgrade? This is about parallel circuits having a higher loading during construction outages on an existing circuit. Construction outages potentially cause short term system constraints. As the constraints are short term in nature compared to the regulatory control period of 5 years, we will not include such circuits in the measure solely because of constraints occurring during construction. Performance Measures Transpower New Zealand Limited. All rights reserved. 3

4 Error! No text of specified style in document. Selected HVAC circuits Inclusion of circuits whose availability significantly affects losses Some customers suggested that we should consider including other circuits where system losses 2 significantly increase when certain circuits are out of service. For example, when one or both of the PAK-WKM circuits are out of service, losses between WKM and OTA can increase markedly. We had originally concentrated on circuits which, when they are out of service, have the greatest potential to cause constraints. Since our July discussions with customers we have looked more closely at the impacts that taking circuits out of service has on losses. We undertook a load flow contingency analysis to assess changes in losses when certain circuits are out of service. The circuits whose outage has the greatest effect on system loss increase are those that supply the major load centres in the upper North Island and upper South Island. As a result we propose to include the following circuits in our HVAC availability measure: ASB-ISL-1 ASB-TWZ-1 ASB-TWZ-2 ISL-LIV-1 ISL-TKB-1 BHL-WKM-2 BHL-WKM-1 BHL-PAK-1 BHL-PAK-2 Comments about the inclusion of specific circuits With the new WRK-WKM C line upgrade Transpower could take out the existing WRK-THI-WKM circuits. ATI-OHK could be included (along with the other Wairakei Ring circuits, unavailability of this circuit can cause constraints in the ring.) RPO-WRK/BPE-TNG could be included (these outages have much the same effect as a RPO-TNG outage.) Transpower could add BPE-BRK 1 and 2 circuits, they are critical for Taranaki generation export in dry years. In the Lower South Island NSY-ROX limits export. Other 110 kv circuits could also be considered for the list. Lack of 110 kv circuit capacity could further constrain 220 kv transfer. 2 System losses are the difference between what generators inject into the grid and what demand takes off the losses on our assets. 4 Performance Measures Transpower New Zealand Limited. All rights reserved.

5 One area for which we welcome feedback is the Wairakei Ring following the commissioning of the WRK-WKM C line and the new generation projects. We have little constraint history so it would be useful to understand customer views on what future constraints might look like on an annual basis. We do not propose to include 110kV circuits which, when out of service, may cause constraints on the 220kV network. We intend to manage those through a different mechanism (eg dry year reconfigurations). The KIN-TRK circuits are managed through the Arapuni split and we will be looking at the BPE-MTR constraint as part of a Major Capex Proposal for capacity in the lower North Island. 2 Targets and proposed incentive regime Revenue source Customers asked whether the revenue increases or reductions will be from a general revenue pool or whether they will be allocated differently for different measures. The current plan is that the incentive regime will be set against the overall interconnection revenue. However, we have discussed with the Commerce Commission the possibility of setting the HVDC availability incentive against the HVDC charge revenue. Level of revenue at risk One customer group noted that the proposed revenue at risk is approximately $10m but that our sanity check comparing this amount to the cost of interruptions to customers (based on the Value of Lost Load (VOLL)) was around $13m. Our VOLL calculation is intended to be solely a sanity check. There are substantial limitations in using the current estimate of VOLL ($20,000/MWh). The proposed amount of our revenue at risk for RCP2 is +/-1% per annum. This value may change before the Commerce Commission approves our submission. Structure of the incentive regime Customers made the following comments on the caps, collars and incentive rates. Transpower, in a bad year, could get to the collar very quickly and then see little incentive for the remainder of the year. Even if we do reach the collar very quickly in a particularly bad year, we will still have incentives to improve for subsequent years. Most of the improvement actions we take are around long term improvement. The regime will lead to significant yearly variances. Transpower could propose a wider yearly band and a cumulative approach over the regulatory period. This would enable good and bad years to have a cancellation effect but provide a good long term incentive. Performance Measures Transpower New Zealand Limited. All rights reserved. 5

6 Error! No text of specified style in document. A cumulative approach would smooth the yearly variances but may make the incentive regime less transparent/intuitive to customers and Transpower personnel. The revenue linked incentives should include targets for N-security points of service. We will include targets for N-security points of service in our proposal and link our performance against these to revenue. These points of service will be included in their own category. That is because their performance is sufficiently different from other points of service that they cannot be grouped without corrupting targets for both N and N-1 points of service and creating unnecessary volatility. Sanity checks Some customers suggested that we should be able to provide sanity checks for the availability measures by considering the market impact or looking at constrained on payments. We will include a basic sanity check in the proposal. This will consider the impact that circuit availability could have on loss and constraint rentals. We have not attempted to quantify wholesale electricity market price impacts. 3 Other Time on N-security Customers reinforced the importance of tracking the occurrence of load on N (that is normally on N-1). Some customers would like us to begin reporting Time on N as soon as possible and to set targets and consider including in the incentive regime. We have only just prototyped the tools used to calculate time on N security. We intend to start historical reporting later this year. The process is computationally intensive it must consider each 10 minute block in a year, look at grid configuration and carry out a contingency analysis to determine which points of service are on N security. We have not historically measured time on N security so we do not have experience to indicate what meaningful targets should be. We do intend to develop this performance measure with a view to setting targets in the future. Momentary interruptions (<1 min interruptions) Customers commented that they would like to see momentary interruptions included, at least as a reporting-only measure. We already will report momentary interruptions under the terms of our Benchmark Agreement. We will include momentary interruptions in a separate measure in our reporting for the RCP2 performance measures. 6 Performance Measures Transpower New Zealand Limited. All rights reserved.

7 Using VOLL for reporting Some customers would like to see Transpower calculating Value of Lost Load (VOLL) for interruptions, using a new VOLL framework under development by the Electricity Authority. The Electricity Authority is investigating a VOLL framework which could potentially replace the current $20,000/MWh figure with an alternative matrix of values reflecting different customers and different lengths of interruptions. This work continues and is not sufficiently advanced to determine whether it would be appropriate as an input to our performance measures. Power quality working group and post event reporting In discussions with customers, there are a number of issues that they would like us to work on in developing our performance measures. Power quality is one significant area, but there are others such as the reporting and targets for momentary interruptions, and post event reporting or further development of measures such as time on N-security, We are happy to extend the remit of the proposed Power Quality Working Group to consider other aspects of our performance measures. Frequency of reporting Some customers would like to understand how and how often we will report our progress against our performance measures. We will report to the Commerce Commission annually, but we are looking at the possibility of publishing our progress against the measures more frequently for at least some of the measures. Performance Measures Transpower New Zealand Limited. All rights reserved. 7