FOCUS GROUP SESSION 21 JUNE 2018

Transcription

1 SERVICE PERFORMANCE: BASELINE TARGETS FOCUS GROUP SESSION 21 JUNE 2018

2 AGENDA AND PURPOSE FOR FORUM Purpose: An interactive session to discuss and answer any questions on the proposed baseline service targets and asset health measures for our RCP3 proposal. Time 9:30am Discussion Topic Welcome and introductions 9:45 10:00am HVDC availability target service performance measure AP1 10:00 10:30am HVAC availability target service performance measure AP2 10:30 11:00am Return to Service Time target service performance measure AP3 11:00 11:20am Morning tea 11:20 12:00pm 12:00 12:45pm Asset Health measures 12:45 1:00pm Wrap-up Unplanned interruptions targets service performance measures GP1 and GP2

3 REFRESHING OUR SERVICE PERFORMANCE TARGETS Through our historic engagement with you and other stakeholders we derived the proposed service measures for RCP3 (as shown in the table below). Five of these measures would be linked to at risk revenue. The proposed baseline targets for these service measures are the subject of our current engagement paper and this forum. Category RCP3 code Proposed RCP3 service performance measure Grid Performance (Reliability) Asset Performance (Availability) GP1 GP2 AP1 AP2 AP3 Number of unplanned interruptions across all points of service in a customer sub-category Average duration of unplanned interruptions across all points of service in a customer subcategory % energy availability of HVDC % availability of selected HVAC assets Return to service time The extent that Transpower keep to planned outage times CS1 (non-revenue linked) Customer Service/Event Communications Existing post event survey. Focuses on timely information provision and communications FOOTER TEXT TO OWN THE SLIDE

4 REFRESHING OUR ASSET HEALTH OUTPUT MEASURES The RCP2 Individual Price Path (IPP) originally set two related types of asset health output measures: Six revenue-linked works delivery targets Non-revenue linked asset health measures for five asset classes, which are based on remaining life measures Neither type of measure is a true asset health measure. We have been working closely with the commerce commission to develop asset health output measures to replace our RCP2 measures. As part of our asset health capability journey we have moved from a remaining life measure to an asset health index approach. This is the first time we have consulted on our proposed asset health measures for the RCP3 proposal.

5 PROPOSED APPROACH FOR TODAY For each service measure we will: present briefly outlining the proposed baseline service target(s); listen to your views about the proposed baseline service targets; respond to your queries. SERVICE PERFORMANCE TARGETS

6 DEVELOPMENT OF BASELINE SERVICE TARGETS Taken a more holistic approach (than in RCP2) to establish a better view about what the upcoming regulatory control period may look like. We have factored in: historical data and performance the current planned work programme for RCP3 (projects and maintenance) the likely impact of future trends, e.g. uncertainties around extreme weather events, suspension of live-line work, aging transmission and secondary asset base, and transformation business improvements for measures GP1 and GP2, how to group Points of Service (POS) results of our recently completed Value of Lost Load (VoLL) study for measures AP2 and AP3, identifying which assets could have the most impact on the market from an outage. SERVICE PERFORMANCE TARGETS

7 MEASURE AP1: % ENERGY AVAILABILITY OF HVDC

8 CURRENT AND PROPOSED BASELINE TARGET Our current target for RCP2 is 98.5%, which allows: 1.0% unavailability for scheduled outages 0.5% for forced outages For RCP3, we propose to retain the 98.5% availability target, except for the periods when availability is affected by a Pole 2 life-extension project, which is planned to take place in RCP3. AP1 PERCENTAGE ENERGY AVAILABILITY OF HVDC

9 POLE 2 LIFE -EXTENSION PROJECT Requires much longer outages in RCP3 than what was required for normal routine maintenance in RCP2 Aims to maintain the high availability target of 98.5% going forward into RCP4 and beyond Without this mid-life work, the probability of forced outages per annum exceeding the 0.5% target would increase Aims to save NZ electricity consumers money by deferring significant investment (Pole 2 replacement) AP1 PERCENTAGE ENERGY AVAILABILITY OF HVDC

10 OPTIONS FOR PROPOSED B AS E L I N E S E RV I C E TAR GETS F OR AP 1 To account for scheduled outages associated with a Pole 2 life-extension project, we seek your feedback on: Option A - set a target of 97.8% for the three years affected by the Pole 2 project (98.5% for the other two years during RCP3). This allows 1.7% unavailability for scheduled outages and 0.5% for forced outages; or Option B - set a target of 98.5% for all five years in RCP3, but exclude unavailability associated with the Pole 2 project from the measure. AP1 PERCENTAGE ENERGY AVAILABILITY OF HVDC

11 HISTORICAL HVDC TARGETS The 98.5% target is challenging to achieve in a normal year. Targets have been much lower in the past. Financial Year Target Availability Comment Availability Achieved 2010/ % 84.9% Pole 2 only as Pole 1 was stood down. HAY-OTB reconductoring affected Pole 2 availability. 2011/ % 83.6% Pole 2 only as Pole 1 was stood down. HAY-OTB reconductoring affected Pole 2 availability. 2012/ % 90.3% Pole 2 only as Pole 1 was stood down. HAY-OTB reconductoring and Pole 3 project work affected Pole 2 availability. 2013/ % 80.8% Pole 3 was commissioned in May Pole 2 controls were replaced August-October. 2014/ % 97.7% First year of normal Pole 2 and Pole 3 operation. 2015/ % 98.9% First year monetary incentives were tied to AP1 availability. 2016/ % 98.6% Additional planned/unplanned outages were required to replace insulators on HAY-OTB.

12 ENGAGEMENT QUESTIONS Engagement Question 4 Do you support both, one, or none of the options to account for the planned HVDC works in the proposed baseline target? Please explain your rationale for your answer. Engagement Question 5 Do you agree with the proposed baseline targets for this measure? Please explain your rationale for your answer. AP1 PERCENTAGE ENERGY AVAILABILITY OF HVDC

13 MEASURE AP2: % AVAILABILITY OF SELECTED HVAC ASSETS

14 CURRENT AND PROPOSED BASELINE TARGET Our current target for RCP2 is: 99.6% for 27 selected circuits on the 220kV network. For RCP3, we are proposing a percentage availability baseline target of: 98.9% over 67 selected assets including 110kV and 220kV circuits, interconnecting transformers and bus sections. AP2 PERCENTAGE AVAILABILITY OF SELECTED HVAC ASSETS

15 EXPANDING THE SELECTED HVAC ASSETS Unanimous support in earlier engagement for selected circuits/assets to better reflect the transmission backbone. We have sought to identify and include those assets with the greatest market impact. We: removed circuits from the list which did not cause a market constraint when out of service; retained/added in assets (circuits, transformers, bus sections and circuit breakers) with the most impact on the market when out of service. Increase from 27 selected HVAC circuits to 67 selected HVAC assets in RCP3. The 67 assets make up approximately 20% of the circuit-kilometres in our AC network and 22% of our interconnecting transformers. Expanding the list of circuits and including transformers, bus sections and circuit breakers would more accurately reflect the impact of asset outages on the market. Good middle-ground between increasing completeness and reducing sensitivity. Incentivises us to avoid outages on assets that are most likely to result in market constraints. AP2 PERCENTAGE AVAILABILITY OF SELECTED HVAC ASSETS

16 R C P 2 S E L E C T ED C I R C U I T S C OMPAR E D TO PROPOSED R C P 3 S E L E C T ED AS S E T S FOOTER TEXT TO OWN THE SLIDE

17 D E T E R M I N I N G T H E PROPOSED B AS E L I N E S E RVICE TAR GET We have sought a proposed baseline target which would incentivise high availability of those assets with greatest market impact. Seeking to incentivise stable and predictable outage planning to assist market participants making production and trading decisions. The proposed baseline target of 98.9% is based on the combined unavailability of all 67 assets in a year. In determining the target we considered: historical data planned maintenance and (at that time) currently known project work for RCP3 an allowance for likely impact of future trends e.g. uncertainties around extreme weather events, suspension of live-line work, aging transmission and secondary asset base, and transformation business improvements (i.e. that could result in unscheduled outages). AP2 PERCENTAGE AVAILABILITY OF SELECTED HVAC ASSETS

18 C ONSIDERAT I ONS IN DETERMINING T H E PROPOSED TAR GET RCP3 Activity/Matter Outage Hours (Annually) Preventative Maintenance: Stations 2500 Preventative Maintenance: Lines 1200 Projects 2500 Unscheduled outages allowance 300 Total 6500 RCP3 Target 98.9% 97 hours per asset annually: 11 days of daily outage/asset (9 hour outages); or 4 days of continuous outage/asset

19 HISTORICAL PERFORMANCE We have been unable to achieve 99.6% during RCP2 so far. RCP 2 Years Performance (27 assets) Comparable performance for 67 proposed assets Year 99.0% 99.1% Year 98.98% 99.0% Year (Current) % 99.0% Average 98.99% 99.0% AP2 PERCENTAGE AVAILABILITY OF SELECTED HVAC ASSETS

20 ENGAGEMENT QUESTIONS Engagement Question 6 As a result of previous engagement feedback, we have reviewed the current RCP2 circuits for RCP3 to incorporate more circuits to better reflect the transmission backbone. Do you agree with the approach to remove circuits that would not have a market impact, and include circuits/assets that would have the most market impact? If not, please explain your rationale. Engagement Question 7 Do you agree with the proposed baseline target of 98.9% for this measure? Please explain your rationale for your answer. AP1 PERCENTAGE AVAILABILITY OF SELECTED HVAC ASSETS

21 MEASURE AP3: RETURN TO SERVICE TIME FOOTER TEXT TO OWN THE SLIDE

22 PROPOSED BASELINE TARGET This is a new measure proposed for RCP3 to incentivise us to return assets (removed for a planned outage) back into service: within 4 hours (8 trading periods) of the scheduled return time 95% of the time. This measure would apply to the same 67 selected assets to which AP2 applies. We are seeking to provide greater certainty to customers as to when assets (with the greatest market impact) will be returned to service following a planned outage.

23 DETERMINING THE PROPOSED BASELINE TARGET We are seeking to incentivise predictable return periods for returning assets to the market to assist market participants making production and trading decisions. The proposed baseline target of 95% of planned outages in the year on the selected 67 assets being returned to market within 8 trading periods, four hours, of the scheduled return time has been proposed following consideration of: historical data analysis of current and recent Removed from Service outages for the proposed RCP3 outage blocks the need to ensure it is challenging but reasonably achievable if it is set too tight it could create pressure to return equipment to service which would increase risks to people and equipment, or result in human error incidents. FOOTER TEXT TO OWN THE SLIDE

24 CONSIDERATION OF HISTORICAL DATA Distribution of Outage Return time difference (Trading Periods) Number of Outages Trading Periods

25 T E S T I N G OUR PROPOSED S E RVICE TAR GET AG AI N S T P R E V I OUS P E R F ORMAN C E Financial Year (ending) More than 8 Trading Periods Outages Percentage Total Outages % % (to Feb) % % 386 AP3 RETURN TO SERVICE

26 COMMUNICATION DURING PLANNED OUTAGES We recognise communication during any outage is important participants require over one hour s notice to adjust offers we will use reasonable endeavours to provide early advice to market AP3 RETURN TO SERVICE

27 ENGAGEMENT QUESTIONS Engagement Question 8 Do you agree with our approach to apply the service target to the same assets as we have for AP2, i.e. those that would have the most market impact? If not, please explain your rationale. Engagement Question 9 Do you agree with the proposed baseline target for this measure? Please explain your rationale for your answer. AP3 RETURN TO SERVICE TIME

28 MEASURES GP1 AND GP2: NUMBER AND DURATION OF UNPLANNED INTERRUPTIONS

29 R E F I N E M E NT OF GRID RELIAB I L I T Y P E R F ORMAN C E M E AS U R E S There are two grid reliability performance measures with proposed revenue-linked targets: GP1 is a target for the number of unplanned interruptions each year across all points of supply (POS) in a sub-category. GP2 is a target for the average duration of those interruptions greater than one minute, across all POS in a sub-category (min/year). Relate to our ability to provide an uninterrupted transmission service. We are proposing a refinement of both the POS categories and the baseline targets for these measures for RCP3. GP1 AND GP1 GRID RELIABILITY PERFORMANCE MEASURES

30 C U R R E N T AN D P R OPOSED B AS E L I N E TAR GETS F OR GP1 N U M B E R OF UNPLAN N E D I N T E R R U PTIONS Our current RCP2 targets and proposed RCP3 targets for GP1 are: RCP2 RCP3 baseline Category Sub-category POS in this sub-category Target per year per POS Category Sub-category POS in this sub-category Target per year per POS N-1 High Priority N-1 security High Economic security Consequence Important Material Economic Consequence Standard Generator Sub-total Sub-total N- security Generat or N-security N-security High Economic Consequence Sub-total Material Economic Consequence Generator Sub-total Sub-total Total

31 C U R R E N T AN D P R OPOSED B AS E L I N E TAR GETS F OR GP2 AV E R AGE D U R AT I ON OF UNPLAN N E D INTERRUPTIONS Our current RCP2 targets and proposed RCP3 targets for GP2 are: RCP2 RCP3 baseline Category Sub-category POS in this sub-category Target per year per POS Category Sub-category POS in this sub-category Target per year per POS N-1 High Priority N-1 High Economic security security Consequence Important Material Economic Consequence Standard Generator Sub-total Sub-total N-security N-security N- High Economic security Consequence Sub-total Material Economic Consequence Generator Generator 9 93 Sub-total Sub-total Total

32 REFINED POINTS OF SUPPLY CATEGORIES We have refined the current POS categories and sub-categories for RCP3. This follows customer feedback from our earlier engagement and our own recognition of the need to review the approach. Proposing categorisation on the basis of: the level of security of POS, i.e.n-1 (or better) and N security categories. different levels of demand and consequence by sub-categorising POS informed by a quantitative evaluation of Economic Consequence of an unplanned interruption. Economic Consequence is the amount of load being served at a POS multiplied by the VoLL at that POS, and is the expected dollar cost of an unplanned interruption at that POS. The Economic Consequence concept more difficult to apply for Generator POS separated those sites into N-1 security and N security. GP1 AND GP1 GRID RELIABILITY PERFORMANCE MEASURES

33 E X P L AI N I N G THE V OLL U S E D F OR DETERMINING P OS S U B - C AT E GORISAT I ON Consultants (PwC) surveyed over 1000 electricity consumers around New Zealand Step 1: Consumers are broken down broadly into the following types: Step 2: A VoLL for each type of consumer is established. Step 3: The breakdown between different consumer types is calculated at each PoS. For example: Business 619 resp. Commercial Small Large Residential 404 resp. According to the survey VoLL varies by time of day, day of week, season, and interruption duration. The following table is one example of the outputs of PwC s survey: Reefton 110kV Pri./Agr. Penrose 110 kv Com. Industrial Small Large Pauatahanui 33kV Agricultural Small Large Res. FOOTER TEXT TO OWN THE SLIDE

34 DETERMINING POS SUB -CATEGORIES Analysed N-1, N and generator categories using k-mean clustering algorithm to look for distinct clusters. Two sub-categories: high economic consequence Material economic consequence for each of n-1, n, and generator categories. We currently use Economic Consequence in our criticality framework for prioritising expenditure at load POS. Applying it to our GP1 and GP2 service measures would align more effectively with our forward workplan to drive a stronger relationship between our costs and services. GP1 AND GP1 GRID RELIABILITY PERFORMANCE MEASURES

35 REFINING THE PROPOSED BASELINE TARGETS 18 years of historical data was used to study interruptions on the grid: across all interruptions the scale of the year-by-year fluctuations is much larger than any (statistically significant) trend the year-by-year fluctuations are smaller, and a trend towards less interruptions is visible, for those interruptions caused by equipment failure Based on these observations, our GP1 and GP2 proposed service targets are: a consolidation of long-term (18-year) average interruptions due to weather, human-error, animals, birds, and miscellaneous causes short-term (3-year) average interruptions due to equipment failure. Overall the targets are challenging. The targets are aspirational in regard to equipment-related interruptions representing a significant improvement from our 18-year averages; we have been more pragmatic in regard to interruptions with less predictable causes.

36 HISTORIC PERFORMANCE Most interruptions are caused by highly unpredictable factors such as weather, birds, animals, and human behaviour. The fluctuations around Equipment failure constitute a smaller fraction of the mean. The fluctuations around Environmental and Human error are more significant than any genuine trend Trending down in recent years

37 ENGAGEMENT QUESTIONS Engagement Question 2 As a result of previous engagement feedback, we have reviewed the point of service (POS) categories and sub-categories. Do you agree with the proposed refinements to the POS categories and sub-categories for RCP3? Please explain your rationale for your answer. Engagement Question 3 Do you agree with the proposed baseline targets for these measures? Please explain your rationale for your answer. GP1 AND GP2 NUMBER AND AVERAGE DURATION OF UNPLANNED INTERRUPTIONS

38 ASSET HEALTH MEASURES

39 A REFRESH The key difference from RCP2 is our proposed measures target what matters (asset health, rather than work volumes). The asset classes selected for the measures represent 40% of our RCP3 grid renewal investment and have mature health models. Asset classes covered Description of measure RCP2 Tower protective coating Tower foundations (grillages) Insulators Outdoor circuit breakers Power transformers Outdoor to indoor conversions Total number of asset replacements or refurbishments during the control period. A mixture of annual and 5-year targets. RCP3 Tower protective coating Tower foundations (grillages) Insulators Outdoor circuit breakers Power transformers The proportion of assets with an asset health score above AHI 8 at the end of RCP3. ASSET HEALTH MEASURES

40 ASSET HEALTH Asset Health models output an Asset Health Index (AHI) for each asset which is a score between 0 and 10. If an asset has an AHI score of greater than 8, then it is typically close to or overdue for intervention. Asset Health is one of many inputs into our decision to replace or refurbish. We also consider other factors such as criticality, risk, eliminating orphan makes/models, future system needs etc. C O N D I T I O N B A S E D A S S E T H E A L T H Intervention zone (Context) ASSET HEALTH MEASURES

41 TARGET METHODOLOGY We propose to set asset class health targets for the proportion of assets with an AHI above eight at the end of RCP3. To set the targets, we will assess: current asset health scores across the population of assets within each asset class future health scores in the absence of investment the impact of intended investment plans on future health. Important points to note about the forecasted health with investment: the assumed effectiveness ratio for volumetric work to reflect the impact of work packaging which means we do not always replace the assets with an AHI grater than eight first e.g. insulators reactive interventions from failures are not forecasted e.g. power transformers ASSET HEALTH MEASURES

42 ENGAGEMENT QUESTIONS Engagement Question 1 Do you consider that revenue-linked asset health targets could be superior to works delivery targets? Engagement Question 10 Do you have any views on the principles that should inform the coverage of our asset health targets Engagement Question 11 Do you have any views on the principles or methodology for setting targets? ASSET HEALTH MEASURES

43 REQUEST FOR WRITTEN FEEDBACK Thank for your time we value your feedback. We would also value written feedback to the questions posed (as set out in Parts C, D, and E of our engagement paper). To consider your written feedback, we need to receive it by 5pm Thursday 28 June. Please send your feedback to rcp3@transpower.co.nz.