20131127 presentation - transgrid deliberative forums
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TransGrid and the changing energy marketDeliberative forums with consumers – Sydney CBD, Wagga and Parramatta November 2013
This TransGrid event brought together a range of community members to provide feedback our five year business plan and revenue proposal.
Some small changes have been made to the following presentation as details will continue to change as we take feedback from our consultation process. All details were correct at the time of publication, E&OE.
2 November 2013 TransGrid Deliberative Forums
Overview of TransGrid
TransGrid promotional videoThis video is current unavailable
3 November 2013 TransGrid Deliberative Forums
Total residential
bill
The electricity supply chain
38%wholesale
plus carbon
8% 34% 13% retail7% green schemes
4 November 2013 TransGrid Deliberative Forums
Generating and transporting electricity
Generating capacity in the National Electricity Market 2013
The transmission network is like the freeways for
electricity
5 November 2013 TransGrid Deliberative Forums
TransGrid’s key statistics
12,609 kms high voltage
transmission lines
47 kms underground
cables
94 substations
63 generator connections
362 distributor and direct
customer connections
1,083 employees, with
more than 70% based
outside Sydney
6 November 2013 TransGrid Deliberative Forums
TransGrid’s revenue
TransGrid is a government-owned ‘natural monopoly’ . It is for-profit, to encourage efficiency.
Regulator sets revenue
NSW Government equity investor / shareholder in business
Revenue collected through electricity bills
80% of profits returned to owner (NSW Government)20% of profits reinvested in TransGrid
7 November 2013 TransGrid Deliberative Forums
What TransGrid does
Design, maintain and operate the network to: Keep the lights on Get the cheapest generation to market
8 November 2013 TransGrid Deliberative Forums
The market has changed
1951/52
70,000 GWh
2012/13
Total electricity demand in NSW
9 November 2013 TransGrid Deliberative Forums
Significant electricity price rises
1990 1994 1999 2004 2009 -
100
200
300
400 NSW residential electricity price
CPIInd
ex
mo
vem
ent
2013
10 November 2013 TransGrid Deliberative Forums
TransGrid’s new approach
Adaptive planning
Sydney CBD 2012/13 Summer demand management (like taking 50,000 air conditioners off the grid)
Effective engagement
‘Have your say’ website Public review of consultation
practices
Smarter regulation
A new way of thinking about the reliability / cost trade-off
11 November 2013 TransGrid Deliberative Forums
Engaging with stakeholders
Government and regulators
Industrial and commercial consumers
Distributors and other
transmitters
Residential consumers
Generators
Impacted communities
TransGrid’s 5-year plan, and broad engagement to understand needs and behaviour
Particular network needs
12 November 2013 TransGrid Deliberative Forums
The energy conversation
CostReliability
Draft five year plan
14 November 2013 TransGrid Deliberative Forums
Business plan overview
Typical annual electricity cost
TransGrid’s Draft Business Plan
$2,100
$168TransGrid part of bill
15 November 2013 TransGrid Deliberative Forums
Business plan overview
Breakdown of typical residential annual transmission charges
Tax & depreciation
Operating expense
Return on proposed capital investment
Return on capital already invested
TransGrid’s Draft Business Plan
Consult today on operating expense proposal
Consult today on new capital proposal
16 November 2013 TransGrid Deliberative Forums
How TransGrid’s prices compare
Prescribed revenue per energy transmitted (c/kWh nominal)
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
0
1
2
3
c/k
Wh
no
min
al
Transend (Tas)
Powerlink (Qld)
TransGrid (NSW)
SP AusNet (Vic)
TransGrid’s Draft Business Plan
ElectraNet (SA)
Proposed capital investment(building the network)
18 November 2013 TransGrid Deliberative Forums
How much network do we need?
Capital – non build focus
19 November 2013 TransGrid Deliberative Forums
Replacement dominates proposedcapital investment
Others
Replacement
Augmentation
Market benefits
Updating infrastructure which is wearing out
New or upgraded infrastructure to cater for growing demand
New or upgraded infrastructure to expand generator access and competition
DescriptionCategory
Non network infrastructure, including commercial property and IT systems, and security compliance
Capital – Overview
Proposed capital investment for 2014 to 2019
20 November 2013 TransGrid Deliberative Forums
Peak demand has slowed and is less certain
Capital - Augmentation
21 November 2013 TransGrid Deliberative Forums
History of network development is driving replacement needs
Capital - Replacement
22 November 2013 TransGrid Deliberative Forums
Comparison with othermature networks
Capital - Replacement
0%
2%
4%
6%
8%
10%
National Grid (UK)
Transpower (NZ) SP AusNet (Vic) Transend (Tas) Powerlink (Qld) TransGrid (NSW/ACT)
ElectraNet (SA)
Annual Replacement Spend as % of Depreciated Asset Value
23 November 2013 TransGrid Deliberative Forums
Proposed replacementproject portfolio
Forecast replacement projects for 2014 to 2019
Substation renewal
Individual equipment replacement
Transmission line renewal
Powering Sydney’s Future (‘contingent’)
Category
Controlsystem renewal
Capital - Replacement
24 November 2013 TransGrid Deliberative Forums
‘Market benefits’ projects to dispatch cheapest generation
Queensland to New South
Wales interconnector
upgrade
Snowy to Yass / Canberra
upgrade
Capital – Market benefits
Operating expense
26 November 2013 TransGrid Deliberative Forums
TransGrid performs well against international peers
Operating expense – Overview
27 November 2013 TransGrid Deliberative Forums
Breakdown of draftoperating expense proposal
Proposed annual operating expense for 2014 to 2019
Plan and manage assets
Supporting the business
Operate the network
IT, health and safety, property and insurance
Inspections, preventative, condition-based and corrective maintenance
DescriptionCategory
Planning the development of the transmission network and capital portfolio management
Maintenance
24 hour control room operations, outage planning and technical studies
Operating expense – Overview
28 November 2013 TransGrid Deliberative Forums
Increased planning and engagement costs
Planning cost increases to date:
More responsive capital expenditure decisions
More transparent investment decision making
Proposed increases Consumer engagement
Demand management innovation20
04/0
5
2005
/06
2006
/07
2007
/08
2008
/09
2009
/10
2010
/11
2011
/12
2012
/13
-
2
4
6
8
10
12
Planning cost trend
Operating expense – Planning
29 November 2013 TransGrid Deliberative Forums
Efficiencies in maintenance, operations and business activities
Automation of condition monitoring and control systems to reduce maintenance costs
Innovation in operations (virtual control room and automation of functions) to reduce costs
Efficiencies achieved in procurement, accommodation and payroll
Operating expense – Maintenance
Video of transformer failure
Discussion
Non-build options
32 November 2013 TransGrid Deliberative Forums
Minimising our build program: past success
Responding to changing demand forecasts
Advocating smarter reliability standards or grid innovation
Demand-driven capital approved by the regulator for 2009 to 2014
Approx $700 million deferred
Capital – Non build focus
Responding to changing demand forecasts
Advocating smarter reliability standards or grid innovation
Approx $1.2 billion completed or underwayContinuing to procure
non-build options such as demand management
33 November 2013 TransGrid Deliberative Forums
Increasing focus on innovative non-build options
Energy efficiency
Demand management
Local generation
Peak load management through time of use tariffs, interruptible loads and load shifting etc.
Local generation (biomass, solar, cogeneration) to reduce loading on network
Increasing customers’ use of efficient appliances, lighting, motors etc.
Capital – Non build focus
34 November 2013 TransGrid Deliberative Forums
Works underway to defer / avoid the need: advocacy for changed
reliability standard seeking network support energy efficiency uptake
study’ electric vehicles study planning and demographics
study ‘low build’ options (eg cable
backfill remediation)
Consulting on requirements for Powering Sydney’s Future
Capital - Replacement
35 November 2013 TransGrid Deliberative Forums
Potential non-build options
Consumer education on saving electricity Research understanding consumers’ behaviour Demand management to postpone network
investment Large companies being willing to turn off Interruptible loads (eg air conditioning fan off at peak
times) Load shifting (eg washing machine at night)
Battery storage pilot program
Discussion
Price and reliability
38 November 2013 TransGrid Deliberative Forums
Allocating transmission revenue between consumers
The pricing methodology must be submitted to the regulator at the time
of the revenue application
Transmission pricing should promote efficient outcomes across all
consumers, and cover the total cost of transmission services
39 November 2013 TransGrid Deliberative Forums
Transmission bill components
38%Wholesale power plus carbon price
8% 35% 13%Retail and retail margin
7% Green (FiTs, RET, other)
40 November 2013 TransGrid Deliberative Forums
Allocating transmission prices – two options
Postage stamp User pays
TransGrid’s charges are now approximately half “postage stamp” and half “user pays”.
Discussion
Thankyou
For further information on TransGrid or this
presentation please contact TransGrid’s External
Communication Manager on 02 9284 3016.
Alternatively visit our consultation website –
yoursaytransgrid.com.au
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