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BR03

ASSET RISK MANAGEMENT Criticality Framework © Transpower New Zealand Limited 2013. All rights reserved.

ASSET RISK MANAGEMENT Criticality Framework

15 November 2013

C O P Y R I G H T © 2 0 1 3 T R A N S P O W E R N E W Z E A L A N D L I M I T E D . A L L R I G H T S R E S E R V E D

Preface

This document has been prepared to outline the state of development and application of a Criticality Framework for the Grid assets, as at the date of the RCP2 submission in December 2013.

BR03 Asset Risk Management – Criticality Framework November 2013


C O P Y R I G H T © 2 0 1 3 T R A N S P O W E R N E W Z E A L A N D L I M I T E D . A L L R I G H T S R E S E R V E D

This document is protected by copyright vested in Transpower New Zealand Limited (‘Transpower’). No part of the document may be reproduced or transmitted in any form by any means including, without limitation, electronic, photocopying, recording or otherwise,

without the prior written permission of Transpower. No information embodied in the documents which is not already in the public

domain shall be communicated in any manner whatsoever to any third party without the prior written consent of Transpower. Any breach of the above obligations may be restrained by legal proceedings seeking remedies including injunctions, damages and costs.



Table of Contents

ASSET RISK MANAGEMENT .............................................................................................................. 1

CRITICALITY FRAMEWORK ............................................................................................................... 1

1 INTRODUCTION ....................................................................................................................... 1

1.1 Purpose ................................................................................................................................. 1

1.2 Risk Management ................................................................................................................. 1

2 CRITICALITY ............................................................................................................................ 1

3 APPLICATIONS ........................................................................................................................ 2

4 CRITICALITY FRAMEWORK ................................................................................................... 2

4.1 Impact on Customers ............................................................................................................ 3

5 FUTURE IMPROVEMENTS ..................................................................................................... 4

5.1 Safety .................................................................................................................................... 4

5.2 Environmental ....................................................................................................................... 4

5.3 Financial ................................................................................................................................ 4

APPENDICES ....................................................................................................................................... 5

APPENDIX A: CRITICALITY APPROACH ........................................................................................... 6


ASSET RISK MANAGEMENT Criticality Framework © Transpower New Zealand Limited 2013. All rights reserved. Page 1

1 INTRODUCTION

1.1 Purpose

This document explains the development and application of a criticality framework as part of our overall asset risk management approach. It includes an overview of criticality and describes the different categories of criticality, how we use criticality, and future improvements. Details of our current criticality approach are set out in Appendix A.

1.2 Risk Management

Risk management is an important foundation for asset management. Its overall purpose is to understand the cause, effect and likelihood of adverse events and to optimally manage associated risks to an acceptable level.

We do not yet have a fully quantified risk assessment framework that can be applied to the management of our assets. As an interim measure, we have sought to reflect the two main determinants (likelihood and consequence) of risk through an integrated framework by using asset health and asset criticality as simplified proxies.1

We use a combination of asset health and criticality to reflect asset-related risk. This is used to support prioritisation within our planning processes. Our asset health and criticality frameworks have been designed to be used together. An illustration of the concept is shown below.

Figure 1: Asset Risk Proxy: Asset Health and Criticality

2 CRITICALITY

Criticality is a concept that recognises that assets have differing importance (value), or represent different vulnerabilities to an organisation. Criticality in a network based utility will generally include consequences of asset failure or non-performance. Understanding the criticality of assets is relevant to system planning, design standards, asset operation, maintenance scheduling, fault response and prioritising investments.

We have developed a framework for criticality that we can systematically apply and implement in our systems and processes.

1 Criticality is used with asset health indices, which is a proxy for the likelihood of asset failure (refer BR02 –Asset Risk

Management – Asset Health Framework’).

Increasing Criticality

Decre

asin

g

AssetH

ealth



3 APPLICATIONS

To date, we have primarily used criticality in the following areas:

Performance Monitoring: we are using criticality to monitor and set targets for our service performance measures. We have set different targets for the number and duration of unplanned interruptions based on point of service criticalities. Further information on our service performance targets can be found in BR04 – Service Performance Measures.

Asset Management Strategies: we are integrating criticality into our business processes to inform our asset management strategies. For example, we take criticality into account in our maintenance and planning decisions.

Investment prioritisation: we have used criticality in conjunction with asset health to prioritise investments during RCP2 by identifying individual assets that may have high failure risk. The extent to which we applied criticality and asset health in the prioritisation process varies by asset fleet, depending on the maturity of the approach, its applicability to the fleet, and the availability of information.

Additional applications include:

supporting differentiated design standards

supporting differentiated approaches to interventions in the manufacture, installation and commissioning of assets

specifying a differentiated approach to the operation and maintenance of assets

Our future development of criticality will begin to incorporate these latter applications.

4 CRITICALITY FRAMEWORK

The impact of asset failure will be different depending on the type of consequence considered. For example, the failure of an oil interceptor at a substation may have a very high impact on the environment, but no impact on service received by customers. Likewise, the failure of a transmission line in a built-up area may have a very high impact on safety, but less of an impact on service performance (particularly if there is redundancy in the system).

So far, we have focused on the impact on customers in terms of service performance (that is, interruptions to supply).

Other categories that we will consider in the future include:

safety

environment

financial.

Each of the above may have different methods for determining the criticality of an asset. These are discussed further in Section 5.



4.1 Impact on Customers

Our method for determining the impact of asset failure on the service received by customers has three elements:

Point of service criticality: reflects the type and scale of load or generation that is connected to the Grid at a point of service.

Bus and circuit criticality: reflects the impact that an outage of a network component (transmission circuit, transformer circuit or busbar) has on a point of service.

Asset criticality: reflects the impacts of individual asset outages on the point of service (similar to bus and circuit criticality) but at the level of an individual asset, such as, a circuit breaker or current transformer.

Point of service, bus and circuit, and asset criticality are linked. We discuss the point of service approach below, bus and circuit and asset criticality are described in Appendix A.

Point of Service criticality

Customer expectations of service quality vary as there are differing needs and expectations as the impact of interruptions can vary significantly. To reflect this, we considered a number of options for categorising points of service. At one extreme, each individual customer could have a different criticality based on their value of unserved energy. We reviewed how distributors categorised their customers and proposed and consulted on an approach that could be easily understood and readily translated into our business objectives.

Our aim in designing point of service criticality was for a pragmatic and straightforward categorisation of the point of service, taking account of the economic impacts that interruptions cause. We have defined the following categories:

high priority,

important; and

standard.2

The figure below illustrates the three categories and the criteria used to assign them to points of service.

Examples are provided in Appendix A showing how we used the above criteria to assign criticality to actual points of service.

2 Generator POS are aligned with the standard load criticality.

• Load of national significance OR

• Meets 2 or more criteria High priority

• Meets 1 criteria Important

• All remaining offtake points of service Standard

Criteria

Main city

Key load

> 25,000ICPs



5 FUTURE IMPROVEMENTS

At present, our criticality approach considers groups of assets at a high level. These groups are busbars, transmission circuits and transformer circuits. The next stage of work will target the individual asset level, where we will be able to assign a specific criticality to an asset position such as a circuit breaker or disconnector.

At the time of writing, most of our work has focussed on service performance criticality. The remaining elements of our Criticality framework are still in the conceptual or early development stages. Further work will also be undertaken to develop criticality assignment methods for other categories such as:

safety

environment

financial.

We will also consider how the different criticalities assigned to an asset under each category could be combined or rolled-up to provide an overall criticality ‘rating’ for each asset.

5.1 Safety

Our method for determining the impact of asset failure on safety must reflect the potential consequences of asset failure on people, including the general public, neighbours, service providers and employees.

Ranking the potential safety consequences is important to managing our safety risks. This consequence ranking will need to be defined. For example, lines over roads or public places, and substations in residential areas pose a greater risk to the community than they do in more remote areas.

We are developing a safety criticality assessment method to provide for a more systematic approach towards safety-based prioritisation of asset management activities. We already have data about the land use and occupancy under each transmission line span, and this will form the basis of the safety criticality assessment method for transmission lines.

5.2 Environmental

Our method for determining the impact of asset failure on the environment must reflect the direct consequences on the environment and our environmental obligations. We have previous experience with ranking sites based on the consequences of an oil spill to the external environment.

5.3 Financial

Financial criticality is intended to recognise the impact of failures in terms of direct costs we incur. This includes direct repair or replacement costs, equipment purchases, inventory or spares disbursements, loss of consumables due to, for example, an oil spill or gas release, and labour. It also includes direct costs that are consequences of failure, such as penalties or liquidated damages, or missed performance targets linked to revenue.



Appendices



APPENDIX A: CRITICALITY APPROACH

We have three types of service performance criticality:

Point of service criticality

bus and circuit criticality

asset criticality.

These are outlined in the following sections.

Point of Service Criticality Examples

Our aim in designing POS criticality was for a pragmatic and straightforward categorisation of the POS, taking account of the economic impacts that interruptions cause. The figure below illustrates the three categories we use and the criteria used to assign the categories.

The table below provides examples of how we have used the above criteria to assign criticality to actual points of service.

Description Load of national significance

Large City Key load >25,000ICPs Criticality

Addington 66 kV Christchurch CBD Yes High Priority

Bream Bay Refinery Refinery High Priority

Invercargill Dairy Yes High Priority

Cambridge Dairy Important

Kaiwharawhara Wellington Important

Kawerau (A) Pulp and Paper Important

Rotorua 33 kV Standard

• Load of national significance OR

• Meets 2 or more criteria High priority

• Meets 1 criteria Important

• All remaining offtake points of service Standard

Criteria

Main city

Key load

> 25,000ICPs



Bus and circuit criticality

The transmission network can be thought of as a system of circuits and busbars. A forced or fault outage of any asset in this system typically removes the entire circuit or busbar from service, and in some cases it affects more than one circuit or busbar.

The grouping of assets into circuits and busbars is illustrated in Figure 2.

33kV bus A 33kV bus B


Transformer ATransformer B

Circuit A Circuit BCircuit A

Circuit C

220kV bus C

220kV bus D 220kV bus E

Grid

Grid

Load

Transformer circuit

Transmission circuit

Busbar

Figure 2: Illustration of how assets are grouped into busbars and circuits

The impact that an outage of a circuit or busbar has on a POS, determines the criticality of that group of assets. Three types of circuit or busbar criticality have been developed for these groups of assets, based on the impact of an outage on POS: high impact, medium impact, and low impact.

High impact

An outage of the busbar or circuit:

causes a loss of connection to one or more high priority POS, or



causes a loss of connection to more than 200 MW of load, or

places two or more POS, including at least one high priority, on single circuit security or

places more than 200 MW of load on single circuit security.

Medium impact

An outage of the busbar or circuit:

causes a loss of connection to one or more important, standard or generator POS, or

places either at least one important point, or at least two standard or generator POS, on single circuit security.

Low impact

An outage of a busbar or circuit does not usually cause loss of connection and places only one standard or generator POS at most on N-security.

Summary

A summary of the criticality rules for busbars or circuits may be represented as shown below.

Consequence of an outage Effects Criticality

Places more than one of the following on single circuit security

Includes High priority POS High

Standard or Important POS Medium

Places one of the following on

single circuit security

>200 MW of load High

High priority POS High

Important POS Low

Standard POS Low

Causes a loss of supply at one of the following

>200 MW of load High

High priority POS High

Important POS Medium

Standard POS Medium

No effect Low

Busbar or circuit criticality assignment rules



The following illustration provides an example showing how we assign bus and circuit criticality.

Example: Assigning bus and circuit criticality

PoS category = Important Total load = 150 MW



Transformer ATransformer B

Circuit A Circuit B

Busbar or circuit POS interruption if out

of service? POS security reduced if

out of service? Criticality

33 kV bus A & B Yes. 75 MW of ‘important’ load lost

Not applicable Medium

Transformer A & B No Yes. 150 MW of ‘Important’ load on single circuit security

Low

110 kV bus A & B No Yes. 150 MW of ‘Important’ load on single circuit security

Low

Circuit A & B No Yes. 150 MW of ‘Important’ load on single circuit security

Low

The criticality of the 33 kV busbars A and B are assigned ‘medium’ because an outage of either of them will result in an interruption to an ‘Important’ POS.

All of the remaining groups of assets are assigned ‘low’ criticalities because even though their outage will cause the POS to be placed on single circuit security, there is no interruption.

Four issues in assigning bus and circuit criticality are: busbars at a point of service, load considerations, changing Grid configuration, and the inter-island HVDC link.

Busbars at a POS

Many POS comprise two or more busbars, each connecting part of the customer’s load or generation. The impact of a busbar outage may therefore be a partial loss of service to a customer;



for example, only half the feeders may be interrupted. For the purposes of assigning criticality to the busbar, this partial loss of service is regarded as an interruption to the POS.

Load considerations

Historic peak load is used when determining the impact of an outage on a POS. This applies to considerations of the amount of load placed on single circuit security, and whether the remaining assets have the capacity to meet the load following an outage.

Changing Grid configuration

The criticality of busbars and circuits will change over time. For example, the commissioning of the two North Island Grid Upgrade (NIGUP) circuits has reduced the criticality of all 220 kV circuits supplying Auckland and Northland. Prior to the NIGUP circuits being commissioned, the outage of a single 220 kV circuit would place Auckland load (a large part of which is high-priority load) on N-security. These circuits would be defined as high impact.

Following the commissioning of the two NIGUP circuits, N-1 security to the Auckland and Northland load is still maintained when one of the original 220 kV circuits is removed from service. These 220 kV circuits are therefore now less critical (medium impact rather than high impact).

Inter-island HVDC link

The HVDC link is initially treated the same as any other element of the transmission system for the purposes of assigning criticality. The entire link from end to end is regarded as a ‘transmission circuit’. However, as outlined in the HVDC Fleet Strategy, we intend to develop a customised application of the Criticality Framework for assets and groups of assets in the HVDC system.

Asset criticality

Asset criticality considers how the failure of an asset impacts on the circuit or bus section of which that asset is a part. This includes primary power transmission equipment, its measurement and control devices, and other associated equipment such as voltage support devices or power electronics.

Each circuit or bus section comprises assets. The diagram in Figure 5 shows the assets that make up a typical transformer circuit.



Network circuits and buses are made of many different

assets. These assets contribute to performance of the

branch in different ways.

As an example, assets in a transformer circuit include:

droppers

disconnectors

earth switches

circuit breakers

cables

power transformers

earthing transformers

surge arrestors

current transformers

voltage transformers

protection systems.

Figure 3: Assets comprising a transformer circuit

Our methodology for determining the criticality of individual assets is yet to be fully developed. In the meantime, we have assigned the bus or circuit criticality to the assets that make up the bus or circuit.

Our intention is to develop a strong risk-based link between asset criticality and the potential consequences of failure for the point of service.

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