Download - 20131127 Presentation - TransGrid Deliberative Forums

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


Total residential

bill

The electricity supply chain

38%wholesale

plus carbon

8% 34% 13% retail7% green schemes


Generating and transporting electricity

Generating capacity in the National Electricity Market 2013

The transmission network is like the freeways for

electricity


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


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


What TransGrid does

Design, maintain and operate the network to: Keep the lights on Get the cheapest generation to market


The market has changed

1951/52

70,000 GWh

2012/13

Total electricity demand in NSW


Significant electricity price rises

1990 1994 1999 2004 2009 -

100

200

300

400 NSW residential electricity price

CPIInd

ex

mo

vem

ent

2013


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


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


The energy conversation

CostReliability

Draft five year plan


Business plan overview

Typical annual electricity cost

TransGrid’s Draft Business Plan

$2,100

$168TransGrid part of bill


Business plan overview

Breakdown of typical residential annual transmission charges

Tax & depreciation

Operating expense

Return on proposed capital investment

Return on capital already invested


Consult today on operating expense proposal

Consult today on new capital proposal


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)


ElectraNet (SA)

Proposed capital investment(building the network)


How much network do we need?

Capital – non build focus


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


Peak demand has slowed and is less certain

Capital - Augmentation


History of network development is driving replacement needs

Capital - Replacement


Comparison with othermature networks


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


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



‘Market benefits’ projects to dispatch cheapest generation

Queensland to New South

Wales interconnector

upgrade

Snowy to Yass / Canberra

upgrade

Capital – Market benefits

Operating expense


TransGrid performs well against international peers

Operating expense – Overview


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


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


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


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


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

http://reg.energyrating.gov.au/comparator/product_types/


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



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


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


Transmission bill components

38%Wholesale power plus carbon price

8% 35% 13%Retail and retail margin

7% Green (FiTs, RET, other)


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