Regulatory Proposal to the AER 2011-2015 AER Public Forum, - - PowerPoint PPT Presentation
Regulatory Proposal to the AER 2011-2015 AER Public Forum, Melbourne 17 December 2009 Presenters and Outline Shane Breheny CEO Neil Watt Manager Asset Strategy and Performance Energy & demand Ongoing
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forecasts
and challenges
customer service performance
process
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Ongoing Expectations Emerging Challenges
restoration performance
bushfire risk mitigation
public and employees
investment choices
in retail
load
policy initiatives impacting
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Key statistics
and inner suburbs
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59.8 64.1 51.6 41.4 36 43.4 32.4 23.8 41.5 27 88.1 44.7 20.6 16.6 61.2 21.4 21.2 21.9 17.2 10 20 30 40 50 60 70 80 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 U n p la n n e d N e tw
A ID I (m in s)
Significant load shedding due to generation shortfalls Major storm events ______ Unplanned Network SAIDI Minutes (no exclusions) ______ Unplanned Network SAIDI Minutes (with exclusions)
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surrounding area to include a second major zone substation supply
western end of CBD to service the CBD and West Melbourne
Melbourne’s CBD
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CitiPow er’s com m itm ent to exceptional service w as acknow ledged at the 2 0 0 8 Custom er Service I nstitute of Australia Australian Service Excellence Aw ard 0.01% 0.01% 0.01% 0.01% 0.01% 0.02%
0.00% 0.01% 0.02% 0.03% 0.04% 0.05% 0.06% 0.07% 0.08% 2003 2004 2005 2006 2007 2008 % of ombudsman complaints per customer Result significant given CitiPower has over 310,000 customers
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– average complaints per 1,000 customer below the industry average since 2002 – a reduction in complaints escalated to the Energy and Water Ombudsman – consistently high satisfaction ratings across residential customers (79 per cent), major customers (86 per cent) and retailers (89 per cent).
2008 National Safety Awards of Excellence
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areas
functionality
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– Capex: bottom-up approach based
demand forecasts – Opex: revealed costs using recurrent efficient 2009 as base year – Where appropriate subject to external advice/ review
management plan
process
rule requirements
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establishing prices
by NIEIR
by:
Government energy policy Global financial crisis impacts AMI
determining Reinforcement Capex
verified with NIEIR
influenced by:
Economic conditions Population growth Appliance purchase & usage patterns
Energy forecasts Maximum demand
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0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2006-10 2009 2011-15 Average annual growth Customer numbers Energy consumption Maximum demand
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conditioning:
– 2009 heatwave, record demand – New phase, from penetration to upgrade
utilised assets
CitiPower Load Profile
0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 900.00 1000.00 1100.00 1200.00 1300.00 1400.00 1500.00 :0 1 :0 2 :0 3 :0 4 :0 5 :0 6 :0 7 :0 8 :0 9 :0 1 :0 1 1 :0 1 2 :0 1 3 :0 1 4 :0 1 5 :0 1 6 :0 1 7 :0 1 8 :0 1 9 :0 2 :0 2 1 :0 2 2 :0 2 3 :0 :0
Time of Day - Eastern Standard Time N
a lis e d lo a d in g 29/01/09 at 43.2oC 28/01/09 at 43.2oC 17/02/09 at 31.7oC 06/02/09 at 33.1oC 12/02/09 at 23.7oC 20/02/09 at 24.5oC
Mild Days Warm Days Hot Days
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CitiPower Network 2006-2015 Zone Sub Energy at Risk (EDPR Iteration 2)
0MWh 20,000MWh 40,000MWh 60,000MWh 80,000MWh 100,000MWh 120,000MWh 140,000MWh 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Energy at Risk (MWh) - Do Nothing - Using expanded DSPR forecasts Energy at Risk (MWh) - With Augmentation - EDPR Iteration 2
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Asset Replacem ent:
costs
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management alternatives where they are economically efficient
– West Melbourne
alternatives are considered depends on:
– CitiPower receiving expressions of interest from proponents of feasible alternatives – advances in technology which may lead to a greater number of viable and feasible alternatives
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Reinforcement of a highly utilised network
– Metro 2012 Capacity Upgrade – CBD Security Upgrade – Regulatory test process completed for both projects
10 20 30 40 50 60 70 80 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year R e in fo rm ce m e n t (2 1 $ m ) CBD Security Metro 2012
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security of the network
– maintaining fault levels at or below plant and equipment ratings has become an increasing challenge due to an increase in embedded generators – installation of impedance reactors to ensure compliance with fault levels – proposed charge being levied on embedded generation connections
– noise control – drainage of oil and asbestos management
– AMI leveraged projects – replacement/ renewal of the SCADA network
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– most recent actual performance (5 months of forecast) – efficiency carry over mechanism applies – audited accounts available before AER final decision
± Add/ subtract changes in service classification ± Add/ subtract change in overhead allocation + Add step changes + Add scale escalation for growth across network + Add cost escalation = Forecast operating expenditure
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Debt raising costs: $22m Scale escalation: $20m
– Increased network size – Increased work volume – Additional customers
Scope Step Changes: $24m
– Climate change – Demand Management (WMTS) – Insurance – Self insurance – AEMC Distribution Planning Rule changes – Safety management
Input cost escalation: $19m
– Increased labour – Increased materials
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200 400 600 800 1,000 1,200 1,400 Gross capex Net capex Operating $m, 2010 2006-10 2011-15
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Return of capital: 29% Opex: 18% Other: 3% Return on capital: 64%
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decreases in average distribution charges of 36 per cent over the last ten years
– maintaining current good performance in the face of increasing peak demand and asset utilisation – enabling connection of embedded generators whilst ensuring security of the network – ensuring sustainable performance in the face of climate change and addressing increasing aging infrastructure
control period:
– 10.1 per cent increase in 2011 and a 8 per cent increase in price per annum over the rest of the regulatory control period
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scheme applying to operating expenditure
incentive scheme
with business specific amendments
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innovative and efficient tariff structures
for possible start-up in 2011
control period as meters are changed over
proposed tariff design changes
following the AER’s Final Decision
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Key statistics
area
state
230 198.5 207.7 185.5 186.6 194.4 141.3 198.5 209.9 133.5 124.6 113.2 140.6 110.3 124.5 123.7
100 120 140 160 180 200 220 240 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 U nplanned N etw
A ID I (m ins)
Storms and third- party incidents caused significant damage to the network Significant load shedding due to generation shortfalls Major storm event ______ Unplanned Network SAIDI Minutes (no exclusions) ______ Unplanned Network SAIDI Minutes (with exclusions)
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period include:
– focus on small areas of customers receiving low levels of service (Otways) – improving identification and rectification of supply quality issues – additional supply capacity in the Sunshine/ St Albans and Geelong areas to meet demand growth – reinforcement of supply capacity along the Murray River between Mildura and Swan Hill
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Powercor’s commitment to exceptional service was acknowledged at the 2008 Customer Service Institute of Australia Australian Service Excellence Award 0.02% 0.03% 0.03% 0.03% 0.03% 0.04%
0.00% 0.01% 0.02% 0.03% 0.04% 0.05% 0.06% 0.07% 0.08% 2003 2004 2005 2006 2007 2008 % of ombudsman complaints per customer Result significant given Powercor has over 683,000 customers
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– average complaints per 1,000 customer below the industry average since 2002 – a reduction in complaints escalated to the Energy and Water Ombudsman – consistently high satisfaction ratings across residential customers (84 per cent), major customers (86 per cent) and retailers (89 per cent).
2008 National Safety Awards of Excellence
– lost time injuries has exhibited a downtrend since late 1990’s – average annual lost time injury rate below one since 2001
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functionality
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– Capex: bottom-up approach based
demand forecasts – Opex: revealed costs using recurrent efficient 2009 as base year – Where appropriate subject to external advice/ review
management plan
process
rule requirements
35
establishing prices
by NIEIR
by:
Government energy policy Global financial crisis impacts AMI
determining Reinforcement Capex
verified with NIEIR
influenced by:
Economic conditions Population growth Appliance purchase & usage patterns
Energy forecasts Maximum demand
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0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2006-10 2009 2011-15 Average annual growth Customer numbers Energy consumption Maximum demand
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air conditioning:
upgrade
utilised assets.
Powercor Load Profile
0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 1400.00 1600.00 1800.00 2000.00 2200.00 2400.00 :0 1 :0 2 :0 3 :0 4 :0 5 :0 6 :0 7 :0 8 :0 9 :0 1 :0 1 1 :0 1 2 :0 1 3 :0 1 4 :0 1 5 :0 1 6 :0 1 7 :0 1 8 :0 1 9 :0 2 :0 2 1 :0 2 2 :0 2 3 :0 :0
Time of Day - Eastern Standard Time N
a lis e d lo a d in g 29/01/09 at 44.3oC 28/01/09 at 43.2oC 17/02/09 at 31.7oC 06/02/09 at 33.1oC 12/02/09 at 23.7oC 20/02/09 at 24.5oC
Mild Days Warm Days Hot Days
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levels
PAL Zone Substations Energy at Risk without Single Transformer Stations
20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year E n e rg y a t R is k (M W h rs ) Actuals Do Nothing Augment BAS MD step increase for both summer & winter. Predominantly due to BAS winter MD downturn (mild winter). Predominantly BAS & WPD Projects.
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– portfolio of ageing assets – average age in excess of 30 years – increasing risk of higher failure rates and rising maintenance costs – prudent conditioning monitoring to manage risk
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management alternatives where they are economically efficient
– Charlton zone substation – solar SWER photovoltaic system trial – hot water load management
alternatives are considered depends on:
– PAL receiving expressions of interest from proponents of feasible alternatives – advances in technology which may lead to a greater number of viable and feasible alternatives
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– augmentation of the existing Geelong East Zone Substation – augmentation of the 66kV lines in the Geelong area – increasing the capacity of the 66kV line in the Charlton area
replacement
– major replacement of conductors – replacement of poles – replacement of cross arms
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– Powercor will conduct a major replacement conductor program based
– enhanced program aims to ensure reliability is maintained in light of continued ageing and deterioration of overhead conductors in rural areas
– AMI leveraged projects – replacement/ renewal of SCADA network
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– most recent actual performance (5 months of forecast) – efficiency carry over mechanism applies – audited accounts available before AER final decision
± Add/ subtract changes in service classification ± Add/ subtract change in overhead allocation + Add step changes + Add scale escalation for growth across network + Add cost escalation = Forecast operating expenditure
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Debt raising costs: $33m Work volume & Customer growth escalation: $9m Input cost escalation: $78m
– Increased labour – Increased materials
Debt raising costs: $33m Scope Step Changes: $94 m
– Climate change – High risk Victorian towns – Insurance – Self insurance – Vegetation management – Safety management scheme – AEMC Distribution planning changes
Network growth escalation: $53m
– Increased network size
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500 1,000 1,500 2,000 2,500 Gross capex Net capex Operating $m, 2010 2006-10 2011-15
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Return on capital: 50% Return of capital: 28% Operating expenditure: 33% Other: 0.04%
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decreases in average distribution charges of 45 per cent over the last ten years
– maintaining current good performance in the face of increasing peak demand, asset utilisation and increasing bushfire risk – ensuring sustainable performance in the face of climate change and addressing increasing aging infrastructure
control period:
– 22.3 per cent increase in 2011 and a 5 per cent increase in price per annum over the rest of the regulatory control period
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scheme applying to operating expenditure
incentive scheme
with business specific amendments
49
innovative and efficient tariff structures
possible start-up in 2011
control period as meters are changed over
proposed tariff design changes
following the AER’s Final Decision
50