Transmission Reliability Standards Jim Gallaugher on behalf of the - - PowerPoint PPT Presentation

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Transmission Reliability Standards

Jim Gallaugher

• n behalf of the Southern Group of Generators

Reliability Panel Public Forum, 30 April 2008

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The I ssues

W hat constitutes “a nationally

consistent fram ew ork”?

W hat are suitable high level

principles to incorporate in the fram ew ork?

W hat is an appropriate form of

transm ission reliability standard?

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Nationally Consistent Fram ew ork “… “… the creation of a truly the creation of a truly national, efficient, national, efficient, sustainable and inclusive sustainable and inclusive economy supported by economy supported by seamless regulation …” seamless regulation …” 1

1 “Australia 2020 Summit – Initial Summit Report”, April 2008 – Page 10

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Nationally Consistent Fram ew ork

‘Minimalist’ ‘Seamless’ National Principles Only Uniform National Regulations & Standards Option A Option E Option B Option D Option C

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Nationally Consistent Fram ew ork

‘Minimalist’ ‘Seamless’

National Principles Only Uniform National Regulations & Standards

TNSPs States ESIPC Energy Australia AER? The Group VENCorp NGF

Reliability Panel

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Nationally Consistent Fram ew ork

Each State is different State politicians ‘take the heat’ for supply

failures

Consistency betw een transm ission and

sub-transm ission standards is ‘im portant’

The stated case in favour of jurisdictional based standards:

These parochial arguments are unconvincing and are generally

• nly offered by those who have little or no interest in participating

in the market beyond the borders of their home State

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Nationally Consistent Fram ew ork

Entrenches jurisdictional specific netw ork

planning

I ntra-jurisdictional TNSP planning focus Jurisdictional differences in the econom ics

• f transm ission versus generation

Reliability Panel’s concerns w ith jurisdictional standards:

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Nationally Consistent Fram ew ork

Lack of com petitive neutrality betw een generation

and transm ission

Needless com plexity Needless retention of jurisdictional discretion Potential for undue influence and discretion for

TNSPs

Likely retention of sim plistic determ inistic

standards

Jurisdictionally based standards =

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High Level Principles

Transparency Governance Econom ic efficiency Specificity “Fit for Purpose” TNSP accountability Effectiveness ( ETNOF) Robustness ( ETNOF) Consistency [ c.f. Dist’n]

( ETNOF/ RP/ The Group)

No w orse ( RP) Technology neutral ( RP)

? ? x x

Broad Consensus Other Suggestions

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Form of Reliability Standard

Probabilistic Determ inistic Hybrid

The 3 Options

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Form of Reliability Standard

The only w ay to preserve com petitive neutrality

betw een various com peting alternatives for m eeting the standard

Fully com patible w ith the NEM Objective and a

proper value based investm ent test for new regulated investm ents

The option that can best satisfy m ost, if not all, of

the proposed principles

The Group strongly favours a probabilistic standard because it is:

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Form of Reliability Standard

The so-called ‘determ inistic’ standard is anything but determ inistic in that it is applied in a decision-m aking process involving planning futures that are inherently uncertain I n fact, as stated by VENCorp, a determ inistic standard in this planning context is nothing m ore than a ‘redundancy standard’

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Form of Reliability Standard

Dem and forecasts ( generally 9 0 % POE) A range of ‘typical’ patterns of generation

dispatch based on a num ber of ‘plausible’ future generation investm ent scenarios

A range of plausible or credible system

contingencies

Probabilistic based inputs into the application of a so-called determ inistic standard include:

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Form of Reliability Standard

• A set of determ inistic

standards based on econom ic considerations – i.e. a hybrid approach

• A probabilistic standard

applied w ithin a w ell- defined, uniform planning m ethodology

• Possible use of an

econom ically based determ inistic surrogate in lim ited, w ell-defined, circum stances – clearly specified in the uniform planning m ethodology – there could be m any of these

Reliability Panel The Group

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Form of Reliability Standard

The theoretical correctness of the

probabilistic approach is inarguable

I t’s detractors criticise it on the

grounds of:

Com plexity Practicality Clarity in investm ent decision-m aking Stakeholder Acceptance

That is, it’s an inconvenience,

principally to TNSPs

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Form of Reliability Standard

“… few pow er system s in advanced econom ies are

developed in this w ay”

“… adoption of such an approach across the NEM

w ould present m any challenges”

“… m ay be desirable for there to be a consistent

relationship betw een transm ission and sub- transm ission standards”

“A very com pelling case w ould have to be m ade to

governm ents and regulators to sw itch to probabilistic standards and planning m ethods …”

The RP’s case against a probabilistic standard:

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Form of Reliability Standard

The probabilistic approach is theoretically correct I t’s advantages ( in term s of satisfying the

proposed principles) com pared to the alternatives are significant

The argum ents against it are unconvincing VENCorp has dem onstrated that it’s doable, but w e

acknow ledge their approach falls w ell short of an ideal probabilistic planning m ethodology

Needlessly settling for a “second best” approach

sim ply because it’s convenient is likely to be very costly in the long run

The Group’s position: