TransGrid and the changing
energy market
Deliberative forums with consumers – Sydney CBD, Wagga and Parramatta
November 20...
Overview of TransGrid

TransGrid promotional video
This video is current unavailable

2

November 2013 TransGrid Deliberat...
The electricity supply chain

38%
wholesale
plus carbon
3

8%

November 2013 TransGrid Deliberative Forums

34%

Total
13%...
Generating and transporting
electricity

Generating capacity in the National
Electricity Market 2013

4

November 2013 Tra...
TransGrid‟s key statistics




94 substations



63 generator connections



362 distributor and direct
customer conne...
TransGrid‟s revenue


TransGrid is a government-owned ‘natural monopoly’ .
It is for-profit, to encourage efficiency.
Reg...
What TransGrid does


Design, maintain and operate the network to:
 Keep the lights on
 Get the cheapest generation to ...
The market has changed

70,000
GWh

Total electricity
demand in NSW

1951/52
8

November 2013 TransGrid Deliberative Forum...
Index movement

Significant electricity price rises

NSW residential
electricity price

400
300
200

CPI

100

2009

2004
...
TransGrid‟s new approach

Adaptive
planning

 Sydney CBD 2012/13 Summer
demand management (like taking
50,000 air conditi...
Engaging with stakeholders
Government
and
regulators

Industrial and
commercial
consumers

Distributors
and other
transmit...
The energy conversation

Cost

Reliability

12

November 2013 TransGrid Deliberative Forums
Draft five year plan
Business plan overview
$2,100

Typical annual
electricity cost

$168

14 TransGrid‟s 2013 TransGrid Deliberative Forums
No...
Business plan overview
Breakdown of typical residential annual transmission charges

Consult
today on
operating
expense
pr...
How TransGrid‟s prices compare
Prescribed revenue per energy transmitted (c/kWh nominal)
3
ElectraNet (SA)

Transend (Tas)...
Proposed capital
investment
(building the network)
How much network do we need?

18 Capital – non build focus
November 2013 TransGrid Deliberative Forums
Replacement dominates proposed
capital investment
Proposed capital investment for 2014 to 2019
Category

Description

Augm...
Peak demand has slowed and
is less certain

20 Capital - Augmentation Deliberative Forums
November 2013 TransGrid
History of network development
is driving replacement needs

21 Capital - Replacement Deliberative Forums
November 2013 Tr...
Comparison with other
mature networks
Annual Replacement Spend as % of Depreciated Asset Value
10%

8%

6%

4%

2%

0%
Nat...
Proposed replacement
project portfolio
Forecast replacement projects for 2014 to 2019
Category
Powering
Sydney‟s Future
(„...
„Market benefits‟ projects to
dispatch cheapest generation





24 Capital – Market benefits
November 2013 TransGrid Del...
Operating
expense
TransGrid performs well against
international peers

26 Operating expense – Overview Forums
November 2013 TransGrid Delibe...
Breakdown of draft
operating expense proposal
Proposed annual operating expense for 2014 to 2019
Category

Description

Pl...
Increased planning and
engagement costs
Planning cost trend



12
10

 More responsive
capital expenditure
decisions

8
...
Efficiencies in maintenance,
operations and business activities




29 Operating expense – Maintenance
November 2013 Tra...
Discussion
Non-build options
Minimising our build program:
past success

TransGrid performs well against international peers Andrew to confirm if publi...
Increasing focus on innovative
non-build options
Demand
management

Peak load management through time
of use tariffs, inte...
Consulting on requirements for
Powering Sydney‟s Future


Works underway to defer /
avoid the need:
 advocacy for change...
Potential non-build options


Consumer education on saving electricity
 Research understanding consumers‟ behaviour
 De...
Discussion
Price and
reliability
Allocating transmission revenue
between consumers



The pricing methodology must be submitted to the regulator at the ti...
Transmission bill components

38%
Wholesale
power plus
carbon price

8%

35%

13%
Retail and
retail margin

7%
Green
(FiTs...
Allocating transmission prices –
two options
Postage stamp

User pays

TransGrid‟s charges are now approximately half “pos...
Discussion
Thankyou
For further information on TransGrid or this
presentation please contact TransGrid’s External
Communication Manager on 02 ...
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TransGrid deliberative forums

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Deliberative 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.

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Transcript of "TransGrid deliberative forums"

  1. 1. TransGrid and the changing energy market Deliberative 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. 2. Overview of TransGrid TransGrid promotional video This video is current unavailable 2 November 2013 TransGrid Deliberative Forums
  3. 3. The electricity supply chain 38% wholesale plus carbon 3 8% November 2013 TransGrid Deliberative Forums 34% Total 13% retail 7% green residential schemes bill
  4. 4. Generating and transporting electricity Generating capacity in the National Electricity Market 2013 4 November 2013 TransGrid Deliberative Forums The transmission network is like the freeways for electricity
  5. 5. TransGrid‟s key statistics   94 substations  63 generator connections  362 distributor and direct customer connections  November 2013 TransGrid Deliberative Forums 47 kms underground cables  5 12,609 kms high voltage transmission lines 1,083 employees, with more than 70% based outside Sydney
  6. 6. 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 6 November 2013 TransGrid Deliberative Forums
  7. 7. What TransGrid does  Design, maintain and operate the network to:  Keep the lights on  Get the cheapest generation to market 7 November 2013 TransGrid Deliberative Forums
  8. 8. The market has changed 70,000 GWh Total electricity demand in NSW 1951/52 8 November 2013 TransGrid Deliberative Forums 2012/13
  9. 9. Index movement Significant electricity price rises NSW residential electricity price 400 300 200 CPI 100 2009 2004 November 2013 TransGrid Deliberative Forums 1999 1994 9 1990 2013
  10. 10. 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 10 November 2013 TransGrid Deliberative Forums
  11. 11. Engaging with stakeholders Government and regulators Industrial and commercial consumers Distributors and other transmitters Residential consumers Generators 11 Impacted communities November 2013 TransGrid Deliberative Forums TransGrid‟s 5year plan, and broad engagement to understand needs and behaviour Particular network needs
  12. 12. The energy conversation Cost Reliability 12 November 2013 TransGrid Deliberative Forums
  13. 13. Draft five year plan
  14. 14. Business plan overview $2,100 Typical annual electricity cost $168 14 TransGrid‟s 2013 TransGrid Deliberative Forums November Draft Business Plan TransGrid part of bill
  15. 15. Business plan overview Breakdown of typical residential annual transmission charges Consult today on operating expense proposal Tax & depreciation Operating expense Return on proposed capital investment Return on capital already invested 15 TransGrid‟s Draft Business Plan Forums November 2013 TransGrid Deliberative Consult today on new capital proposal
  16. 16. How TransGrid‟s prices compare Prescribed revenue per energy transmitted (c/kWh nominal) 3 ElectraNet (SA) Transend (Tas) c/kWh nominal 2 Powerlink (Qld) TransGrid (NSW) 1 SP AusNet (Vic) 0 2005-06 2007-08 2009-10 16 TransGrid‟s 2013 TransGrid Deliberative Forums November Draft Business Plan 2011-12 2013-14 2015-16 2017-18
  17. 17. Proposed capital investment (building the network)
  18. 18. How much network do we need? 18 Capital – non build focus November 2013 TransGrid Deliberative Forums
  19. 19. Replacement dominates proposed capital investment Proposed capital investment for 2014 to 2019 Category Description Augmentation New or upgraded infrastructure to cater for growing demand Replacement Updating infrastructure which is wearing out Market benefits New or upgraded infrastructure to expand generator access and competition Others Non network infrastructure, including commercial property and IT systems, and security compliance 19 Capital – Overview November 2013 TransGrid Deliberative Forums
  20. 20. Peak demand has slowed and is less certain 20 Capital - Augmentation Deliberative Forums November 2013 TransGrid
  21. 21. History of network development is driving replacement needs 21 Capital - Replacement Deliberative Forums November 2013 TransGrid
  22. 22. Comparison with other mature networks Annual Replacement Spend as % of Depreciated Asset Value 10% 8% 6% 4% 2% 0% National Grid (UK) Transpower (NZ) SP AusNet (Vic) 22 Capital - Replacement Deliberative Forums November 2013 TransGrid Transend (Tas) Powerlink (Qld) TransGrid (NSW/ACT) ElectraNet (SA)
  23. 23. Proposed replacement project portfolio Forecast replacement projects for 2014 to 2019 Category Powering Sydney‟s Future („contingent‟) Substation renewal Control system renewal Transmission line renewal Individual equipment replacement 23 Capital - Replacement Deliberative Forums November 2013 TransGrid
  24. 24. „Market benefits‟ projects to dispatch cheapest generation   24 Capital – Market benefits November 2013 TransGrid Deliberative Forums Queensland to New South Wales interconnector upgrade Snowy to Yass / Canberra upgrade
  25. 25. Operating expense
  26. 26. TransGrid performs well against international peers 26 Operating expense – Overview Forums November 2013 TransGrid Deliberative
  27. 27. Breakdown of draft operating expense proposal Proposed annual operating expense for 2014 to 2019 Category Description Plan and manage assets Planning the development of the transmission network and capital portfolio management Maintenance Inspections, preventative, conditionbased and corrective maintenance Operate the network 24 hour control room operations, outage planning and technical studies Supporting the business IT, health and safety, property and insurance 27 Operating expense – Overview Forums November 2013 TransGrid Deliberative
  28. 28. Increased planning and engagement costs Planning cost trend  12 10  More responsive capital expenditure decisions 8 6  More transparent investment decision making 4 2 - Planning cost increases to date:  Proposed increases  Consumer engagement  Demand management innovation 28 Operating expense – Planning Forums November 2013 TransGrid Deliberative
  29. 29. Efficiencies in maintenance, operations and business activities   29 Operating expense – Maintenance November 2013 TransGrid Deliberative Forums Innovation in operations (virtual control room and automation of functions) to reduce costs  Video of transformer failure Automation of condition monitoring and control systems to reduce maintenance costs Efficiencies achieved in procurement, accommodation and payroll
  30. 30. Discussion
  31. 31. Non-build options
  32. 32. Minimising our build program: past success TransGrid performs well against international peers Andrew to confirm if public information Demand-driven capital approved by the regulator for 2009 to 2014 Responding changing Responding toto changing demand forecasts demand forecasts Approx $700 million deferred Advocating smarter Advocating smarter reliability reliability standards or standards or grid innovation grid innovation Continuing to procure non-build options such as demand management 32 Capital – Non build focus November 2013 TransGrid Deliberative Forums Approx $1.2 billion completed or underway
  33. 33. Increasing focus on innovative non-build options Demand management Peak load management through time of use tariffs, interruptible loads and load shifting etc. Local generation Local generation (biomass, solar, cogeneration) to reduce loading on network Energy efficiency Increasing customers‟ use of efficient appliances, lighting, motors etc. 33 Capital – Non build focus November 2013 TransGrid Deliberative Forums
  34. 34. Consulting on requirements for Powering Sydney‟s Future  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) 34 Capital - Replacement Deliberative Forums November 2013 TransGrid
  35. 35. 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)  35 Battery storage pilot program November 2013 TransGrid Deliberative Forums
  36. 36. Discussion
  37. 37. Price and reliability
  38. 38. 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 38 Pricing November 2013 TransGrid Deliberative Forums
  39. 39. Transmission bill components 38% Wholesale power plus carbon price 8% 35% 13% Retail and retail margin 7% Green (FiTs, RET, o ther) 39 Pricing November 2013 TransGrid Deliberative Forums
  40. 40. Allocating transmission prices – two options Postage stamp User pays TransGrid‟s charges are now approximately half “postage stamp” and half “user pays”. 40 November 2013 TransGrid Deliberative Forums
  41. 41. Discussion
  42. 42. Thankyou
  43. 43. 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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