The document discusses load profiling arrangements for the NSW gas market as it transitions to full retail competition (FRC). It summarizes that net system load profiling (NSLP) using regional profiles will be used to facilitate FRC. Key aspects include annual apportionment of loads to retailers, forward reconciliation over 28 days, and global settlements to spread errors across all participants. The arrangements aim to balance objectives like equity, efficiency and minimizing barriers to competition during the transition to FRC.
transmission versus distribution planning, long term versus short term planning,issues in transmission planning,generation planning,capacity resource planning, transmission planning,national and regional planning, integrated resource planning
Summary of Modern power system planning part one
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Ratemaking and Environmental Compliance PlansJohn Wolfram
Utilities make significant investments to comply with environmental regulations. This paper discusses the ratemaking considerations for utilities' Environmental Compliance Plans.
transmission versus distribution planning, long term versus short term planning,issues in transmission planning,generation planning,capacity resource planning, transmission planning,national and regional planning, integrated resource planning
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the main topic of this chapter is the analysis of the various techniques required for utility planning engineers to optimally plan the expansion of the electrical power system.
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The Government will publish the draft EMR Delivery Plan in July 2013. This sets out the Government’s proposed draft strike prices for renewable projects and the plans for a capacity market. Everyone with an interest will have the opportunity to respond to the consultation before final strike prices are set at the end of the year.
In preparation for this DECC has produced an explanation of the methodology underlying the analysis being undertaken to help inform Ministers’ decisions on strike prices.
The explanation is designed to help prepare stakeholders for the consultation in July 2013, enabling them to better understand and respond to the content.
The consultation events held during the summer 2013 will be interactive sessions, during which there will be ample opportunity to raise any queries which these slides may generate.
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In the day-ahead dispatching of network-constrained electricity markets, renewable energy and distributed resources are dispatched together with conventional generation. The uncertainty and volatility associated to renewable resources represents a new paradigm to be faced for power system operation. Moreover, in various electricity markets there are mechanisms to allow the demand participation through demand response (DR) strategies. Under operational and economic restrictions, the operator each day, or even in intra-day markets, dispatchs an optimal power flow to find a feasible state of operation. The operation decisions in power markets use an optimal power flow considering unit commitment to dispatch economically generation and DR resources under security restrictions. This paper constructs a model to include demand response in the optimal power flow under wind power uncertainty. The model is formulated as a mixed-integer linear quadratic problem and evaluated through Monte-Carlo simulations. A large number of scenarios around a trajectory bid captures the uncertainty in wind power forecasting. The proposed integrated OPF model is tested on the standard IEEE 39-bus system.
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Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
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In its MYPD 3 Selective Reopener application hearing starting on June 23, Eskom’s acting CEO Brian Molefe will argue that an increase in tariffs will shorten load shedding and improve overall generation stability.
Real Time Voltage Assessment
•In Real Time MISO Reliability Coordination monitors:
–Voltages through SCADA voltage alarms and/or RTNET voltage results. Voltages compared to TOP defined voltage limits.
–Circuit flows and bus voltages
–Predefined constraint boundary flows
–Load levels
•RC monitors Real Time Contingency Analysis (RTCA)
–RTCA utilizes data from state estimator (RTNET) and performs AC contingency analysis
–RTCA determines both real and reactive power flow and bus voltages violations.
–RC will monitor and take corrective action to prevent potential post-contingency voltage violations as determined by RTCA.
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Definition of cost of capital : WACC / Cost of equity / Cost of debt / Capital structure (gearing) / Treatment of taxes
Quantification of cost of capital : CAPM (Capital Assets Pricing Model) / Price Arbitrage Theory / Dividend Growth Model / Comparable Earnings Model / "Precedent Case" Approach
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The Government will publish the draft EMR Delivery Plan in July 2013. This sets out the Government’s proposed draft strike prices for renewable projects and the plans for a capacity market. Everyone with an interest will have the opportunity to respond to the consultation before final strike prices are set at the end of the year.
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The explanation is designed to help prepare stakeholders for the consultation in July 2013, enabling them to better understand and respond to the content.
The consultation events held during the summer 2013 will be interactive sessions, during which there will be ample opportunity to raise any queries which these slides may generate.
An integrated OPF dispatching model with wind power and demand response for d...IJECEIAES
In the day-ahead dispatching of network-constrained electricity markets, renewable energy and distributed resources are dispatched together with conventional generation. The uncertainty and volatility associated to renewable resources represents a new paradigm to be faced for power system operation. Moreover, in various electricity markets there are mechanisms to allow the demand participation through demand response (DR) strategies. Under operational and economic restrictions, the operator each day, or even in intra-day markets, dispatchs an optimal power flow to find a feasible state of operation. The operation decisions in power markets use an optimal power flow considering unit commitment to dispatch economically generation and DR resources under security restrictions. This paper constructs a model to include demand response in the optimal power flow under wind power uncertainty. The model is formulated as a mixed-integer linear quadratic problem and evaluated through Monte-Carlo simulations. A large number of scenarios around a trajectory bid captures the uncertainty in wind power forecasting. The proposed integrated OPF model is tested on the standard IEEE 39-bus system.
Load forecasting is a process to estimate the need or demand for power from a system. It helps to maximize efficiency and minimize the operational cost of any power generation unit. Some common models are used for this purpose among which the five most used models for load predictions are discussed here.
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
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Load types, estimation, grwoth, forecasting and duration curvesAzfar Rasool
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In its MYPD 3 Selective Reopener application hearing starting on June 23, Eskom’s acting CEO Brian Molefe will argue that an increase in tariffs will shorten load shedding and improve overall generation stability.
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Training Module on Electricity Market Regulation - SESSION 5 - Cost of CapitalLeonardo ENERGY
The weighted average cost of capital (WACC) methodology is a widely accepted method for calculating the allowed rate of return. Regulators use different models to set the allowed cost of capital. This section explains the models and their practical application.
Definition of cost of capital : WACC / Cost of equity / Cost of debt / Capital structure (gearing) / Treatment of taxes
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Financial Analysis
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An approach to evaluate the heat exchanger retrofit for installed industrial ...eSAT Journals
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Small Power Generation Plant solution (SPGP) continues to be an important segment of Electrical Energy production. The increasing demand for energy has to be satisfied while considering the impact on the global environment. SPGP plays an important role in industrial applications. Small size cogeneration plants sited close to industrial energy consumption can deliver power with high fuel efficiency and low emissions, and with modest space requirements. CRDenergy can offer to its customers complete solutions from feasibility studies to the actual turnkey cogeneration plant construction, aftermarket services and customized financial solutions. We are using oil and gas industrial port city Port Harcourt city (PH) in Nigeria, African largest economy as a case study, with its complexity, it reflects the shortage of power or barriers and opportunity encountered in every growing economy . Avoiding the structural complexity of building large scale power plant; SPGP offers a flexible, realiable, close to consumer option that can be multipled in multiple units and easily transformed to negbourhood service station in industrial hubs.
The project involves determining real time electricity charges incurred by the residential consumers. The smart grid integrated with residential PV systems was modeled in Simulink to determine demand response in dynamic pricing environment. Based on the load demand, electricity charges were calculated and compared with flat rate charges to highlight cost savings.
Aemo victoria to new south wales interconnector upgrade rit t padr 2019Power System Operation
The energy landscape across the National Electricity Market (NEM) is changing rapidly. Strong investor interest in renewable generation continues to shift the geography and technical characteristics of supply, while it is anticipated that an aging fleet of existing conventional generators will progressively withdraw from the market over the coming decades. Furthermore, consumer behaviour is evolving and the increasing penetration of distributed energy resources (DER) is changing the nature of ‘demand’ while also providing new opportunities to address Australia’s energy transformation.
This energy transformation is already having a dramatic impact on the utilisation of the existing power system. It is, for instance, increasing network congestion in some areas, while also increasing the system’s reliance on interconnections between regions. Well-targeted and timely investment in the transmission network is required to keep pace with these changes and provide consumers with the most cost-effective energy outcomes.
AEMO’s 2018 Integrated System Plan1 (ISP) sets out an optimised national pathway for development of the power system that would maximise the value from new and existing resources across the NEM, while delivering energy reliability at the lowest cost to consumers.
The ISP identified that immediate action was required on several fronts, and designated these as priority ‘Group 1’ projects. This group included the need for increases to the transfer capability between Victoria and New South Wales.
Transfer between these two states is currently restricted by thermal, voltage stability, and transient stability limitations. Without investment, these limitations will result in the northern states having limited access to lower-cost generation from the southern states, preventing reductions in the underlying economic cost of generating electricity across the NEM, and increasing the requirement for new generation investment to maintain adequate supplies.
The Value of Diversifying Uncertain Renewable Generation through the Transmis...Power System Operation
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Impacts of Demand Side Management on System Reliability Evaluationinventy
Electricity demand in Saudi Arabia is steadily increasing as electrical loads grows at a rate of about 7% per year, this represents a high rate by all standards, and largely due to population growth, as well as due to government subsidies which may lead to prices much lower than actual production cost. This growth represents a challenge that requires Saudi Electricity Company (SEC) to invest huge amounts of money every year, for the construction of additional generation capacity along with the reinforcement of transmission network to meet the consumption growth.Also the demand varies frequently throughout the day, causing a waste of a large part of the energy. SEC believes the optimum solution lies in altering the load shape in order to have a better balance between customer’s consumption and SEC’s generation, This paper describes the method for improving the power system reliability by shifting the portion of peak load to off-peak periods This load management scheme can be achieved by lifting the generation during off peak periods and utilizing the stored energy during peak periods. A hybrid set up involving solar and wind energy along with batteries can also be used to store energy and utilize it during peak periods.
A hybrid approach for ipfc location and parameters optimization for congestio...eSAT Journals
Abstract
The deregulated power system operation with competitive electricity market environment has been created many challenging tasks to the system operator. The competition with strategic bidding has been resulted for randomness in generation schedule, load withdrawal and power flows across the network. The economic efficiency of electricity market is mainly dependent on network support. In the event of congestion, it is required to alter the base case market settlement and hence the economic inefficiency in terms of congestion cost can occur. In order to anticipate congestion and its consequences in operation, this paper has been considered Interline Power Flow Controller (IPFC).This article proposed a tactical approach for optimal location and then its parameters in Decoupled Power Injection Modeling (DPIM) are optimized using Gravitational Search Algorithm (GSA). The case studies are performed on IEEE 30-bus test system and the results obtained are validating the proposed approach for practical implementations.
Keywords: Deregulated power system, competitive electricity market, congestion management, IPFC, Gravitational Search Algorithm (GSA)
Optimum Location of DG Units Considering Operation ConditionsEditor IJCATR
The optimal sizing and placement of Distributed Generation units (DG) are becoming very attractive to researchers these days. In this paper a two stage approach has been used for allocation and sizing of DGs in distribution system with time varying load model. The strategic placement of DGs can help in reducing energy losses and improving voltage profile. The proposed work discusses time varying loads that can be useful for selecting the location and optimizing DG operation. The method has the potential to be used for integrating the available DGs by identifying the best locations in a power system. The proposed method has been demonstrated on 9-bus test system.
Optimal Expenditure and Benefit Cost Based Location, Size and Type of DGs in ...TELKOMNIKA JOURNAL
The economic issue is an essential element to determine whether DG should be installed or not. This work presents the economical approach for multi-type DGs placement in microgrid systems with more comprehensive overview from DG’s owner perspective. Adaptive Real Coded GA (ARC-GA) with replacement process is developed to determine the location, type, and rating of DGs so as the maximum profit is achieved. The objectives of this paper are maximizing benefit cost and minimizing expenditure cost. All objectives are optimized while maintaining the bus voltage at the acceptable range and the DGs penetration levels are below of the DGs capacities.The proposed method is applied on the 33 bus microgrids systems using conventional and renewable DG technology, namely Photovoltaic (PV), Wind Turbine (WT), Micro Turbine (MT) and Gas Turbine (GT). The simulation results show the effectiveness of the proposed approach.
Trans African Energy Pty. Bidders’ Guide to Power Purchase Programmes, Stephen Labson
Acting on behalf of Eskom (SOC) Pty Ltd, we developed a Bidder's Guide to Power Purchase Programmes covering three procurement initiatives as of 2008:
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While the many conditions underlying the procurement programmes and associated PPAs covered in these Guidelines are complex by nature, fundamental aspects of each PPA can be usefully summarised to highlight key similarities and differences between the various programmes. In this regard, the aim of these Guidelines is to help bidders form a broad view on which programme might best suit their needs, and to be able to better understand why certain provisions might vary between the alternative programmes. As such, this summary is not intended to provide a comprehensive overview to any of the individual programmes, but is intended to provide a map for investors to utilise in formulating their initial bids.(Dr Stephen Labson, lead author, May 2008)
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Load Profiling for the NSW Gas Mass Market
1. Load PPrrooffiilliinngg ffoorr tthhee
NNSSWW GGaass MMaassss MMaarrkkeett
Prepared by
Trowbridge Consulting
26 June 2001
NSW Natural Gas
Achieving Strategic and Operational Readiness For FRC
2001
2. Outline of Presentation
Introduction
Full Retail Competition
Forms of Load Profiling
The Objectives of Load Profiling
Summary of Arrangements for NSW Gas
Retailer Impacts
Key Customer Impacts
Profiling in Electricity and Victorian Gas
Conclusions
1
2
3
4
5
6
7
8
9
P_13072000_energy2
2
3. Introduction
1
The wholesale gas market in NSW is a Contract Carriage
Model (compared to Victoria which is a Market Carriage
Model.)
There is no current spot market for gas in NSW.
Retailers are expected to bring gas to the market in order
to meet its customers load in both terms of timing and
volume.
With no time of year price signals (eg: a spot market)
timing is less important.
P_13072000_energy2
3
4. Full Retail Competition
2
Rollout of full retail competition (FRC) to mass market
requires a mechanism for allocating the wholesale energy
costs for a franchise area between multiple retailers.
Current contestable customers ( 10TJ pa or 2nd Tier 1 TJ
pa) are daily metered and as such timing and volume is
known (with appropriate adjustments for UAFG).
Imposing a metering requirement on the mass market would
be cost prohibitive and represent a barrier to competition.
Load profiling enables the allocation of wholesale gas and
costs to retailers in the absence of daily metering for all
customers.
The primary objective of load profiling is to facilitate FRC.
P_13072000_energy2
4
5. Forms of Load Profiling
3
There are two basic forms of load profiling:
Net System Load Profiling (NSLP); and
Load Research Based Profiling.
A third form of profiling (Hybrid NSLP/Load Research Based
Profiling) combines elements of these two basic forms.
P_13072000_energy2
5
6. Forms of Load Profiling
3
Net System Load Profiling
Net system load profiling is the simplest form of profiling.
It refers to the construction of profiles using the interval (daily
in gas, half hourly in electricity) metered system load for a
defined geographical area.
The net system load broadly represents:
the aggregate energy consumed during a day (gas) or
half hour (electricity) by all customers located in an
area; less
the energy consumed by customers in that area that are
interval metered (eg. large industrial/commercial
customers).
P_13072000_energy2
6
7. Forms of Load Profiling
The following chart illustrates the net system load shape for
the Victorian Wholesale Electricity Market on two different
days.
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
P_13072000_energy2
7
Net System Load For Victoria
0.0%
12:00 AM
2:00 AM
4:00 AM
6:00 AM
8:00 AM
10:00 AM
12:00 PM
2:00 PM
4:00 PM
6:00 PM
8:00 PM
10:00 PM
Time of Day
Proportion of Daily Consumption within Half Hour
Hot Summer Weekend Day
Cold Winter Weekday
3
8. Forms of Load Profiling
3
The following chart illustrates the net system load shape
(normalised) for the three network regions in NSW gas.
Daily Load Profiles for Three Networks
Proportion of Daily Consumption to Annual Network Consumption
0.8%
0.7%
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to Support Effective
Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
P_13072000_energy2
8
Date
Proportion of Daily Consumption to Annual Network Consumption
Network 1 Network 2 Network 3
9. 3 Forms of Load Profiling
Load Research Based Profiling
Load research based profiling draws on a sample of
customers’ historical or live interval metered consumption to
construct a profile.
The profiles so constructed can be:
Deemed (ie constructed from engineering or other
acceptable estimates eg. street lighting);
Static (ie drawn from a historical sample);
Static Adjusted (ie drawn from a historical sample but
adjusted for current effects such as weather); and
Dynamic (ie drawn from a “live” sample).
It is more expensive to construct and maintain/refine.
It must be remembered that a profile is “only a profile”.
P_13072000_energy2
9
10. The Objectives 4 of Load Profiling
The primary objective of load profiling is to facilitate
FRC.
The secondary objectives are:
Promote an efficient market;
Eliminate barriers to customer choice of retailer;
Minimise barriers to entry for competing retailers;
Protect the legitimate interests of customers;
Minimise cross-subsidies between host
(incumbent) and second tier retailers;and
Provide an opportunity for market and
technological evolutions.
P_13072000_energy2
10
11. The Objectives 4 of Load Profiling
Economic efficiency- user pays
- encourages demand side response
User equity - history matters (ie. past investment decisions, existing
tariff regime)
- price shocks / volatility unfair and undesirable
- some cross subsidies are considered socially desirable
P_13072000_energy2
11
/ load shifting
Competing Objectives
12. The Objectives of Load Profiling
4
Equity and efficiency objectives cannot be satisfied
simultaneously in the short term.
Arguably, the move to more cost reflective pricing should
not be pre-empted or driven by the selection of a profiling
regime.
Instead, it is considered important for the industry to retain
the option (but not be compelled) to gradually embrace cost
reflective pricing over time.
This view is at odds with the efficient pricing objective of
load profiling which links the effectiveness of competition to
the removal of cross-subsidies.
The tension between these two views is expressed in the
following slide in the case of the gas market:
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13. 4 The Objectives of Load Profiling
“Community
Rating”
• Shippers book capacity and
enter into wholesale producer
contracts to meet the
requirements of their portfolios.
• Costs should be shared evenly
across all users.
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““UUsseerr PPaayyss””
• Poor load factor customers require shippers to
book more capacity and purchase greater MDQ
per unit of AQ
• These customers should pay for the incremental
“peak period”supply costs whilst good load
factor customers should receive appropriate
discounts to their end use prices.
Key Considerations
• Load profiling should not force an immediate move to “user
pays”.
• In IPART’s words “end users have made decisions on
location, production and investments in energy consuming
equipment based on existing pricing structures and
locational differences. It would be inequitable to substantially
change prices in the short term”.1
1: IPART Draft Decision of 28 October 1999 on AGLGN’s Access Arrangement (Attachment 7,
Economic Principles for Network Pricing).
14. Summary of Arrangements for NSW Gas
5
The Wholesale Gas Market will be balanced based on
Net System Load Profiling (Net Section Load - NSL)
NSL at regional level (Network Section)
Will mean a large number of NSLs (30 or more)
Annual Apportionment (although business rules allow
administrator to change)
Forward Reconciliation
Payback over 28 days for Total Reconciliation Amounts
(Adjustment to Forecast Withdrawals)
Global Reconciliation (eg: use of equalisation amount)
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15. Summary of Arrangements 5 for NSW Gas
Key Advantage Key Disadvantage
NSL Simplest form to implement to
facilitate FRC
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Does not provide cost reflective pricing
Regionalisation
of NSL
Smaller Areas are balanced
individually
Volatility of small areas
Impact of large consumers
Regionalised price signals (not based on true
customer usage)
Annual
Apportionment
Maintains pricing signals in
current tariffs
Avoids breach of voluntary pricing
principles
Least Cost Reflective
Forward
Reconciliation
No need to recreate Gas Day Does not reflect time of use price signals
28 Day
Payback Period
Reduces Risk for Small Portfolios Does not minimise Cummulative Reconciliation
Balances
Global
Settlements
Spread Errors Across all
Participants
Both 1st and 2nd Tier Customers need to be
profiled
16. Summary of Arrangements for NSW Gas
5
Apportionment
Required to allocate the NSL on a daily basis
Used for both forecast withdrawals and deemed
(estimated) withdrawals
Carried out at customer level but summed for retailer
Annual Apportionment
Annual consumption (maybe normalised for weather)
No seasonal effects
Quarterly Apportionment
Annual consumption (maybe normalised for weather)
Allows for some seasonal effects
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17. Summary of Arrangements for NSW Gas
5
Reconciliation Amounts
Calculated as Daily Amount
Difference between
Deemed (Estimated) Withdrawals; and
Actual Withdrawals (from Meter read, adjusted for
UAFG)
Actual will have “sculpting factor” applied to get
Daily Share from cumulative meter read
Considered as Borrowed or Loaned Gas
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18. Summary of Arrangements for NSW Gas
5
Forward Reconciliation
Gas Repaid by Adjusting Future Forecast and Deemed
(Estimated) Withdrawals
28 Day Payback
Based on Total Reconciliation Amount (TRA) for Day
Each TRA paid back over 28 days
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19. Summary of Arrangements for NSW Gas
5
Replicating Portfolio (Theoretical)
Even Share of all “profiled” market segments
Large enough portfolio
Even distribution of timing of meter reads
Retailer will replicate NSLP
No Reconciliation Amounts
Host Retailers will (closely) replicate NSLP (particularly initially)
Other Retailers will head towards replicating portfolios if
Target all Mass Market
Win Large Enough Share
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20. Summary of Arrangements for NSW Gas
5
Effects of Payback (eg: Temperature Sensitive Load)
Illustration of Withdrawal Profiles for Retailer with Temperature Sensitive Portfolio
Based on Annual Apportionment
12,000
10,000
8,000
6,000
4,000
2,000
0
January
February
March
April
May
June
July
August
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September
December
October
November
Date
Daily Consumption (GJ)
True Withdrawal
Deemed Withdrawal No Payback
Deemed Withdrawal 100% Payback
21. Summary of Arrangements for NSW Gas
5
Effects on Reconciliation Amounts (Host Ret2 Replicating,
Ret3 Temp Sensitive, Ret4 Baseload)
Illustrative Cumulative Reconciliation Amount
Annual Apportionment
200,000
150,000
100,000
50,000
0
January February March April May June July August September October November December
-50,000
-100,000
-150,000
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No PayBack
Network 1
-200,000
Date
Cumulative Reconciliation Amount GJ
Host Retailer Retailer 1 Retailer 2 Retailer 3
22. Summary of Arrangements for NSW Gas
5
Effects on Reconciliation Amounts
Illustrative Cumulative Reconciliation Amount
Annual Apportionment
100% Forward Payback
2,000
1,500
1,000
500
0
January February March April May June July August September October November December
-500
-1,000
-1,500
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Network 1
-2,000
Date
Cumulative Reconciliation Amount GJ
Host Retailer Retailer 1 Retailer 2 Retailer 3
23. Summary of Arrangements for NSW Gas
5
End of Year Cumulative Amount is Caused by
Difference
Weather Experienced
Weather Used for Calculating Apportionment
Factors
Example Assumes Current year is colder than that used
for apportionment.
Lag caused by Meter Reading Cycle and calculation of
Cumulative Reconciliation Amounts.
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24. Retailer Impacts
6
Level Playing Field
Profiling solutions attempt to maintain competitive neutrality
between retailers with respect to their status ie:
incumbent / host / first-tier Vs
new entrant / second tier.
In the absence of a regulatory price cap, net system load
profiling will act to equalise the unit energy costs loaded into a
host retailer’s offered price regardless of the true load
characteristics of a customer.
The equalisation occurs at the boundary used for the NSLP.
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25. Retailer Impacts
Equalisation of Price Loaded for Energy Costs
Equalisation of Energy Costs
1 2 3 4 5 6 7 8 9
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Customer Type
Unit Energy Cost ($/MWh or $/GJ)
Competition
Forces host to price at NSLP Cost or risk
losing customers 6 to 9
Opportunity Gain
If Host prices at true energy cost, host will
be giving up the opportunity to price in the
energy cost faced by the STR for customers
1 to 4
NSLP Cost
6
26. Retailer Impacts
6
Other Issues
There are a number of other issues that concern
retailers:
choice of profiling area - must provide for host and
new entrant to price off the same profile;
diversification benefits - the net system load will
typically exhibit lower volatility than the true profile
of small portfolios of customers;
reconciliation of meter reads and losses -
unaccounted for energy must be fairly allocated;
informational asymmetry - host has privileged
understanding of the load characteristics of its
former franchise area;
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27. 6 Retailer Impacts
availability of hedges - there is some prospect that
intermediaries will offer hedges based on profiles;
and
regulatory risk - appears to fall more heavily on host
retailers as second tier retailers have a greater
ability to “walk away” from an unprofitable market
segment.
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28. Retailer Impacts
6
A number of factors will impact on the regionalised profiles
Localised Weather;
Gas penetration (size of area);
Impact of Large (profiled) customers
Customer Types;
Residential versus Commercial;
Appliance penetration.
Consideration when forecasting NSLP
Impact on volatility of profile.
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29. 6 Retailer Impacts
Three Different TRS/POTS Profiles
Illustration of Daily Load Profiles for Selected POTS/TRS
Proportion of Daily Consumption to Annual Area Consumption
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to Support
Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
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Date
Proportion of Daily Consumption to Annual Area Consumption
TRS/POTS 20 TRS/POTS 15 TRS/POTS 3
30. 6 Retailer Impacts
Illustration of Historical Load Factor for
Networks,Geographical Areas, TRS/POTS
Historical Net System Profile Load Factors Based on Geographical Areas
Broken Down to Individual Trunk Receiving and Packaged Offtake Stations
55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
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Area
Load factor
TRS/POTS
Grouped
Network
Region 1 Region 2 Region 4 Region 5 Networks
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
31. 6 Retailer Impacts
Comparison of Load Factor and Annual Consumption for
TRS/POTS
Illustration of Historical Load Factor for Different Trunk Receiving and Packaged Offtake Stations (TRS/POTS)
- Note Wilton not included.
45%
40%
35%
30%
25%
20%
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000
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Average Annual Consumption GJ
Load factor
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
32. 6 Retailer Impacts
Comparison of Historical HDDs for different Geographical
Areas
Comparision of Annual HDD by Site
2,500
2,000
1,500
1,000
500
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
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Year
Annual HDD
Canberra
Airport
Bathurst
Armidale
University of New England
Albury
Wagga Wagga
Bega
Meringo Street
Dubbo
Coorena Road
Bankstown
Airport
Wollongong
Sydney
Observatory Hill
Newcastle
Source: Compiled by Trowbridge Consulting from Data provided by the Bureau of Meteorology
33. 6 Retailer Impacts
Forecast Variations in Load Factor due to Weather
Illustration of Geographic and Network Load Factor Variation for Different Weather Scenarios
Based on Forecast Consumption
60%
55%
50%
45%
40%
35%
30%
Region 1 Region 2 Region 4 Region 5 Network 1 Network 2 Network 3
Geographic Area or Network Area
Load Factor
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to Support
Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
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Max
Average
Min
Max 56% 48% 45% 47% 55% 56% 46%
Average 51% 42% 42% 45% 50% 53% 43%
Min 45% 36% 38% 41% 44% 51% 40%
34. 6 Retailer Impacts
Key Observations From Overseas Implementations
Load profiling is generally not mentioned in retailers’
communications with customers. It is commonly regarded as a
matter of interest only to retailers for settling their wholesale
energy purchase costs;
Regulators have also tended to shy away from communicating
with customers on the method used by their retailer to
determine the customer’s energy costs;
Numerous customer surveys reveal that customers are mainly
interested in the price implications (ie net overall effect of load
profiling) of FRC. Customers also generally require a
significant price cut before they will be persuaded to switch
supplier;
Most customers found the process of switching under a load
profiling regime relatively easy and seamless;
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35. 6 Retailer Impacts
Some customers have complained about the difficulty of
making price comparisons between retailers, particularly in
respect of dual fuel offerings;
We are aware of one utility which has had to defend litigation
on its adopted load research based profiling approach for
agricultural customers on the grounds that the utility did not
have sufficient data to produce statistically significant results.
Although the utility in question successfully defended the
litigation, the case highlights the need for the industry to tread
carefully when adopting load research based profiles for some
customer classes.
Larger users will be especially price conscious and aware of
the savings available from switching suppliers.
Transfer/switching rates for these customers are also generally
higher.
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36. 6 Retailer Impacts
Marketers do not appear to have neglected the lower
income/disadvantaged consumers, but the methods
employed for marketing to these consumers are clearly
different (greater percentage of door to door selling in
UK).
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37. 7 Key Customer Impacts
Customer Segments for each Retail Area
Tariff Market Consumption Split for AGLGN
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Residential
56%
Commercial/Industrial
44%
Residential
Commercial/Industrial
Tariff Market Consumption Split for GSN
Residential
76%
Commercial/Industrial
24%
Residential Commercial/Industrial
Tariff Market Consumption Split for AGC
Residential
72%
Commercial/Industrial
28%
Residential Commercial/Industrial
Source: IPART Issues Paper “Review of the Delivered Price of Natural Gas to Tariff Customers Served from AGL Gas Network in NSW”; May 1998 and
“Review of the Delivered Price of Natural Gas in Wagga Wagga and Albury”; October 1999
38. 7 Key Customer Impacts
Geographical BreakDown of Mass Market (in terms of
annual consumption)
Geographical Dispersion of Tariff Market Consumption for AGLGN
Source: IPART Issues Paper “Review of the Delivered Price of Natural Gas to Tariff Customers Served from AGL Gas Network in NSW”; May 1998
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Sydney
79%
Wollongong
4%
Newcastle
6%
Country Areas
11%
Sydney
Wollongong
Newcastle
Country Areas
39. Key Customer Impacts
7
Customers who are “peakier” than the NSLP
(temperature sensitive customers) are subsidised by
“flatter” (non temperature sensitive).
We explore the key customer impacts of load profiling
under the following headings:
The cross subsidies inherent within the existing
tariffs; and
Effect on a customer’s bill; and
Incentives for interval metering.
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40. 7 Key Customer Impacts
Cross Subsidies Inherent Within the Existing Tariffs
Consumer to consumer cross-subsidies exist at present as
retail tariffs do not reflect the true energy costs.
A load profiling regime that sought to reflect the customer’s
“true” energy purchase costs (eg. a load research based
profiling regime) or indeed the installation of daily meters
would “undo” a significant level of cross subsidy which
currently exists.
This may in lead to breach of the voluntary pricing principles
and the risk falls to the incumbent retailer because 2nd tier
retailers are not bound to compete for unprofitable segments
of the market.
In the absence of a reduction in the non energy components
of a customer’s bill, the effective price faced by some
customer segments would rise.
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41. 7 Key Customer Impacts
Cross Subsidies Inherent Within the Existing Tariffs
Currently in NSW gas, most residential and small business
tariffs are based on Uniform Tariffs (No time of Use Signals)
Will this change???
Households with access to gas mains that are actually
connected.
AGL Retail Area 60%
Wagga Wagga 80%
Albury 85%
Potential growth (especially in AGL area)
Potential for Tariff Structure to Change
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42. 7 Key Customer Impacts
Load profiling only impacts the energy purchase cost
component of a customer’s bill.
Victorian Electricity Example
Metropolitan General
Domestic Customer
(Annual Bill $660)
Network Charges
46%
Retail Costs
11%
Wholesale Energy
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Costs
17%
Retail Gross
Margin
24%
NEMMCO
Charges
2%
Network Charges
52%
Retail Costs
9%
NEMMCO
Charges
Wholesale Energy
Costs
27%
3%
Retail Gross
Margin
9%
Effect on a Customer’s Bill
Source: From Trowbridge Consulting report to Victorian Distributors “Victorian Electricity Load Profiling
Study”; March 2000, based on data provided by participants.
Rural Hot Water
Domestic Customer
(Annual Bill $810)
43. 7 Key Customer Impacts
Effect on a Customer’s Bill
Illustration of cross subsidies for NSW residential gas
customers under NSLP (ignoring Payback).
Comparison of Median Consumer Cross Subsidies by Profiling Option
Expressed as a % of Bills for House Dwellers with 3 Occupants
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
CK CH HW CK + HW CH + HW + CK
Appliance Mix
Cross Subsidies as % of Bill
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43
Annual NSL
Quarterly NSL
Monthly NSL
Annual NSL -2% 14% -4% -4% 6%
Quarterly NSL -1% 7% -2% -3% 3%
Monthly NSL -1% 4% -2% -2% 2%
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to Support
Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
44. 7 Key Customer Impacts
Effect on a Customer’s Bill
Illustration of cross subsidies for NSW commercial gas
customers under NSLP (ignoring Payback).
Comparison of Median Consumer Cross Subsidies by Profiling Option
Expressed as a % of Bills for Sample IC Customers
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
Small No Heating Small Heating Large No Heating Large Heating
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Sample Customer
Cross Subsidies as % of Bill
Annual NSL
Quarterly NSL
Monthly NSL
Annual NSL -5% 27% -6% 32%
Quarterly NSL -3% 20% -4% 23%
Monthly NSL -2% 15% -2% 17%
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
45. 7 Key Customer Impacts
Payback reduces level of cross subsidies
Depends on class of business
eg: Central Heating Only Customer - reduce from
14% to 10%. (subsidised by others)
Cross subsidies exist in current tariff structure (as
discussed)
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46. Key Customer Impacts
7
Incentives for Interval Metering
Customers with more desirable load characteristics than
NSLP
Reasonable size
Clear economic signals for interval metering
As Metering Costs come down size threshold for economic
metering will also reduce
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47. Key Customer Impacts
7
Incentives for Interval Metering
Annual Consumption per Customer Required Before there is a $400 Cross Subsidy
Based on EAPL Costs and Annual NSL Profiling
1,000
900
800
700
600
500
400
300
200
100
0
Mandating of Daily Meters
Could be Considered
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Consumption 98 289 1,311 1,458 629 453 376
Customer's Load Factor Calculated Using Quarterly Bill Data
Annual Consumption Required (GJ)
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Retailer has Economic
Incentive to Install Meter
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to Support Effective
Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
48. Key Customer Impacts
Over time the net system load shape will “deteriorate” but
become more representative of the load characteristics of the
profiled customers.
Incumbent sets tariffs
based on NSLP for all
customers
The new NSLP is
peakier but more
representative of
remaining customers
Flatter (Non Peaky)
have economic
incentive to install
interval meters
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Flatter/non-peaky
customers are
overcharged under
NSLP
Evolution of a NSLP Regime
7
49. Profiling in Electricity 8 and Victorian Gas
Trowbridge Consulting has undertaken quantification
studies in load profiling options for the mass market in:
Victorian Electricity (Vic DBs - public document)
Victorian Gas (DNRE - public document)
NSW Gas (ENCorp)
NSW Electricity (advised NSW retailer on response
to MIG paper)
The following summarises the current situation in terms of
implementation of profiling for FRC.
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50. Profiling in Electricity 8 and Victorian Gas
Victorian Gas
FRC expected to commence in mid 2002
5-10TJ customers contestable from 1 Sept 2001 based on
a metering solution for 2nd tier only customers.
Net System Load Profiling will be used as balancing
arrangement.
5-10TJ customers can choose between metering or
profiling once full contestability implemented.
Profiling at Distribution Business Boundary Area (DBBA)
Partial settlements
Backward Reconciliation (Victoria has a daily spot market)
Apportionment Factors based on customer level “like
billing period” data, adjusted for EDDs.
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51. Profiling in Electricity 8 and Victorian Gas
NSW Electricity
FRC expected to commence in 1 January 2002.
There has been a staggered approach for 40-100MWh
and 100-160MWh commercial customers (based on
metering solution for 2nd Tier.)
Net System Load Profiling to settle wholesale market.
NSLP at Local Network Service Provider (LNSP)
boundary
Partial settlements
Controlled Load Profiles (CLPs) (basically Off Peak Hot
Water) will be “peeled off” NSLP for both 1st and 2nd Tier
customers.
CLPs will be based on sampling
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52. Profiling in Electricity 8 and Victorian Gas
VIC Electricity
FRC expected to commence in 1 January 2002.
Net System Load Profiling to settle wholesale market.
NSLP will be undertaken at Local Network Service
Provider (LNSP) boundary
A Partial settlements regime will operate.
No allowance for “peel-off” of off-peak loads (Hot Water)
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53. 9 Conclusions
A simple net system load profiling solution has the potential
to afford residential and small commercial industrial
customers the opportunity to share in the benefits of full
retail competition.
Implementation must be carefully managed recognising the
key customer and retailer impacts.
The single largest risk is that the load profiling solution is
“over engineered” to the point where the industry loses
sight of the primary objective (ie to facilitate FRC).
In considering the optimal solution for preserving the “load
shifting” and energy conservation incentives, we believe
there is limited value in refining the profiling solution.
The benchmark against which any such refinements
should be measured is the cost of interval metering.
A profile can never be made to “behave like an interval
meter”.
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