From the
editor’s desk…
Welcome
to Pipes & Wires #141. After much thought I’ve decided to change the format
of Pipes & Wires from geographical clustering of articles to clustering by
topic as there are an increasing number of issues that are global and don’t
neatly fit into any one country or continent. So … enjoy.
Matters for attention in NZ
Readers’
attention is drawn to the following matters…
· Changes to
operating procedures for Long & Crawford Manchester
(later rebadged as GEC-Alsthom) oil-insulated combined fuse switches after an
explosion at the Morley Galleria shopping mall in Perth, Australia.
· Changes to the requirements for connecting embedded generation to distribution.
· Increasing interest in ISO 55000:2014 in regard to asset management practices and systems, and
the associated withdrawal of BSI PAS 55:2008.
· Revised standard NZS 7901:2014 for Safety Management
Systems.
· Increased obligations for worker safety.
· The Electricity Authority’s intention to “improve
distribution efficiency”.
· Increasing interest in ISO 37120:2014 in regard to sustainable community development.
Asset strategy & management
Withdrawal of asset management standard PAS 55:2008
Readers
should note that the asset management standard PAS 55:2008 was withdrawn on 1st
February 2015, and effectively superseded by ISO 55000. That doesn’t mean that
all the hard work of achieving PAS 55 certification is now worthless, but
rather that the internationally consistent ISO 55000 is now the preferred
standard. To discuss how your company can move towards ISO 55000 certification,
pick here.
Solar, electric cars & nett metering
US – shaping the rooftop solar regulatory framework
Introduction
Pipes & Wires #140 noted that the South Carolina
Public Service Commission developed
what commentators claimed was an innovative and forward-looking rooftop solar
regulatory framework in which the feed-in multiple is 1 and customers can keep
their existing tariff structure until 2025. This article examines matters in a
bit more detail and suggests that the way forward might not be as smooth as was
hoped for.
The Distributed Energy Resource Program Act 2014
Section 2 of this Act sets out the South Carolina Distributed Energy Resource
Act, the goals of which are to promote the establishment of a reliable,
efficient and diversified portfolio of energy resources for the State. The Act
provides inter alia for electric
companies supplying over 100,000 customers to apply to the PSC for approval of
a renewable energy program that includes changes to tariffs that support the
goals of the Act.
South Carolina Gas & Electric has developed a Renewable Generation
Plan which is expected to promote about 100MW of additional
solar generation by 2020.
Objections to the Plans
The Alliance For Solar
Choice has attacked SCG&E’s Plan, claiming that the Plan is
not as transparent as SCG&E claims. In response, SCG&E says that
customers can choose an alternative regulated rate if they don’t like the SCG&E
terms.
So what do we make of this ??
The
battle lines seem to be drawn around a couple of key issues…
· Expectations that rooftop solar owners will be paid high
prices for their exported electricity, ostensibly a lot higher than the price
that those very same connected customers would pay for the equivalent imported
electricity. If the exported electricity was actually reducing the electric
company’s costs by reducing peak demand or avoiding network investment, sure
that would be fine. However in many cases solar panels are oriented to the
midday sun so that the exported electricity just piles into the trough in the
demand profile.
· Expectations that rooftop solar owners somehow shouldn’t
have to pay the full economic cost of connecting to the local distribution
network which they all admit is an integral part of capturing feed-in tariffs.
My
guess is that at least some degree of impasse will remain until there is an
acceptance that distribution network connections must be fully paid for. On
that note it is pleasing to see the New Zealand Electricity
Authority wanting solar users to see the costs their investment may
impose on others. The Authority also went on to note that perverse pricing
signals that were often driven by environmental objectives are now creating
longer term issues.
Aus – solar changes the network demand characteristics
Introduction
Penetration
of rooftop solar has reached 23% in South Australia … 174,000 installations
with an installed capacity of about 550MW. This article takes a closer look and
unpacks 2 critical solar issues … changes to network demand profiles, and the
need to move away from nett kWh metering … and then concludes with a challenge
to policy makers & regulators.
Changes to the South Australian demand profile
Electricity
from rooftop solar effectively displaces imported (mains) electricity, so that
the demand profile “seen” by the network may be a lot less than the actual
electricity demand. The following facts should help to elaborate that point…
· The half-hour from 4:30pm to 5:00pm on Thursday 16th
January 2014 was a record demand for Victoria and South Australia of 13,225MW.
This was the coincident demand “seen” by the 6 combined distribution networks.
· During that half-hour period it is thought that rooftop
solar was supplying an additional 410MW, meaning that the total Victoria and
South Australian peak was probably more like 13,635MW.
So
rooftop solar would’ve avoided the operation of about 400MW to 500MW of peaking
plant, as well as avoiding transmission and distribution peaks. That is long-term
investment that can be avoided, and which provides the opportunity to share those
avoided costs with customers through amended and more innovative tariffs.
Further research indicates that over the years from 2008 to 2013 increasing
rooftop solar penetration has reduced South Australia’s average summer day
demand by about 150MW but has also shifted the timing of the peak from 2pm to
6pm. More recent reports on the back of further increases in solar penetration
indicate that the (grid) peak has shifted even further into the evening to
about 7:30pm. Better storage may well change the magnitude and timing of the
traditional morning and evening peaks even further.
The need to move away from nett kWh metering
SA Power Networks has indicated that it will need to migrate its tariffs away
from a nett kWh “consumption” basis to a demand basis. No surprises there …
most electric companies around the world are saying that.
A challenge to policy makers & regulators
The
need to move away from nett-kWh based tariffs is now abundantly clear. Policy
makers & regulators are encouraging and expecting electric companies to be
innovative and responsive to increased solar penetration, but seem slow to
allow correspondingly innovative tariffs that reflect the true costs of
operating a network with a high solar penetration.
As
noted in the previous article, the New Zealand Electricity Authority wants solar owners to see the true economic costs they
impose both on the networks and on the other customers who don’t install solar
panels. I’d offer every encouragement for the Electricity Authority to codify
those principles as policy, and secondly for other regulators to follow this
important lead.
US – abandoning nett metering in the Aloha State
Introduction
Nett
metering seems to be an integral part of the solar debate. This article
examines Hawaiian Electric Company’s (HECO) moves to abandon nett metering and replace it with
an alternative tariff structure that reduces the subsidy from non-solar to
solar customers.
The state of solar in Hawaii
Most
of us can imagine that anything solar would go well in Hawaii, preferably close
to one of the magnificent beaches. HECO has solar penetration rates of between
9% and 12% on its various islands, or about 20x the national average solar
penetration rate of 0.5%. The expected costs of the subsidy from the 88% of
non-solar customers to the 12% who have nett metering is about $50m, which is
far from trivial.
HECO’s proposed metering and tariff plan
HECO
recently filed a Transitional Distributed Generation Plan with the Hawaii Public
Utilities Commission which proposed a feed-in tariff based on HECO’s true cost
of connecting solar customers, which is pretty much only about ˝ the current tariff.
HECO argues (quite correctly) that network operation, maintenance and renewal
costs must be deducted from what is paid to customers.
Opposition to HECO’s proposed tariffs
Advocates
of solar are claiming that…
· The treatment of exported electricity is analytically
incorrect.
· There is no time-of-use (TOU) rates within the tariff.
Just
how analytically sound HECO’s treatment of exported electricity is can be
verified by economic and engineering studies, however the prima facie claim
that there are no TOU rates does seem concerning given that exported solar
electricity during peak times can help to significantly offset air conditioning
load (and should therefore be rewarded).
Where might all this go ??
There
are no obvious signs that advocates of solar are moving away from their
expectations of free-riding the network, however Pipes & Wires will
continue to watch this one closely especially as HECO is regarded as being at
the forefront.
Cool stuff
Conference transaction now on line
A
couple of weeks ago I starting reading a cool book entitled “Mercury-Arc
Current Convertors” by H.Rissik, published in 1947. This book referred to the
Second World Power Conference in Berlin in 1930, so I thought I’d have a poke
around and see what I could find about these early conferences.
And
here it is … The Transactions Of The First World Power Conference from London in 1924 are now on line. The conference lasted
13 days from 30th June to 12th July, and I guess some of
the 2,000 delegates (like the dudes from California) would’ve taken 5 or 6 days
to travel each way so that’s pretty much 3˝ weeks to attend a conference. By
all accounts the banquet was pretty good as well … 6,000 bottles of wine, 2,000
chooks and ˝ ton of turtle meat for the soup.
Newly published book – “Keeping The Lights On”
Well-known
electricity historian and author Helen Reilly has recently published her latest
book “Keeping The Lights On – The History Of System Operations In New Zealand
1939 – 2013”. Pick here to order your copy for only $46.50 from Grid Heritage. It’s
a thoroughly good read, and complements Helen’s previous book “Connecting The
Country”.
Regulatory decisions
NZ – determining the WACC for the Maui Pipeline
Introduction
The
Commerce Commission has recently determined the cost of capital that will apply to Maui Development
Limited for the 2016 information disclosure, known as NZCC 1.
Regulatory framework
The
regulatory framework for setting the Maui WACC’s is set out in Subpart 4 of Part 2 of the Gas Transmission Services Input Methodologies
Determination 2012.
Key features of NZCC 1
The
key features of NZCC 1 are the setting of vanilla and post-tax WACC’s for the 5
year period commencing on the first day of the 2016 disclosure year ie. 1st
January 2015. These are as follows…
|
WACC
method |
25th
percentile |
Mid-point |
75th
percentile |
|
Vanilla WACC |
6.27% |
7.08% |
7.89% |
|
Post-tax WACC |
5.58% |
6.39% |
7.20% |
Previous WACC decisions
Some
of the Commissions’ previous WACC decisions are as follows.
|
WACC
decision applies to |
Approx
date |
Mid-point
WACC |
75th
percentile WACC |
|
Maui
Developments for 2016 disclosure year |
January
2015 |
Vanilla
7.08% |
Vanilla
7.89% |
|
Vector,
GasNet CPP application before December 2015. |
December
2014 |
Vanilla
7.11%, 7.14%, 7.22% |
|
|
All
electricity CPP applications after 30th September 2014. |
September
2014 |
Vanilla
6.58%, 6.64%, 6.72% |
|
|
Auckland,
Christchurch Airports for 2015 disclosure year. |
July
2014 |
Vanilla
7.64% |
Vanilla
8.63% |
|
Vector,
GasNet for 2015 disclosure year. |
July
2014 |
Vanilla
7.54% |
Vanilla
8.35% |
|
Transpower
for 2015 disclosure year. |
July
2014 |
Vanilla
6.83% |
Vanilla
7.55% |
|
Wellington
Airport for 2015 disclosure year. |
April
2014 |
Vanilla
7.70% |
|
|
EDB’s
for 2015 disclosure year. |
April
2014 |
Vanilla
6.89% |
|
|
Powerco
gas CPP applications before March 2015. |
March
2014 |
Vanilla
5-year 7.54% |
Vanilla
5-year 8.35% |
|
Maui
pipeline (gas transmission). |
January
2014 |
Vanilla
7.64%, post-tax 6.85% |
|
|
Vector,
GasNet CPP applications before December 2014. |
December
2013 |
Vanilla
7.56% |
|
|
All
CPP applications before 30th September 2014 |
September
2013 |
Vanilla
from 6.26% to 6.69% |
Vanilla
from 6.97% to 7.41% |
|
Transpower |
July
2013 |
|
Vanilla
6.85% , post-tax 6.17% |
|
Vector
gas distribution, GasNet |
July
2013 |
|
Vanilla
7.65%, post-tax 6.97% |
|
Auckland
& Christchurch airports |
July
2013 |
|
Vanilla
8.00%, post-tax 7.75% |
|
All
electricity distribution |
April
2013 |
|
Vanilla
6.83%, post-tax 6.14% |
|
Maui
pipeline (gas transmission) |
February
2013 |
|
Vanilla
7.46%, post-tax 6.80% |
|
All
gas distribution and gas transmission DPP’s |
December
2012 |
|
Vanilla
6.63% |
|
Vector,
GasNet CPP’s |
December
2012 |
Vanilla
6.39% (5 years) |
|
|
Powerco
gas distribution |
October
2012 |
Vanilla
6.83%, post-tax 6.12% |
|
UK – amending the license conditions for slow-track
licensees
Introduction
The RIIO-ED1
regulatory framework recently introduced by Ofgem included provision for
fast-track approval of an applicant distribution network operators’ (DNO)
business plan (rate case). This article examines the additional and amended license conditions that have been imposed on those DNO’s that did not achieve
fast-track approval.
The RIIO-ED1 regulatory regime
All of
the UK’s 14 electricity distribution licenses (held by 6 DNO’s) are subject to
the 5th electricity distribution price control (EDPR5) until 31st
March 2015. On 1st April 2015 the licenses will become subject to
the RIIO-ED1 regime which is based on specifying outcomes rather than
prescriptively focusing on inputs. The wider philosophy is “Revenue =
Incentives + Innovation + Outputs”.
The process of fast-track approval
The
incentive feature has been carried through to the business plan submission and
assessment process by providing for business plans of sufficiently high quality
to be fast-tracked and receive early approval (subject to consultation), with
the incentive being to avoid resubmitting a business plan that Ofgem considers
to be deficient.
Assessment of the DNO business plans
The 6
DNO’s submitted a combined 14 business plans to Ofgem in July 2013. After an
initial assessment in November 2013, Ofgem decided to fast-track Western Power
Distribution’s (WPD) 4 business plans and noted that the DNO’s had clearly
learnt from the RIIO-T1 and RIIO-GD1 electricity transmission, gas transmission
and gas distribution price reviews.
Ofgem’s
final view was that only the 4 WPD business plans met the 5 criteria for
fast-tracking, and that the licenses held by the other DNO’s would be subject
to additional and amended license conditions to reflect Ofgem’s Final
Determinations of November 2014.
The slow-track license conditions
In
February 2015 Ofgem wrote to the 5 DNO’s whose collective 10 business plans were not fast-tracked
setting out a range of additional and amended license conditions. Subsequent to that, Northern Powergrid and British Gas have sought permission from the Competition & Markets Authority to appear various elements of the slow-track settlement.
Mergers & acquisitions
US - New Jersey regulators approve Exelon-Pepco merger
Introduction
Previous
issues of Pipes & Wires have examined Exelon’s proposed acquisition of Pepco. This issue notes the New
Jersey Board Of Public Utilities approval.
Key features of Exelon’s offer
Exelon
has made a $6.8b all-cash offer of $27.25 per Pepco share, which represented a
24.7% premium to Pepco’s closing price on the announcement day.
Key features of the New Jersey Board of Public Utilities
approval
Key
features of this approval include…
· Achieving a settlement between Exelon, Pepco, the Board and
the Independent Energy Producers of New Jersey that included provisions for
$15m of efficiency gains for customers of Atlantic
City Electric.
· Establishing a fund of $62m to provide rebates to Atlantic
City Electric customers.
Status of the required approvals
The
status of the regulatory approvals is…
|
Regulator |
Current
status of approval |
|
Federal Energy Regulatory Commission. |
Application
approved 20th November 2014. |
|
District of Columbia Public Service
Commission. |
Application
filed on 18th June 2014. |
|
Delaware Public Service Commission. |
Application
filed on 18th June 2014. |
|
Maryland Public Service Commission. |
Application
filed on 19th August 2014, approval may take up to 15 months. |
|
New
Jersey Board of Public Utilities. |
Approved
on 11th February 2015. |
|
Virginia
State Corporation Commission. |
Application
approved 8th October 2014. |
Pipes
& Wires will comment further as the last 3 approvals emerge.
US – the We Energies – Integrys merger
Introduction
Wisconsin
electric company We Energies has announced a $9.1b bid for Integrys Energy
Group. This article examines the key features of the deal and the
surrounding regulatory requirements.
A bit about We Energies
We
Energies owns the 2 regulated companies Wisconsin Electric Power Company and
Wisconsin Gas LLC that supplies 1,143,000 electric customers, 1,081,000 gas
customers and 429 steam customers across Wisconsin and the upper Michigan
peninsula.
A bit about Integrys
Integrys
Energy Group is a holding company based in Chicago that includes 5 regulated
electric and gas companies which span Michigan, Minnesota, Wisconsin and
Illinois…
· People’s Gas.
These
5 regulated companies collectively supply 1,365,000 gas customers and 445,000
electric customers.
The proposed merger
The
proposed merger is a combined stock, cash and assumption of debt deal totaling
$9.1b which values Integrys at $71.47 per share. The merged company would
supply 1,490,000 electric customers and 2,445,000 gas customers and would be
headquartered in Milwaukee.
Required regulatory approvals
Approvals
from the following (energy) regulators are required…
· Federal Energy
Regulatory Commission.
· Wisconsin Public
Service Commission.
· Illinois Commerce
Commission.
· Michigan Public
Service Commission.
· Minnesota Public
Utilities Commission.
Emerging issues
Most
of the mergers examined by Pipes & Wires include a wide range of public
skepticism over exactly how good the deal will be for customers, and the We
Energy – Integrys merger is no exception. An interesting adjunct to this is We
Energies proposal to sell its Presque Isle generating station to the Upper
Peninsula Power Company so that Upper Peninsula customers are not paying system
support payments in return for the Michigan governor’s support for the merger.
Pipes
& wires will comment further as this deal progresses.
Industry structural changes
Poland – building an energy champion
Introduction
The
formation of energy champions to fly the national flag (or least build a
sustainable energy company) in the face of regionalisation is not new. This
article examines Poland’s attempt to build such an energy champion.
Other energy champions
Long-time
readers might remember these previous attempts to form energy champions…
· The German government was keen to see Ruhr Gas remain German-owned, and consequently relaxed a few
anti-trust requirements to allow E.On to buy Ruhr Gas.
· The French government was keen to form an energy champion by
merging Electricité de France and Gaz de France, but the final play saw GdF merge with
Suez.
· The Spanish government were keen form an energy champion.
After unsuccessful attempts to acquire Iberdrola in 2003 and Endesa in 2006, Gas Natural
managed to acquire and integrate Union Fenosa to form 1 of Europe’s 10 largest energy companies in 2009.
· The Romanian government’s plans to consolidate a fragmented
oil, gas and electricity into a majority state-owned energy champion never
really got much traction.
The issue facing Poland
The
official line from the Polish government is that it wants to build an energy
company that is strong enough to compete in a consolidating European market,
and also to promote national energy security. Poland notes that its energy
companies are small compared to the big European energy companies, and they
also lack sufficient access to cheap capital to develop new coal, nuclear and shale
gas resources beyond the €23b planned for the next 5 years.
It
would appear that some relaxing of anti-trust regulations will be required,
noting that a previous merger was declined by the competition authority.
The planned formation of the champion
The
Polish government plans to merge the following 4 energy companies…
· Polska Grupa
Energetyczna (PGE) which is a vertically integrated company that owns
lignite mines, 40 power stations, 8 distribution networks, and 8 electricity
retail companies. EBIT is about €930m.
· Tauron Polska
Energia which owns coal mines, power stations and electricity and
heat distribution networks. EBITDA is about €700m.
· ENEA which owns 920MW of generation and sells about 13,500
GWh of electricity annually. EBITDA is about €400m.
· Energa owns 533MW of generation capacity and supplies
2,900,000 electric customers. EBITDA is about €440m.
Pipes
& wires will comment further as the political process progresses.
US – the continuing saga of muni’ising Boulder
Introduction
Pipes & Wires #126, #128 and #137 examined the City Of Boulder’s (Colorado) plans to purchase Xcel Energy’s distribution assets and run those assets as a Muni. This
article examines recent events.
Key events to date
Key
events to date include…
· In 2004 Boulder commissioned a report which concluded that
the City could feasibly purchase Xcel’s distribution assets and keep tariffs comparable to Xcel’s.
· These plans were shelved in 2008 when Xcel selected Boulder
for its SmartGridCity program
· The shelved plans were dusted off in 2011 when negotiations
to develop a wind farm broke down.
· The City planned a vote on the issue in April 2012, with the
expectation that the vote would be in favor of purchasing Xcel’s distribution business and running it as a Muni.
· Boulder then planned a vote for April 2013 which would
authorise the City to form a Muni and issue bonds to fund the purchase of
Xcel’s distribution assets providing that the Muni’s tariffs would be no
greater than Xcel’s at the time the Muni starts.
· In August 2013 the City voted 6 to 3 in favor of forming a
Muni, and additionally gave voters the opportunity to set an upper limit on key
costs of $214m and gave the City the power to file a condemnation
lawsuit if negotiations breakdown.
· In late October 2013 voters were asked to consider the following 2
ballot questions (the “Yes on 310” question, backed by Xcel Energy which aimed
to limit the debt that the City could take on to form the Muni, and the “2E”
question, backed by the City). The final election results revealed 66.5%
support for “2E” but only 31.1 support for “Yes on 310”, which supporters of
the Muni claim as a double victory and evidence of increased support since
2011.
· In late 2013 disputes over jurisdiction emerged amidst
claims that the Colorado Public Utilities Commission (PUC) has primary jurisdiction, and unless the issues
become legal rather than factual the Colorado Supreme Court does not have any
obvious jurisdiction.
Recent events
In January 2015 a
District Court judge ruled that the City cannot takeover Xcel’s distribution
business without the PUC’s involvement because the City’s plans include taking
ownership of assets that supply Xcel customers outside of the Boulder City
limits and effect regional reliability. The judge wrote that…
· The PUC has the authority to regulate public utilities and the
facilities which provide service within the City Of Boulder as well as
unincorporated Boulder.
· The City has the right to create a municipal utility to serve its
citizens. These facilities are intimately intertwined.
· Therefore it is necessary and appropriate for the PUC to determine how
facilities should be assigned, divided or jointly used to protect the system’s
effectiveness, reliability and safety.
The matter is
rapidly becoming even more complicated, and involves lofty legal concepts such
condemnation proceedings, eminent domain, Boulder’s right to home-rule, and
exactly what powers the Colorado constitution grants to the PUC. So … Pipes
& Wires will comment further as progress emerges.
Energy policy
Aus – a swing to the left in Queensland
Introduction
The January 2015 election in the Australian state of Queensland resulted in an unexpected swing to the left in which
Queensland Labour secured 44 seats, sufficient to form a minority government.
This article examines what that swing to the left might mean for state energy
policy.
Likely policy shifts
It’s
still early days, however some of the key elements of Labour’s emerging energy
policy are examined in the following table…
|
Policy
element |
Expected
Labour policy (some of which was pre-election) |
|
Solar energy |
Increase
the number of roof-top solar panels, as part of achieving the 90% renewable
energy target by 2030. This includes setting a “fair price” and what that
would cost non-solar customers, noting the possibility of paying that subsidy
(which amounts to about 6% of the average household electric bill) from asset
lease and privatisation funds. |
|
Privatisation
of state-owned electricity assets |
Retain
all assets marked for privatisation, and allocating 67% of the profits to a
Debt Reduction Trust for paying down general government debt. The 3 network
companies (Energex, Ergon and Powerlink) would be combined into 1 company, as
would the 2 generators CS Energy and Stanwell. Not surprisingly, there would
be no forced redundancies so it is hard to see how expected savings of $150m
per year will be achieved. |
|
Development
of fossil energy resources. |
Not
clear which way this will go. On one hand the coal and gas industries provide
and create a lot of jobs, but on the other hand Labour governments also place
a high emphasis on reducing CO2 emissions. |
It
will be interesting to see how these pre-election policies take shape as the
bureaucrats shape the detail and remind their political masters of what can and
can’t be done, and what prior commitments can’t be broken. It might be useful
to reflect on Sir Humphry’s insightful comment that “ministers come, and ministers go,
but permanent under-secretaries remain” (which a former NZ member of parliament
has assured me does has a degree of truth to it).
Regulatory policy
Aus – reviewing the energy market
Introduction
On-going
reviews of energy market structures are nothing new. This article examines the key
features of an expert panel reviewing the governance structure of Australia’s
energy market.
What has prompted the review ??
The
primary prompt for the review is a commitment made in 2007 by the Council of
Australian Governments (COAG) to review the energy market governance arrangements
5 years after the start of that arrangement. As the AEMO was established in 2009, a review is due. It is noted that
the energy markets, regulations and technology have evolved substantially since
2009.
The terms of reference
The terms of reference inter alia
require the review to…
· Consider the performance of the current energy market
governance arrangements.
· Identify governance arrangements that support stated market
outcomes.
· Whether the structure and roles of the AEMO, the AER and the AEMC remain appropriate
· Provide advice to the Standing Council on
Energy & Resources on possible improvements to both institutions and their
oversight.
Pipes
& Wires will comments further once the panel presents its report in
September 2015.
Global - the impact of technology as a competitive enabler
Introduction
Technology
has enabled competition within many segments of the legacy telecommunications
supply chain, and has reduced the need for regulation of the traditional
monopolies. This video clip examines how emerging electrical technologies could
do the same for the electricity industry.
The video clip
Professor Ingo Vogelsang from Boston University was recently invited to New Zealand
by the Electricity Authority and the Commerce
Commission to share his thoughts on how emerging technologies might
shape and re-shape the electricity supply chain as we know it. He does express
the reservation that the intermittent nature of many common forms of embedded
generation may limit their direct substitutability from local distribution
networks, however the rapid advances and falling costs of battery storage even
over the last few months have made it clear that solar plus battery overcomes
the intermittent problem, and is therefore likely to be a very real competitor
for the local distribution network.
The video clip is 55 minutes long and is thoroughly worth watching, along
with a few pauses for reflection.
Recent client projects
Here’s
a sample of work done for clients over the last few years that demonstrate the
breadth of skills, insight and experience that is available from Utility
Consultants....
· Advising a major global investment bank on the revenue and
capital cost characteristics of the New Zealand generation industry.
· Assessing the investment characteristics of proposed CapEx
increases to an investor-owned electric network.
· Assessing three EDB’s asset management practices against ISO
55000:2014.
· Assessing an EDB’s compliance with the lines – generation
separation requirements of the Electricity Industry Act 2010.
· Assessing an EDB’s compliance with the Electricity Industry
Participation Code.
· Compiling safe operating procedures for a wide range of
distribution switches.
· Advising an investor on the investment characteristics and
regulatory constraints of small hydro development and grid connection.
· Reviewing the engineering aspects of an EDB’s lines pricing
methodology.
· Advising a major global consultancy on specific features of
emerging electricity transmission and distribution regulatory regimes,
including period length, potential for re-opening determinations, caps &
collars, total expenditure levels and incentive mechanisms.
· Examining the economic efficiencies of an EDB’s pricing
methodologies.
· Advised on the wider philosophical and potential tax issues
of the way consumer discounts are paid by EDB’s.
· Prepared an independent engineer’s report to justify
proposed alternative asset lives.
· Advised an electricity business on the regulatory
implications of bringing externally contracted field services back in-house.
· Identified economic and regulatory arguments to support
inclusion of transmission interconnection charge risk into network tariffs.
· Advised lines businesses on a regulator’s proposed treatment
of CapEx and OpEx.
· Advised an international investor on gas distribution policy
and regulatory trends.
· Identified national energy policy implications for lines
businesses.
· Assisted a lines business to identify the burden of proof
implied by regulatory determinations.
· Suggested amendments to a gas transmission AMP to strengthen
the economic arguments.
· Identified electricity network investment characteristics as
part of an acquisition study.
· Developed an AM framework for a gas distribution business to
link AM to regulatory requirements.
· Identified OpEx – CapEx tradeoffs for an electricity lines business.
· Performed various substation growth and reinforcement
assessments.
· Performed network physical and business risk studies.
· Compiled disaster recovery and business continuity plans.
Pick here to download a profile of recent projects, or here to contact Phil.
General stuff
Guide to NZ electricity laws
I’ve
compiled a “wall chart” setting out the relationship between various past and
present electricity Acts, Regulations, Codes etc in sort of a chronological
progression. To request your free copy, pick here. It looks really cool printed in color as an A2 or A1 size.
A bit of light-hearted humor
What
if price control had been around in the 1920’s and 1930’s ? A collection of
photo’s with humorous captions looks at some of the salient features of price
control. Pick here to download.
Conferences & training courses
The following
conferences and training courses are planned...
· Fundamentals
of the NZ electricity industry, Auckland, 20th – 21st April
2015.
Utility
Consultants takes no responsibility for the content of individual courses or
conferences, nor for any administrative or travel arrangements.
Wanted – old electricity history books
If
anyone has an old copy of the following books (or any similar books) they no
longer want I’d be happy to give them a good home…
· Economic Operation Of Power Systems (Kirchmayer).
· Distribution Of Electricity (WT Henley, the cable
manufacturer)
· Northwards March The Pylons.
· Two Per Mile.
· Live Lines (the old ESAA journal).
· The Engineering History Of Electric Supply In New Zealand.
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Disclaimer
These articles are
of a general nature and are not intended as specific legal, consulting or investment
advice, and are correct at the time of writing. In particular Pipes & Wires
may make forward looking or speculative statements, projections or estimates of
such matters as industry structural changes, merger outcomes or regulatory
determinations. These articles also summarise lengthy
documents, and it is important that readers refer to those documents in forming
opinions or taking action.
Utility
Consultants Ltd accepts no liability for action or inaction based on the
contents of Pipes & Wires including any loss, damage or exposure to
offensive material from linking to any websites contained herein, or from any
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by other parties.