AUFLS II Appendix F. Market Options Workshop Summary. Carbon+Energy Partners and Transpower New Zealand Limited. May 2011

Transcription

1 AUFLS II Appendix F Market Options Workshop Summary Carbon+Energy Partners and Transpower New Zealand Limited May 2011

2 AUFLS Market Options Workshop Summary Page 2 of 6 TABLE OF CONTENTS 1 Background Objective AUFLS Provision AUFLS & IL Feeder Sharing Commercial AUFLS Arrangements Status Quo Cap and Trade Dynamic Procurement Conclusion Appendix Agenda Attendees PowerPoint Slides Discussion Paper... 6

3 AUFLS Market Options Workshop Summary Page 3 of 6 1 Background An AUFLS workshop was planned to enable early discussion with industry and to better understand various industry participants perspectives on AUFLS market development options and ultimately find a way to progress towards an optimal AUFLS arrangement for New Zealand. The workshop was held on Thursday 14 April 2011 and was attended by a range of parties with varying interest in the development of commercial mechanisms. The attendees in the meeting included the following broad groupings in addition to Transpower participants: Network/Distribution Generator/Retailers Major Users Service Providers (e.g. Aggregators) During the workshop a brief overview of the current AUFLS review and an introduction to the technical workstream being undertaken were presented to the group. An interactive session was then held on the potential methods to commercially enable the effective provision of AUFLS. These methods ranged from the status quo through to the dynamic procurement of AUFLS. 2 Objective The summary paper provides a brief overview of the industry perspectives discussed at the workshop. Industry perspectives on the following topics are outlined in this paper: AUFLS Provision AUFLS & IL Feeder Sharing Market Options The paper is intended to be circulated to participants in order to ensure perspectives have been adequately captured and to progress the discussion of commercial arrangements as the technical work stream continues. 3 AUFLS Provision The starting point for the Network Companies tended to be built on a belief that there should be mandated obligation to provide AUFLS. Some Network Companies viewed the provision of AUFLS as a static activity, hard wired relays left armed for emergency events. This differed from some of the Major Users and the Aggregators who believe there should be the ability to institute a property right around provision (with associated payment) to adequately prepare for the future market. The movement from an unpaid (but not costless) obligation to the establishment of a property right to load which requires payment for it to be returned for IL or AUFLS seems not to be supported at the current time by Network companies.

4 AUFLS Market Options Workshop Summary Page 4 of 6 4 AUFLS & IL Feeder Sharing Network Companies seemed to be in support of the ability to offer IL from behind an AUFLS feeder. However the issue of how IL and AUFLS feeder sharing is managed when an aggregator or a retailer has rights to the load for IL purposes then the and Distributors will need to be addressed to manage AUFLS obligations. The aggregators make the point that the development of the Smart Grid that they envisage requires all classes of consumers of electricity to have the property rights over load (including for AUFLS). It seems that the thinking is the granularity of control (more parties able to be subject to AUFLS through the use of new technology) will enable consumers to have choice about whether they want to be included in AUFLS. 5 Commercial AUFLS Arrangements The discussion of an optimal contracting mechanism started with a description of the three potential mechanisms and the conversation was opened for other mechanisms to be suggested by participants. No additional AUFLS market options were suggested however there was a suggestion for a faster interruptible load product. This section outlines the various perspectives on each market option discussed. 5.1 Status Quo The simple obligation method is effectively the current obligations for providing AUFLS. Network companies highlighted the challenge of separating critical and non-critical customers when network diversity is low (i.e. critical load such as hospitals and emergency services end up in AUFLS blocks). Another network company shared that the arrangement of their network requires them to have an AUFLS relay connected to all of their feeders, excluding supply to a dairy factory, to meet the current obligations. 5.2 Cap and Trade The ability to contract out AUFLS obligations provides a slight extension to the Status Quo option. This option was generally seen by the workshop participants as a useful enhancement. One participant did point out that such an arrangement could be accommodated under the existing rules - but it was generally thought that it hadn t been utilised due to lack of sufficient detail. It was emphasized by some distribution companies that the ability to trade obligations would most likely be sought out as a means to ensure supply to critical load and not on the basis of commercial incentives. 5.3 Dynamic Procurement A further extension of the Cap and Trade system was an active and dynamic trading environment. This was not supported at all by Network companies, but found some support with proponents of the Smart Grid. One distribution company shared that their company had little to no interest in seeking commercial incentives for AUFLS provision. The debate is actually around Obligations and Property/Rights, with the Status Quo and Cap and Trade being systems to support an Obligation based regime, whereas more dynamism is required to support a Property Rights based regime.

5 AUFLS Market Options Workshop Summary Page 5 of 6 6 Conclusion Although it is difficult to establish a general mood of the meeting, there appeared to be more support of the Cap and Trade based models as they presented an improvement over the status quo. An important outcome of the workshop was the need to develop a means to prevent critical load from being placed on AUFLS. Further work is required on the principles and process through which parties can trade AUFLS provision. The co-habitation of IL and AUFLS was supported by the participants. The discussion also highlighted the need for greater transparency to the Network/Distribution companies and the of any downstream commercial arrangements that may impact on the ability to call upon AUFLS. 7 Appendix 7.1 Agenda Time Item 10:00 Morning Tea 10:10 Welcome & Overview 10:15 UFM Overview 10:25 Background (Previous AUFLS work) 10:35 Overview of Known Issues 10:45 AUFLS Market Options Intro 11:00 Round Table Option Discussion 12:30 Lunch 1:00 Discussion cont. - Transaction cost - Implementation 2:00 Conclude discussion

6 AUFLS Market Options Workshop Summary Page 6 of Attendees Name James Moulder Brent Thomas Derek Todd Darryl Renner Dean Gowans Robert Derks Vince Smart Derek Caudwell Allan Neilson Ralph Matthes Rebecca Osborne Terrance Currie Grant Crawshay Andrew Collier Dick Whitelaw Fred Staples Mike Smith Robert Gaskin Tahmina Tariq Andrew Twaddle Gari Bickers John Cambell Mike Phethean Nicki Lao Young Kevin Small Steven Nutt Cheryl Frankis Tony Smallman Keith Gilby Scott Finlay Nigel Brown Bas van Esch Lee Goddard Andy Wilson Geoff Douch Graham Petrie Company Carbon+Energy Partners (Chair) Contact Energy Counties Power Limited Electricity Authority Energy Intellect Ferranti Consulting Genesis Energy Horizon Energy Kiwirail Major Electricity Users' Group Meridian Energy MEUG Mighty River Power Ltd Northpower NZ Steel Pan Pac Powerco Powerco PowerCo (Presenter) (Presenter) The Lines Company Top Energy Top Energy Limited Transpower Unison Networks Ltd Vector Waipa Networks Limited Wellington Electricity Wellington Electricity Wellington Electricity Note the above list was compiled from those that RSVP d for the workshop; some may have not been in attendance on the day. 7.3 PowerPoint Slides The PowerPoint slides used during the workshop can be requested. 7.4 Discussion Paper The discussion paper for the workshop can be requested.