VOLUME 1 FINAL. Energex. Distribution Annual Planning Report / 2015 to 2018 / Energex DAPR 2014/ /19 Volume 1

Transcription

1 VOLUME 1 FINAL Energex Distribution Annual Planning Report 2014 / 2015 to 2018 / 2019 Energex DAPR 2014/ /19 Volume 1

2 Version Control Version Date Description /09/2014 Final version for publication Disclaimer Energex s Distribution Annual Planning Report is prepared and made available solely for information purposes. While care was taken in the preparation of the information in this report, and it is provided in good faith, Energex accepts no responsibility or liability (including without limitation, liability to any person by reason of negligence or negligent mis-statement) for any loss or damage that may be incurred by any person acting in reliance on this information or assumptions drawn from it, except to the extent that liability under any applicable Queensland or Commonwealth of Australia statute cannot be excluded. It contains assumptions regarding, among other things, economic growth and load forecasts which may or may not prove to be correct. The forecasts included in the document involve subjective judgements and analysis which are subject to significant uncertainties and contingencies, many of which are out of the control of Energex. Energex makes no representation or warranty as to the accuracy, reliability, completeness or suitability for any particular purpose of the information in this document. All information should be independently investigated, reviewed, analysed and verified, and must not be relied upon in connection with any investment proposal or decision. The information contained in this report is subject to annual review. Energex is obligated to publish future editions by 30 th September, in accordance with the National Electricity Rules. Energex Limited, Australia This work is copyright. Material contained in this document may be reproduced for personal, in-house or non-commercial use, without formal permission or charge, provided there is due acknowledgment of Energex Limited as the source. Requests and enquiries concerning reproduction and rights for a purpose other than personal, inhouse or non-commercial use should be addressed to the Group Manager Corporate Communication, Energex, GPO Box 1461, Brisbane, Queensland, Energex DAPR 2014/ /19 Volume 1

3 Table of Contents EXECUTIVE SUMMARY... I 1 INTRODUCTION Foreword Background and Purpose Network Overview Peak Demand DAPR Enquiries OVERVIEW Energex Corporate Overview Vision Purpose Objective Business Function Energex Electricity Distribution Network Network Operating Environment Physical Environment Economic Activity Social and Demographic Change Technological Change Shareholder Expectations Government Environment Community Safety Economic Regulatory Environment CUSTOMER ENGAGEMENT Overview Connecting With You Customer Engagement Research Program Customer Engagement Strategy Concerns in Relation to Rising Electricity Prices Customer Performance Measures Energy Supply Performance Community Regard Service Performance Reliability and Services versus Price Stability Reliable Supply Poor Performing Feeders Service versus Price Energex DAPR 2014/ /19 Volume 1

4 3.5.4 Reliability and Services Strategy Customer Expectations Overhead versus Underground Power Lines Vegetation Management Substation Design Demand Management New Technologies Reliability ASSET MANAGEMENT OVERVIEW Network Asset Management Framework Network Asset Management Policy Current Asset Management Policy Network Risk Framework Five Year Asset Management Strategy Five Year Strategic Direction Changing Focus Community Expectations Future Network Characteristics Network Investment Process Corporate Governance Program and Project Governance Investment Guidance Asset Management Investment Process Program of Work Implementation FORECASTING Drivers of Forecasts Customer Behaviour Solar PV Systems Electric Vehicles Battery Storage Customer Sentiment Temperature Sensitive Load and Air-conditioning Growth Economic Growth Population Growth Energy Sales Forecasts Energy Sales versus Energy Consumption Energy Sales Forecast Methodology Energy Sales History and Forecast Substation and Feeder Maximum Demand Forecasts Substation Forecasting Methodology Transmission Feeder Forecasting Methodology Sub-transmission Feeder Forecasting Methodology Distribution Feeder Forecasting Methodology Energex DAPR 2014/ /19 Volume 1

5 5.4 System Maximum Demand Forecast System Demand Forecast Methodology System Maximum Demand Forecast Results PLANNING FRAMEWORK Background Planning Terminology Joint Planning Joint Planning Methodology Role of Energex in Joint Planning Emerging Joint Planning Limitations Network Connection Proposals Joint Planning Activities and Interactions Joint Planning Results Energex Distribution Network Planning Assessing System Limitations Overview of Methodology to Assess Limitations Bulk and Zone Substation Analysis Methodology Transmission Feeder Analysis Methodology Sub-transmission Feeder Analysis Methodology Distribution Feeder Analysis Methodology Fault Level Analysis Methodology Project Approval and Implementation Detailed Planning Consideration of Distribution Losses OVERVIEW OF NETWORK LIMITATIONS Energex Network Limitations Adequacy and Security Bulk and Zone Substation Limitations Transmission Feeder Limitations Sub-transmission Feeder Limitations kv Distribution Feeders Exceeding Target Maximum Utilisation Energex Network Limitations Voltage Sub-Transmission Feeder Voltage Limitations Identification kv Distribution Networks Low Voltage (LV) Networks Energex Network Limitations Fault Level Summary of Emerging Network Limitations Emerging Network Limitations Maps DEMAND MANAGEMENT ACTIVITIES Non-Network Options Considered in 2013/ Actions Promoting Non-Network Solutions Demand Management Results for 2013/ Energex DAPR 2014/ /19 Volume 1

6 8.4 Demand Management Programs for 2014/15 to 2018/ Other Demand Side Participation Activities Regulatory Test / RIT-D Projects ASSET LIFE-CYCLE MANAGEMENT Approach Safety and Compliance Asset Inspections and Condition Based Maintenance Vegetation Management Asset Condition Management Methodology Critical Spares Specific Replacement Programs kv SF6 Insulated Ring Main Units (RMUs) LV Service Lines Obsolete Protection Relays Oil Filled Circuit Breakers Transformer Oil Containing Corrosive Sulphur LV Service Fuse Holder Replacement Overhead Feeders Crossing Major Highways NETWORK RELIABILITY Reliability Measures and Standards Reliability Performance in 2013/ Reliability Compliance Processes Reliability Non-compliance Corrective Actions Service Target Performance Incentive Scheme (STPIS) STPIS Methodology STPIS Results High Impact Environmental Events Stradbroke Island Bushfires Flood Resilience Guaranteed Service Levels (GSL) Automated GSL Payment Worst Performing Feeders POWER QUALITY Customer Experience Power Quality Supply Standards, Codes Standards and Guidelines Power Quality Performance in 2013/ Power Quality Performance Monitoring Steady State Voltage Regulation Voltage Unbalance Energex DAPR 2014/ /19 Volume 1

7 Harmonic Distortion Voltage Sags Power Quality Non-Compliance Corrective Actions Power Quality Compliance Processes EMERGING NETWORK CHALLENGES Solar PV Solar PV Emerging Issue and Statistics Future Impacts of Solar PV on Asset Ratings V Low Voltage Standard Electric Vehicles Battery and Energy Storage Systems Land and Easement Acquisition INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ICT Investments 2013/ ICT Investments Program ICT Investment Program 2014/ ICT Investment Program 2015/16 to 2018/ METERING Ageing Meter Population Metering Investments in 2013/ Metering Investments from 2014/15 to 2018/ OPERATIONAL AND FUTURE TECHNOLOGY SCADA and Communications Systems SCADA and Communication Investments in 2013/ Data Centre Related facilities Telecommunication Network Facilities SCADA and Automation Infrastructure Future Distribution Network Technologies Substation Secondary System Integration APPENDIX A TERMS AND DEFINITIONS... 2 APPENDIX B NER CROSS REFERENCE... 2 APPENDIX C DAPR VOLUME 2 TABLE OF CONTENTS... 2 Energex DAPR 2014/ /19 Volume 1

8 Table of Figures Figure 1 Typical Electricity Supply Chain... 4 Figure 2 Energex Strategic Objective... 7 Figure 3 Energex Distribution Hubs Figure 4 Customer Performance Measures Figure 5 Priority for Vegetation Management Program (Residents) Figure 6 Priority for Vegetation Management Program (Businesses) Figure 7 Design Preferences for new Substations (Residents) Figure 8 Design Preferences for new Substations (Businesses) Figure 9 Importance of Energex providing Demand Management Programs (Residents) Figure 10 Importance of Energex providing Demand Management Programs (Businesses) Figure 11 Willingness for Residents to pay for Battery Storage Figure 12 Willingness for Businesses to pay for Battery Storage Figure 13 Overall Satisfaction with Supply for Residential Customers Figure 14 Overall Satisfaction with Supply for Business Customers Figure 15 Energex s Approach to Asset Management Figure 16 Alignment with ISO Figure 17 Program of Work Governance Figure 18 Network Investment and Implementation Process Figure 19 Energex System Demand Solar PV Impact, 22 January Figure 20 Solar PV Impact on Currimundi CMD 3A on a Peak Day Figure 21 Solar PV Impact on Lota Substation on a Peak Day Figure 22 Number of Days at Amberley > Standard Temperature (30.4 C) Figure 23 Number of Days with Maximums > 30 C at Amberley Figure 24 Summer Demand Temperature Sensitivity Figure 25 Mango Hill Zone Substation Temperature Sensitivity Figure 26 Peak Demand and Temperature Range at Amberley Figure 27 Energex System Demand Variations by Average Temperature and Season Figure 28 Air-Conditioning Connected Load Forecast Figure 29 Queensland GSP Growth Forecasts Figure 30 Queensland Population Projections Figure 31 Average Number of Persons per Household in SEQ Figure 32 HIA Queensland Dwelling Forecasts Figure 33 New Metered Customer Growth Figure 34 Solar PV Installations Figure 35 Solar PV Impacts on Energy Sales Figure 36 Growth of Total Energy Sales Figure 37 Electricity Sales by Category (GWh pa) Figure 38 Zone Substation Growth Distribution Figure 39 Energex Peak Demand Forecast April Figure 40 Previous Demand Forecast Comparison Figure 41 Planning Process Figure 42 Demand Management to 30 June Figure 43 Concepts of Health Indices Figure 44 CBRM Health Index and Probability of Asset Failure Figure 45 Age Profile of Power Transformers Figure 46 Age Profile of Circuit Breakers Figure 47 STPIS Urban SAIDI / SAIFI Forecast Figure 48 STPIS Rural SAIDI / SAIFI Forecast Figure 49 STPIS CBD SAIDI / SAIFI Forecast Figure 50 Power Quality Voltage Enquiries Figure 51 Power Quality Voltage Categories Figure Month Voltage Profile of Distribution Transformer Measurements Figure 53 Voltage Unbalance Factor Profile of Distribution Transformer Measurements Figure 54 Total Harmonic Distortion Profile of Distribution Transformer Measurements Figure 55 Sag Severity Indicator Profile of Distribution Transformer Measurements Figure 56 Grid Connected Solar PV System Capacity by Tariff Figure 57 Impacts of Solar PV on Currimundi CMD3A (2nd Tuesday in October) Energex DAPR 2014/ /19 Volume 1

9 Figure 58 Distribution Transformers with Solar PV Penetration > 25% of Nameplate Rating Figure 59 Distribution Feeders with Solar PV Penetration > 1000 kva Figure 60 Impact of EV Charging Figure 61 Historical Meter Usage July 2008 to June Figure 62 Energex Electro-Mechanical Meter Age Profile Figure 63 Energex Electronic Meter Age Profile Energex DAPR 2014/ /19 Volume 1

10 Table of Tables Table 1 Summary of Network and Customer Statistics Table 2 Level of Engagement for Residential Customers Table 3 Level of Engagement for Business Customers Table 4 10%, 50% and 90% PoE Amberley Temperatures Table 5 Actual Maximum Demand Growth Table 6 Maximum Demand Forecast (MW) Table 7 Solar PV Contribution to Summer System Peak Demand Table 8 Electric Vehicle Contribution to Summer System Peak Demand Table 9 Joint Planning Activities and Interactions Table 10 Joint Planning Activities Covering 2014/15 to 2018/ Table 11 Summary of Substation Limitations Identified Table 12 Summary of 132 kv and 110 kv Transmission Limitations Identified Table 13 Summary of 33 kv Sub-transmission Limitations Identified Table 14 Summary of 11 kv Feeders > TMU Identified Table 15 Demand Management Core Elements Table 16 - Projects (>$1 M augmentation) Approved Past 12 Months Table 17 - Projects Planned for RIT-D Table 18 Performance Compared to the MSS Table /14 STPIS Results Table /14 STPIS Uncapped Revenue Table 21 STPIS SAIDI / SAIFI Forecast Table 22 STPIS SAIDI / SAIFI Targets Table 23 STPIS SAIDI / SAIFI Forecast Gap to Targets Table 24 Reliability GSLs Table 25 Reliability GSLs Claims Paid 2013/ Table 26 Worst Performing Feeder Performance Comparison Table 27 Worst Performing Feeder Performance Criteria Change Table /15 Worst Performing Feeder List Current Performance (2013/14) Table 29 ICT Investments 2013/ Table 30 ICT Investments Budget 2014/ Table 31 ICT Capital Investment Forecast 2015/ /19 ($ M) Table 32 Contribution to Meter Usage Increases (5 years) Table 33 Metering Investments 2013/ Table 34 Operational and Future Technology Investments 2013/ Energex DAPR 2014/ /19 Volume 1

11 Executive Summary Energex Limited (Energex) and its predecessor organisations have provided electricity to homes and businesses in South East Queensland since the late 19th Century. Energex distributes electricity to approximately 1.4 million residential, commercial and industrial customers across a population base of around 3.2 million in South East Queensland. As a Government Owned Corporation (GOC), Energex has two shareholding Ministers, Treasurer and Minister for Trade and Minister for Energy and Water Supply. Other stakeholders include: Customers and community; Employees and employee unions; The Queensland Government; Electricity retailers; Transmission networks; Electricity generators; and Regulators. Energex is pleased to present the 2014/15 to 2018/19 Distribution Annual Planning Report (DAPR). This DAPR represents the outcomes of the annual planning processes required under Section 5.13 and Schedule 5.8 of the National Electricity Rules. The key outcomes of this planning process represent Energex s intentions for the next five years in relation to load forecasting, demand management, new capacity investments, asset replacement and refurbishments, reliability and supply power quality. The changes to the operating environment in which the DAPR has been produced is characterised by lower demand growth and a new customer reliability safety net obligation that has been titled Customer Outcome Standard. The combination of these two has had the effect of reducing the capital requirements for the forward planning period, reducing the pressure on electricity prices. The introduction of the Customer Outcome Standard follows the Government s decision in June 2013 to accept the recommendations of the Inter- Departmental Committee on Electricity Sector Reform on reliability standards. The Customer Outcome Standard targets a more appropriate balance between service outcomes for customers and electricity prices. Above all, Energex must continue to ensure the safety of the public and its employees by managing the risks associated with operating the electricity network. These factors take high priority in Energex s pursuit of the National Electricity Objective (NEO) to promote efficient investment in, and operation and use of, electricity services for the long term interests of customers. - i - Energex DAPR 2014/ /19 Volume 1

12 Because electricity cannot be readily stored, the network must have sufficient capacity to deliver power to meet the needs of every customer at any one time. Growth in peak demand is a critical aspect that drives expansion and the running of the electricity system. Peak demand occurs at different times in different locations, and this has different implications at different levels of the network. Whilst the average demand growth across the Energex network is subdued, there are areas across the Energex network that still have strong growth particularly where new property development is occurring, which requires the network to be upgraded or expanded. Energy usage patterns are also changing due to changes in customer behaviour, price, energy efficiency initiatives and the continued rapid deployment of distributed generation such as solar photovoltaic (PV). The continued rapid deployment of solar PV has presented a number of technical challenges that need to be addressed, such as power quality and voltage management. Energex is also focussing on how it can maximise value from its existing assets to the benefit of its customers. This will be achieved by optimising life cycle costs, engaging with stakeholders and customers to further develop appropriate and sustainable demand side management solutions. Energex will continue to seek efficiencies to deliver on price, quality, safety, reliability and security of supply objectives. Energex will also ensure its investment plans appropriately account for the impacts of new customer energy needs such as rooftop solar PV and electric vehicles; and also the adoption of new network technologies such as smart grid technologies and emerging battery storage technologies. In managing the network, Energex will also continue to identify customer and community expectations through various customer engagement programs. The National Electricity Rules (NER) and Queensland s Electricity Industry Code require Energex to publish this DAPR to explain how Energex is continuing to safely and efficiently manage the electricity distribution network for South East Queensland. Accordingly, the DAPR contains the results from annual network planning, asset performance and asset condition assessments to identify emerging network limitations. The aim of the document is to inform network participants and stakeholders about the Energex network, including potential opportunities for non-network solutions particularly for large investments where the Australian Energy Regulator (AER) Regulatory Investment Test for Distribution (RIT-D) applies. - ii - Energex DAPR 2014/ /19 Volume 1

13 Chapter 1 Introduction Foreword Background and Purpose Network Overview Peak Demand DAPR Enquiries -1- Energex DAPR 2014/ /19 Volume 1

14 1 Introduction 1.1 Foreword This Distribution Annual Planning Report (DAPR) explains how Energex is continuing to safely and efficiently manage the electricity distribution network for South East Queensland (SEQ). In the release of this second edition, the DAPR aims to provide information to assist interested parties to: Identify locations that would benefit from significant electricity supply capability or demand side and non-network initiatives; Identify locations where major industrial loads could be located; Understand how the electricity supply system supports customer and participant needs; and Provide input to the future development of the network. Energex understands that as cost of living pressures increase for many South East Queenslanders, prudent investment plans are required in order to maintain required performance targets whilst minimising operating and capital costs. In addition, Energex must continue to ensure the safety of the public and its employees by managing the risks associated with the electricity network. These factors take high priority in Energex s pursuit of the National Electricity Objective (NEO) to promote efficient investment in, and operation and use of, electricity services for the long term interests of customers. This report captures the results of planning activities mandated by National Electricity Law (NEL), including forecasts of emerging network limitations for the purposes of market consultations. Importantly, customer supply risks are assessed through ongoing planning activities, and in conjunction with market participants, appropriate future investments are scheduled to ensure risks are addressed in accordance with obligated service standards. Energex will continue to seek efficiencies to deliver on price, quality, safety, reliability and security of supply objectives. Energex will also ensure its investment plans appropriately account for the impacts of new customer energy needs such as solar PV and electric vehicles; and also the adoption of new network technologies such as smart grid and battery storage technologies. In managing the network, Energex will also continue to identify customer and community expectations through various customer engagement programs. The feedback from these programs will be used as input to network investment and management plans to ensure an appropriate balance between service and price. With reducing growth in demand and changing customer expectations about their willingness to pay for levels of reliability, Energex has adopted the Customer Outcome Standard. This follows the Government s decision to accept the recommendations of the Inter-Departmental -2- Energex DAPR 2014/ /19 Volume 1

15 Committee on Electricity Sector Reform on reliability standards. The Customer Outcome Standard includes customer safety net targets mandated in the distribution authority issued by the Queensland Government. These targets applied from 1 July 2014, and the 2014/15 Distribution Annual Planning Report and the regulatory submission for are prepared on this basis. The revised standard enables Energex to provide a more appropriate balance between service outcomes for customers and prices. In addition to reviewing capital investments, Energex is focussing on maximising value from its existing assets to the benefit of its customers. This DAPR has been prepared with this focus, and Energex is delivering on these objectives by optimising life cycle costs, engaging with stakeholders and customers, developing appropriate and sustainable demand side management solutions, and refining capital investment criteria via new customer consultation mechanisms. 1.2 Background and Purpose This DAPR has been prepared to comply with National Electricity Rules (NER) clause The publication of this DAPR is also in compliance with Queensland s Electricity Industry Code clause 2.3. With a five year forward planning horizon, from 2014/15 to 2018/19, this DAPR is the second edition to be published by Energex. Over the past 12 months, a number of key issues have emerged which influence the outcome of this year s forward planning cycle. The aim of this document is to inform network participants and stakeholder groups about development of the Energex network, including potential opportunities for non-network solutions particularly for large investments where the AER Regulatory Investment Test for Distribution (RIT-D) applies. 1.3 Network Overview Electricity is a commodity that is generated when it is required because the bulk of electricity consumed is not readily stored. Large generators located outside SEQ are connected to Powerlink s transmission network. In turn, Powerlink delivers this electricity to the Energex distribution network in order to distribute electricity to customers. Figure 1 summarises this electricity supply chain to illustrate how electricity is generated, transmitted and distributed to customers. Connection points exist between generators, transmission networks, distribution networks, embedded generators and large customers. Electricity carried over Powerlink s network is delivered in bulk to substations that connect to overhead or underground sub-transmission feeders to supply zone substations. Zone substations connect to overhead or underground distribution feeders operating at 11 kv. Distribution feeders distribute electricity to transformers that supply low voltage lines at 415/240 volts for customers. Importantly, customers use the network to obtain electricity, and to export electricity when excess solar power is generated. -3- Energex DAPR 2014/ /19 Volume 1

16 Figure 1 Typical Electricity Supply Chain 1.4 Peak Demand The capacity of a network is the amount of electricity it can carry to every customer at any point in time. Because electricity cannot be readily stored, the network must have sufficient capacity to deliver power to meet the needs of every customer at any point in time. The demand for electricity at the point in time when prevailing electricity use is at its highest is known as peak demand. Growth in peak demand is a critical part of what drives design and operation of the electricity system. Peak demand occurs at different times in different locations, and this has different implications at different voltage levels of the network. Transmission levels must contain sufficient capacity to carry enough electricity to meet the global peak demand for the region serviced. Whereas, distribution levels of the network must contain sufficient capacity to carry enough electricity to meet peak demand in every street. The points in time that peak demand occurs on assets in each street, is often different to the point in time the peak occurs for the whole region. Therefore, there are varying degrees of -4- Energex DAPR 2014/ /19 Volume 1

17 diversity in demand between the points in time that peaks occur across each street, and the points in time that peak demands occur on the backbone network. In a positive demand growth environment, increasing peak demand is a major driver of network costs. Energex must maintain sufficient capacity to supply every home and business on the day of the year when electricity demand is at its maximum, no matter where those customers are connected in the network. In addition, growth in peak demand may occur where new property developments are being established; whilst over the same period peak demand may be declining in areas where usage patterns are changing due to customer behaviour or from the impacts of alternative sources like solar PV. This means that growth patterns of electricity demand may be flat on a global scale, but there may be pockets of insufficient network capacity emerging in streets experiencing increasing peak demand or new development. 1.5 DAPR Enquiries In accordance with NER (e), Energex advises that all enquiries relating to this document are to be submitted by to the following address: DAPR_Enquiries@energex.com.au -5- Energex DAPR 2014/ /19 Volume 1

18 Chapter 2 Energex Overview Energex Corporate Overview Energex Electricity Distribution Network Network Operating Environment -6- Energex DAPR 2014/ /19 Volume 1

19 2 Overview 2.1 Energex Corporate Overview Energex has a balanced commercial outcome framework that is outlined below Vision The Energex vision is to deliver energy services for a sustainable future. Energex aims to achieve balanced commercial outcomes and to support the long term sustainability of electricity distribution in South East Queensland (SEQ). In the current environment, the Energex vision underpins the provision of a safe, reliable and cost effective electricity distribution network Purpose To achieve the vision, Energex s purpose is to provide choice and affordability to meet our customers' evolving energy needs Objective Energex has a strategic objective to achieve balanced commercial outcomes. This is achieved by understanding and effectively managing the customer, risk and financial elements of its business. This is represented below in Figure 2. Figure 2 Energex Strategic Objective -7- Energex DAPR 2014/ /19 Volume 1

20 Energex s future success and sustainability as an organisation is based on the ability to balance positive customer outcomes, financial performance and business risks. Specifically these elements are: Satisfied Customers The focus is on maintaining and strengthening Energex s standing with its key customer groups. Energex s sustainable position is to deliver its commitments, obligations and value proposition, while optimising customer relationships. Managed Risk This focus includes ensuring both staff and public safety, and that Energex maintains its licence to operate. Energex s sustainable position is to deliver appropriate levels of network performance acknowledging technical standards, regulatory and legislative obligations, commercial considerations, customer expectations and commitments to staff. Financial Sustainability This focus is on maintaining Energex s ongoing economic viability. Energex s sustainable position is to deliver shareholder returns and operate the business from a strong financial and commercial platform Business Function Energex s core business functions are to: Build, operate and maintain its electricity network to deliver safe, efficient, and reliable quality of supply; Engage the community and manage electricity supply relationships with end use customers and electricity retailers; Balance short term network management and long term network aspirations by improving network performance and emergency response; Progress towards the delivery of an intelligent connective network and the provision of leading practice energy solutions to customers; and Meet regulatory and shareholder requirements including sustainable and sound commercial operations evidenced by affordable expenditure levels, a strong balance sheet and delivery of shareholder value. 2.2 Energex Electricity Distribution Network Energex distributes electricity to approximately 1.4 million residential, commercial and industrial customers across a population base of around 3.2 million in SEQ. At the core of -8- Energex DAPR 2014/ /19 Volume 1

21 the business is a high performing network that consists of property, plant and equipment assets valued at approximately $12 billion. The bulk of electricity distributed by Energex is carried by Powerlink to Energex connection points across large distances, because base-load generation is located remotely. However, Energex also enables connection of distributed generation, such as solar PV and embedded generators. The Energex network is characterised by: Connection to Powerlink s high voltage transmission network at 28 connection points; High Density / Central Business District (CBD) areas such as the Brisbane CBD, and the Gold Coast and Sunshine Coast city areas which are typically supplied by 110/11 kv, 110/33 kv, 132/33 kv, or 132/11 kv substations; Urban and Rural areas where 110/33 kv or 132/33 kv bulk supply substations are typically used to supply 33/11 kv zone substations; Inner suburban areas close to the CBD which have extensive older, meshed 33 kv underground cable networks that supply zone substations; Outer suburbs and growth areas to the north, south and west of Brisbane which are supplied via modern indoor substations of modular design that enable further modules to be readily added; and New subdivisions in Urban and suburban areas which are supplied by underground networks with padmount substations. Table 1 presents a summary of Energex s network and customer statistics over the past five years. Changes in asset numbers over this timeframe have occurred as a consequence of demands for electricity, residential, commercial and industrial developments. -9- Energex DAPR 2014/ /19 Volume 1

22 Table 1 Summary of Network and Customer Statistics Assets 2009/ / / / /14 Total Overhead and Underground (km) Lines - Length of Overhead (km) 50,205 50,863 51,434 51,879 52,176 Total 34,837 34,959 35,051 35,094 35,112 LV (Low Voltage) 14,294 14,287 14,274 14,262 14, kv 17,404 17,451 17,502 17,529 17, kv 1,999 2,080 2,098 2,130 2, kv and 110 kv 1,140 1,141 1,177 1,173 1,173 4 Cables - Length of Underground (km) Total 15,368 15,904 16,383 16,785 17,064 LV 9,711 9,990 10,262 10,457 10, kv 4,722 4,938 5,122 5,290 5, kv kv and 110 kv Other Equipment (Quantity) Bulk Supply Substations Zone Substations Poles 1 638, , , , ,714 Distribution Transformers 45,456 46,083 46,792 47,436 47,875 Street Lights 2 324, , , , ,716 Customer Numbers Residential 1,187,770 1,204,190 1,220,430 1,235,740 1,250,326 Other 111, , , , ,489 Total 1,299,075 1,316,140 1,333,615 1,347,195 1,363,815 All poles including customer poles and streetlight poles held on record. All streetlights including rate 3 streetlights. All information as at June 30 each year. Distance includes previously purchased 110 kv lines from Powerlink that are currently out of service. The large number of Energex assets is managed across six hubs centred on geographical regions. These hubs provide regional asset and resource management, and can respond promptly to local network outages. The geographical boundaries for each hub are shown in Figure Energex DAPR 2014/ /19 Volume 1

23 Figure 3 Energex Distribution Hubs -11- Energex DAPR 2014/ /19 Volume 1

24 2.3 Network Operating Environment Key external drivers and associated industry impacts are presented in this section. Many of these have emerged from Energex s forward planning process which informs the identification of Energex s five year business objectives covering this forward planning period Physical Environment SEQ experiences challenging environmental conditions in which to operate an electricity network. Although located in a temperate zone, SEQ has some of Australia s highest incidences of lightning activity, with Darwin the only other Australian capital city with a higher exposure. The spring and summer season is generally accompanied by severe storms where wind gusts in excess of 80 km/h are a common occurrence. These weather extremes expose the network to damage from overhanging vegetation, flying debris and lightning. Other aspects of the region s climatic conditions impacting the distribution network are: High rainfall areas with rapid vegetation growth; Periods of sustained high temperatures and or high humidity; Salt spray in exposed coastal areas resulting in reduced life of assets due to corrosion; and Bushfires and flooding. Performance of the network under these conditions is discussed further in Section Economic Activity Economic growth in SEQ is forecast to increase in coming years. A key driver is population growth, which slowed markedly during 2010/11 and 2011/12, but is expected to continue its upbeat trend over the next 2 to 3 years. Its impact on housing sector activity will be a key determinant of economic growth over the medium term. Following the global financial crisis, customers have become more cautious and attuned to economic conditions and their personal financial security. In Queensland, cost of living pressures, particularly increases in energy and water prices, continue to be of concern Energex DAPR 2014/ /19 Volume 1

25 Impacts Changes in demand The electricity sector continues to face significant challenges as residential customers and businesses respond to rising prices by reducing their energy purchases from the Energex network. With the increased uptake of solar PV in the residential sector, the historical relationship between economic growth and grid supplied electricity is changing. A similar effect in the commercial & industrial sector is anticipated with the take up of solar PV installations. The disconnect between economic growth and energy sales will continue to place upward pressure on prices, unless there is a revision of price structures away from reliance on volumetric prices to peak load associated tariffs particularly for the residential sector Social and Demographic Change As the population ages, Australia will face changes in workforce composition (more retirees) and a new generation of primary income earners that may hold significantly different social values than previous generations. This may lead to changes in society s expectations and needs, which are likely to occur in much shorter timeframes with respect to typical network investment and asset lifespans. There may also be significant changes in the structure of employment and communication - in particular social media is expected to be used more pervasively in business and lifestyle applications. Impacts Increasing energy dependency At work and at home, the range and volume of electrical and digital equipment continues to proliferate. E-commerce and the ability to work remotely or while on the move is now a lifestyle expectation, along with access to the internet and social media. The impact of power outages or poor power quality is therefore likely to be more acute than previous experience. Community Response Securing permission to build infrastructure when and where it is required is an important element in maintaining a sustainable and cost effective supply of electricity to Queensland. Enhanced engagement with local councils and community groups is required with regard to infrastructure design, feeder route selection and the development of more efficient and consistent approval processes and timeframes Technological Change New technology is influencing the way residential, commercial, and industrial customers use and source electricity. Trends affecting future consumption from the grid include increasing -13- Energex DAPR 2014/ /19 Volume 1

26 energy efficiency of equipment, the introduction of load control devices for home appliances and for the adoption of alternative energy supply options (solar PV). Future technology trends that are being monitored include battery storage and electric vehicles as well as the proliferation of internet enabled digital equipment, particularly as the National Broadband Network is rolled out. The further development of internet delivered and enabled service is expected to allow more sophisticated energy management systems and aggregated services and opportunities to further impact on demand and energy consumption. Impacts Changing supply and demand relationship With the support of an accommodative government and regulatory policy, customers are seeking options to manage their electricity consumption and costs. In recent years this has been through improved energy efficiency, the adoption of solar PV, and the requirement for greater transparency and information on energy consumption. The net result is reduced consumption of electricity supplied from the grid and changes in the shape of network load profiles. Technologies with the potential to significantly affect future consumption patterns include battery storage and electric vehicle and internet enabled technologies and services, particularly when combined with solar PV Shareholder Expectations In response to rising electricity costs, the Queensland Government established two committees the Interdepartmental Committee on Electricity Sector Reform (IDC) and the Independent Review Panel on Network Costs (IRP) to identify issues and provide solutions. Energex is pursuing the recommendations of these committees that have been adopted by the Queensland Government. In particular, by setting clear business targets focussed on reducing costs to prudent levels in a sustainable and efficient way to achieve the proposed reductions in expenditure. Energex and Ergon Energy have established a Joint business practice asset management approach to ensure that both businesses work together to jointly address emerging customer issues, new technologies, develop new standard products and improve operational efficiency. In July 2014, the shareholding Minister reiterated the Queensland Government s decision to implement reforms, and in accordance with the Electricity Act 1994 amended the Energex Distribution Authority to reflect an obligation for Energex to transition to an economic customer value based approach to reliability from 1 July This included an obligation to manage increased outage risks to customers using new safety net targets, and the obligation to publish the worst performing feeder program in the DAPR Energex DAPR 2014/ /19 Volume 1

27 Building on the government's commitment to combat rising electricity costs, the Department of Energy and Water Supply developed a 30-year strategy to help ensure Queensland's electricity supply system remains secure, reliable and cost-effective. The strategy was shaped by the findings of the IDC and IRP plus submissions made through the development process: Directions paper (released 17 December 2012); Discussion paper (released 11 September 2013); and 30-year electricity strategy (released 20 June 2014). Impacts Long term reform The reforms described above have the potential to impact/change policy in regards to customer, community and shareholder expectations for the electricity supply industry. In particular, the reforms are focussed on reducing duplication and improving the efficiency of the electricity network businesses in Queensland with the ultimate goal of creating savings that can be passed on to customers in the form of lower electricity prices. Consequently, the changes are expected to result in a leaner business with a more competitive cost structure into the future Government Environment A raft of policy and regulatory reform has been developed and proposed in response to electricity price increases over the last five years. Some of the key areas under review that will impact the future cost of electricity include: The efficiency and commercial structure of network businesses; Empowering customers through information and engagement; The price impact of environmental schemes (e.g. renewable energy targets, carbon regimes, and solar bonus schemes); and Enhancing competition and innovation in the supply chain. Impacts Electricity market reform increased supply chain efficiency The significant increase in electricity costs in recent years has prompted increased scrutiny of supply side investment and operating efficiency by State and Federal Governments and regulators. Electricity network businesses are being required to rationalise their expenditure programs and improve their forecasting to reduce upward pressure on prices. New rules and customer advocacy groups are also being introduced to ensure that the voice of the consumer is better represented in the determination of future network investment and prices Energex DAPR 2014/ /19 Volume 1

28 Key regulatory reforms currently under consideration have the potential to significantly change the industry Community Safety Energex places high importance on the safety of the public and the community. The Energex Community Safety Plan demonstrates how the company is meeting its commitment to community safety by drawing together the safety strategies, programs and activities undertaken across the business. The objectives of the Community Safety Plan are to: Increase electrical safety awareness and understanding in the community; Monitor community safety issues to provide targeted programs; and Encourage the community to regard Energex as a recognised expert, and the point of contact for electrical safety. The various initiatives, publications and safety messaging can be found on the Energex website ( Legislative Compliance Energex Limited is a Queensland Government Owned Corporation (GOC). The two shareholding Ministers to whom Energex s Board report under the GOC Act, are the Treasurer and Minister for Trade and the Minister for Energy and Water Supply. Energex operates in accordance with all relevant laws and regulations, including: Government Owned Corporations Act 1993; Electricity Act 1994; Electricity Industry Code; Electricity - National Scheme (Queensland) Act 1997; The National Electricity (Queensland) Law as set out in the schedule to the National Electricity (South Australia) Act 1996; The National Electricity (Queensland) Regulations under the National Electricity (South Australia) Act 1996; The National Electricity Rules; Electrical Safety Act 2002; Work Health and Safety Act 2011; The Electrical Safety Codes of Practice 2010; and -16- Energex DAPR 2014/ /19 Volume 1

29 Sustainable Planning Act 2009 and state and federal environmental and planning laws Economic Regulatory Environment Energex is subject to a number of regulatory requirements which determine the required performance standards and allowed revenues. As a result of amendments to the NER in January 2008, the Australian Energy Regulator (AER) assumed responsibility for Energex s revenue determinations from 1 July The transition to the national regulatory framework saw the implementation of a number of nationally consistent guidelines, models and schemes. National schemes introduced at that time under the new framework are the Efficiency Benefits Sharing Scheme (EBSS), the Service Target Performance Incentive Scheme (STPIS) and the Demand Management Incentive Scheme (DMIS). The regulatory framework establishes the maximum amount of revenue that Energex can recover from customers through network charges. The annual revenue cap for each year is determined through a cost-linked building block approach comprised of the following elements: Efficient operating costs; Asset depreciation; Estimated cost of corporate income tax; Revenue adjustments resulting from the application of the EBSS, STPIS and DMIS; and An allowed return on capital, representing the return necessary to achieve a fair and reasonable rate of return on the assets invested in the business. Energex is currently preparing its regulatory proposal which must be submitted to the AER by 31 October More information regarding the submission process and Energex s expenditure plans can be found on the Energex website ( Energex DAPR 2014/ /19 Volume 1

30 Chapter 3 Customer Engagement Overview Connecting With You Concerns in Relation to Rising Electricity prices Customer Performance Measures Reliability and Services versus Price Stability Customer Expectations -18- Energex DAPR 2014/ /19 Volume 1

31 3 Customer Engagement 3.1 Overview Energex is committed to improving and developing its ongoing customer engagement activities. Energex s purpose is to provide choice and affordability to meet customer s evolving energy needs. Meaningful customer engagement is a core element to deliver on Energex s purpose through effective and relevant consultation with customers, and an enhanced understanding of their needs and expectations. Energex s approach to customer engagement will ensure the business delivers balanced commercial outcomes giving consideration to ensuring customers are satisfied with the services provided and the cost to provide those services, whilst also ensuring financial sustainability and appropriate management of risks. This chapter outlines the expectations of customers gained through Energex s customer engagement program Connecting with you ( and addresses how these expectations are incorporated into the development of the program of work. 3.2 Connecting With You Energex launched the Connecting with you program in March Connecting with you is an engagement program designed to ensure customers can have input into key business decisions that have an impact on them. Customers can register online at Energex s website ( to receive updates and are regularly contacted to provide feedback on a number of different Energex programs. To date Energex has just under 400 customers registered on the Connecting with you program Customer Engagement Research Program To better understand customer views and expectations Energex conducted an extensive customer engagement research program during 2013 with just under 6,700 participants. Energex spoke to a number of different customer groups to gain detailed information about key topics structured around My Home/Business, My Street, My Community, My Bill and emerging technologies. Some of the key insights from the research include: Customers believe Energex s primary focus should be the safe and reliable operation of the network; Customers want a relationship with Energex even if this is to provide information; Customers are becoming increasingly concerned about rising electricity costs. There is a preference for current reliability to be maintained within the current cost structure (though customers on feeders with lower reliability are more likely to want investment to increase); and -19- Energex DAPR 2014/ /19 Volume 1