Network Capability Proposal

Transcription

1 28 January 2015 South Australia s electricity transmission specialist Network Capability Proposal Stakeholder Round Table Simon Appleby, SM Regulation & Land Development Bill Jackson, Pricing Manager Brad Harrison, Principal Energy Market Analyst Vicky Knighton, Senior Regulatory Consultant electranet.com.au

2 Objectives > Outline the network capability incentive and the background to the proposal > Gather insights from participants on the proposed projects as feedback to guide our proposal 2

3 Background Simon Appleby Senior Manager Regulation and Land Development 3

4 What is the Network Capability Incentive? > Jurisdictional reliability standards drive networks to ensure adequate supply at connection points > AER Service Target Performance Incentive Scheme drives improved outage performance: Service measures and targets, focused on availability and reliability Market impact component, focused on availability when most needed > Gap recognised in the current regulatory arrangements: No driver to maximise the capability of the network Network Capability Incentive introduced by the AER in late

5 How does it benefit consumers? > The incentive rewards low cost operational and capital expenditure on the network which results in: Improved capability of those parts of the transmission system most important to determining spot prices Improved capability of the transmission system at times when users place greatest value on the reliability of the system > These works improve network capability, deferring major investment or reducing congestion > It provides an incentive of up to 1.5% of annual allowable revenue for expenditure on approved projects of up to 1% of revenue 5

6 How does it work? > Network Capability Incentive Parameter Action Plan required to: Identify the limitations across the transmission network Present priority projects involving low cost works to address the limits Demonstrate the benefits for consumers and wholesale market > AEMO reviews priority projects to ensure best value for consumers > ElectraNet engages with consumers on proposals > AER formally assesses Plan in consultation with consumers > Annual reporting of project delivery against the approved plan > Revenue claw-back for any failure to deliver on program 6

7 How can the Incentive be introduced? 1. Rule change needed to enable the AER to approve the Plan: NCI took effect after ElectraNet 2012 Revenue Determination started No network capability projects included in Final Revenue Decision Will not otherwise apply in SA until July 2018 Network capability projects now in train in all other NEM States > Status: Rule change lodged Jan 2014 and released June 2014 for comment Draft Decision in November 2014, submissions closed 8 January 2015 Final Decision expected February 2015 AER and AEMO supportive 7

8 How can the Incentive be introduced? 2. NCI Parameter Action Plan must be developed: Identifying limitations across the transmission network Presenting projects involving low cost works to address priority limits Demonstrating the benefits for consumers and wholesale market No double counting of works already included in approved allowances > Status: Limits identified across SA transmission network Proposed priority projects developed in consultation with AEMO ElectraNet consulting with consumers on proposed projects Action Plan being finalised over next 1-2 months 8

9 How can the Incentive be introduced? 3. Action Plan to be submitted to the AER for approval: Consult publically on the proposed projects Assess the Plan against the Scheme requirements Determine whether projects result in material benefit to consumers Formal determination on whether to approve > Status: Plan to be lodged following Final Rule change decision, if approved Target commencement date 1 July 2015 Proposing 3-year Action Plan spanning to

10 Proposals Brad Harrison Principal Energy Market Analyst 10

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15 Questions Bill Jackson Pricing Manager 15

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18 Next Steps Simon Appleby Senior Manager Regulation and Land Development 18

19 Where to from here? > Welcome consumer feedback on the proposals Submissions sought by 30 January 2015 > Final Rule change decision from the AEMC > Action Plan to be finalised and endorsed by AEMO > Action Plan to be submitted to the AER for formal assessment 19

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21 Thank you South Australia s electricity transmission specialist