2012 Electricity Authority TPM proposal

The Electricity Authority consulted on a new approach to transmission pricing in 2012. We provided the following information to assist stakeholders in their assessment of the Authority's proposal.

Information overview

Information Summary Status
Connection Charges On 5 June 2014 the Authority requested that we answer several questions to assist submitters in responding to the Authority’s connection charges working paper. The questions were submitted by the Major Electricity Users Group (MEUG) to the Authority. We have answered the questions fully wherever possible. Published 18 June 2014.
Transpower Revenue Updated information on our forecast transmission revenue. Annual Regulatory Report information (2013-2015) published.
Assets Information on the value and location of assets that would have their costs allocated via the proposed ‘SPD method’, Information on revenue profiles of NIGU, pole 2 and pole 3 asset groups. List published 19 December 2012.
Grid Development Updated information on future grid development, including information on our upcoming Annual Planning Report.  
Injection Data Historical information on injection volumes at connection points. Available on request.
LCE Data Historical information on breakdown of loss and constraint excess amounts. Data published 21 December 2012.
SPD Modelling Information from our work applying the SPD method. Analysis published 8-22 February 2013.
Implementation Information on scoping the time and cost of developing and implementing the proposed TPM. Report published 21 December 2012.
Economic Analysis Economic review of the Authority's TPM issues and proposals consultation. Report published 8 February 2013.
Presentations Our presentations regarding the Authority's transmission pricing proposal. Modelling workshop presentations added 5 December 2012.

Connection Charges

Connection Charges (Responses to MEUG) [ pdf 378.91 KB ]

Transpower Revenue

The Authority has presented transmission revenue forecasts based on our June 2011 business plan. We updated our business plan forecasts in June 2012 and will provide updated information here.

We also have an annual cycle of updating our regulatory revenue forecasts. These forecasts currently extend to 2014/15 and were last updated in October 2012. The update is summarised below:

  2013/14 2014/15
  Total
$m
HVAC
$m
HVDC
$m
Total
$m
HVAC
$m
HVDC
$m
Updated MAR forecast 874.3 713.7 160.5 959.7 804.5 155.2
Pass-through and recoverable costs (including 2011/12 wash-up) 4.0 2.0 1.9 15.2 12.5 2.8
Updated forecast revenue 878.3 715.8 162.5 974.9 816.9 158.0
 
Previously forecast revenue (October 2011) 930.8 777.7 153.1 979.1 821.4 157.7
Movement (52.5) (61.9) 9.4 (4.2) (4.5) 0.3

Read more information in our 2011/12 Annual Regulatory Report

Assets

The Authority proposes that we should recover the costs of certain groups of assets using the 'SPD method'. We have prepared a list of 64 asset groups and associated values, along with a description of our approach.

SPD pricing asset groups [ xlsx 3.45 MB ]

The following charts summarise the results of our analysis.

Impact of threshold on number and value of asset groups [ pdf 49.18 KB ]
Distribution of asset group values [ pdf 81.21 KB ]

The spreadsheet below presents approximate revenue profiles for major asset groups NIGU, HVDC Pole 2 and  HVDC Pole 3. Assumptions are described in the sheet.

TPM - approximate revenue profiles [ xlsx 147.68 KB ]

Grid Development

The Authority's consultation paper includes information on modelled future transmission projects. Some of this information is based on the last Annual Planning Report. We are currently working on our next annual planning report, and aim to provide updated information here if possible.

Injection Data

One element of the proposed TPM is a charge based on 'regional coincident peak injection' (RCPI). To assist parties seeking to model the proposed change, we have prepared five years’ worth of raw injection figures. Due to the large volume of data contained in these reports, this information is not available to download from the website.

Contact the Pricing Team to be sent out a DVD pack containing the data

LCE Data

The Authority proposes that 'loss and constraint excess' amounts from the wholesale electricity market, and auction residuals from the financial transmission rights (FTR) market, should be credited against the costs of transmission assets.

The first spreadsheet below contains historical information on loss and constraint excess amounts, broken down into HVDC, connection and interconnection amounts. The second contains the connection total over the past 10 years to the end of calendar 2013 broken down by GXP.

Historic LCE breakdown [ xlsx 49.51 KB ]
Historic Connection LCE breakdown [ xlsx 16.15 KB ]

SPD Modelling

The Authority is proposing a SPD-based allocation method and has tested the application of the method using a research version of the wholesale market software (vSPD).

We are carrying out a range of modelling work to test and understand the proposed method. This includes:

  • using a full SPD environment to replicate modelling the Electricity Authority has carried out in vSPD
  • testing the application of auxiliary tools such as the reserve management tool (RMT) and the simultaneous feasibility tool (SFT)
  • testing the robustness of the method for heavily loaded assets.

We will provide updates here on our work.

SPD analysis report [ pdf 512.76 KB ]
Pole 3 RampUp differences [ zip 13.11 MB ]
NIGUP SFT differences [ xlsx 29.46 KB ]
WDV_MST SFT differences [ xlsx 76.23 KB ]
ISL_KIK2 SFT differences [ xlsx 94.63 KB ]
Pole 2 SPD charge [ xlsx 9.11 MB ]
ISL_KIK2 SPD charge [ xlsx 8.95 MB ]

vSPD Modelling

Below is a summary of vSPD analysis we have commissioned, together with a document outlining the modelling assumptions employed.

Summary of vSPD analysis [ pdf 2.34 MB ]
Assumptions used in modelling [ pdf 288.81 KB ]

Implementation

We engaged PricewaterhouseCoopers to carry out a high-level scoping exercise on the time and cost requirements of implementing the Authority's proposed TPM.

The report below represents the view of PricewaterhouseCoopers based on high level discussions with Transpower, EMS and Authority staff, so is indicative only.

Transmission Pricing Methodology: Impact Assessment report [ pdf 743.46 KB ]

Economic Analysis

We commissioned the economic consultants CEG to conduct a high-level economic review of the Authority’s TPM issues and proposals consultation. A particular purpose of the independent economic review is to inform our understanding of the likely implications, requirements, and challenges which we would need to take into account in implementing the draft proposals.

The views expressed are those of an independent advisor, not of Transpower.

As with other analysis undertaken to inform the TPM review process, we are publishing this analysis to assist the Authority and other market participants.

Economic analysis [ pdf 1.17 MB ]

Presentations

Past presentations to public audiences about the Authority's proposed TPM are published below.

EA modelling workshop (4 December 2012, Auckland): Early update on SPD method modelling [ pdf 1019.68 KB ]
EA modelling workshop (4 December 2012, Auckland): Defining asset groups for inclusion in the SPD method. [ pdf 907.46 KB ]