Consultation on CUWLP benefit-based investment
We are now consulting on the proposed starting benefit-based investment (BBI) customer allocations for the Clutha and Upper Waitaki Lines Project (CUWLP), which we have calculated under the new Transmission Pricing Methodology (TPM) the Electricity Authority announced on 12 April 2022. The consultation period is 4 weeks, commencing Tuesday, 17 May. Submissions are due by 5pm on Tuesday, 14 June 2022. This is followed by a 1 week period for cross-submissions. Cross-submissions are due by 5pm on Tuesday, 21 June 2022. Following our consideration of feedback, and feedback as part of the draft assumptions book consultation, we will make our final calculation of the starting BBI customer allocations for CUWLP and publish these. We will notify customers of their benefit-based charges (BBCs) for CUWLP in December 2022, along with other charges under the TPM for the 2023/24 pricing year.
The CUWLP BBI consultation package includes:
- Part A: Consultation Paper
- Part B - Application of the price-quantity method to CUWLP BBI: proposed starting customer allocations
- Part C: Technical assurance
- Part D: Legal assurance
- Part E: The post-processing model used for CUWLPs proposed starting BBI customer allocations [ xlsm 3.2 MB ]
- Part F: A summary of modelling data outputs and inputs from the wholesale market model [ xlsx 9.34 MB ]
Online drop-in session
On Wednesday, 25 May at 10:30am we will host an online drop-in session. It is an opportunity for stakeholders to ask questions and seek clarifications about the consultation. The session will be recorded and transcribed for interested parties unable to attend on the day.
Under the new TPM, certain capex and opex costs of a BBI (the BBIs covered cost) must be recovered by Transpower from beneficiary customers through benefit-based charges (BBCs).
CUWLP is considered a high value post-2019 BBI under the new TPM. As such, we have used the price-quantity method to determine beneficiary customers and calculate their starting BBI allocations. The price-quantity method is one of two standards methods for high-value BBIs, as outlined in the draft assumptions book we are also currently consulting on.
The starting BBI customer allocations for CUWLP are an input into calculating customer benefit-based charges (BBCs). A customer’s starting BBI customer allocation is equal to the positive net private benefit (EPNPB) expected to accrue to the customer from CUWLP, if any, as a percentage of total EPNPB across all customers. We have used the price-quantity method because its primary investment need is to alleviate, or prevent, transmission constraints that are expected to exist in the wholesale electricity market if CUWLP did not occur.
This is our first consultation on the application of the TPM to a high-value BBI. CUWLP is the only high-value post-2019 BBI that will contribute to transmission charges for PY 2023/24.
CUWLP was approved by the Electricity Commission in 2010 as part of the Lower South Island Renewables Investment. Transpower announced its decision to proceed with CUWLP in June 2020. CUWLP was effectively fully commissioned in April 2022. In TPM terms, this means CUWLP’s expected effective full commissioning date occurred in the financial year (FY) 2021/22. CUWLP is a post-2019 BBI that is expected to be high value when fully commissioned.
We published an initial case study application of the price-quantity method to CUWLP as part of our 30 June 2021 TPM proposal. The starting BBI customer allocations and BBCs in that case study were indicative only and subject to change. The proposed starting BBI customer allocations we are now consulting on have been calculated in accordance with the TPM as approved by the Electricity Authority.
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Consultation on draft assumptions book
We are now consulting on a draft assumptions book for benefit-based charges (BBCs) in relation to the new TPM. The consultation period is 4 weeks. Submissions are due by 5pm on Friday, 27 May 2022. This is followed by a 1 week period for cross-submissions. Cross-submissions are due by 5pm on Friday, 3 June 2022. Following our consideration of feedback from this consultation we will publish a summary and response document and then finalise and publish the first edition of the Assumptions Book.
The draft assumptions book consultation package includes:
- Part A: The draft assumption book consultation paper [ pdf 1.22 MB ]
- Part B: The draft assumption book [ pdf 3.22 MB ]
- Part C: Technical assurance on technical aspects of the Assumptions Book (draft for consultation)
- Part D: Legal assurance on the compliance of the Assumptions Book (draft for consultation) with the new TPM
- from Chapman Tripp [ pdf 2.29 MB ]
- Part E: Supporting information: Simple method customer allocation model [ xlsx 2.9 MB ]
- The model includes the simple method factors (SMF), regional net private benefit (RNPB), demand adjustment factors (IF) and proposed customer allocation (CA) values for the first simple method period.
- Part F: Supporting information: Arc flow data
- This is the data that was used by Transpower in order to determine the modelled regions for the first simple method period.
- Arc-flow_file1 [ csv 134.94 MB ]
- Arc-flow_file2 [ csv 134.88 MB ]
- Arc-flow_file3 [ csv 135.76 MB ]
- Arc-flow_file4 [ csv 136.14 MB ]
- Arc-flow_file5 [ csv 135.76 MB ]
- Arc-flow_file6 [ csv 9.06 MB ]
- Arc-flow_file7 [ csv 33.35 MB ]
- Arc-flow_file8 [ zip 43.37 MB ]
Online drop-in session
On Friday, 6 May at 1:30pm we hosted an online drop-in session. It was an opportunity for stakeholders to ask questions and seek clarifications about the consultation and the draft assumptions book itself. The session was recorded and transcribed [ pdf 157.86 KB ] for interested parties unable to attend on the day.
On 12 April 2022, the Electricity Authority (Authority) announced its decision to adopt a new TPM, to take effect in prices for the year commencing 1 April 2023 (Pricing year 2023/24). The Authority’s decision paper and the new TPM are available on its website.
The new TPM contains the structural and fundamental aspects of the new transmission pricing regime. It also includes a role for secondary documentation to help ensure consistent and transparent application at an operational level. Under the new TPM’s requirements for BBCs, Transpower must develop, consult on and publish an Assumptions Book.
Our draft assumptions book contains assumptions and detailed methodologies Transpower intends to apply for allocating and adjusting BBCs (calculating starting BBI customer allocations for post-2019 BBIs and following a BBC adjustment event). It takes a relatively detailed approach, intended to provide greater (up-front) certainty about how BBCs will be allocated and adjusted under the new TPM.
The Assumptions Book will be a living document that is updated as inputs change (e.g. if MBIE update its Electricity Demand and Generation Scenarios) and as Transpower and stakeholders gain experience with the allocation and adjustment of BBCs. It will be non-binding, except as otherwise stated in the new TPM.
Where Transpower proposes to depart materially from the assumptions book we will explain and consult on this when we consult on our application of the relevant BBC allocation or adjustment methodology. We may not deviate from the Assumptions Book in any way that does not comply with the new TPM or wider Code.
The Assumptions Book will be consistent with the TPM and all aspects of the Code. It is not intended to replicate, and cannot change, the fundamental and structural requirements for allocating or adjusting BBCs, which are specified in the new TPM itself.
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Consultation on baseline data - now closed
In April 2022, we consulted with customers on the baseline data that will be used to determine residual charges, transitional cap adjustments and simple method customer allocators for April 2023 prices under the new TPM. This was to provide customers with an early opportunity to review some of the inputs that will be used to determine charges.
As the Authority’s final decision included a change to the AMD parameters for residual charge allocations for a subset of connection locations, we re-published the relevant calculation tables with explanations and extended the consultation period for impacted customers. This review period has now closed.
Later in the year we will ask customers to review the assets and capacity factors that make up their regulated transmission charges, in time with our usual annual pricing engagement process.