Download Commerce Commission ODV Handbook Conference Counties …

Commerce Commission
ODV Handbook
Counties Power
Presentation
14 April 2004
Counties Power
Trust owned Electricity Lines Business
In Franklin area
2,200 sq km
31,000
customers
Counties Power supports the
Adoption of a standard, relatively accurate,
and easy to use ODV handbook
Disincentives exist to create lower
Overall cost networks
Certain changes need to be made in order
to prevent perverse outcomes
Reducing total cost to the
customer should be
encouraged
• At present no incentive for ELB to
optimise the total cost as seen by the
customer
• ELB and Transpower costs treated in
isolation
• Counties Power 110kV substation –
reduced total cost to customer yet
CP “penalised”
• Specific provision should be made in
handbook for “Total Transmission
Solution”
Short valuation planning
periods encourage
sub-optimal solutions with
high future remedial costs
• Electrical infrastructure assets have
high capital value and long lives
Short valuation planning
periods encourage
sub-optimal solutions with
high future remedial costs
• Short-sighted and impractical to
separate valuation planning periods
and engineering planning periods
Short valuation planning
periods encourage
sub-optimal solutions with
high future remedial costs
• Valuation planning periods should
align with optimum life cycle
engineering planning periods i.e.
encourage optimal solutions
Energy Efficiency loses out
under industry structure
and ODV Rules
• In ELB energy losses are typically 58% of total energy supplied
• Several techniques exist to reduce
energy losses (reduce wasted
energy)
• No incentive exists for ELBs to
reduce energy losses (as these cost
money and there is no reward for
ELB)
Techniques to reduce
energy losses
• Select an economic conductor size
• Increase the Voltage
– Increase the distribution voltage
from 11kV to 22kV and the
energy losses are reduced by
75% for a given load and
conductors
Implications of reducing
energy losses
• CP believes that using sound economic
techniques it would be very practical to
achieve an energy loss reduction of at lease
1% of total
• Nationally; 1% of say 37,000 GWh at say 4c
per kWh = $15M / year
• At 0.3kg of CO2 per kWh, 1% of 37,000
GWh  a reduction of 100,000 tons of
CO2 emission per year.
Industry mechanism
required
• With so much at stake a mechanism should
exist within the industry to require effective
loss reduction techniques to be employed
• Capital Cost of loss reduction techniques
must be explicitly allowed for in ODV rules
• ELBs and TPNZ must be called on to
demonstrate a design philosophy that seeks
to optimise life cycle costs including
notional cost of future energy losses
Summary
• Handbook to recognise assets that
result in reduction of total cost (ELB +
TPNZ) to end use customers.
• Imperative that valuation planning
periods are in line with engineering
planning periods.
• Capital cost of energy loss reduction
techniques must be recognised.