Consumer engagement roundtable Hosted by TransGrid Welcome and some - - PowerPoint PPT Presentation

Hosted by TransGrid

Consumer engagement roundtable

Welcome and some ground rules…

We really value what you have to say:

• Please help us by making sure that only one

person talks at a time

• Personal confidentiality is assured – no feedback

will be attributed to individuals

• There are no right or wrong answers to questions

– just ideas, experiences and opinions

• It is important for us to hear all sides of an issue –

both the positive and the negative.

Agenda

6.00pm - Welcome and introductions 6.30pm - Presentation one - introduction to the new energy conversation and TransGrid’s role 7.10pm - Break 7.25pm - Part two: empowering consumers 7.55pm - Break 8.15pm - Part three: the AER’s hot topics 8.55pm - Close

Introduction to the new energy conversation and TransGrid

Presented by Stephen Clark, TransGrid Presentation One

Roundtable objectives

Over the next two decades, Australia will need to deliver secure, reliable and competitively priced energy for a growing population and economy. Today we would like to discuss:

• The new energy conversation;
• TransGrid’s role and the impact to you as a consumer; and
• Ask for your feedback about what’s important to you and

how you would like to get involved moving forward.

What are people saying?

The energy conversation explained

National and State priorities

• Supporting economic

growth

• Cutting emissions
• Delivering clean

sustainable energy TransGrid

• Future electricity demand
• Supply reliability
• Building new transmission

lines and substations

• Facilitating competition in

generation

• Greater consumer

participation (demand management)

• Maintaining and operating

network Energy to you

• How energy gets to you
• Energy infrastructure
• Electricity prices
• Energy consumption
• Technology and

innovation e.g. smart meters

• Sustainable energy
• ptions
• Prices – setting, design &

reform

price and reliability

The National Electricity Market

About TransGrid

TransGrid has a statutory duty to deliver high voltage electricity from power generators to the distribution network that supplies power to homes and businesses. TransGrid’s electricity transmission system includes:

Over 12,772km of overhead transmission line and underground cable 36,000 transmission line structures More than 91 substations and switching stations

Did you know?

You have a choice of retailer (the company that sends you your electricity bill) but all electricity is delivered along the same set of transmission and distribution lines...

The transmission network can be seen as being similar to freeways and motorways where the distribution network, can be seen as the small roads and streets in towns and suburbs.

What makes up my bill?

*IPART Fact Sheet - Regulated Retail Prices

20%

Electricity generators

8%

Transmission network – transporting electricity from power stations at high voltage (the highway)

42% 15%

Distribution network – transporting it from the highway to your home or business (your local road network) Retailers

15%

The carbon price and State and Federal government green schemes

Electricity prices over time

Empowering consumers

• Getting involved in our business

Presentation Two

Regulation

• A transmission business has no

competitors

• The Australian Energy Regulator

(AER) is there to keep the business focussed on minimising its costs and keeping its prices low

• Every 5 years TransGrid proposes

to the AER what costs it expects to incur to run the business

What does the AER do?

The AER:

• Spends almost a year reviewing, analysing and

testing the business plans

• Arrives at a decision on how much revenue the

business requires

• TransGrid has a strong incentive to manage its

costs below the AER allowance to make a profit

What information does the AER get from the business?

Capital expenditure forecasts

• Costs needed to build new or larger parts
• f the network and replace ageing

equipment Operating expenditure forecasts

• Costs required to maintain the existing

electricity network

• Costs required to run the business, e.g.

pay salaries, cost of offices, IT systems

Historical NSW peak energy demand

Capital expenditure

2004/05-2008/09 2009 /10-2013/14 2014/15-2018/19

Operating expenditure

What are your thoughts?

• TransGrid consults with stakeholders and communities

impacted by its works - for example, when proposing to build new infrastructure

• TransGrid also consults with industry and interested

stakeholders via the Annual Planning Report which sets

• ut future investment plans
• TransGrid’s capex and opex expenditure forecast

proposal is a public document and the regulator seeks public submissions

How do you want to be involved?

• Group 1 & 2 - are you interested in finding out more about

TransGrid’s capital expenditure forecasts?

• Group 3 & 4 - are you interested in finding out more about

TransGrid’s operating expenditure forecasts?

• Which part are you particularly interested in? Why?
• What do you think is the best way TransGrid can

communicate this with you?

The AER’s hot topics….

Presentation three

Hot topics

• Capital expenditure investment
• Alternatives to network investment
• Price versus reliability
• Reliability standards
• Price setting and design

Considerations before building new infrastructure include…

?

Network investment

Network investment process

Emerging Network Problem Identify all feasible options Community Consultation Preferred option Approvals Invest

• Equipment

condition

• insufficient

capacity

• Investigate

non-network

• ptions
• Route corridor
• ptions
• Environmental

considerations

• Community impacts
• Technically

feasible

• Lowest cost
• Community

view

• Environmental
• Planning
• Economic

Regulation

• Build

Alternatives to network investment

• TransGrid has two options to meet growth in electricity demand
• by building additional capacity; or
• funding alternatives to network investment

Examples of alternatives:

• Paying privately owned standby generators to operate at times of

peak demand

• Paying large energy users to switch off or reduce their electricity

usage at times of peak demand

• Paying many small energy users to allow the network to control some
• f their energy usage

Price versus reliability

• Electricity networks are built to set reliability

standards and these investments come at a cost

• Changing reliability standards can change prices
• But power cuts have a cost for customers too
• Inconvenience at best
• Loss of stock
• Loss of sales
• Loss of production time

The level of risk can be compared to having spare tyres in your car.

Reliability standards

• Standards are set by the NSW Government
• Currently under review by the Australian Energy

Market Commission (AEMC)

• Recent studies in the distribution sector found that

for a 15 minute increase in power cuts, you could save $15 a year.

• For transmission the equivalent reduction in your bill is

likely to result in longer power cuts

Is the reliability and price balance right for you?

TransGrid is participating in the current national review of reliability standards We would like to know:

• Should the current standard be changed?

i.e. Should we pack a spare tyre?

• What is important to you? i.e. Keeping the current standard or

increasing the level of risk of a power cut for a slightly less electricity bill?

• You can also participate directly with the AEMC.

Price setting and design

• The Australian Energy Regulator determines the revenue a business

can earn each year

• The National Electricity Law and its Rules specify how this revenue

should be translated into prices

• Transmission prices have a location element and a shared element

reflecting common assets all customers use i.e. Your bill can vary according

to how far away from the main transmission lines you live, how much you use or if you use electricity at peak times e.g. using air conditioners on hot days.

Are there better ways to price our services?

• Different tariff designs can result in different price
• utcomes for customers

We would like to know:

• What do you think about current price structures?
• Are there better ways of pricing transmission

services?

What else is important to you?

Next steps

• The feedback received from you during this

session will help TransGrid develop a consumer engagement program

• The program will provide an approach for

TransGrid to begin engaging consumers about business forecasting, tariff setting, reliability and electricity prices