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Auckland Summer Electricity Risk Decreases

Minister of Energy Pete Hodgson has welcomed a report indicating that Auckland electricity supply security risks for the coming summer appear to have lessened.

Mr Hodgson today released the report, from an industry working group set up in September to address the risks.

It says the risk of electricity supply failing to meet demand in Auckland over summer has reduced to a level at which the use of normal demand management techniques, such as ripple control of water heating, should be enough to prevent problems.

The working group now expects a risk to security of supply to exist for only 1% of the time from mid January to the end of March 2001, rather than the 7% forecast in September. The report assumes that the new plant at Otahuhu B will remain unavailable through this period.

The report notes that some risk remains, if any presently operating generating plant becomes unavailable or in the unlikely event of a sustained transmission failure. Supply might also come under pressure if temperatures from mid-January to the end of March are extreme. If there are any difficulties they are expected to occur on hot afternoons, when air-conditioning load is heaviest.

"I am pleased to see the industry, under Transpower’s leadership, working together to avoid disruption to consumers," Mr Hodgson said. "Co-operation of this type will be increasingly important as the Government's proposed industry self-governance arrangements take effect.

"I look forward to a further report from the Working Group around the end of November. I will be particularly looking for assurance of continued co-operation by the industry to ensure that significant disruption is avoided."

Report attached. The Working Group’s papers can be found on Transpower’s website at www.transpower.co.nz


31 October 2000


Mr Pete Hodgson
Minister of Energy
Executive Wing
Parliament Buildings
WELLINGTON


Dear Minister

Report to the Minister of Energy
On 2000/01 Summer Electricity Supply Situation in the Upper North Island

Purpose

To provide an update on the situation following information provided to the Minister on 14th September 2000. Also to provide a briefing on the work programme and progress of the Working Group established to monitor the situation and recommend appropriate responses.

Background

With the failure of Contact Energy’s Otahuhu Combined Cycle Gas Turbine (CCGT) generator and lower than expected Lake Taupo inflows a potentially “tight” electricity supply issue was identified for the Upper North Island including Auckland in summer.

In September two main areas of concern were identified; the provision of voltage support and the availability of generation to meet peak demand in the upper North Island. Both of these are affected by the availability of generation from Huntly, which can be constrained due to high Waikato River temperatures in summer. Genesis have a resource consent for Huntly currently under appeal. If Genesis are successful their ability to generate at high Waikato river temperatures will be improved.

Transpower provided a presentation which identified issues which may arise given previous years electricity demand and possible generation scenarios.

The Minister asked that the industry members present at the 14th September 2000 meeting co-operate to ensure the situation was well managed and progress communicated to him. An industry working group was formed to complete these tasks and an update report was to be provided at the end of October 2000. This paper is that report.

Working Group Progress

The Working Group developed a scope which identified five main workstreams. The following description of progress report made by each of the workstreams will cover all the issues relevant to this update report.

Workstream 1 – Review and gain confidence in the forecasts to predict critical circumstances.

A review of the forecasts for summer load and generation availability has been completed. Further reviews will continue to be undertaken as we move closer to the critical period. The highlights of the current review are:

i) The situation is considered to be more optimistic than the previous report made in September. This is due to:

 improved forecasts of likely demand and connection of new plant (such as capacitors by Vector and intertrip by Transpower),
 modelling of revised voltage limits based on actual load behaviour of last summer.
 a clearer understanding of likely generation availability to met demand and voltage support requirements.

ii) Risk of failing to meet demand has reduced to a level at which the co-ordinated application of normal demand side management techniques (e.g. ripple control of water heating) should be sufficient.

iii) The more optimistic situation can change if a further plant failure occurs. The next most likely events that would potentially put the risk beyond that which can be easily managed are:

(a) no generation from Southdown Power Station
(b) reduced output from generators in the Taranaki area
(c) significant long term failure of a transmission line

The Working Group has now moved its focus to ensuring the potential for the above events is reduced. The availability of generation can be subject to both failure of plant and the commercial positions taken by the owners.

(iv) Genesis are continuing to progress their resource consent appeal, towards a hearing in December. Transpower has sent a further letter of support for use in the appeal process. Genesis have informed the Working Group that it does not require any further support at this time. Genesis have undertaken to inform the Minister directly of progress with the resource consent.

Workstream 2 – Identify & recommend possible “quick fixes” to raise voltage stability limit or transfer of MW into upper North Island at peaks.

Some of the quick fixes identified by this workstream are being implemented which has contributed to the more optimistic outlook. Transpower and Contact Energy have been asked to complete additional voltage support contract negotiations from the Otahuhu A Gas Turbine plant. The earlier completion of these agreements will give increased confidence that voltage support can be met this summer without the need to take further action.

Additional capital expenditure for further capacitors in Auckland installed on the Vector network was not considered to be necessary if the Transpower/Contact arrangements for voltage support are put in place.

Transpower is progressing the automatic tripping scheme to increase power transfer into the upper North Island.

Workstream 3 – Contingency Planning.

As this workstream relies on outputs from the first two workstreams and in particular, a clearer view of the likely situation, it is appropriate that work on contingency planning did not begin until now. The work now underway will review existing contingency planning and make recommendations for implementing changes. A report to the Working Group is being prepared for its 22nd November 2000 meeting.

Workstream 4 – Voltage Constraint Price Signals

Consideration has been given to the introduction of a voltage price signal being introduced in the nodal energy price. The introduction of such a signal would incentivise retailers to make efforts to gain demand side responses from their customers.

The conclusion was that whilst this signal is desirable in the future it would have little positive effect in the short term. This is due to retailers having insufficient time to develop techniques for responding to the signals.

A detrimental effect could also result as the current cost signal would be removed from the line companies who currently manage much of the controllable load.

Workstream 5 – Customer Information and Advice

The workstream has produced a co-ordinated communication plan should an event causing a power shortage occur. Work is now being undertaken to ensure that arrangements for advice to electricity users to prevent supply loss by reducing demand, are on hand should an event occur.

Much of the communication required is already available. A review is however needed to ensure co-ordination and co-operation between line companies and retailers.

EECA is assisting the Working Group in this area.


Conclusions

The working group is pleased to report a more optimistic outlook to the Minister. The key issue is now seen to be energy availability rather than voltage support. In terms of exposure, we now expect a risk to security of supplies to exist for only 1% of the time in mid January 2001 to the end of March 2001, rather than the 7% as forecast in September. This means that the risk can be managed within the normal operating and market systems. The situation may change if there is further plant failure or the summer weather is extreme.

It should be noted that the ability to cope with the non-availability of major plant has been mainly due to the success of measures taken following the experiences of 1997.
The Working Group will make recommendations for any further improvements that are identified as a result of its work.

We will continue to monitor the situation and provide brief updates on a monthly basis.

I am available to meet with you to provide an update on our previous presentation and discuss any questions you may wish to raise.


Yours faithfully

Bill Heaps
General Manager Sales & Marketing
Transpower

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