access to electricity distribution networks - a users guide 1998
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Access to
Electricity Distribution Networks
A Users Guide
version 1 August 1998
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TABLE OF CONTENTS
1 SUMMARY .............................................................................................................................. 1
2 INTRODUCTION .................................................................................................................... 1
3 MARKET ARRANGEMENTS IN WESTERN AUSTRALIA ............................................... 1
4 GENERAL TERMS AND CONDITIONS............................................................................... 2
5 DESCRIPTION OF NETWORK ASSETS.............................................................................. 2
6 TECHNICAL CODE................................................................................................................ 3
7 DISTRIBUTION NETWORK PRICING............................................ .................................... 3
8 NETWORK CHARGES........................................................................................................... 3
8.1 DESCRIPTION OF CHARGES ................................................................................................... 3
8.2 ENERGY BALANCING............................................................................................................ 4
8.3 ANCILLARY SERVICES .......................................................................................................... 5
9 CAPITAL CONTRIBUTIONS ................................................................................................ 5
10 ACCESS ENQUIRIES.......................................................................................................... 6
11 APPLICATION PROCEDURE ........................................................................................... 6
12 FURTHER INFORMATION........................................................... .................................... 6
13 BIBLIOGRAPHY................................................................................................................. 7
FIGURE 1 WESTERN POWERS NETWORKS....................................................................... 8
FIGURE 2 - DISTRIBUTION NETWORK - ASSET DESCRIPTION ......................................... 9
FIGURE 3 - DISTRIBUTION NETWORK PRICING ZONES................................................... 10
FIGURE 4 - ACCESS APPLICATION PROCEDURE FLOW CHART..................................... 11
Picture on front cover: Western Powers Aaron Thiel performing live 33kV insulator change,
Eastern Goldfields
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1 Summary
The Western Power Corporation (WPC) distribution
networks became available for open access on 1 July
1997 in order to facilitate competition in the energyindustry. This provides opportunities for independent
generators to contract with electricity users by
utilising WPC distribution and transmission networks,
and various ancillary services provided by WPC or
third parties.
Access to the South-West and Regional distribution
networks is managed by the Network Services
Division of WPC (Perth) and access to the North-West
distribution networks is managed by the Pilbara Power
Division (Port Hedland).
The market arrangement is for bilateral contract
trading between generators and loads. This is in
contrast to the proposal for the National Electricity
Market (NEM) in Eastern Australia where all
electricity will be traded through a pool. In the WA
arrangement, independent generators seeking access
must do so in conjunction with contracted associated
loads.
The access regime has been developed through
extensive consultation with the Office of Energy and
industry representatives. The terms and conditions of
network access are defined by the ElectricityDistribution Regulations 1997 (Regulations), the
Distribution Access Technical Code and Planning
Criteria (Technical Code) and the Electricity
Distribution Access Pricing and Charges paper
(Pricing and Charges Paper).
Both the technical requirements for access and the
distribution network pricing follow where practical
the proposals for the National Electricity Market.
The purpose of this user guide is to outline the
distribution network open access regime that has beenset in place, and provide details on how to make a
distribution network access application.
2 Introduction
WPC has two separate interconnected distribution
networks: the South West Interconnected Network and
the North West Interconnected Network (refer to
figure 1). A brief outline of each is given below.
The South West Interconnected Network extends
from Kalbarri to Albany and across to the Eastern
Goldfields. It contains 92 zone substations, and
over 59,000km of high voltage (HV) lines owned
by WPC.
The North West Interconnected Network extends
from Dampier/Karratha to Roebourne/Cape
Lambert and across to Port Hedland. It contains 7
zone substations and over 500km of HV linesowned by WPC.
In addition there are 29 separate (non-interconnected)
regional networks generally based on regional towns,
located from Esperance to Kununurra.
The programme of implementation of access to
WPCs distribution and transmission networks, as
determined by the Western Australian State
Government, is as follows:
Access to the transmission networks has beenavailable to all users regardless of load size since 1
January 1997.
Access to the distribution networks has been
available to users with an average load of 10MW
or above since 1 July 1997, and to users with an
average load of 5MW or above from 1 July 1998.
Load levels for distribution network access will be
progressively reduced. The State Governments
current timetable for further deregulation is:
1 January 1999 for Regional networks. The
threshold for access is annual consumption of
300,000 kilowatt hours.
1 January 2000 - Average load of 1MW or
above;
3 Market Arrangements in
Western Australia
Network access in Western Australia is via acontractual arrangement with Users of the network
and WPC via an access agreement. A User of the
network is the party to the access agreement with
WPC and can be either a generator or a load
connected to the network, or a third party trader, and
includes the Retail Division of WPC.
Where generators and loads are located on different
distribution networks joined by the transmission
network; there is a requirement to contract for
transmission as well as distribution access services.
Generators and associated loads will be required to
balance energy injected to and taken from the
network.
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In addition, generators will be required to supply
additional energy to the system to cover network
losses. Alternatively a generator will benefit from any
reduction in network losses should their generation
create a net reduction in system losses. Unless
otherwise arranged, there should be zero net
interchange of energy with Western Power.
Users may contract to purchase standby power from
Western Power or other generator Users.
The methodology for energy balancing, excess
network usage charges and loss factor determination
is included in the Electricity Distribution Access
Regulations 1997. There are worked examples in the
Pricing and Charges paper to assist in understanding
the process.
Users must comply with the technical requirements setout in the Technical Code to ensure that the reliability
and integrity of the networks are maintained.
4 General Terms and Conditions
The terms, conditions, and regulations that form the
open access regime for the distribution networks in
Western Australia are set out in the following
documents:
Electricity Corporation Act 1994;
Electricity Distribution Regulations 1997 (the
Regulations);
Electricity Distribution Access - Pricing and
Charges (published each financial year);
Distribution Technical Code and Planning Criteria
(Technical Code); and
Electricity Referee and Dispute Resolution
Regulations 1997.
The Electricity Corporation Act 1994 requires WPC to
provide access to its transmission and distribution
networks, the manner and timing being prescribed by
Ministerial order. Section 100 of the Act provides for
the Governor to make any regulations necessary to
give effect to the open access regime, in accordance
with the principles and requirements set out in the
Act.
The Electricity Distribution Regulations 1997 provide
the framework for access to WPCs distribution
networks. They set out, among other things:
the application and access procedure;
confidentiality requirements;
demand and energy balancing requirements;
technical regulation provisions (contained in
the Technical Code); and
terms and conditions of an access agreement.
The Pricing and Charges Paper sets out the prices to
be charged for access. These charges are covered in
more detail in sections 7 and 8 of this user guide.
The Technical Code sets out the technical
requirements applying to the distribution networks
and users facilities, and the network planning criteria
to be used when planning reinforcements or
enhancements to the distribution networks. Furtherdetail is provided in Section 6 of this user guide.
The Electricity Referee and Dispute Resolution
Regulations 1997 establish the office of the Electricity
Referee for resolving disputes regarding transmission
and distribution access.
5 Description of Network Assets
Zone substations provide the interface between the
transmission and distribution networks.
The distribution network enables the transportation of
electricity from the zone substations to customers.
The principal elements include high voltage overhead
and underground feeders, control devices such as
automatic reclosers and other distribution switchgear,
transformers, and low voltage overhead and
underground feeders.
For the purpose of distribution open access, the
distribution network assets comprise connection assets
and shared network assets. These are described asfollows:
Connection Assets: those assets at the point of
physical interconnection with the distribution
network that are dedicated to a single user.
Connection assets for generators are referred to as
entry assets and for loads they are called exit
assets.
Shared Network Assets: all other distribution
assets in the networks not dedicated to any
particular customer, but shared to some extent by
network users. All distribution network assets in
existence prior to June 1997 are deemed as shared
assets.
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Figure 1 shows the location of WPCs network assets.
Figure 2 shows in simplified form the principal
elements of the distribution networks and the
categorisation of the assets as described above.
6 Technical Code
Regulations 28 and 29 of the Electricity Distribution
Regulations 1997 require WPC to publish a Technical
Code and Network Planning Criteria. The two are
published together in the Distribution Technical Code
and Planning Criteria document. It sets out, among
other things:
distribution network performance criteria,
including network planning criteria;
technical requirements of users facilities;
inspection, testing, commissioning, disconnection
and reconnection requirements;
power system security requirements;
metering requirements; and
schedules of technical information required to
support an application for access to the network.
The Regulations require WPC and all users to use all
reasonable endeavours to comply with the Technical
Code.
The requirements of the Technical Code are similar to
those set out in the National Electricity Code.
7 Distribution Network Pricing
The principles used to develop network access pricing
are similar to those used for the National Electricity
Market.
Prices are derived from an annual revenue
requirement for the network business. This consists
primarily of asset related charges, reflecting the
capital intensive nature of the distribution business.
The distribution network assets are independently
valued and the financial rate of return is regulated.
The annual revenue requirement also has an operating
cost component. This reflects good operating practicebased on industry benchmarking and is scaled from
year to year using an efficiency factor to reflect
expected improvements in operating efficiency.
The revenue requirement is allocated to the network
components, which are grouped into geographic zones
to reflect technical and cost structure similarities. A
cost reflective network price is then calculated foreach zone. These zones are depicted in Figure 3.
Network pricing is logically based on a Users relative
utilisation of its part of the shared network. Therefore
an individual users network price will be based on
their proposed contract maximum demand and their
distance from a zone substation.
Network prices are not included in this publication
since they are adjusted annually.
8 Network Charges
As described in Section 3, a user connected to the
network will normally have both a distribution and
transmission access agreement and will pay for access
to both networks.
The charges for the provision of distribution access
services, which a user must pay WPC in respect of
each of its connections, are summarised below.
8.1 Description of Charges
Distribution network access charges consist of the
following.
Use of network;
Common services;
Metering services;
Stand-by network access (if applicable);
Connection services (if applicable); and
Excess network usage charge.
These charges are calculated on an annual basis butbilled monthly.
For regional networks, where no transmission network
exists, there may be additional charges depending on
the particular circumstances. These services and their
related charges, would be negotiated individually and
could include:
Energy balancing;
Excess stand-by generation capacity charge; and
Ancillary service charges.
Each of the above charges is described in detail as
follows:
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The use of network charge relates to the
financing, depreciation and operations and
maintenance of the distribution network fixed
assets.
The common service charge relates to the
administration of the distribution business and the
financing and depreciation of non-network fixed
assets (such as buildings, plant and equipment).
The metering service chargerelates to the cost of
provision of metering for both the generator and
load user.
The stand-by network access charge is
applicable if a user requires network access that hewill not normally use. For example, this can occur
where a user with on-site generation requires
stand-by from the network when his own generator
is unavailable.
The connection service charge is based on the
connection assets provided. Provision of the
connection asset is a contestable service that
means there is no obligation on the user to utilise
Western Power to provide the asset. However
Western Power would normally make an offer for
the connection service that would include a capital
contribution and an annual charge.
Excess network usage chargerefers to a network
charge incurred when the customer exceeds his
contracted maximum demand.
Energy balancing chargesare discussed in detail
in section 8.2.
The excess stand-by generation capacity charge
is discussed in detail in section 8.2.
Ancillary service charges are discussed in detail
in section 8.3.
8.2 Energy Balancing
Customers utilising network access are required to
have half-hourly demand metering in place. Energy
balancing is required for each half-hour period so that
all energy provided to the network by generators is
reconciled with all energy taken from the network by
load users and all energy losses on the network.
Monthly charges are based upon monthly meterreadings and the related balancing and reconciliation
process. These include:
Energy balancing charges;
Excess network usage charge; and
Excess stand-by generation capacity charge.
In regional networks, charges that relate to alternative
generation will frequently not apply because there willgenerally be only one source of generation in place.
Losses
Network energy losses cannot be measured. However
they are calculated utilising transmission and
distribution loss factors which are determined in
accordance with the Regulations. They are to be re-
calculated annually and based on past system
operating conditions.
Loss factors are used to determine the half hourly
energy to be sent out from generators to meet the halfhourly energy usages at the associated load points plus
system losses.
Balancing
Energy balancing is included as part of the
transmission access agreement for users of the south-
west and north-west interconnected networks. For
users the non-interconnected regional networks,
energy balancing requirements will be included in
their distribution access agreement.
The energy balancing charge consists of the
balancing service charge,the out of balance charge,
and the half hourly out of balance charge. The
balancing service charge depends on the number of
connections involved in the access arrangement. The
out of balance and half hourly out of balance charges
depend on energy usage.
The principles of energy and demand balancing are
given in Part 4 of the Electricity Distribution Access
regulations 1997. A practical example is provided in
the Pricing and Charges Paper.
As stated earlier, the energy market arrangement
currently operating in the Western Australian
distribution open access regime is not based on a
generator pool system, but on bilateral contracts
between generators and loads.
Therefore, network users must use reasonable
endeavours to ensure that the energy imported at their
load (exit) points is balanced, after considering losses,
with the energy exported at their generation (entry)
points. It is likely that some form of load following
equipment would need to be installed to achieve this.
Energy imbalances that occur within a permitted
tolerance of 3% of the Contract Maximum Demand,
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(ie small load following errors), may be settled on an
energy basis. Where imbalances exceed this
tolerance, settlement will be on a financial basis at
published half-hourly seasonal energy rates for the
interconnected networks and at contracted rates for
the non-interconnected networks.
To assure reliability of supply during periods of
generator maintenance or unplanned outages, users
are encouraged to contract for the provision of stand-
by power. This stand-by power, or stand-by
generation reservation, may be contracted from WPC
or from any independent generator user.
Where a users import power demand exceeds its
generators export power supply by more than its
stand-by generation reservation it will incur an
excess stand-by generation capacity charge for
each kW in excess. This charge can only be appliedonce in every seven days and is applied to the
maximum demand imbalance occurring during that
period (called the excess demand period).
Unlike energy imbalances, there is no permitted
tolerance for demand imbalances. This provides users
with a significant incentive to contract for the
provision of stand-by power.
8.3 Ancillary Services
WPC in its role of system operator is responsible formaintaining the quality of supply, and ensuring the
safe, secure and reliable operation of the power
system.
To this end WPC has defined a number of related
ancillary services:
Voltage Control;
Spinning Reserve;
Post Trip Management; and
Control System Services.
Users of transmission networks will pay for ancillary
services through their transmission access agreement.
In the case of regional networks that have no
transmission network and only a single source of
generation, ancillary services will generally not be
required. Any requirement for ancillary services by
the prospective user can be discussed with WPC
during negotiations for access.
A full description of ancillary services is contained in
the Transmission Network Access User Guide.
9 Capital Contributions
Up front capital charges may be required as part of the
process to obtain network access. This capital
contribution could include:
Connection service capital charge;
Shared network augmentation capital charge.
The connection service capital charge is normally
the full capital cost for provision of the asset.
Provision of the connection asset is a contestable
activity and the prospective user is at liberty to seek
competitive prices for provision of this service.
The shared network augmentation capital charge
relates to augmentation work required to be carried
out on the shared network to provide the level of
capacity required for the prospective new user.
A new user who requires WPC to augment the
network will be required to make a capital
contribution if the necessary capital investment is not
commercially viable for WPC.
The investment is commercially viable for WPC if:
WPC can recover within a reasonable time the
costs, the capital investment and a reasonable rate
of return without increasing the charges payable by
the existing users; and
WPC has sufficient allocated capital funds to
undertake the augmentation.
The reasonable time, which is limited to 15 years, is
determined based on:
the expected commercial life of the augmentation;
the potential future use of the augmentation by
existing and potential users; and
the financial viability of the applicant and the
applicants business.
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13 Bibliography
1. Electricity Corporation Act 1994.
2.Electricity Distribution Access regulations 1997(as amended).
3. Electricity Referee and Dispute ResolutionRegulations 1997.
4. Western Power Corporation, ElectricityDistribution Access - Pricing and Charges - July
1998.
5. Western Power Corporation, Distribution
Technical Code and Planning Criteria .
Documents 1, 2 and 3 are available from:
State Law Publisher
10 William Street
PERTH WA 6000
Telephone: (08) 9321 7688
Facsimile: (08) 9321 7536
Documents 4 and 5 are available from the WPC
contacts listed in Section 11 above.
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FIGURE 1 WESTERN POWERS NETWORKS
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FIGURE 2 - DISTRIBUTION NETWORK - ASSET DESCRIPTION
GenLoad
TransmissionNetwork
Zone
Substation
Zone
Substation
Zone
Substation
LoadLoad
Distribution Network
Gen
Load
Gen
Load
Gen
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FIGURE 3 - DISTRIBUTION NETWORK PRICING ZONES
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FIGURE 4 - ACCESS APPLICATION PROCEDURE FLOW CHART
R E S P O N S I B I L I T Y
APPLICANT WESTERN POWER
1. Formulate proposal.
2. Submit access application
with optional request for
preliminary assessment.
3. Prepare written response to
access application. Response
to be provided within 20
business days (unless further
information requested by
Western Power).Response to include:
Time for preliminary
assessment
Time to make access offer
Estimated costs.
4. If a preliminary assessment is
required, prepare report within
time specified in response;
otherwise prepare access offer
within period specified in
response (unless further
information requested by
Western Power).
5. Prepare access offer within
time specified (unless furtherinformation requested by
Western Power).6. Accept access offer
within 20 business days
or such longer period as
is agreed.7. Finalise access agreement.
NOTE: The process shown in this flow chart is in simplified form, is for illustrative
purposes only and otherwise has no force or effect. The process and times for
performing activities are subject to conditions and variations set out in Part 2 ofthe Regulations.
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