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Nuttall Consulting Slide 2 Purpose overview of the form and use of the AERs augex tool Not Detailed reference material on the underlying spreadsheets Defence of the tools regulatory role and suitability Nuttall Consulting Slide 3 Summary Background Augex model data requirements Overview of workbook augex modelling tool Overview of augmentation algorithm Discussion of issues raised Nuttall Consulting Slide 4 Slide 5 Background capex category Nuttall Consulting Capex driver Capex activity ReplacementAdditional assets Demand driven: customer connection replacement and development of assets to facilitate the connection of customers Augex tool Demand driven: augmentation replacement and development of network assets to increase the capacity of the network Repex tool Non-demand driven replacement of aged assets with modern equivalents installation of new assets Slide 6 Background - key aims Regulatory tool NOT planning/management tool Should account for main driver at aggregate level but not concerned with excessive detail Allow intra- and inter-company comparisons Targeting of matters for detailed review Development of benchmarks But not intended to determine specific network constraints and solutions Nuttall Consulting Slide 7 Overview Similar in form to repex tool Similar to tools used by ESV and NSPs Nuttall Consulting Asset state network utilisation and capacity growth in peak demand Planning parameters utilisation thresholds augmentation costs Outputs forecast capacity forecast costs forecast utilisation Slide 8 Overview Nuttall Consulting Tool is spreadsheet based - uses VBA functions Does not rely upon proprietary or black box algorithms Uses probability model to apply utilisation threshold relatively simple to independently verify Asset utilisation = peak loading / normal rating Slide 9 Anticipated application Nuttall Consulting 1 - Base-case Prepare individual DNSP models based upon DNSP data 2 - Calibration Derive planning parameters from actual historical information of DNSP Prepare individual DNSP calibration models 3 - Comparison Derive benchmarks parameters based upon set of DNSPs calibrated planning parameters Prepare individual DNSP benchmark models Augex tool assessment inform other elements of the review for example, targeting matters for more detailed review, set expenditure allowance Slide 10 Nuttall Consulting Slide 11 Network representation - segments Multiple network segments used to improve accuracy allows for differences between networks reduce impact of aggregation e.g. differences in planning parameters Individual segments represent typical planning components sub-transmission lines load type and/or arrangements sub-transmission/zone substations load type and/or transformer number distribution feeder load type distribution substations load type Nuttall Consulting 15 30 separate segments Slide 12 Network representation - grouping Each network segment must be assigned to a group allows aggregation for analysis and reporting Nuttall Consulting Example distribution groups Sub-transmission linesCBD distribution feedersCBD distribution substations Sub-transmission substations Urban distribution feedersUrban distribution substations Zone substationsShort rural distribution feeders Short rural distribution substations Long rural distribution feeders Long rural distribution substations Slide 13 Segment input data For each network segment 1. Asset state data a. Utilisation profile array of the capacity (MVA) of assets at utilisations (0% to 151% - in 1% increments) b. Utilisation annual growth rate %pa average over study period 2. Planning parameters a) Utilisation threshold mean and standard deviation (assumes a normal distribution) b) Capacity factor capacity added = capacity factor x capacity requiring augmentation c) Augmentation unit cost - (k$ per MVA of capacity) Nuttall Consulting Slide 14 Data asset status Obtain: loading, rating, type and growth data Form of data required: loadings, ratings, types, should reflect actual data individual components: sub-transmission lines and substations, zone substations, and distribution feeders grouping of data for distribution substations (and LV feeders?) latest loading and rating data is used to develop utilisation profile input other actual data is used to assess changes (calibration) Nuttall Consulting Slide 15 Data asset status General comments Actual maximum demand should exclude abnormal operating conditions Maximum demand estimate acceptable if not directly measured Distribution feeders trunk model maximum demand at feeder exit rating of main trunk section Distribution substations expect segments to be based upon load type or categories of substation capacity or substations type Demand growth rates most appropriate that are available for category Nuttall Consulting Slide 16 Data capex and capacity Obtain: historical and future capex and capacity Form of data required: Capex should be exclusive of corporate overheads Unmodelled capex separately identify augmentation capex that is not considered to be related to utilisation and peak demand growth Assuming there will be an augmentation capex category in the regulatory reporting requirements overall capex should be reconcilable to this category The type of capacity should reflect rating types defined for asset status Capex ideally should be as commissioned Nuttall Consulting Slide 17 Supporting information Explanations of data sources, calculations, assumptions for tool data inputs rationale for segments if defined by NSP basis of asset status data - maximum demand, ratings, growth rates derivation of planning parameters Nuttall Consulting Slide 18 Possible other supporting information Other responses to aid understanding of data Inclusions and exclusions in capex actual development costs, direct project analysis/planning costs, other costs allocated to the project Capex-capacity allocations rules it is expected that internal systems may not align to AER groups Explanation of unmodelled capex Project/program descriptions, drivers, outcome on capacity Comparability with other DNSPs Differences that may impact augmentation requirements utilisation levels, project types and costs Nuttall Consulting Slide 19 Slide 20 workbook structure Input sheets Model initialisation data sheet Tables segment data input sheet Asset data Output sheets Asset category summary sheet Utilisation profile summary Augmentation forecast sheet aug forecast Chart sheets Utilisation profile utilisation profile chart Augmentation forecast Forecast Ch1 and Forecast Ch2 Internal calculation sheets Nuttall Consulting Slide 21 Overview of demo model Nuttall Consulting Slide 22 See handbook for more detailed reference material Nuttall Consulting Slide 23 Slide 24 Forecasting for each segment Nuttall Consulting probabilistic model to account for variations in the threshold (similar to asset lives in repex model) Slide 25 VBA function Nuttall Consulting Array function =aug_calc(utilisation profile index, capacity profile, growth, capacity factor, utilisation threshold, SD, method, years) Inputs utilisation profile index array of utilisation (%) increments capacity profile array of capacity (MVA) matched to utilisation profile index growth average per annum compound growth in peak demand (%) capacity factor as discussed utilisation threshold mean utilisation at augmentation point (%) SD standard deviation of utilisation at augmentation point (%) method augmentation algorithm method (only 1 at this time) Years number of years for forecast Outputs Array of forecast capacity added by year Array of forecast average utilisation by year Slide 26 VBA function worked example Nuttall Consulting Assume a network segment is defined in the model Where utilisation threshold Mean utilisation threshold = 65% SD of threshold = 5% Capacity factor 0.5 (i.e. add 1 MVA for every 2 MVA requiring augmentation) Augmentation cost = $1,000 per MVA added Slide 27 VBA function worked example Nuttall Consulting VBA function steps through each element of the utilisation profile to prepare a forecast for the existing capacity at that utilisation level That is, the capacity that has survived to that utilisation level For each element of capacity in the utilisation profile Step 1 calculate for each forecast year the amount of capacity requiring augmentation (the probabilistic calculation) Step 2 calculate the amount of capacity to be added (using the capacity factor) Post-function calculation - expenditure forecasts calculated outside of VBA function as - capacity added x augmentation cost For example, assume we still have 100 MVA that is utilised at 60% Slide 28 Step 1 probability calculation Nuttall Consulting Slide 29 Step 1 transform u to year Nuttall Consulting using peak demand growth for that segment assume here it is 2% pa. transform the x-axis from utilisation to forecast year Slide 30 Step 2 capacity added Nuttall Consulting For each forecast year Using forecast capacity requiring augmentation (CRA) Capacity added = CRA x capacity factor For example in year 1, CAR is 7.7 MVA (utilised at 61.2%) Capacity added = 7.7 MVA x 0.5 = 3.9 MVA Utilisation of augmented capacity = demand associated with CAR / (CAR + capacity added) = (7.7 x 61.2%) / (7.7 +3.9) = 41% utilisation Return to step 1 to calculate any later augmentation associated with this augmented capacity. Slide 31 Nuttall Consulting Slide 32 Common issues raised Nuttall Consulting Anomaly for high growth rates More detail in manual HV trunk feeder model Use of N-1 rating rather than N for utilisation Sensitivity to utilisation threshold Including LV segments Clarifications on modelling certain circumstances Cross feeder ties Non-trunk HV feeder augmentations Projects with long lead times Meshed networks Preparing $/MVA for different projects Weather correcting utilisation Augmenting one segment to address constraints on other segments Slide 33 Nuttall Consulting