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

Consumer engagement roundtable Hosted by TransGrid

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 TransGrid Energy to you National and State priorities • • Future electricity demand How energy gets to you • • Supply reliability Energy infrastructure • Supporting economic • • Building new transmission Electricity prices growth • lines and substations Energy consumption • Cutting emissions • • Facilitating competition in Technology and • Delivering clean generation innovation e.g. smart sustainable energy • Greater consumer meters • participation (demand Sustainable energy management) options • • Prices – setting, design & Maintaining and operating network 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 36,000 transmission More than 91 substations and transmission line and line structures switching stations underground cable

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? Electricity generators 20% Transmission network – transporting electricity from power stations at high voltage 8% (the highway) Distribution network – transporting it from the 42% highway to your home or business (your local road network) 15% Retailers The carbon price and State and Federal 15% government green schemes *IPART Fact Sheet - Regulated Retail Prices

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 of 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 out 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

Network investment Considerations before building new infrastructure include… ?

Network investment process Identify all feasible options Emerging Community Network Consultation Problem • Investigate non-network • Equipment options • Route corridor condition options • insufficient • Environmental capacity considerations • Community impacts Invest Preferred option Approvals • Build • Technically feasible • Environmental • Lowest cost • Planning • Community • Economic view Regulation

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 of 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 outcomes 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