ELSEVIER

Reliability Engineering and System Safety 46 (1994) 109-112 ~) 1994 Elsevier Science Limited

Printed in Northern Ireland. All rights reserved 0951-8320/94/$7.00

Progress towards integration of reliability concepts in a segregated electric utility system

Bob Simpson Trans Power New Zealand Limited, PO Box 1021, Wellington, New Zealand

This is a position paper describing the changes in the framework of the New Zealand electricity industry with particular reference to system reliability and adequacy in an evolving user pays environment. The role Trans Power, the national grid monopoly is described in supplying customers on the basis of reliability to match the service paid for. Asset management planning is explained in the context of customer service based reliability and the evolving information disclosure regime.

1 INTRODUCTION

New Zealand is comprised of two main islands, each about 750 km in length and very narrow in places. Approximately one-quarter of the three million population live in the top third of the north of the two islands. The economy is mainly based on farming, light manufacturing and forestry, although there is an aluminium smelter at the southern tip of the southern island. Of the 30000GWh of electricity 70% is generated from hydro-electric stations, the balance being from thermal stations using geothermal heat, coal, gas and oil. The Electricity Corporation generates 96% of the electricity with the balance from distributor-owned stations.

The maximum demand is about 5200 MW with an installed capacity of 7700 MW. Transmission develop- ment has been influenced by geographical features and to a lesser extent by the characteristics of energy sources. Power flow is predominantly from southern generation to north loads facilitated by an HVDC link between the two islands. Interesting features of the link include HV under-sea cables and the hybrid combination of 25-year-old mercury valves with state of the art of thyristor valves. In dry years flow can be reversed. The HVDC link has a capacity of 1240 MW northwards and up to 800 MW southwards (depend- ing on AC system constraints) operating at +270 / - 350 kV.

Transmission line route km are 13 005 made up of HVDC lines (583km), 220kV (5887km), l l 0 k V (5143km) and 66/50kV (1392km). Construction at voltages above l l 0 k V is steel tower single and

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double circuit and below this a mixture of wood pole and steel tower; 30% of route km are of wood pole construction.

2 UTILITY STRUCTURE

New Zealand utility systems like most other countries developed from local communities constructing their own plant to supply their own needs. This soon extended to a state-owned State Hydro which constructed hydro-stations and transmission lines linking stations and communities. Communities continued to develop the distributor systems. By late 1980s, this had fully evolved into a state owned generation (thermal and hydro) and bulk transmission system. The distributors were either community- owned power boards or rate-payer-owned utilities.

In 1987 the state-owned electricity department (generation and transmission) was corporatised and set up on a commercial basis as a stand-alone company (The Electricity Corporation of New Zealand) with private sector directors, but the shares were all held by Government. Subsequent to this, the transmission part was formed into a wholly owned subsidiary Trans Power New Zealand Ltd.

The future utility structure is continuing to evolve with distributors operating as stand-alone commercial companies with a range of ownership's including customer-owned, local government-owned to possible part-ownership by an overseas utility. There are pres- ently some 40 distributors supplied from the national transmission grid and six direct supply users. The

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generators are dominated by Electricity Corporation (96%), although in time this may be operated as more distinct units. The Transmission Company (Trans Power New Zealand Ltd) became a Government owned corporation on 1 July 1994.

It is intended that energy traders be formed to buy and sell energy over the 'transparent' networks (both transmission and distribution). For example, a customer in one part of the country will be able to purchase energy from an energy trader in another part.

Price disclosure will operate in all sectors to provide comprehensive cost, price and performance information for consumers, competitors and other interested parties. Although Government would be able to stop power companies from excessive pricing practices, pressures of information disclosure and competition are intended to keep these to a reasonable level.

Trans Power is a management company of 231 staff and employs a range of supporting consulting/ contractors. Through period contracts covering inspections/patrols/repairs/fault repairs, it employs a range of private contractors with total contract staff of approximately 2000 to carry out asset operation, maintenance and development.

3 TRANSMISSION REGULATORY ENVIRONMENT

Energy sector reform is leading to opening up of market competition and removal of franchise areas with the separation of line and energy charges at transmission and distribution levels. The regulator environment is intended to be one of 'light-handed regulation' where performance is monitored through an information disclosure regime. In addition to these, there are a range of regulations relating to safety and practices.

Commercial and legal frameworks are applicable to these as with other non-energy companies. This covers such as director behaviour, fairness in pricing and business practices, etc. There are no specific regulations to which electricity utilities have to comply with as to price setting or business practices.

4 FACTORS CONTRIBUTING TO RELIABILITY

The New Zealand system with its long, thin and lightly meshed network with predominantly hydro-based generation, does not have the ability like overseas utilities to improve reliability except through internal investment. Reliability is largely predetermined by

existing design although with the rapid international interchange of technology, customers have a much higher expectation of reliability than they did several years ago.

Interruptions to supply due to generation plant failure contribute approximately 1% to the customers reliability performance factor. The system has adequate plant capacity and is mainly dependent on hydrological inflows to ensure an adequate supply of energy. Plants are scheduled to minimise fuel cost with a set of water values assigned to determine merit order dispatch. The expected unserved energy is used as a measure of reliability for generation adequacy assessment.

Transmission and distribution reliability are both in the main determined by the design criteria used. In the transmission system for loads above 10-20MW (N-l) is adopted as a security criteria. System reliability is being improved with the removal of old wood pole lines and the transfer of these loads supplied onto the more reliable 220 kV steel tower network. Spur customers and those where (N-I) are not provided, do not receive as reliable a service. Customers can enter into new investment agreements for additional network assets to improve reliability level with an appropriate change in cost of transmission service. Maintenance using live line techniques and the installation of state of the art network SCADA will enable improved reliability to be provided. At a distribution level, the more radial design contributes the greater impact on the overall level of reliability (approximately 80% of the interruption of supply).

Customers are becoming increasingly concerned over their perceived level of reliability. Outages, whether they are planned or not are becoming of greater concern to them. It is becoming unacceptable to shut off supply for maintenance. In most cases distributors are taking a more customer focused approach to managed expectations.

A major study carried out by Centre for Advanced Engineering entitled Reliability of Electricity Supply ~ examines reliability from generation, delivery (trans- mission and distribution) and customer points of view. Although customers rate present level of reliability as favourable there is a need to improve performance after cuts and better communication for shutdowns. All of this highlights a greater desire on the part of customers for an improved reliability of their supply. The reliability of supply study will improve under- standing by the industry and public of all aspects of supply reliability.

5 TRANS POWER'S ROLE IN RELIABILITY

Trans Power is changing from engineering excellence as a business driver to one of customer service. This is

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done through the provision of high-quality and secure transmission and energy management services which minimise industry costs and provide a fair and reasonable return to shareholders. Customers are charged for service on the basis of use of the network and the level of reliability required.

The drivers that determine how Trans Power manage its assets to ensure reliability are safety, customer service, economic efficiency, environmental responsibility and corporate profile. Safety is acting as a reasonable and prudent operator in accordance with local legal requirements and recognised internal practices. Customer service is providing agreed customer needs in a user pays environment where adequacy and continuity of service have a direct relationship with cost of supply. Economic efficiency ensures that all work is conducted to maximise economic efficiency and environmental responsibility/corporate profile ensures a socially responsible attitude towards community impacts is adopted.

6 TRANS POWER'S APPROACH TO RELIABILITY

6.1 Customer service principles

Trans Power has 40 distributor customers and six direct supply customers the latter taking 24% of energy generated. As a monopoly Trans Power considers that if we are not customer orientated then we are likely to be regulated to ensure acceptable levels of service. Trans Power's mission in relation to customer service is to establish and maintain a level of customer service that will promote excellent long-term business relationships. This is effected through principles such as developing cooperative service standards; working with customers for incremental improvement (not by formulas); ensuring all cus- tomers count; that we are about long-term relation- ships; that people matter and feedback is essential.

6.2 Pricing principles

Pricing is the allocation of required revenue such that it reflects the cost of supplying services to individual customers, the 'common good' benefit of connection to the grid and requires the cost of new investment to be borne by those customers who obtain the benefit of the new investment.

Connection costs associated with assets specific to customers which include depreciation, operating, maintenance and an appropriate rate of return on the assets are charged to the customer. Network charges are allocated on a historical basis dependent on a network usage (power flows through particular

assets). A capacity charge is allocated based on historical winter peak off-takes.

The network and capacity charges recover aggreg- ate revenue less generator charges, distributor and direct supply connection charges and HVDC charges. HVDC charges reflect the cost of the HVDC link and are allocated on the basis of energy used by north island customers (53% of total cost of HVDC) and the balance to Electricity Corporation. Generators pay costs to connect and dispatch.

Losses are intended to be charged on the basis of nodes from which energy is taken. A reference node is set and customers pay a national energy rate plus cost of losses to transport energy from the reference node.

6.3 Asset management

As part of its open and neutral policy, Trans Power developed for the first time in 1992 an Asset Management Plan which has now been updated to 1993. 2 The plan provides a systematic approach to the planning and programmes intend to ensure that the condition and performance of infrastructure assets are being efficiently maintained or improved to satisfy stakeholder requirements. The plan is based on drivers which include safety, customer service, economic efficiency and social responsibility provides maintenance and development activities over the period. Key maintenance activities include inspection, fault repairs, repairs/refurbishment and replacement. Development activities include asset enhancement (e.g. extending capacity at an existing point of supply) and system development (e.g. adding a new point of supply).

Development directions are determined from either load growth/network requirements or specific cus- tomer requests for additional assets to improve their reliability. To support particular network aspects, security criteria have been developed to link into design policies although when it comes to customer specific assets, the criteria is only a guide and it is up to the customer to determine his own level.

Principles of system maintenance are developed, asset condition detailed and maintenance programmes described to ensure that the operating capability is maintained. The plan also provides a performance link which will be further developed in time to also include how effective previous plans were to improving/ maintaining performance.

6.4 Performance analysis

Trans Power publishes an annual Transmission Performance Quality report 3 which looks at perfor- mance of the year including trends with respect to past years. This presents information firstly from an overall grid perspective and leads through performance at

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individual points of supply. This enables stakeholders to form an overall view of the business performance and individual customers the performance of their respective points of supply.

At an overall grid level, monthly and annual system minutes for both core grid and subtransmission are given with respective targets of 5 and 10. Losses of supply causes with frequency and impact along with transmission line failure rates are also given. At a customer level, numbers of interruption trends, number outages versus duration and individual point of supply percentage unserved energy are presented.

Distribution companies as a result of recommenda- tions for Centre for Advanced Engineering study are to collate and publish annual performance results principles based on SAIDI, SAIFI and CAIDI.

The publication of performance is being done proactively because although statistical returns are provided to Ministry of Commerce (Government Agency who monitors energy, etc. company perfor- mance and provides safety framework), the industry is taking the lead and analysing the trends.

6.5 Reliability improvement through quality systems

The underlying principles in guiding what we do on the road to quality are

• Continuous focus on customers • Management leads the process • Everyone will be involved • Measurement of costs of quality • Continuous improvement of the processes • Our standard will be right first time.

The reinforcing of this message and associated skills/techniques are supported by

• General introduction to quality to ensure common understanding

• Understanding customer requirements and how we will meet them

• Understanding the role that managers must play if quality is to be successful

• Involving others in the quality improvement process

• The tools and techniques to make improvements and measure success

• Overcoming barriers to change

This leads to continuous improvement cycle where it is intended that people take action to improve performance by

• Understanding performance requirements

• Assessing the capability of meeting those requirements

• Improving processes to meet the requirements • Documenting changes in a quality system • Process of monitoring and continuous

improvement

The ultimate goal being to achieve customer satisfaction by continuous process improvement.

6.6 Future direction

Trans Power future direction is to focus on the customer needs and provide better information for them to judge performance and to determine alternative delivery systems to satisfy their requirements.

To this end we are introducing probabilistic tools to supplement deterministic and historical performance. This will enable predicted performance for various options to be considered and enable the customer to determine the estimated benefits of additional investment which he would be expected to fund.

These tools will further enhance our ability to target processes for the most effective performances.

7 CONCLUSION

New Zealand has a high level of reliability when compared with systems of similar capacity bearing in mind 'restraints' from hydro-resources, the two-island structure and extended network with generation relatively separated from loads.

The developing contractual relationships will enable customers to directly link assets provided for them and the associated reliability to the price they pay.

Further improvement in reliability will come from variability reduction by better process management, building whenever possible, or principles emanating from the 'quality movement'.

REFERENCES

1. Centre for Advanced Engineering, Reliability of Electri- city Supply 1993. University of Canterbury.

2. Trans Power Asset Management Plan 1993. Trans Power Ltd, Wellington, New Zealand.

3. Transmission Quality Performance 1992-93. Trans Power NZ Ltd, Wellington, New Zealand.