This TransGrid event brought together a range of community members to provide feedback our five year business plan and revenue proposal.

1. TransGrid and the changing
energy market
Deliberative forums with consumers – Sydney CBD, Wagga and Parramatta
November 2013
This TransGrid event brought together a range of community members to provide
feedback our five year business plan and revenue proposal.
Some small changes have been made to the following presentation as details will continue to change as
we take feedback from our consultation process. All details were correct at the time of publication, E&OE.

2. Overview of TransGrid
TransGrid promotional video
This video is current unavailable
2
November 2013 TransGrid Deliberative Forums

3. The electricity supply chain
38%
wholesale
plus carbon
3
8%
November 2013 TransGrid Deliberative Forums
34%
Total
13% retail
7% green residential
schemes
bill

4. Generating and transporting
electricity
Generating capacity in the National
Electricity Market 2013
4
November 2013 TransGrid Deliberative Forums
The transmission network
is like the freeways for
electricity

5. TransGrid‟s key statistics


94 substations

63 generator connections

362 distributor and direct
customer connections

November 2013 TransGrid Deliberative Forums
47 kms underground
cables

5
12,609 kms high voltage
transmission lines
1,083 employees, with
more than 70% based
outside Sydney

6. TransGrid‟s revenue

TransGrid is a government-owned ‘natural monopoly’ .
It is for-profit, to encourage efficiency.
Regulator sets revenue
NSW Government equity investor / shareholder in business
Revenue collected through electricity bills
80% of profits returned to owner (NSW Government)
20% of profits reinvested in TransGrid
6
November 2013 TransGrid Deliberative Forums

7. What TransGrid does

Design, maintain and operate the network to:
 Keep the lights on
 Get the cheapest generation to market
7
November 2013 TransGrid Deliberative Forums

8. The market has changed
70,000
GWh
Total electricity
demand in NSW
1951/52
8
November 2013 TransGrid Deliberative Forums
2012/13

9. Index movement
Significant electricity price rises
NSW residential
electricity price
400
300
200
CPI
100
2009
2004
November 2013 TransGrid Deliberative Forums
1999
1994
9
1990
2013

10. TransGrid‟s new approach
Adaptive
planning
 Sydney CBD 2012/13 Summer
demand management (like taking
50,000 air conditioners off the grid)
Effective
engagement
 „Have your say‟ website
 Public review of consultation
practices
Smarter
regulation
 A new way of thinking about the
reliability / cost trade-off
10
November 2013 TransGrid Deliberative Forums

11. Engaging with stakeholders
Government
and
regulators
Industrial and
commercial
consumers
Distributors
and other
transmitters
Residential
consumers
Generators
11
Impacted
communities
November 2013 TransGrid Deliberative Forums
TransGrid‟s 5year plan,
and broad
engagement
to understand
needs and
behaviour
Particular
network
needs

12. The energy conversation
Cost
Reliability
12
November 2013 TransGrid Deliberative Forums

13. Draft five year plan

14. Business plan overview
$2,100
Typical annual
electricity cost
$168
14 TransGrid‟s 2013 TransGrid Deliberative Forums
November Draft Business Plan
TransGrid part
of bill

15. Business plan overview
Breakdown of typical residential annual transmission charges
Consult
today on
operating
expense
proposal
Tax & depreciation
Operating expense
Return on proposed capital investment
Return on capital already invested
15 TransGrid‟s Draft Business Plan Forums
November 2013 TransGrid Deliberative
Consult
today on
new
capital
proposal

16. How TransGrid‟s prices compare
Prescribed revenue per energy transmitted (c/kWh nominal)
3
ElectraNet (SA)
Transend (Tas)
c/kWh nominal
2
Powerlink (Qld)
TransGrid (NSW)
1
SP AusNet (Vic)
0
2005-06
2007-08
2009-10
16 TransGrid‟s 2013 TransGrid Deliberative Forums
November Draft Business Plan
2011-12
2013-14
2015-16
2017-18

17. Proposed capital
investment
(building the network)

18. How much network do we need?
18 Capital – non build focus
November 2013 TransGrid Deliberative Forums

19. Replacement dominates proposed
capital investment
Proposed capital investment for 2014 to 2019
Category
Description
Augmentation
New or upgraded infrastructure to
cater for growing demand
Replacement
Updating infrastructure which is
wearing out
Market benefits
New or upgraded infrastructure to
expand generator access and
competition
Others
Non network infrastructure, including
commercial property and IT
systems, and security compliance
19 Capital – Overview
November 2013 TransGrid Deliberative Forums

20. Peak demand has slowed and
is less certain
20 Capital - Augmentation Deliberative Forums
November 2013 TransGrid

21. History of network development
is driving replacement needs
21 Capital - Replacement Deliberative Forums
November 2013 TransGrid

22. Comparison with other
mature networks
Annual Replacement Spend as % of Depreciated Asset Value
10%
8%
6%
4%
2%
0%
National Grid
(UK)
Transpower (NZ) SP AusNet (Vic)
22 Capital - Replacement Deliberative Forums
November 2013 TransGrid
Transend (Tas)
Powerlink (Qld)
TransGrid
(NSW/ACT)
ElectraNet (SA)

23. Proposed replacement
project portfolio
Forecast replacement projects for 2014 to 2019
Category
Powering
Sydney‟s Future
(„contingent‟)
Substation
renewal
Control
system renewal
Transmission
line renewal
Individual
equipment
replacement
23 Capital - Replacement Deliberative Forums
November 2013 TransGrid

24. „Market benefits‟ projects to
dispatch cheapest generation


24 Capital – Market benefits
November 2013 TransGrid Deliberative Forums
Queensland to New South
Wales interconnector
upgrade
Snowy to Yass / Canberra
upgrade

25. Operating
expense

26. TransGrid performs well against
international peers
26 Operating expense – Overview Forums
November 2013 TransGrid Deliberative

27. Breakdown of draft
operating expense proposal
Proposed annual operating expense for 2014 to 2019
Category
Description
Plan and
manage assets
Planning the development of the
transmission network and capital
portfolio management
Maintenance
Inspections, preventative, conditionbased and corrective maintenance
Operate the
network
24 hour control room
operations, outage planning and
technical studies
Supporting the
business
IT, health and safety, property and
insurance
27 Operating expense – Overview Forums
November 2013 TransGrid Deliberative

28. Increased planning and
engagement costs
Planning cost trend

12
10
 More responsive
capital expenditure
decisions
8
6
 More transparent
investment decision
making
4
2
-
Planning cost
increases to date:

Proposed increases
 Consumer engagement
 Demand management
innovation
28 Operating expense – Planning Forums
November 2013 TransGrid Deliberative

29. Efficiencies in maintenance,
operations and business activities


29 Operating expense – Maintenance
November 2013 TransGrid Deliberative Forums
Innovation in operations
(virtual control room and
automation of functions) to
reduce costs

Video of transformer failure
Automation of condition
monitoring and control
systems to reduce
maintenance costs
Efficiencies achieved in
procurement,
accommodation and
payroll

30. Discussion

31. Non-build options

32. Minimising our build program:
past success
Demand-driven capital approved by
the regulator for 2009 to 2014
Responding changing
Responding toto changing
demand forecasts
demand forecasts
Approx
$700
million
deferred
Advocating smarter
Advocating smarter reliability
reliability standards or
standards or grid innovation
grid innovation
Continuing to procure
non-build options such
as demand management
32 Capital – Non build focus
November 2013 TransGrid Deliberative Forums
Approx
$1.2 billion
completed
or
underway

33. Increasing focus on innovative
non-build options
Demand
management
Peak load management through time
of use tariffs, interruptible loads and
load shifting etc.
Local
generation
Local generation (biomass, solar,
cogeneration) to reduce loading on
network
Energy
efficiency
Increasing customers‟ use of
efficient appliances, lighting, motors
etc.
33 Capital – Non build focus
November 2013 TransGrid Deliberative Forums

34. Consulting on requirements for
Powering Sydney‟s Future

Works underway to defer /
avoid the need:
 advocacy for changed
reliability standard
 seeking network support
 energy efficiency uptake
study‟
 electric vehicles study
 planning and demographics
study
 „low build‟ options (eg cable
backfill remediation)
34 Capital - Replacement Deliberative Forums
November 2013 TransGrid

35. Potential non-build options

Consumer education on saving electricity
 Research understanding consumers‟ behaviour
 Demand management to postpone network
investment
 Large companies being willing to turn off
 Interruptible loads (eg air conditioning fan off at peak
times)
 Load shifting (eg washing machine at night)

35
Battery storage pilot program
November 2013 TransGrid Deliberative Forums

36. Discussion

37. Price and
reliability

38. Allocating transmission revenue
between consumers


38
The pricing methodology must be submitted to the regulator at the time
of the revenue application
Transmission pricing should promote efficient outcomes across all
consumers, and cover the total cost of transmission services
November 2013 TransGrid Deliberative Forums

39. Transmission bill components
38%
Wholesale
power plus
carbon price
8%
35%
13%
Retail and
retail margin
7%
Green
(FiTs, RET, o
ther)
39
November 2013 TransGrid Deliberative Forums

40. Allocating transmission prices –
two options
Postage stamp
User pays
TransGrid‟s charges are now approximately half “postage
stamp” and half “user pays”.
40
November 2013 TransGrid Deliberative Forums

41. Discussion

42. Thankyou

43. For further information on TransGrid or this
presentation please contact TransGrid’s External
Communication Manager on 02 9284 3016.
Alternatively visit our consultation website –
yoursaytransgrid.com.au