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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Access To Western Powers Distribution Networks - A Users Guide

Version 1 - August 1998

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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.

Access to Electricity Distribution Networks - A Users Guide 1998

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