Customer Facing Performance Measures Feedback Summary Response

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Customer-facing performance measures Transpower New Zealand Limited 2007. All rights reserved. i

CUSTOMER-FACINGPERFORMANCE MEASURES

CUSTOMER FEEDBACK AND RESPONSE

Transpower New Zealand Limited

March 2013


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Customer-facing performance measures Transpower New Zealand Limited 2007. All rights reserved. iii

Table of Contents

Executive Summary ............................................................................................................ iv

1 Introduction and purpose .......................................................................................... 5

1.1 Note on terminology .............................................................................................. 5

1.2 Overview of original proposal ................................................................................ 6

1.3 Overview of feedback ............................................................................................ 7

2 Our general approach ............................................................................................... 8

3 Our proposed measures ........................................................................................... 9

3.1 Proposed categories ............................................................................................. 9

3.2 Number and duration of unplanned interruptions ................................................. 11

3.3 Information provision ........................................................................................... 14

3.4 Comparisons with distribution .............................................................................. 15

4 Other issues and possible measures ...................................................................... 17

4.1 Voltage sags ....................................................................................................... 17

4.2 Economic impact ................................................................................................. 18

4.3 Planned outages and the impact on the market ................................................... 19

4.4 Risks of non-supply ............................................................................................. 20

4.5 Qualitative customer service ............................................................................... 21

4.6 Feedback: other issues ....................................................................................... 21


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Customer-facing performance measures: Customer feedback and response

Customer-facing performance measures Transpower New Zealand Limited. All rights reserved.iv

Executive Summary

We are developing new measures and targets for grid performance based on what matters

to our customers and to end consumers. We published proposed new measures at the end

of October 2012 and invited customers and their representatives to provide feedback either

at meetings or in writing.

This document provides a summary of customer views on the proposed measures and

targets. It outlines the way we intend to develop grid performance measures in light of the

feedback.

We experienced widespread support for our approach and the measures we proposed. The

key measures focus on the number and duration of interruptions and the information we

provide during interruptions.

Customers provided suggestions for improving the measures and highlighted other areas

that are important to them.

Key issues raised by customers were:

Whether interruptions caused by extreme events and those that are less than one

minute long should be included.

The importance of power quality, in particular voltage sags.

The impact on the market of both planned and unplanned outages this was of

particular importance to generator-retailers.

The financial impact of interruptions.

Information on the risks of non-supply and improved communication after interruptions.

A separate paper describes our revised proposal, how the performance measures fit with

our next regulatory control period proposal and the next steps. It is available on our

website1.

1https://www.transpower.co.nz/about-us/industry-information/customer-facing-grid-performance-measures-consultation
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Customer-facing performance measures Transpower New Zealand Limited. All rights reserved. 5

1 Introduction and purpose

We are introducing new measures and targets for grid performance based on what

performance matters to our customers and end consumers. These targets will be

used to report our performance, to prioritise our expenditure and to inform therevenue incentive regime applying to Transpower in our next regulatory control

period (2015-2020).

We prepared a draft proposal2 for review by our customers and end-consumer

representatives in October 2012.

We met with representatives of 30 customers over a series of meetings, and received

written feedback from 13 parties. We also met with Commerce Commission

representatives to discuss the proposal and consultation process. Written feedback is

available on our website3.

Our customers generally supported the overall approach we are taking in introducing

measures focusing more directly on the service that customers receive and the shift

away from system average-based measures. Customers welcomed the opportunity

to comment and we would like to thank all those customers and their representatives

for their time and expertise. These performance measures involve a change in

emphasis for us and the consultation has been a critical part of making sure that we

target efforts and spending on performance that our customers value.

This paper summarises the feedback, discusses issues raised by customers or

consumer representatives and outlines the way we intend to progress these

measures and targets in light of the feedback.

A separate paper describes our revised proposal, how the performance measures fit

with our next regulatory control period proposal and the next steps. It is available on

our website4.

1.1 Note on terminology

In our proposal we used the term outage to mean an event that causes a loss of

supply or loss of generation connection. We used this term because we thought it

was more relevant to consumers and is often used by distributors in communicationwith their customers.

This confused some customers because the term outage is often used to mean when

assets are out of service, but there is no loss of supply, and it can be used to

describe both planned and unplanned outages. The term interruption is used

internationally and by the Commerce Commission to refer to a loss of supply.

2 Transpower: Customer-facing grid performance measures consultation paper, October2012, available at:https://www.transpower.co.nz/sites/default/files/plain-page/attachments/long-term-performance-measures-consultation-paper_1.pdf3

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Customer-facing performance measures Transpower New Zealand Limited. All rights reserved.6

In this paper we have reverted to the standard terminology to avoid confusion. An

interruption is a loss of supply; an outage is an equipment outage. Both interruptions

and outages can be planned or unplanned.

1.2 Overview of original proposal

The proposal that we set out in our consultation paper described performance

measures and targets that are significantly different from our existing measures. The

main differences were:

A change in emphasis from measures that are focused on the performance of our

assets to measures of the service received by customers.

Different targets reflecting different categories of customers at grid connections.

Forward-looking targets that reflect what customers expect rather than targets

based on historical performance.

The measures focused on the ability of the grid to transmit power without interruption

and not on power quality aspects of grid performance or power losses or constraints.

Table 1 provides an overview of the original proposal. For a more detailed description

of the proposal refer to the consultation paper5.

Table 1 Overview of original proposal

Proposed customer-facing measures(Measured at the customer point of service)

Proposed long-term targets

Number of unplanned interruptions Different for different categories: high-priority, important, standard, generatorand N security connections.

Average and 90th percentile duration ofunplanned interruptions

Information provision during unplannedinterruptions:

- Time to provide first notice- Time to provide updates- Accuracy of restoration estimates

Common targets for all customers.

Comparisons with distribution companies A national target for number and

duration of unplanned interruptionsrelative to distribution networks.

5https://www.transpower.co.nz/sites/default/files/plain-page/attachments/long-term-

performance-measures-consultation-paper_1.pdf
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1.3 Overview of feedback

Both the customer meetings and the written feedback support the direction and

emphasis that we proposed in the consultation paper. Distributors and large users

support concentrating on the number and duration of interruptions but some havesuggested improvements or further measures. Generator-retailers also consider

these measures are appropriate for off-take, but want to see development of market

impact measures and consideration of planned outages. All customers value the

information provision measures.

For these reasons, we will continue with the core parts of our published proposal

measures focused on the number of interruptions, the duration of interruptions and

information provision. We will refine these measures to reflect suggestions. In

addition, we will look at ways to develop our performance measures and targets in

the future to respond to customer feedback through consultations and trials.

The three following sections summarise customers views and our response.


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2 Our general approach

2.1.1 Customer views

There was significant support from distributors and large users for our overall

approach which involves:

a change in emphasis to measures of the service received by customers rather

than system averages

using different targets for different categories of customers

using forward-looking targets that reflect what customers expect rather than

targets based solely on historical performance, and

concentrating on the number and durations of unplanned interruptions.

The generator-retailers supported the approach for off-take, but would like to see

measures that reflect the impact of both planned and unplanned outages on themarket.

Individual customers made the following comments about our general approach.

Measures should be meaningful to Transpower and our contractors as well as to

customers.

Measures should encourage learning from all events, not just high profile events.

We should be mindful of the end-plan and trial reporting and measures that

customers would like to see in the future.

2.1.2 Our response

Reflecting on the feedback, we consider that our measures and targets should first

be meaningful to our customers and ensure we are managing our assets to deliver

the service valued by our customers. They should focus on measurable outcomes,

not on inputs.

Efforts to achieve these outcomes will be embedded into our asset management

approach and will be important in driving improvements. We have structured the

measures so that they are meaningful to both us and our contractors.


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3 Our proposed measures

3.1 Proposed categories

3.1.1 Customer views: categories

Customers were generally supportive of introducing categories for different customer

loads. We proposed a relatively simple method of categorisation that most customers

or their representatives thought was broadly sensible. Customers widely supported

treating N security sites separately. However, customers made the following

comments or suggestions:

Finer differentiation or use of an economic metric. Some customers said we

should introduce further categories and one suggested we should have individual

customer targets. Some recommended a closer alignment of the categories with

an economic metric such as the Value of Lost Load (VOLL).

Price-quality trade-off. A small number of customers commented that with

different performance categories customers should be able to make a price-

quality trade-off.

Feedback on categories and targets. Some customers asked for more

transparency on how we will determine categories and the opportunity to discuss

their categories and targets with us before they are finalised.

Use of the term essential. At one of the customer meetings, customers pointed

out that ranking a point of service as essential implies that it should never lose

supply. One customer suggested high priority may be better.

Generation targets. Two generators objected to the generator targets being set

at the same level as the standard off-take categories. One generator suggested

that the generator performance targets should reflect the different securities at

generator points of connection and the other considered that the targets should

be the same as the important or essential load categories, as least for those

Grid Injection Points (GIPs) where the loss of generation would have a significant

impact on the market (eg 100 MW or greater).

3.1.2 Our response: categories

Finer differentiation or an economic metric

We think the proposed three off-take and one generator categories, with particular

consideration of N security sites, is a pragmatic way to introduce different targets for

different customers. It is easily understood and relevant to customers as well as

being relatively easily translated into objectives for our asset management strategy,

staff and contractors.

Some customers suggested using size of load (eg peak demand in MW) or value of

the load (ie based on some value of VOLL) as the basis for defining criticality. Using

size of load alone does not take into account the different values of the supply to

different customers. Explicitly using VOLL values that reflect the different values to


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different customers may be theoretically correct but is limited by the approximations

inherent in VOLL calculations and does not capture effects not currently considered

in VOLL calculations. VOLL will vary hugely by season, time, length of outage and

type of customer and we doubt that the classification which results would be either

significantly different or any more correct.

The Electricity Authority is undertaking a study to determine a value, or range of

values, for VOLL that is relevant to New Zealand electricity consumers. When this is

completed, we will consider integrating VOLL into the off-take criticality framework -

providingthe overall VOLL framework is sufficiently robust.

In the meantime, our proposed categories provide a proxy for economic impact. They

take into account the number of customers connected at a point, whether there are

large industrial customers or CBDs connected for whom an interruption is more

costly, and whether there are loads of national significance connected.

Price-quality trade-off

The nature of transmission networks means that the same assets are often used to

supply many customers, and the grid is designed as an interconnected network. This

makes it difficult to provide different levels of service at different points of within the

grid, beyond negotiated connection assets.

The different categories may invite useful discussions on price and quality and

potentially open up further development of price-quality trade-offs.

Feedback on categories and targets

During the consultation period, we published a spreadsheet showing the full list of

points of service and the method of allocating categories to points of service. We

received very little feedback on the detail in the spreadsheet. We have made this

spreadsheet available again and invite more detailed feedback by Tuesday 16 April

2013. A copy of the spreadsheet including details of how to provide feedback are

provided on our website6.

Use of the word essential

We agree that high priority is a better term to describe the essential category.

Generator targets

We have ignored the nature of the network when categorising off-take points of

service and considered solely the nature of the customer and therefore the impact of

an interruption. We will do the same for generation. However, there is already some

reflection of the different security levels at different generators as N and N-1 points of

service are treated differently as they are for off-take.

We will set the generator targets at the level of the standard off-take category rather

than important or high priority as generally the impact of an interruption on a

6https://www.transpower.co.nz/about-us/industry-information/customer-facing-grid-

performance-measures-consultation
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generator is lower than on off-take as foregone revenue is partly offset by avoided

costs.

The instantaneous reserves regime already provides financial incentives on

Transpower to maintain the performance of grid assets connecting large generatingunits. The causer of under-frequency events is liable for the event charge.

Transpower is the causer when the unplanned outage of transmission assets causes

the under-frequency event through the disconnection of generation.

3.2 Number and duration of unplanned interruptions

All customers supported the use of the number and duration of unplanned

interruptions as performance measures. Customers made the following comments or

suggestions on three key aspects of the definitions of the two measures.

Whether interruptions less than one minute should be included.Whether interruptions caused by extreme events should be included.

How back-feeding and load management should be considered when measuring

the duration of an interruption.

3.2.1 Customer views: less than one minute interruptions

Our consultation paper proposed that only those unplanned interruptions longer than

1 minute should be reported and included in the targets. This would be consistent

with the definition of an interruption for information disclosure and other Commerce

Commission and Electricity Authority purposes.

It is clear from the feedback that shorter interruptions are a problem, particularly for

both directly connected large users and for industrial and other customers embedded

in the distribution networks.

For example, Powerco noted that: for some major process-intensive industrial

connections, momentary outages of as little as thirty seconds can have a substantial

negative impact on their business operations. NZSteel commented: after only 0.5s,

NZSteel loses load and the damage is done. The large users and a number of

distributors all requested that interruptions less than one minute be included. Other

distributors considered that definitions of interruptions should be consistent with

those used by distribution companies the SAIDI and SAIFI measures which

exclude interruptions less than one minute.

3.2.2 Our response: less than one minute interruptions

Over the last five years, we have recorded 289 interruptions of less than one minute

these are known as momentary interruptions. This compares with 712 longer

interruptions over the same period.

We do not measure the length of interruptions less than one minute and they are

recorded with a duration of zero (All durations are rounded down to the nearest

minute). However, most 281 out of 289 of the momentary interruptions were theresult of protection systems acting to remove faulted circuits from service followed by


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a successful autoreclose operation. The vast majority of these momentary

interruptions will have durations of 1 to 2 seconds7. These momentary interruptions

generally have little impact on all but sensitive consumer loads.

We report these momentary interruptions to our customers under the Benchmark

Agreement requirements, and we will continue to do so. At this stage, we will notinclude these interruptions in our targets, but will investigate how we could do so in

the future.

Customer concern about momentary interruptions was related to concerns about

voltage sags (which are covered in section 4.1.) Momentary interruptions and voltage

sags can have similar impacts on our customers. We will set up an industry working

group to look at how we might introduce voltage sag, momentary interruptions and

other power quality reporting.

3.2.3 Customer views: extreme events

Our proposal raised the issue of whether we should include unplanned interruptions

caused by extreme events in our measures and targets. Customers held different

views but generally agreed that whether the events were included or excluded, we

should provide information on them.

For example Meridian commented: We consider it is reasonable to exclude outages

caused by extreme conditions with respect to targets for outage frequency and

duration, however we consider targets relating to information provision should still

apply. Further, we consider that it is important to measure the frequency and

duration of outages caused by extreme conditions in order to track long-term system

resilience, even if such measures are not used as targets.

Customers supporting the inclusion of the events said that since, in at least some

cases, an economic solution to mitigating the impact of extreme conditions can be

found, these interruptions should be included in the performance measures. While it

is accepted that extreme conditions can and do have an impact on interruptions, it is

possible to at least mitigate the impact of some extreme conditions.

Customers supporting the exclusion of the events recognised that in some cases

such as earthquakes our assets are not designed to withstand severe events.

To exclude extreme events, we would need to develop a definition of what comprisesan extreme event. Customers had suggestions about how to define an extreme

event, however some noted the difficulties in agreeing a definition and that the

present extreme events regime used by the Commerce Commission is causing

problems for distributors.

3.2.4 Our response: extreme events

We agree that we should report all events, and on balance consider that it is

appropriate to include all events in our targets partly due to the problems in defining

7The majority of the reclose time delays on our protection relays are set for 1s.


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extreme events and because it is possible to take account, at least partly, for extreme

events in our asset management.

3.2.5 Customer views: measuring duration (back-feeding and load

management)

We sometimes restore supply gradually through load management or a staged

restoration. In other cases, distributors have arrangements in place to back-feed from

other grid connections or from generators within their own network until we can

restore supply.

Our proposal raised the issue of how to measure the duration of an interruption.

Customers responded with a range of suggestions:

Interruption duration should end when the issues with Transpower assets are

resolved.Duration should not be measured to the time when restoration is achieved

through customer back-feeds and load management as this distorts

Transpowers interruption duration statistics.

The duration should be measured from when the customer loses supply to when

the customer has full supply restored (ie no load management is required, but

supply may be by back-feed or alternate configuration).

Transpower could report to the customer when the supply is restored, but have

an internal KPI to restore assets to service.

It would be more appropriate to weight the restoration based on time to restore

and customers affected rather than when first restoration occurs.

In addition, customers made related comments:

Back-feeding through the network places strain on distributor equipment which

has a cost. If customers incur an additional cost of back-feeding or load

management as a result of a transmission service fault, then that cost should be

measured. The measurement should be in economic terms; though a time lapsed

measure could be designed initially.

Do unplanned interruptions include planned interruptions that are extended?

Where a distribution solution is used to provide supply an avoided customer

minutes could be recorded to provide an indication of how severe the interruptioncould have been if a distribution solution was not available/present.

3.2.6 Our response: measuring duration (back-feeding and load management)

We record two different durations; initial duration (which we generally report) and

final duration.

Initial duration is the elapsed time until the first significant tranche of customers have

their supply restored, whether through bring assets back into service or through

backfeeding. This is typically at least 50 percent of the load lost and possibly 80 to

100 percent.


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Final duration is the elapsed time until, for example, the last feeder is closed or, if

restoration is by backfeed, all of our assets are back in service.

Back-feeding or load management is often a cost-effective alternative to investing in

N-1 reliability. We discuss these options with customers, and take account of them in

our planning. There may be a cost associated with providing the backfeed, but thereis also the avoided cost of paying for higher security. For this reason, it makes sense

to measure the duration of an interruption to the initial restoration even though our

assets may not be restored to full operation. That reflects the outcome to the

customer: to use an intermediary measure, such as our restoration time, could

encourage us to invest when there is no change in outcome to the customer.

In addition, the nature and speed of our response to an interruption is sometimes

governed by the availability of a backfeed, so the duration to final restoration might

be longer than would be the case without a backfeed being in place.

We will continue to measure final duration but propose to continue reporting initialrestoration.

Unplanned interruptions include all interruptions with less than 24 hours notice.

Planned interruptions that overrun are not included in the unplanned interruptions. It

is appropriate to report planned overruns separately from unplanned interruptions.

Planned outage overruns are covered in more detail in section 4.3.

3.3 Information provision

3.3.1 Customer views: information provision

Customers strongly valued clear and timely information provision and generally

supported the proposed information provision measures and targets. Some noted

that the quality of the information is more important than the timing and that

information should be given as soon as it is available regardless of targets.

Customers made the following suggestions:

Information should include information on what is the worst that can happen.

There should be a target for providing post-event information including what

happened and what we are doing to prevent it happening again.

There is a need to coordinate and avoid parallel paths of communication(distributors/retailers/system operator/grid operator).

Information should be available even if it is not in the customers area as out-of-

area customers may experience voltage sags.

Information provision targets should also track communications when planned

outages are delayed unexpectedly.

Although customers widely supported the proposed measures, they differed in their

views on the proposed targets. Here is a sample of views:

The proposed targets for accuracy of restoration time might be too challenging

with one customer suggesting that a window of two hours is more realistic.


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The target should be to provide some information within 15 minutes, with updates

every 30 minutes.

30 minutes to get information on estimated restoration time is too long as most

interruptions are restored in less than 30 minutes.

Provision of information about the interruption as soon as possible after the eventis critical preferably in a timeframe much less than the 15 minutes proposed.

3.3.2 Our response: information provision

We propose to report the information provision measures for unplanned interruptions

as described in the consultation paper which were:

Time to provide an initial notice.

Time to provide follow-ups.

Accuracy of restoration estimate.

We will set targets for the first of these two measures, but at this point we are

proposing to report the accuracy of the restoration estimates without targets. We

expect that reporting these measures will provide both us and our customers with

useful information and will encourage discussions around the types of information

customers value during unplanned interruptions.

Reporting accuracy of restoration estimates is new for us and we want to build

experience in reporting this measure. Setting targets now may drive compliance with

targets at the expense of quality and timely information.

Customers provided useful feedback on other aspects of our communication and wepropose to include these concerns in a wider review of what we communicate and

how we communicate to customers. The review should involve: discussions with

customers on coordination of communication and on post-event information, and

discussions with the Electricity Authority on the requirements set out in the

Benchmark Agreement and Part 12 of the Electricity Industry Participation Code.

3.4 Comparisons with distribution

3.4.1 Customer views

We received mixed views on this proposed measure. Some customers saw thesemeasures as interesting but we received the following feedback:

Cross-New Zealand averages hold little relevance; different regions may have

very different performance. We could consider comparisons by distribution

company region, but these may not be statistically significant.

It is not clear how these measures would influence behaviour.

If these measures are to be used we need to ensure we are comparing like with

like. Horizon summed up the pitfalls in interpretation of this measure: With the

addition of relative cost comparisons the measure may help inform future

investment decision making, however without access to a lot of backgroundmaterial it will be interpreted incorrectly. For example it does not provide a valid


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comparison of relative asset performance due to the differing nature of

transmission and distribution grids.

3.4.2 Our response

There are some practical problems in calculating these measures. As they are

comparisons with distribution company numbers and durations of interruptions we

need to ensure that we are comparing like with like.

For example, SAIDI and SAIFI calculations require knowledge of the number of ICPs

(Installation Control Points) connected to the point of service. For small remote points

of service this is sometimes straightforward, but if the customer has a meshed

system and routinely transfers customers to one point of service or the other, we

would not know how many ICPs are affected.

Our discussions with customers suggested that it is unlikely that these measures will

provide information we or our customers can usefully act on.

We are not proceeding with these measures.


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4 Other issues and possible measures

4.1 Voltage sags

4.1.1 Customer views: voltage sags

A number of customers cited power quality and voltage sags in particular as just as

important an issue as losses of supply.

Voltage sags are caused mainly by faults or large, sudden changes in load. A fault

can depress voltages a long distance away for up to several seconds until the fault is

removed. Large changes in load can cause voltage drops which will remain until

voltage regulating equipment can act to improve voltages. Some equipment and

appliances cannot ride out these voltage sags and either operation is affected for a

short time, protection systems trip, or the equipment itself fails. These types of

voltage sags can occur more frequently than full losses of supply.

This comment from Carter Holt Harvey was typical of comments from large users:

For many customers, a momentary loss or even a momentary voltage dip has an

impact on them that is similar to a total loss of supply of a minute or more so these

types of outage should be included in any assessment or measure of outages.

Whilst voltage quality is not a problem for all distributors, a number gave examples of

problems: a voltage fluctuation can turn lights off in freezing works causing injuries,

cause flaws in weave at a woollen mill, or cause wastage for a preserving works.

Distributed generation can also be affected.

One customer said that it is essential to include measures on voltage sags and

suggested reporting against statistical limits. Other customers commented that it is

important to at least start reporting and providing information on voltage quality.

4.1.2 Our response: voltage sags

We will not include voltage sag as part of our RCP2 performance measures and

targets. We do not yet have enough understanding about voltage sag to be able to

set meaningful targets.

While we currently have a fully developed, formal system for recording and reportingprimary equipment outages and interruptions, there is nothing similar in place for

voltage sags or other aspects of power quality such as harmonics or transients.

However, we are installing new revenue meters at grid exit points that come

complete with the built-in capability to automatically record (and analyse) power

quality. The nationwide meter replacement programme will be completed by around

May 2013.

We already have access to the power quality information from some of the

meters. There is also a back-office software system we have deployed to manage

access to the power quality information.


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Given the infrastructure that is in place, or will shortly be in place, it would be

possible to design and develop a power quality monitoring and reporting

service. This might take a range of forms, and we need to identify what would be of

most use to customers.

At this point, we will not include voltage quality in our performance measures andtargets for the next regulatory control period (RCP2) because there are too many

uncertainties around what would be the most useful, our ability to record and report

any measures and our only partial of control over power quality.

We will set up an industry working group to analyse the voltage disturbance

information becoming available with the end goal of determining voltage sag

measurements and targets that are meaningful and valuable to customers and end

consumers. This working group will also look at reporting and targets for momentary

interruptions. We may trial some measures and targets and incorporate them in a

later regulatory control period proposal.

4.2 Economic impact

4.2.1 Customer views: economic impact

A number of customers (including generator-retailers, distributors and large

industrials) would like to see a measure that more closely reflects the financial impact

of interruptions.

Customers suggested that we include a financial loss measure based on VOLL. One

suggested that every event should be followed up and a financial impact recorded.

Another suggested a MWh or unserved energy measure would be useful8.

Customers acknowledge the limitations of VOLL. For example, MEUG made the

following comment in its feedback: We accept that . VOLL is prone to wide error

bounds. Nevertheless publication of a dollar impact range with wide probability

distributions provides another measure to prioritise effort to reduce USE [Unserved

Energy] in the future.

4.2.2 Our response: economic impact

Ideally, our performance measures should reflect the economic impacts on our

customers and the wider impacts on New Zealand.

At present, the Electricity Authority and Commerce Commission use a $20,000/MWh

value for VOLL, but as mentioned in section 3.1.2, the Electricity Authority is

undertaking a study to establish appropriate VOLL ranges for New Zealand electricity

consumers.

When this study is complete, assuming it provides a more robust and wider

assessment of VOLL, we can report the value of lost load for interruptions in order to

provide an indication of the potential economic impact of interruptions.

8

We report annual unserved energy for planned and unplanned interruptions under theBenchmark Agreement, although this report does not show the unserved energy for individualevents. We also report to customers breaches of the service levels for unserved energy.


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4.3 Planned outages and the impact on the market

4.3.1 Customer views: planned outages and impact on the market

The three generator-retailers who provided feedback were concerned that ourproposed measures did not cover planned equipment outages and the impacts that

our performance can have on the electricity market.

In summary, their concerns were:

That asset availability can have impacts on the electricity market and therefore

our customers. When assets are not available through planned or unplanned

outages, this can restrict generators ability to provide electricity to the market

and can increase prices. Over time, any market impacts faced by generators are

likely to be passed on to end consumers. Outage frequency and duration will

contribute to the size of market impacts, but outage timing (eg peak or offpeak) isalso critical. Meridian particularly mentioned the impact on the market from the

unavailability of the HVDC.

Minimising and avoiding planned outages is important; these outages comprise a

majority of total outages.

Unplanned extensions to planned outages should be included as unplanned

outages.

The existing net-benefit test9 applying to grid outage decisions does not provide

sufficient incentive for Transpower to take account of market impacts.

Generators suggested possible measures that could be introduced:

Targets for planned outages completed on time.

Targets for information provision for planned as well as unplanned outages,

including the quality and notice period of information provided. Such targets

might include churn (i.e. how many times an outage schedule is revised), and

variations between actual and estimated return times.

4.3.2 Our response: planned outages and the impact on the market

In our proposal we did not include measures that related to market impact. This is not

because we do not recognise the importance of optimising grid availability with

respect to the market: rather, it is because of the difficulty in doing it so it positively

influences our performance.

Losses and constraints are heavily affected by the behaviour of generators and

retailers - not just Transpower performance - and the wholesale market includes

pricing mechanisms to take account of losses and constraints. In addition, the

Electricity Authority is implementing Financial Transmission Rights which will enable

the market to better manage some costs and risks associated with constraints.

9

The net benefit test is specified in part 2 of Appendix A of the Outage Protocol. If aninterested participant does not think a planned outage meets the net benefit principle,Transpower must carry out a net benefit test on the planned outage.


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We also did not include measures related to planned outages as the outage

protocol10 prescribes the process and considerations involved in planning outages11.

However, general availability measures provide reporting that covers both planned

and unplanned outages. We are required to have at least one asset performance

measure in our RCP2 performance targets. We intend to include HVDC branchavailability targets as the availability of the HVDC link has a major effect on market

outcomes. We will also include some availability measures for some other core grid

branches with a significant market impact as part of our RCP2 proposal. Possible

branches are the 220kV circuits from Haywards to Bunnythorpe through to

Whakamaru (including those that are part of the Wairakei Ring.)

We recognise that extensions to planned interruptions can be disruptive to

customers, but it is appropriate to report them separately from unplanned

interruptions. They have different impacts on customers than unplanned interruptions

and they are driven by different aspects of our performance.

Currently, we notify customers directly when a planned interruption overruns through

the interruption to connection notices. We also report planned interruption restoration

performance, under information disclosure requirements.

We do not at present compile reports on planned outage overruns but we will

introduce reporting planned outage restoration and set targets. We have some work

to do to develop the measure and to set targets.

4.4 Risks of non-supply

4.4.1 Customer views: risk of non-supply

Both through discussions at meetings and written feedback it is clear that

understanding the risks of non-supply is an important matter to customers.

Customers commented that they want to know when planned or unplanned

equipment outages place them at higher risk of interruption. A number of customers

suggested we report when the security of their supply moves from N-1 to N.

4.4.2 Our response: risk of non-supply

We consider the ability to signal future risks of non-supply to be more valuable to

customers and end customers than analysis of historic risks (although these areinformative).

We communicate our upcoming outage plans to customers as part of our outage

planning processes. However, the risks of non-supply that these outages pose are

not necessarily presented clearly.

Upon request we can arrange notice of upcoming outages that cause individual

customers to be placed on N security to be provided. As part of a wider review of

10The Outage Protocol is incorporated into the Code bv reference and is available at:

http://www.ea.govt.nz/dmsdocument/905911Planned outages and interruptions are those for which at least 24 hours notice has been

given, all remaining outages and interrupions are unplanned.
http://www.ea.govt.nz/dmsdocument/9059http://www.ea.govt.nz/dmsdocument/9059http://www.ea.govt.nz/dmsdocument/9059


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what and how we communicate to customers, we intend to look at options for

communicating risks of future non-supply to customers.

We will also report on a national time on N security measure and are investigating

ways to measure and report this.

4.5 Qualitative customer service

4.5.1 Customer views: customer service

Powerco suggested that we should include a measure that reflects our customer

service and interactions with customers. Powerco commented that meaningful

interaction with customers, the on-going provision of information even when no

particular problem exists and the perception that a constructive approach is being

taken to customer relationships are all important.

Powerco proposed that an overall target rating from Transpowers annual customer

satisfaction survey should form part of the set of customer-facing grid performance

measures but should not be linked to revenue.

4.5.2 Our response: customer service

We already include this as an important internal performance indicator and plan to

continue to do so rather than include it in our grid performance measures.

4.6 Feedback: other issues

There were a number of issues that customers provided views on that we will

consider as we progress our work. These are summarised here.

4.6.1 Customer views: targets

We did not ask customers specifically about the proposed targets, however,

customers made the following comments and we will take these into account as we

finalise the targets:

The objective should be to target a downwards trend in interruptions or an

improvement in service.

One approach may be to have both average and maximum targets.

Targets should be what we tell you, not what you tell us.

Targets should be driven by business targets, not historical performance.

Indicative targets shown for generation connection locations are broadly in line

with those for standard (rural) loads. Many generation connection locations,

particularly those on the 220 kV grid and interconnected grid, enjoy a high level of

transmission security via multiple circuits. In comparison, many rural connection

locations would fall into the category of relatively low security connection grid

spurs. Performance targets should therefore be relatively ambitious for high

security generation connection locations, scaling downwards as the level of

redundancy decreases.


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4.6.2 Customer views: Benchmark agreements

Transmission customers Transmission Agreements (based on the Benchmark

Agreement) currently include a schedule on service measures. A number of

customers noted that they would support Transpower and the Electricity Authority

amending these service measures to align with the final performance measures thatwe develop.

Some customers were dissatisfied with the current Benchmark Agreement measures

noting that:

They were imposed on both customers and Transpower rather than negotiated.

They are based on historic performance rather than forward-looking objectives.

The performance reporting required under the Benchmark Agreement is not of

value.

4.6.3 Customer views: price-quality and getting the incentives right

Customers have concerns that:

Incentives should be aligned with the costs of interruptions and not encourage

inefficient spending.

That the performance targets will be different for different points of service, so

customers should be given the ability to make price quality trade-offs.

That there is no direct compensation to individual customers for poor

performance.

Customer Facing Performance Measures Feedback Summary Response

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