Proposed Amendments Designed to Ensure That Line Companies Provide an Appropriate Level of Security of Supply
Proposals Resulting from Review of OFFER's Performance Measures
20. The Ministry has compared the current reliability performance measures in the Regulations with those used by OFFER in the UK. The Regulations already include most of the performance measures used by OFFER, but we propose that:
- OFFER's more user-friendly reliability terms - "Overall reliability" (instead of "faults per 100km"), "Security" (instead of SAIDI) and "Availability" (instead of CAIDI) be adopted in the Regulations; and
- the Regulations require disclosure of "Proportion of interruptions not restored within 3 hours" and "Proportion of interruptions not restored within 24 hours", as required by OFFER.
21. These proposals will require amendments to the reliability performance measures in the First Schedule to the Regulations.
Disclosure of Asset Management Plans
22. It will be recalled that the Ministerial inquiry into the Auckland power failure was critical of Mercury Energy's asset management planning and practices.1The inquiry team recommended that the Government consider requiring publication of asset management plans as part of the disclosure regulations.2The Minister of Energy announced on 21 July 1998, when the inquiry report was released, that he had directed officials to develop detailed proposals for disclosure of asset management plans.
23. Ensuring security of lines is a matter of legitimate public interest. The Ministry considers that disclosure of asset management plans will help promote strong incentives to put in place and maintain good practices within New Zealand, and will assist companies in demonstrating that they follow high standards.
24. Disclosure is expected to enhance the quality of discussion between line businesses and those parties who have the ability and incentive to review the plans. This is consistent with the Government Policy Statement on line security published on 7 April 1998. More specifically, we expect that disclosed asset management plans will be reviewed by retailers (who have an interest in ensuring that final consumer needs are met) and by those consumers who have the expertise to interpret the plans (e.g. larger industrial and commercial consumers). A strong measure of peer review within the industry will also be possible following disclosure. The Ministry considers that each of these will help improve the reliability of line supply, consistent with consumer expectations.
25 With these considerations in mind, the Ministry asked PricewaterhouseCoopers to conduct preliminary work on the suggested requirements for disclosure of asset management plans for discussion with the industry and other interested parties. Annex 2 sets out the suggested requirements, based on the brief review performed by PricewaterhouseCoopers, but in summary it is proposed that asset management plans contain information on:
- the background and objectives of the plan (including relationships with other corporate goals, and accountabilities and responsibilities for asset management);
- the assets covered;
- proposed service levels;
- network development and lifecycle asset management action plans (including planning assumptions, demand forecasts and policies on non- asset solutions);
- risk policies and mitigation; and
- performance measurement, evaluation and improvement.
It is also proposed that the plans be disclosed annually to parties making requests to see them and possibly on the Internet. The Ministry welcomes comment on these proposals.
Disclosure of Reliability Performance Standards and Targets
26. The Ministerial inquiry into the Auckland failure also recommended that line companies be required to disclose past and future security standards.
Past Security Standards
27. The Regulations already require line companies to disclose a comprehensive range of reliability, security and availability performance measures (the latter two broken down into interruption classes), and the Ministry is proposing the amendments outlined in paragraph 17 above for these.
Future Security Standards
28. The Ministry proposes that the Regulations be amended to require line companies to disclose, in addition to ex post information, details of the performance they plan to achieve in future. They would be required to disclose performance targets for:
- Maximum total number of interruptions;
- Maximum total number of faults per 100 circuit kilometres of line;
- System average interruption duration index ("SAIDI");
- System average interruption frequency index ("SAIFI"); and
- Customer average interruption duration index ("CAIDI").
broken down (except in the case of faults per 100 km) into:
- planned interruptions by the line company; and
- unplanned interruptions originating within the works of the line company;
and showing (for all five measures):
- the target for the coming year; and
- the average target for the coming five years.
Disclosure of Faults for Lines of Different Voltages
29. The Inquiry also proposed that line companies be required to disclose past and future security standards for lines of different voltage. The Ministry proposes to amend the Regulations to require disclosure of faults per 100km in the same categories as used by ESANZ - that is, 110kV, 66kV/50kV, 33kV, 22kV, 11kV, 6.6kV and 3.3kV lines or cables. It is also proposed that line companies disclose future performance targets (coming year and average for the coming five years) for each of these categories.
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