Asset Management Distribution Annual Planning Report 2016

Transcription

1 Asset Management Distribution Annual Planning Report 2016 December 2016

2 Table of Contents 1. INTRODUCTION About Essential Energy Our Objectives Our Vision Operating Environment Essential Energy Statistics Essential Energy s Network Number and Types of Distribution Assets Annual Planning Review Network Planning Process Significant Changes from previous DAPR Analysis and explanation of forecast changes Analysis and explanation of changes in other information FORECASTS FOR THE FORWARD PLANNING PERIOD ing Strategy ing Methodology and Process Sources of load forecast input information Assumptions applied to load forecasts North Coast Region Terranora Supply Area Lismore Supply Area Casino Supply Area Grafton Supply Area Coffs Harbour Supply Area Nambucca Heads Supply Area Kempsey Supply Area Port Macquarie Supply Area Herons Creek Supply Area Taree Supply Area Stroud Supply Area Hawks Nest Supply Area Tenterfield Supply Area Northern Region Armidale Supply Area Glen Innes Supply Area Inverell Supply Area Waggamba (Ergon) Supply Area Moree Supply Area Narrabri Supply Area Gunnedah Supply Area Tamworth Supply Area Beryl Supply Area 72 Page 2 of 202

3 Wellington Supply Area Dubbo Supply Area Nyngan Supply Area Broken Hill Supply Area Orange Supply Area Molong Supply Area Bathurst Supply Area Oberon Supply Area Parkes Supply Area Forbes Supply Area Southern Region Moruya North Supply Area Cooma Supply Area Munyang Supply Area Bega Supply Area Steeple Flat Supply Area Tumut Supply Area Queanbeyan Supply Area Goulburn Supply Area Cowra Supply Area Murrumburrah Supply Area Yass Supply Area Temora Supply Area Wagga North Supply Area Wagga Wagga (Copland St) Supply Area Morven Supply Area Albury Supply Area Finley Supply Area Deniliquin Supply Area Coleambally Supply Area Darlington Point Supply Area Griffith Supply Area Yanco Supply Area Buronga Supply Area Future Connection Points Transmission Distribution Connection Point Transmission Distribution Connection Point load forecast North Coast Transmission Distribution Connection Point load forecast Northern Transmission Distribution Connection Point load forecast Southern of Reliability Target Performance IDENTIFIED SYSTEM LIMITATIONS Sub-transmission Feeder Limitations Sub-transmission and Zone Limitations Primary Distribution Feeder Limitations 163 Page 3 of 202

4 4. NETWORK INVESTMENTS Regulatory Test / RIT-Ds Completed or in Progress Potential RIT-Ds for Identified System Limitations Committed Investments Refurbishment and Replacement Investments Urgent and Unforeseen Investments JOINT PLANNING Results of Joint Planning with the TNSP TransGrid in Summary of the Process and Methodology Investments Jointly Planned in Additional Information Results of Joint Planning with the TNSP Powerlink in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP Energex in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP Ergon in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP Ausgrid in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP Endeavour Energy in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP ActewAGL in Summary of the Process and Methodology Investments jointly planned in Additional Information Results of Joint Planning with the DNSP Powercor Australia in Summary of the Process and Methodology Investments jointly planned in Additional Information NETWORK PERFORMANCE Reliability Performance Feeder Category Performance against STPIS Targets Performance against Individual Feeder Standards Quality of Supply Performance 173 Page 4 of 202

5 7. ASSET MANAGEMENT Essential Energy s Asset Management Approach Introduction Asset Management Plans Network Planning Strategy Distribution Growth Strategy Reliability Strategy Power Quality Strategy Bushfire Prevention Strategy Environmental Management Strategy Refurbishment Strategy Maintenance Strategy Network Operating Strategy Asset Disposal Strategy Delivering the Network Management Strategies Treatment of Distribution Losses Asset Issues Impacting Identified System Limitations Obtaining Further Information on the Asset Management Strategy and Methodology DEMAND MANAGEMENT Demand Management Activities in the Preceding Year Plans for demand management and embedded generation Issues arising from applications to connect embedded generation Generation Connection Details INVESTMENTS IN METERING AND INFORMATION TECHNOLOGY Metering Information Technology REGIONAL DEVELOPMENT PLANS GLOSSARY NER CROSS REFERENCE ZONE SUBSTATION INDEX 200 List of Figures Figure 1 Essential Energy s Network Area 12 Figure 2 Typical components of Essential Energy's electricity network 14 Figure 3 Essential Energy's recorded maximum demands 17 Figure 4 ing Methodology 18 Figure 5 Installed Solar Capacity, Excluding Major Generators 185 Figure 6 Diagram of Essential Operational Regions 192 List of Tables Table 1 Essential Energy Statistics for FY2015/16 11 Table 2 Network Assets at 30 June Table 3 Potential sources of load forecast input information 20 Table 4 STPIS targets 2015/16 to 2018/ Table 5 Refurbishment and Replacement Projects 164 Table 6 TransGrid Joint Planning Projects 169 Table 7 Feeder Performance by Category 172 Page 5 of 202

6 Table 8 Individual feeder standards specified in the Licence Conditions applicable to Essential Energy 172 Table 9 Individual Feeder Performance against the Standard Summary 173 Table 10 Completed investigations from network complaints 174 Table 11 Connection Enquiries and Applications 186 Table 12 Meter Change Program 187 Table 13 Metering Asset Expenditure Program 188 Table 14 Information Technology Investments 2015/ Table 15 Information Technology Investments 2016/ / Table 16 ICT Investment actual 2015/16 and forecast 2016/17 to 2018/19 (nominal $) 190 Page 6 of 202

7 DISCLAIMER Essential Energy is registered as a Distribution Network Service Provider. This Distribution Annual Planning Report 2016 has been prepared and published by Essential Energy under clause and of the National Electricity Rules to notify Registered Participants and Interested Parties of the results of the distribution network annual planning review and should only be used for those purposes. This document does not purport to contain all of the information that a prospective investor, participant or potential participant in the National Electricity Market, or any other person or interested parties may require. In preparing this document it is not possible, nor is it intended, for Essential Energy to have regard to the investment objectives, financial situation and particular needs of each person who reads or uses this document. In all cases, anyone proposing to rely on or use the information in this document should independently verify and check the accuracy, completeness, reliability and suitability of that information for their own purposes. Accordingly, Essential Energy makes no representations or warranty as to the accuracy, reliability, completeness or suitability for particular purposes of the information in this document. Persons reading or utilising this document acknowledge that Essential Energy and their employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matter (expressed or implied) arising out of, contained in or derived from, or for any omissions from, the information in this document, except in so far as liability under any New South Wales and Commonwealth statute cannot be excluded. Contact For all enquiries regarding the Distribution Annual Planning Report 2016 and for making written submissions contact: Essential Energy DM Coordinator PO Box 5730 Port Macquarie NSW dmcoordinator@essentialenergy.com.au Page 7 of 202

8 EXECUTIVE SUMMARY Since 1 January 2013, the National Electricity Rules (NER) have stated that all Distribution Network Service Providers (DNSPs) operating in the National Electricity Market (NEM) are required to: Conduct an annual planning review and publish a Distribution Annual Planning Report (DAPR) Conduct economic assessments of potential project options under a new Regulatory Investment Test for Distribution (RIT-D) Implement a Demand Side Engagement Strategy to consult with and engage non-network providers in the development and evaluation of potential solutions to identified network needs. The annual planning review includes the planning for all assets and activities carried out by Essential Energy that would materially affect the performance of its network. This includes planning activities associated with the replacement and refurbishment of assets and negotiated services. The objective of the annual planning review is to enable DNSPs to plan for and adequately address possible future issues in a timely manner. The outcome of the annual planning review is the DAPR. Essential Energy is required to prepare and publish a DAPR that is compliant with the requirements of the NER (Section and Schedule 5.8) to: Provide transparency to Essential Energy s decision making processes and provide a level playing field for all regions in the NEM in terms of attracting investment and promoting efficient decisions Set out the results of Essential Energy s annual planning review, including joint planning, covering a minimum five year forward planning period for distribution assets Inform registered participants and interested parties on the annual planning review outcomes - report on capacity and load forecasts for sub-transmission lines, Zone s (ZSs) and transmission-distribution connection points, plus, where they have been identified, any 11 primary distribution feeders which were overloaded or forecast to be overloaded within the next two years Provide information on Essential Energy's demand management activities and actions taken to promote nonnetwork initiatives each year, and plans for demand management and embedded generation over the forward planning period Assist non-network providers, Transmission Network Service Providers (TNSPs), DNSPs and connection applicants to make efficient investment decisions. The DAPR covers a minimum five year forward planning period for distribution network assets. Page 8 of 202

9 1. INTRODUCTION 1.1 About Essential Energy A State Owned Corporation, Essential Energy delivers electricity distribution services to more than 830,000 customers across New South Wales. With around 200,000 kilometres of powerlines, 1.4 million power poles and 138,000 distribution substations spanning 95 per cent of New South Wales, Essential Energy is responsible for managing and operating Australia s most extensive electricity distribution network. Essential Water, an operating division of Essential Energy, currently services approximately 9,500 water services customers in Broken Hill, Menindee, Sunset Strip and Silverton and 9,000 sewerage services customers in Broken Hill. Essential Energy continues to support regional development and economies through its locally based employees. Essential Energy s field operations are divided into three regions, reflecting the environmental and geographic diversity of our network footprint. This includes sub-tropical areas in mid to northern NSW, the alpine highlands of the Snowy Mountains, and dry arid conditions in the regional western centres of Broken Hill and Wentworth. Essential Energy s business purpose is to be of service to our communities by efficiently distributing electricity to our customers in a way that is safe, reliable, and sustainable Our Objectives Essential Energy s principal objectives, stated in Section 6B of the Energy Services Corporations Act 1995 No. 95 are: (a) (b) (c) (d) (e) (f) to be a successful business and, to this end: to operate at least as efficiently as any comparable businesses to maximise the net worth of the State s investment in it to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates. to protect the environment by conducting its operations in compliance with the principles of ecologically sustainable development contained in section 6 (2) of the Protection of the Environment Administration Act 1991, to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates, to operate efficient, safe and reliable facilities for the distribution of electricity and other forms of energy, to be an efficient and responsible supplier of electricity and other forms of energy and of services relating to the use and conservation of electricity and other forms of energy, to be a successful participant in the wholesale and retail markets for electricity and other forms of energy and for services relating to the use and conservation of electricity and other forms of energy. Each of the principal objectives is of equal importance. Essential Energy also has an objective to improve value for money and reduce price pressures for electricity users, through adopting measures to enhance efficiency and productivity and ensure an appropriate and cost-effective investment program Our Vision The Essential Energy vision is to be of service to our communities by efficiently distributing electricity to our customers in a way that is safe, reliable and sustainable. Page 9 of 202

10 Essential Energy aims to achieve balanced commercial outcomes supporting the long term sustainability of electricity distribution in regional NSW. Our Principle Activities A Leading Provider of Essential Services Operating under a decentralised regional management structure, with three regional management teams responding quickly and effectively to local needs and priorities Providing essential energy services to more than 830,000 homes and businesses across rural and regional NSW, and water services to around 9,500 homes and businesses in Far West NSW Maintaining around 200,000 kilometres of power lines, 1.4 million power poles and 138,000 distribution substations across a diverse geographical area Investing in network upgrades to meet changing population and energy demands, renew ageing assets and ensure the continued delivery of safe, reliable and sustainable essential services Transforming the electricity network through a focus on cost effective alternatives to improve reliability, supporting the growth of renewable energy and making energy efficiency simpler for customers Operating Environment Essential Energy is regulated by statutory and legislative requirements including workplace health and safety (WHS), environmental, competition, industrial, consumer protection and information laws, the NER, the NSW Electricity Supply Act 1995, the Energy Services Corporations Act 1995, and a NSW Distribution Network Service Provider licence. Essential Energy ensures compliance with these laws and regulations through its internal codes and policies and a common control framework. It comprises plans, policies, procedures, delegations, instruction and training, audits of compliance and risk management. Essential Energy is subject to the National Electricity Law (NEL) and NER which regulate the NEM. As a NSW Statutory State Owned Corporation and NSW Energy Services Corporation, Essential Energy is generally subject to most of the statutory and other legal requirements as other businesses. Essential Energy operates in the NEM as a DNSP. Essential Energy is also required to follow government and regulatory direction. Locally the NSW Government Industry and Investment NSW department (IIN - Legislative framework) mandates the Network Design, Reliability and Performance Licence Conditions. The Independent Pricing and Regulatory Tribunal (IPART - Electricity) is responsible for administering licensing within the NSW energy industry and monitoring compliance with licence requirements. The Australian Energy Regulator (AER) regulates the transmission and distribution sectors of the NEM under the NEL and NER. Essential Energy s operations are guided by a number of important policies and codes, including a Code of Conduct, Safety Policy, Environmental Code of Conduct and Policy and Statement of Business Ethics. Page 10 of 202

11 1.1.4 Essential Energy Statistics Table 1 Essential Energy Statistics for FY2015/16 Category Number at 30/6/16 Distribution Customer Numbers (Total) 834,594 Customer Numbers at Year End (Southern) 282,495 Customer Numbers at Year End (Northern) 242,384 Customer Numbers at Year End (North Coast) 309,715 Maximum Demand (MW) 2,327 Feeder Number CBD - Feeder Number Urban 299 Feeder Number Short Rural 912 Feeder Numbers Long Rural 243 Energy Received by Dist Network to Year End GWh 13,108 Energy Distributed to Year End (Residential) GWh 4,554 Energy Distributed to Year End (Non-Residential including un-metered supplies) GWh 7,759 Energy Distributed to Year End (Southern) GWh 4,518 Energy Distributed to Year End (Northern) GWh 4,918 Energy Distributed to Year End (North Coast) GWh 2,877 System Loss Factor (%) 6.07 Transmission System (km) - Transmission (Number) 1 20 Sub-transmission System (km) 11,409 - Zone (Number) Distribution (Number) 138,592 High Voltage Overhead (km) 146,454 High Voltage Underground (km) 2,488 Low Voltage Overhead (km) 28,899 2 Low Voltage Underground (km) 6,517 Pole (Number) 3,4 1,389,888 Streetlights (Number) 157,227 Notes: Distances for overhead and underground lines are circuit km. 1.2 Essential Energy s Network Essential Energy s network is unique in terms of the geographic area it covers, the terrain it traverses, the vegetation that grows within it and the diversity of weather that impacts it. The scale of assets required to ensure the network physically reaches customers in the most far reaching corners of NSW is unlike any other network in Australia. Essential Energy s core business is the distribution of electricity to customers in a specified geographical boundary of New South Wales and authorised supply areas of Queensland. 1 Essential Energy assumes any substation that converts to a voltage that is not used for distribution is a Transmission. 2 LV Services classification has changed from 2015 data. Services use to contain the road crossing section. Now it is only the last span from the pole to the Point of Attachment. 3 The large increase in pole numbers this year is due to some new transmission lines only recently added to the pole database, although built some time ago. 4 This number includes all poles, in or out of service. Page 11 of 202

12 It is important to understand the scale of assets that Essential Energy must manage, and acknowledge that the majority of costs associated with electricity distribution are not driven by the number of customers or their demand on the network. Rather, network costs are driven by the number of assets required to deliver electricity to each customer. Whether there are 50 customers connected to one pole or 50 poles connecting one customer, each asset needs to be inspected, safely maintained and replaced at the end of its life. Essential Energy s franchise area, (shown in Figure 1) covers approximately 737,000 km², or 95 per cent of New South Wales, with over 830,000 network customers. The electricity distribution network is one component of an integrated system by which electricity is generated, transmitted and distributed to customers. The network has a large number of asset types across different voltage levels. Customers can be connected at any voltage level from 220 down to low voltage (400/230 Volts), depending on their power needs. Figure 2 illustrates a variety of network components owned by Essential Energy, with shaded portions showing examples of connected customers and bulk supply points not owned by Essential Energy. Electrical loads on the network range from large single customers, such as gold and coal mines, cotton gins, abattoirs, feedlots, irrigation pumps and shopping complexes, to urban commercial and residential centres, rural farms, villages and remote Single Wire Earth Return (SWER) connected customers Number and Types of Distribution Assets Figure 1 Essential Energy s Network Area Essential Energy s network consists of around 200,000 kilometres of sub-transmission, high voltage distribution, low voltage distribution power lines, and around 1.4 million poles. The network is predominantly overhead and traverses terrain varying from coastal, alpine and mountainous in the east, to the open plains in the west and is exposed to a variety of extreme climatic conditions. Page 12 of 202

13 The majority of the rural distribution network is radial, with most parts only able to be supplied from one source. There is little opportunity for interconnection with other circuits for security and continuation of supply when performing maintenance activities or in the event of unplanned outages. This is equally true of the radial 132 and 66 sub-transmission networks. Due to the low customer densities found throughout the rural network, capital expenditure cannot generally be justified to improve this situation. Essential Energy is, however, committed to continually reviewing the reliability of its network in all parts of its supply area with a view to utilising available technologies and appropriate practices to provide the maximum reliability and security of supply possible within these constraints. Approximately 95 per cent of the network is of an overhead construction type and 95 per cent of the distribution substation population are pole-mounted due to the predominately rural nature of the supply area. Table 2 Network Assets at 30 June 2016 ASSETS Overhead lines Circuit kilometres Underground cables Number Transformers Nominal capacity and below SWER (all voltages) Low voltages Total network Page 13 of 202

14 Figure 2 Typical components of Essential Energy's electricity network 1.3 Annual Planning Review The NER require that the Annual Planning Review includes the planning for all assets and activities carried out by Essential Energy that would materially affect the performance of its network. This includes planning activities associated with the replacement and refurbishment of assets and negotiated services. The objective of the Annual Planning Review is to identify possible future issues that could adversely impact the performance of the distribution network to enable DNSPs to plan for and adequately address such issues in a timely manner. The outcome of the Annual Planning Review is the DAPR. This DAPR provides information to Registered Participants and interested parties on the nature and location of emerging constraints on Essential Energy s sub-transmission and 11 distribution network assets, commonly referred to as the Distribution Network. The timely identification and publication of emerging network constraints allows the market to identify potential non-network solutions and Essential Energy to develop and implement appropriate and timely solutions to them. Essential Energy has worked closely with the Institute of Sustainable Futures (ISF) to publish network opportunity maps. These maps use the Australian Renewable Energy Mapping Infrastructure (AREMI) platform to provide a visualisation of emerging constraints over the next 10 years Network Planning Process The planning and development process for the distribution network is carried out in accordance with the NER Chapter 5 Part B Planning and Expansion. Essential Energy carries out network planning at both a strategic and project level. The processes used for each of these levels of network planning are set out in the Essential Energy procedural guideline Sub-transmission and Distribution Network Planning Criteria and Guidelines, housed and administered through Essential Energy s Business Management System. Page 14 of 202

15 The Essential Energy investment governance process ensures continuous review and assurance that capital prudence and efficiency are being achieved, as well as being consistently and seamlessly aligned with longer term strategic planning in congruence with the Essential Energy Network Asset Management Plan, Statement of Corporate Intent and Strategic Business Plan objectives. The Essential Energy network planning process is designed to identify the most efficient ways of ensuring the network business meets its network performance obligations. Significant emphasis is placed on the planning and project identification stage, assessing customer supply needs, identifying and selecting the optimal solution to meet those needs, and provide the most pragmatically prudent and efficient outcome. All relevant potential credible options, including non-network and operational alternatives are considered in determining how to best meet network performance obligations and the objectives of the NEL. The first stage of the network planning process involves researching the data required to inform the investment process. This includes historical and existing peak demands, the preparation of a range of seasonal demand forecasts, examining network capacity limits, assessing asset condition, forecasting new customer connections (including new or augmented spot loads and/or embedded generators) and taking into account duty of care obligations. The forecast adequacy of the network is assessed against key criteria including: Meeting modern infrastructure standards, including safety and security of the network and environmental compliance Addressing any Demand Capacity imbalance Risk, Reliability and Power Quality performance Asset condition and re-investment considerations Customer connection requirements (loads and embedded generation). When emerging network limitations are identified, a range of feasible options, including both network and nonnetwork solutions, are developed to address the network need and to ensure continuing compliance. A rigorous review then selects the most economic option (or options). Each network capital investment is required to be consistent with Essential Energy s longer term network plans and standards while being compliant with the National Electricity Law objective. There is a robust selection process based on Present Value of Cost options analyses and a range of sensitivity analyses that explicitly trade off alternative investment options. These use quantified estimates for credible option costs and market benefits against business performance targets to identify the optimum portfolio of projects that minimises the cost of achieving the desired performance. In accordance with NER obligations and statutory requirements, network augmentation and demand management options are assessed impartially using a consistent cost effectiveness review process. Demand management options are evaluated on the extent to which they can avoid or defer the need for network augmentation. This allows the assessment of various combinations of demand management and deferred augmentation projects. This DAPR seeks to inform stakeholders and provides advice on emerging network limitations and network adequacy. It also provides details of the expected time required to allow appropriate corrective network augmentation, non-network alternatives or modifications to connection facilities. The Essential Energy network planning approach is outlined in its Network Management Plan and is consistent with the principles of the NSW Government Total Asset Management framework. Essential Energy is required to comply with mandatory service standards in accordance with the Reliability and Performance Licence Conditions for Electricity Distributors (July 2014), imposed by the former NSW Minister for Energy. These Licence Conditions facilitate the delivery of a safe and reliable supply of electricity. This document provides information for locations where investment is required to address network limitations due to forecast demand and other prudent inseparable considerations. Page 15 of 202

16 1.4 Significant Changes from previous DAPR The majority of the 2016 DAPR consists of only minor changes. The content has been improved based on feedback from various stakeholders including the AER. There has been continued focus on developing the forecasting process using a nationally consistent methodology explained in detail in Section Analysis and explanation of forecast changes Overall network load is expected to increase at a steady rate but significantly slower than historical growth rates. However, as expected, the recorded demand allows for the refinement of previous forecasts over the next five years. At the sub-transmission and ZS level, forecasts have also been adjusted to account for expected load transfers for new and decommissioned sites. There have been a number of changes to Essential Energy s network including the commissioning and decommissioning of ZSs and sub-transmission lines. These may affect the recorded loads on the existing system based on various load transfers. The methodology used to generate ZS forecasts is consistent with the forecasting methodology used for the 2015 DAPR. This process closely aligns with AEMOs latest connection point forecasting methodology, which was published in July Analysis and explanation of changes in other information There are some minor variations in this document attributed to equipment classifications. These changes enable the published data to align with the annual Regulatory Information Notice. Page 16 of 202

17 2. FORECASTS FOR THE FORWARD PLANNING PERIOD This section provides a detailed assessment of the current peak demand forecast process. Peak demand forecasts provide Essential Energy with the basis for identifying network limitations, evaluating the credible network and non-network options to address those limitations and (if applicable) commencing the RIT-D process. It also feeds into the Strategic Asset Management Plan (SAMP), which documents the capital and operating investment expected to be required for the forward planning period. Essential Energy s Network System peak demand for the 2016 Winter period peaked at 2,327 megawatts (MW) at 6:30pm (EDST) on Monday, 27 June Figure 3 Essential Energy's recorded maximum demands 2.1 ing Strategy A primary driver in network development and the identification of specific projects is the forecast of electricity demand and energy. The spatial demand forecast is a critical process that supports planning, development of the capital program and the regulatory submission. Given the importance of the demand forecast on the required capital expenditure and the SAMP, Essential Energy s main objectives are: Efficient, closed-loop development and refinement of the forecasting process, data and documentation Engagement of the wider audience to appropriately inform the impacts and building blocks of demand. Page 17 of 202

18 In the process of moving towards achieving these objectives, Essential Energy has seen a substantial transition in the network forecasting methodology and process from a relatively simplistic process (such as minimal weather correction and reconciliation between top-down and bottom up forecasts) which required a high level of subjectivity to a more complex, repeatable process closely aligned with the AEMO connection point forecasting methodology. 2.2 ing Methodology and Process The forecasting methodology has been developed and refined using two main vision items as the driving force, these items are: That the demand forecasting process undertaken is commensurate with the benefits the forecast provides That all demand forecasts are auditable and repeatable. Essential Energy has developed a methodology which provides for the establishment of the building blocks required to achieve this vision. This methodology is summarised in Figure 4. Question What data may be important for a specific forecast? Prediction Testing Analysis Document potential forecasting inputs and sources Predict accuracy improvement and required forecast effort Develop or refine forecasting processes appropriate for the benefits derived from the output Produce forecasts using process applicable to the benefits derived from the output Document forecasting accuracy, benefit and risk over any alternate forecast processes previously undertaken Figure 4 ing Methodology As shown in Figure 4, Essential Energy s methodology calls for continuous improvement in the forecasting process specific to the site in question and dependent on the predicted cost/benefit. As an example some sites may have poor input data and hence poor forecasting accuracy, however if no benefits can be identified from improving the forecast, the cost to improve the process cannot be justified and the forecast inaccuracy specific to the site in question will remain. Alternatively high benefits (such as capital deferral) would justify substantial forecasting effort and the appropriate level of expense and rigour. To assist in the network planning process and to identify regional growth patterns, several levels of forecast are used by Essential Energy: Overall Essential Energy network forecast Regional TransGrid and Powerlink connection point forecast Sub-transmission feeder forecast ZS forecasts Local distribution feeder forecasts as necessary. The base forecasting process used by Essential Energy is fundamentally the same as the Australian Energy Market Operators (AEMOs) published Connection Point ing Methodology 5. 5 Australian Energy Market Operator AEMO Connection Point ing Methodology ing Maximum Electricity Demand in the National Electricity Market 29 July 2016 Page 18 of 202

19 At a high level, the process consists of: Data collection and collation To cater for regional and local needs, a forecast of the demand at each ZS is developed based on historical demands and information provided by major customers. Account is taken of load diversity between connection points. generation is recognised and included in the forecast where it offers firm capacity at the time of demand. Outlier removal / Data preparation In order to ensure only system normal conditions are evaluated, this may include the removal of large customers etc. Temperature correction (or normalisation) In order to provide a reference set of conditions from which each year can be compared (with a probability of exceedance of 50 per cent). Repeat for each season over the time periods available The forecast covers both summer and winter demands and uses data going back to 2004 where possible. Determine the most applicable growth rate based on known variables Growth rates can be applied using residential growth rates or similar. Calculate forecast load The forecast extends over a planning horizon of five to ten years. Apply any post model adjustments Where there is known potential for the connection of major spot load developments, such as mining loads and major subdivisions, the forecast takes into account any reasonably firm step load increases in the medium term. Where the impacts of government policy decisions of technological developments can be determined, Essential Energy endeavours to include an appropriate adjustment factor. Reconciliation of forecasts Calculation to ensure the forecast aligns with previously developed forecasts for upstream and downstream network components. Page 19 of 202

20 2.2.1 Sources of load forecast input information Potential inputs to an individual forecast and the applicable source data may include: Table 3 Potential sources of load forecast input information Potential Inputs Historic demands Seasonal indicators Future step loads (large customer or residential subdivision) Residential growth rates Economic conditions Weather patterns Technology changes Generation Individual customer demands Regulatory variation Distribution changes Distribution programs Tariff changes Potential Source Data Interval meter data, supervisory control and data acquisition (SCADA) data, recloser data, derived loads, assumed factors Seasonal trends Information from large customers and developers Department of Planning Australian Bureau of Statistics Bureau of Meteorology Industry Reports, Government Department Reports e.g. Department of Industry, Innovation and Science Interval meter data, Bureau of Meteorology, customer information Interval meter data AER documentation, Minimum Energy Performance Standards (MEPS) reports, other government initiatives Network information (planning, operations, load control) Network program information (planning, load control) Network Tariff information Assumptions applied to load forecasts Numerous assumptions are required in order to streamline the forecasting process. Some of these include: All large customers and embedded generators are recorded appropriately Historic demand data used for summer forecasts comprise the high temperature days from months November to March inclusive while winter forecasts consider the low temperature days from months May to September All load information is actual (i.e. no erroneous readings, metering drift, etc) All switching events are recorded or easily detected in analysis All temperature related data is actual The selected temperature sites are the best currently available to Essential Energy for representation of the conditions at the load sites All historic network changes have been accounted for Information provided by large load customers and developers will come to fruition Sub-transmission feeder forecasts are a special case, using a proportion of the Bulk Supply point forecast rather than an actual forecast. Hence, sub-transmission forecasts may not reconcile to ZS forecasts Site forecasts are performed individually. Consequently there may be deviations to combined upstream forecasts. Page 20 of 202

21 2.3 North Coast Region Terranora Supply Area Description of Terranora area The Terranora Sub-transmission (STS) is owned by Essential Energy and is supplied from the Queensland transmission system via 2 x 110 lines that are jointly owned by Essential Energy and Powerlink. A high voltage direct current transmission network is connected between Mullumbimby and Terranora (via Bungalora) which allows supply to be either injected into the Lismore area from Terranora or injected into the Terranora area from Lismore. Population growth in the Tweed Shire is one of the highest in regional NSW and is expected to remain above the state average. TERRANORA Identified System Limitations SYSTEM LIMITATION Nil Refer to DAPR Section Sub-transmission feeder load forecast Summer Winter Feeder # Feeder Voltage Feeder Origin Feeder Destination MVA MVA MVA 16/17 17/18 18/19 19/20 20/21 MVA Powerlink Mudgeeraba 275/110 STS Terranora 110/66 STS Powerlink Mudgeeraba 275/110 STS Terranora 110/66 STS Terranora 110/66 STS Cudgen ZS Terranora 110/66 STS Murwillumbah ZS Terranora 110/66 STS Banora Pt ZS Terranora 110/66 STS Condong Sw Stn Cudgen ZS Banora Point ZS Terranora 110/66 STS Tweed Heads ZS Banora Point ZS Tweed Heads South ZS Condong Sw Stn Murwillumbah ZS Tweed Head South ZS Tweed Heads ZS Cudgen ZS Casuarina Sw Stn Casuarina Sw Stn Hastings Pt ZS Casuarina Sw Stn Hastings Pt ZS A 30MW biomass generator is located at Condong and is connected to the Terranora 110/66 STS at 66 via feeders 9504, 9514 and Page 21 of 202

22 STS and ZS load forecast SUMMER Terranora Supply Area POE50 Indicative Demand Banora Point 66/11 24/30 24/ Cudgen 11 66/33/11 70/40/30 70/40/ Cudgen 33 66/33/11 70/40/30 70/40/ Hastings Point 33/ / Murwillumbah 66/11 15/20/25 15/20/ Terranora 110/66 110/66 70/100 70/100 70/ Terranora 11 66/11 24/30 24/ Tweed Heads 66/ Tweed Heads South 66/11 20/30 20/ WINTER Terranora Supply Area POE50 Indicative Demand Transformer Normal Tx.1 Tx.2 Tx.3 16/17 17/18 18/19 19/20 20/21 Transformer Normal Tx.1 Tx.2 Tx Banora Point 66/11 24/30 24/ Cudgen 11 66/33/11 70/40/30 70/40/ Cudgen 33 66/33/11 70/40/30 70/40/ Hastings Point 33/ / Murwillumbah 66/11 15/20/25 15/20/ Terranora 110/66 110/66 70/100 70/100 70/ Terranora 11 66/11 24/30 24/ Tweed Heads 66/ Tweed Heads South 66/11 20/30 20/ Page 22 of 202

23 Sub-transmission Single Diagram of Terranora area TWEED NSW-Qld border Mudgeeraba (Qld) Powerlink Essential Energy (note 1) 758 double-circuit Energex 33 Kirra n.o. Banora Point (note 2) Tweed Heads Tweed Heads South Notes 1) Essential Energy owns the NSW side of the 110 double circuit (757,758), Powerlink owns the QLD side 2) Energex take backup supply from Essential Energy at their Kirra substation during contingencies on their 33 system 3) Directlink is privately owned Bungalora 9502 TERRANORA Cudgen Murwillumbah DirectLink (Mullumbimby) (note 3) 9514 Condong Sw Stn G Condong Co-generation Hastings Point Private G Generator AC/DC Converter 110 Essential Energy Zone s Essential Energy Transmission 110/66/11 66/33/11 33/11 66/11 66 Switching Station & Sub-transmission s Page 23 of 202

24 2.3.2 Lismore Supply Area Description of Lismore area The Lismore 132/66 STS is owned by Essential Energy. It receives its supply via three Essential Energy 132 lines from the TransGrid 330/132 STS at Lismore. A high voltage direct current transmission network is connected between Mullumbimby and Terranora (via Bungalora) which allows supply to be either injected into the Lismore area from Terranora or injected into the Terranora area from Lismore. LISMORE Identified System Limitations SYSTEM LIMITATION Nil Refer to DAPR Section Page 24 of 202

25 Sub-transmission feeder load forecast Summer Winter Feeder # Feeder Voltage Feeder Origin Feeder Destination MVA MVA MVA 16/17 17/18 18/19 19/20 20/21 MVA U U W1 132 TransGrid Lismore 330/132 STS TransGrid Lismore 330/132 STS TransGrid Lismore 330/132 STS Lismore 132/66 STS Lismore 132/66 STS Lismore 132/66 STS G2 132 Ballina ZS Lennox Head ZS G3 132 Lennox Head ZS Suffolk Park ZS G4 132 Suffolk Park ZS Ewingsdale ZS G5 132 Ewingsdale ZS Mullumbimby ZS U6 132 Lismore 132/66 STS Mullumbimby ZS U7 132 Lismore 132/66 STS Dunoon ZS U7/1 132 Dunoon ZS Mullumbimby ZS Lismore 132/66 STS Woodburn ZS Lismore 132/66 STS Casino ZS :LME 66 Lismore 132/66 STS Kyogle ZS :LME 66 Lismore 132/66 STS Alstonville ZS Lismore East ZS Alstonville ZS Ballina ZS Alstonville ZS Alstonville ZS Ballina ZS Lismore Sw Stn East Lismore ZS Lismore 132/66 STS Lismore Sw Stn Lismore Sw Stn Lismore University ZS Lismore Sw Stn Lismore University ZS Lismore 132/66 STS South Lismore ZS Lismore 132/66 STS South Lismore ZS Lismore 132/66 STS Lismore Sw Stn A 30MW biomass generator is located at Broadwater and is connected to the Lismore 132/66 STS at 66 via feeder Page 25 of 202

26 STS and ZS load forecast SUMMER Lismore Supply Area POE50 Indicative Demand Alstonville 66/ / Ballina 66/ Ballina /66 35/45/ Dunoon 132/ Ewingsdale 132/11 30/45 30/ Kyogle 66/11 8/10 8/ Lennox Head 132/ Lismore 132/66 132/66 80/120 80/120 80/ Lismore East 66/11 15/19/23 15/20/ Lismore South 66/ / Lismore Uni 66/11 20/30 20/ Mullumbimby 132/ Suffolk Park 132/ Woodburn 66/11 8/10 8/ WINTER Lismore Supply Area POE50 Indicative Demand Transformer Normal Tx.1 Tx.2 Tx.3 16/17 17/18 18/19 19/20 20/21 Transformer Normal Tx.1 Tx.2 Tx Alstonville 66/ / Ballina 66/ Ballina /66 35/45/ Dunoon 132/ Ewingsdale 132/11 30/45 30/ Kyogle 66/11 8/10 8/ Lennox Head 132/ Lismore 132/66 132/66 80/120 80/120 80/ Lismore East 66/11 15/19/23 15/20/ Lismore South 66/ / Lismore Uni 66/11 20/30 20/ Mullumbimby 132/ Suffolk Park 132/ Woodburn 66/11 8/10 8/ Page 26 of 202