ATS Short Circuit March/April 2014

Short Circuit MARCH / AP R I L 2 0 1 4

Advice to members Tracey Gordon, ATS Energy Account Manager

HYDRO SITUATION STORAGE (% OF MAXIMUM) 50%

75%

100%

25%

50%

75%

100%

SHORT CIRCUIT | MARCH / APRIL 2014

25%

For any questions or concerns you have about your electricity accounts please call Tracey at ATS Energy on 0800 BUY ATS (289 287).For any questions or problems about your energy needs call Tracey today on 0800 BUY ATS (289 287).

1 JUN 1 JUL 1 AUG 1 SEPT 1 OCT 1 NOV

1 DEC 1 JAN 1 FEB

0%

I would like to thank those members that supported the evening and hope they Tracey Gordon found it beneficial. For those that weren’t able to make it, the article for Short Circuit this month covers some of the content and another article in the Ruralco Real Farmer next month will cover the balance. Any members requiring clarification or further information on the changes can contact EA Networks. We are more than happy to take you through the changes and help you understand the impact on you.

An online Dairy Farm Energy Efficiency tool has recently been launched by EECA Business. This tool allows farmers to compare their energy use with other farms around the country, as well as industry best practice. Click here to view the tool.

Research undertaken by EECA showed that some farms use more than 900 kilowatt-hours of electricity per tonne of milk solids produced. The authority estimates best practice at between 250 kWh and 300 kWh. An average New Zealand dairy farm spends more than $20,000 a year on electricity, EECA says. There are around 12,000 dairy farms in the country and they will use $251 million of electricity each year—around 7 per cent of New Zealand’s total consumption. EECA advises that there could be savings from meeting best practice of around $42 million a year nationally.

Some interesting information is being discussed in the market currently around the impending price increases being announced from the retailers and networks.

Analysis on pricing undertaken last year by accounting firm PriceWaterhouseCoopers revealed that the generator-retailer portion of a “typical” residential power bill was around 52 per cent, yet some of these retailers are advising that distribution charges make up about half of an electricity bill, and generation about one third.

As such, it was hard for retailers to drive an overall change in pricing behaviour. However, the report says the truth is apparently almost exactly the opposite.

Now is the time with the impending price increases to check your accounts to make sure you are on the best possible option. We will be working with our partners to ensure your accounts are checked and if you are not on a contract you will be contacted to discuss the options.

We are also working with our partners closely to ensure the offers are suitable and advantageous to our members. If you are not contacted over the next few months please let me know and I can look at the options for you.

As summer wanes it is an opportunity to send out some timely reminders.

• If you are turning off your connections at the mains and you have a smart meter, please ensure you let your retailer or ATS Energy know as reads cannot be obtained from the meter with the mains off. Advising us will allow estimates to reflect the fact that no power is on.

• If you are concerned some of your connections are not being read please let me know as soon as possible. Delaying checking in to the issues could cause large back bills.

0%

ATS Energy recently held an information evening with EA Networks for ATS Energy members. It gave our members a chance to hear why changes were being implemented by EA Networks and get clarification on their own situations.

Information taken from NZX Energy DISCLAIMER: The purpose of this information is to outline historic data and is intended for general reference only

Change in price category: General and Irrigation EA Networks in Mid Canterbury faces a unique set of challenges in meeting the rapidly expanding demand for electricity supply to power the region’s growing irrigation infrastructure. Year on year for the past decade, that growth has averaged around 10%, or doubled from what it was back in 2004.

With that comes a need to closely manage the investment required for EA Networks to keep up with the peak load demand profile irrigation brings with it, depending upon soil moisture and weather conditions.

Because a key philosophy of EA Networks is to remain capable of providing electricity supply that helps maintain the region’s economic growth, the company is adjusting its policy around irrigation pricing options.

EA Networks commercial manager Jeremy Adamson says the changes are essential to ensuring electricity network planners and engineers can continue to operate and grow the network and maintain reliability of supply, regardless of loads.

In the past it has not been unusual for an irrigator with low annual usage to re-categorise the “Irrigation” Pricing classification of their pumping equipment into a “General” pricing option.

This could be made when an irrigator believes their pump may not be required for the irrigation season at all, or used considerably less. The re-categorisation means the user will face a considerably lower daily fixed line charge, and are gambling on not incurring the considerably higher variable use rate that the change may drive.

While outwardly making sense from an irrigator’s perspective, the shift brings significant negative implications for EA Networks and the network’s future capacity.

“From EA Networks point of view we have developed the network around the forecast peak load demand that irrigation equipment brings, including investment in the hardware like transformers to do so.”

But with distributors like EA Networks required to fund that investment and then make a rate of return from that, the move to “General” pricing, with its lower fixed network charge, compromises that return, and the company’s ability to continue investing in upgrades and growth.

Jeremy also points to a “loss of visibility” that occurs when an irrigator moves their equipment from “Irrigation” pricing to “General” pricing.

The irrigator’s ICP (Installation Connection Point) effectively becomes lumped with all other General users, including domestic, despite the very different load profile and cost to deliver supply to that ICP. Losing the ‘irrigation’ identity makes it difficult to know exactly how many irrigation ICPs actually exist, and with that EA Networks loses its ability to accurately predict irrigation load profiles in the future.

“Customer pricing is developed from the underlying network investment to supply electricity to different customer types. Each customer type has 2

a unique load profile that our electrical engineers and planners use to design the network to meet that demand. General domestic customers for instance have a profile that is high in the early morning, dropping off during the day and then peaking again later in the early evening, year in year out. However irrigation load profiles are quite different, being seasonal and affected by prevailing weather conditions.

To remain capable of keeping track of true irrigator numbers on the network, EA Networks is amending the rules around shifting from Irrigator to General pricing.

The amendment will mean irrigation connections with capacity exceeding 20kW will not be able to shift to any other price category.

New connections will also be placed on the irrigation price category and connections that have switched from general to irrigation price category will not be able to be switched back.

The rapid development of gravity fed irrigation schemes in the region, including Valetta, Barrhill and Ashburton Lyndhurst has further heightened concerns over visibility loss.

“We have a situation where irrigators may run their pumps in parallel to these schemes. But once they are confident that the pressurised systems are delivering reliable water they may switch off the pumps and consequently we will lose visibility of that load and potentially the revenue from the connection. This is despite having already made the investment in the infrastructure to supply those pumps. In these cases we would be forced to remove equipment if it was not delivering an adequate return.”

Jeremy says an electricity network like the one EA Networks operates has to be able to cope with the significant seasonal peak load irrigation demand can bring, and that requires significant investment in network equipment such as sub-stations, transformers and feeders to ensure electricity supply is available when that demand ramps up.

“One alternative to investing in more network capacity is to install load control systems. In this scenario during really dry periods when irrigation load peaks, we would progressively shut down electricity supply to these irrigators. Farmers have to ask themselves - would they be happy for us to shut down their irrigation system as we approached that peak load?”

Having a clear picture of connection types and their related load profiles is critical if EA Networks is to continue to play its key part in providing reliable electricity supply that continues to facilitate positive, strong economic growth for the region.

SHORT CIRCUIT | MARCH / APRIL 2014