1. Consumer engagement roundtable
Hosted by TransGrid

2. Welcome and some ground rules…
We really value what you have to say:

Please help us by making sure that only one
person talks at a time

Personal confidentiality is assured – no feedback
will be attributed to individuals

There are no right or wrong answers to questions
– just ideas, experiences and opinions

It is important for us to hear all sides of an issue –
both the positive and the negative.

3. Agenda
6.00pm - Welcome and introductions
6.30pm - Presentation one - introduction to the new energy
conversation and TransGrid’s role
7.10pm - Break
7.25pm - Part two: empowering consumers
7.55pm - Break
8.15pm - Part three: the AER’s hot topics
8.55pm - Close

5. Introduction to the new energy
conversation and TransGrid
Presented by Stephen Clark, TransGrid
Presentation One

6. Roundtable objectives
Over the next two decades, Australia will need to deliver
secure, reliable and competitively priced energy for a
growing population and economy.
Today we would like to discuss:
• The new energy conversation;
• TransGrid’s role and the impact to you as a consumer; and
• Ask for your feedback about what’s important to you and
how you would like to get involved moving forward.

7. What are people saying?

9. The energy conversation explained
National and State
priorities
•
•
•
Supporting economic
growth
Cutting emissions
Delivering clean
sustainable energy
TransGrid
•
•
•
•
•
•
Future electricity demand
Supply reliability
Building new transmission
lines and substations
Facilitating competition in
generation
Greater consumer
participation (demand
management)
Maintaining and operating
network
price and reliability
Energy to you
•
•
•
•
•
•
•
How energy gets to you
Energy infrastructure
Electricity prices
Energy consumption
Technology and
innovation e.g. smart
meters
Sustainable energy
options
Prices – setting, design &
reform

10. The National Electricity Market

11. About TransGrid
TransGrid has a statutory duty to deliver high voltage electricity from
power generators to the distribution network that supplies power to homes
and businesses. TransGrid’s electricity transmission system includes:
Over 12,772km of overhead
transmission line and
underground cable
36,000 transmission
line structures
More than 91 substations and
switching stations

12. Did you know?
You have a choice of retailer
(the company that sends you
your electricity bill) but all
electricity is delivered along
the same set of transmission
and distribution lines...
The transmission network can be seen as being
similar to freeways and motorways where the
distribution network, can be seen as the small roads
and streets in towns and suburbs.

13. What makes up my bill?
20%
Electricity generators
8%
Transmission network – transporting
electricity from power stations at high voltage
(the highway)
42%
15%
Retailers
15%
*IPART Fact Sheet - Regulated Retail Prices
Distribution network – transporting it from the
highway to your home or business (your local
road network)
The carbon price and State and Federal
government green schemes

14. Electricity prices over time

16. Empowering consumers
- Getting involved in our business
Presentation Two

17. Regulation

A transmission business has no
competitors

The Australian Energy Regulator
(AER) is there to keep the
business focussed on minimising
its costs and keeping its prices low

Every 5 years TransGrid proposes
to the AER what costs it expects to
incur to run the business

18. What does the AER do?
The AER:

Spends almost a year reviewing, analysing and
testing the business plans

Arrives at a decision on how much revenue the
business requires

TransGrid has a strong incentive to manage its
costs below the AER allowance to make a profit

19. What information does the
AER get from the business?
Capital expenditure forecasts

Costs needed to build new or larger parts
of the network and replace ageing
equipment
Operating expenditure forecasts

Costs required to maintain the existing
electricity network

Costs required to run the business, e.g.
pay salaries, cost of offices, IT systems

20. Historical NSW peak energy demand

21. Capital expenditure
2004/052008/09
2009 /102013/14
2014/152018/19

22. Operating expenditure

23. What are your thoughts?

TransGrid consults with stakeholders and communities
impacted by its works - for example, when proposing to
build new infrastructure

TransGrid also consults with industry and interested
stakeholders via the Annual Planning Report which sets
out future investment plans

TransGrid’s capex and opex expenditure forecast
proposal is a public document and the regulator seeks
public submissions

24. How do you want to be involved?

Group 1 & 2 - are you interested in finding out more about
TransGrid’s capital expenditure forecasts?

Group 3 & 4 - are you interested in finding out more about
TransGrid’s operating expenditure forecasts?

Which part are you particularly interested in? Why?

What do you think is the best way TransGrid can
communicate this with you?

26. The AER’s hot topics….
Presentation three

27. Hot topics

Capital expenditure investment

Alternatives to network investment

Price versus reliability

Reliability standards

Price setting and design

28. Network investment
Considerations before building new infrastructure include…
?

29. Network investment process
Emerging
Network
Problem
• Equipment
condition
• insufficient
capacity
Identify all
feasible options
Community
Consultation
• Investigate
non-network
options
• Route corridor
options
• Environmental
considerations
• Community impacts
Invest
Preferred option
Approvals
• Build
• Environmental
• Planning
• Economic
Regulation
• Technically
feasible
• Lowest cost
• Community
view

30. Alternatives to network investment

TransGrid has two options to meet growth in electricity demand
 by building additional capacity; or
 funding alternatives to network investment
Examples of alternatives:
 Paying privately owned standby generators to operate at times of
peak demand
 Paying large energy users to switch off or reduce their electricity
usage at times of peak demand
 Paying many small energy users to allow the network to control some
of their energy usage

31. Price versus reliability

Electricity networks are built to set reliability
standards and these investments come at a cost

Changing reliability standards can change prices

But power cuts have a cost for customers too
 Inconvenience at best
 Loss of stock
 Loss of sales
 Loss of production time
The level of risk can be compared to
having spare tyres in your car.

32. Reliability standards

Standards are set by the NSW Government

Currently under review by the Australian Energy
Market Commission (AEMC)

Recent studies in the distribution sector found that
for a 15 minute increase in power cuts, you could
save $15 a year.
 For transmission the equivalent reduction in your bill is
likely to result in longer power cuts

33. Is the reliability and
price balance right for you?
TransGrid is participating in the current national
review of reliability standards
We would like to know:

Should the current standard be changed?
i.e. Should we pack a spare tyre?

What is important to you? i.e. Keeping the current standard or
increasing the level of risk of a power cut for a slightly less electricity bill?

You can also participate directly with the AEMC.

34. Price setting and design

The Australian Energy Regulator determines the revenue a business
can earn each year

The National Electricity Law and its Rules specify how this revenue
should be translated into prices

Transmission prices have a location element and a shared element
reflecting common assets all customers use i.e. Your bill can vary according
to how far away from the main transmission lines you live, how much you use or if you
use electricity at peak times e.g. using air conditioners on hot days.

35. Are there better ways to
price our services?

Different tariff designs can result in different price
outcomes for customers
We would like to know:

What do you think about current price structures?

Are there better ways of pricing transmission
services?

36. What else is important to you?

37. Next steps

The feedback received from you during this
session will help TransGrid develop a consumer
engagement program
 The program will provide an approach for
TransGrid to begin engaging consumers about
business forecasting, tariff setting, reliability and
electricity prices