During our assessment of compliance by electricity distribution businesses against the initial default price-quality path (1 April 2009 to 31 March 2010) we found that Alpine Energy Limited (AEL) had breached the quality standards. AEL had also breached the quality standards at four out of five assessment dates under the targeted control regime (between 2004/05 and 2008/09).
We engaged Strata Energy Consulting Limited (Strata) to review AEL's reliability performance and to advise whether AEL's performance trend indicated a sustained deterioration of its electricity distribution network.
A copy of Strata's Report on the reliability performance of Alpine Energy can be found below.
About AEL
AEL operates its electricity distribution network in South Canterbury. The network supplies electricity to approximately 30,600 individual connection points (ICPs), through 4,106 kilometres of lines and has a total regulatory asset base value of $119 million. More information about AEL can be found here.
How has AEL performed?
In 2009/10 AEL's SAIDI result of 328 minutes exceeded the quality standard by 240 minutes, ie nearly three times their allowable SAIDI level. Its SAIFI result of 2.1 interruptions exceeded the quality standard by 1.0 interruption, ie nearly double their allowable SAIFI level.
Our concern was that when AEL's performance was normalised for major event days SAIDI and SAIFI still trended upwards. However, as this observation was based solely on historical outage data and, given the variability in actual performance on a year-by-year basis, we did not consider it appropriate to reach a finding of 'sustained quality deterioration' without further investigating the nature and underlying causes of the breaches.
What was the purpose of the review?
We asked Strata to provide its opinion on:
- whether evidence suggests a worsening trend in reliability performance
- what remedies were being employed by AEL and whether such remedies were reasonable and likely to change the trend
- whether the timeframes in which changes proposed by AEL are likely to take effect are reasonable
- any additional actions that it considers AEL should take to change the trend from a management or engineering perspective.
Strata's review found that...
AEL's asset management policy and asset management plan are comprehensive and both provide a good foundation on which AEL can develop its asset management procedures.
Strata considered that AEL can improve its reliability performance through improved data, analysis, and strategic review. Investments being made by AEL in developing the network will lead to a more resilient and reliable network.
To prevent future breaches of the quality standards Strata recommended that AEL:
- adopt a proactive approach to its asset management practices
- improve information and data systems to better support strategic asset management
- continue to develop its engineering resources
- ensure that future expenditure is sufficient and applied appropriately.
How has AEL responded to the report?
AEL took a positive approach to the review and cooperated fully and transparently with Strata and us. In response to the Report's findings, AEL discussed with us steps that the company is taking, or intends to take including:
- reviewing the treatment of operational expenditure (opex), including investigating why approximately a third of opex spend is currently spent on reactive projects
- commencing a three-five year work programme to improve information management
- resuming live line work based on a new policy and associated procedures following a full investigation into the concerns around safety procedures raised in 2006/07, which had seen live line work cease for a prolonged period
- purchasing a mobile diesel generator to reduce the impact of planned outages on consumers.
How will we monitor AEL's progress?
AEL has agreed to provide us with a report outlining its progress at the same time that it provides its 2011/12, 2012/13, and 2013/14 annual compliance statements against the default price-quality path. We will update our website from time to time as the impacts of AEL implementing the above steps take effect. We will notify 'interested parties' of the updates as they occur.
If you would like to be included as an interested party and receive updates on our website please email regulatory.branch@comcom.govt.nz.
