Asset Management Plan - Summary MainPower Limited April 2016 – March 2026 11,18 0 square kilometres

MainPower New Zealand Limited (MainPower) and its predecessor have been distributing electricity to the region for nearly 100 years. MainPower delivers a safe, secure and reliable electricity supply to more than 37,000 connected customers in the North Canterbury and region, covering a population base of approximately 65,000. MainPower’s network encompasses a distribution area of 11,180 square kilometres and Kaikoura includes the Waimakariri, Hurunui and Kaikoura districts.

Culverden

Cheviot Hawarden

Waipara

Amberley

Rangiora Oxford Woodend

Kaiapoi MainPower is one of 29 electricity distributors or ‘lines companies’ in New Zealand who are responsible for the power lines and distribution networks in local areas.

Purpose Stakeholders MainPower’s Asset Management Assessing the interests of our stakeholders assists us in defining our asset Plan (AMP) is an annual document management targets and objectives. The ownership of MainPower is held in that provides information on trust by the MainPower Trust on behalf of the community and customers of asset management processes the region. Our key stakeholders include: and practices with a specific focus on service targets and the development, maintenance and CONNECTED CUSTOMERS COMMUNITY replacement plans for our assets. Recipients of our services People within the distribution The plan provides our customers including residential, small to area that are affected by our and stakeholders with insight and medium business, large users, network either in use or during explanation on how we intend rural (farming) and individually installation and maintenance. to provide electricity distribution managed customers. services to our customers over the Connected customers are also next ten years. preference shareholders. The AMP demonstrates our alignment with best practice asset management processes and compliance with the Commerce Act, Electricity STAKEHOLDERS PARTNERS Distribution Information Disclosure Determination 2012. Customers with an interest Customers in the electricity in the operation of our supply chain that help meet our The information in the AMP organisation including the connected customers’ needs aims to ensure that MainPower MainPower Trust, government including Transpower, electricity continues to deliver a level and regulators, representative retailers, other distributors, of service to customers in a groups, regional councils, electrical contractors, and safe, reliable and economically contractors/suppliers, property alternative technology efficient manner that meets the developers, and the media. providers. expectations of stakeholders. Ensuring that our level of service meets customer expectations is consistent with our overall Consultation with our stakeholders has identified expectations and key corporate strategic objectives. interests in respect to asset management, which includes safety of staff, contractors and the public; compliance with legislative and regulatory requirements; service quality which includes reliability, power quality and customer service; prudent risk management; and efficiency and effectiveness in our network operations and planning. Challenges Corporate Strategy MainPower’s network has MainPower’s asset management program is aligned with our Statement of undergone significant Corporate Intent (SCI). The SCI establishes MainPower’s corporate strategic transformation over the past objectives for governance, asset management, the operating environment, decade, primarily as a result of major projects and reviews, and financial performance. It provides a changing land use and associated corporate strategic framework for the organisation and the AMP. customer demand. Challenges The annual strategic plan and business plan embody much of the agreed SCI include: and also include MainPower’s strategic objectives which are included below. • Increased agricultural activity, particularly dairy. • Increased population density CUSTOMER AND COMMUNITY from lifestyle developments Deliver quality services to our customers and population drift from and positively engage with our community. Christchurch. • Growth in tourism, particularly in the northern part of our network.

• Increase in major wind and snow OPERATIONAL EXCELLENCE storms affecting our network. Achieve excellence in all aspects of operations. • Increased dependency on power supply both economic and social which requires strengthening of security of supply and improving the resilience of our network to HEALTH AND SAFETY reduce the impact of outages. Zero harm to people, public property • Energy usage patterns are and the environment. changing due to changes in customer behaviour. • Changing residential load profiles caused by heat pumps, energy FINANCIAL PERFORMANCE efficient appliances and lighting. Deliver a sustainable financial position. • Installation of photovoltaic (PV) solar panels which impacts on the design and operation of the network. • Ongoing activity following the LICENCE TO OPERATE Canterbury earthquakes is still Maintain our regulatory model. creating forecasting uncertainty, as the nature and location of demand in Canterbury has fundamentally changed and is PEOPLE still evolving. Develop a motivated and high performing team. To meet these challenges, a significant network reinforcement programme continues with a focus on network maintenance and renewal activity. Ensuring sufficient capacity is available on the network to meet customer demand and improving the resilience of our network, are immediate challenges.

Asset Management Safety Service Levels Strategy Prioritising safety means providing a The implementation and safe, reliable network and a healthy achievement of MainPower’s asset MainPower’s Asset Management work environment. Following a management strategy and asset Strategy has been developed to review of our work practices and management objectives is achieved deliver on our asset management processes, we have identified by defining key performance policy objectives, which provide the new workplace and public safety indicators and setting performance link between the Asset Management indicators to help improve our safety targets for each indicator. Policy and the asset management performance. Monitoring these key plans that describe how those Section 3 of our AMP sets out measures will enable us to assess objectives are going to be achieved. how we have determined the key our safety performance and lead to performance indicators relevant Our asset management policy continual improvement. to the achievement of our asset objectives are: To improve safety performance we management objectives, our targets • Develop and maintain effective will establish systems to manage for the planning period and how Asset Management Systems and monitor: these have been set. with commitment, accountability • The frequency of public safety Asset management service level and involvement across the incidents from our assets; measures and targets are reviewed organisation; • Public safety KPIs that are being and refined each year to ensure • Apply key sustainability developed by the Electricity they remain consistent with the priorities focused around safety, Engineers Association; needs of our stakeholders and align environment, people, culture, with our strategic objectives. Target community and customers; • Compliance with the Electricity outcomes are consistent with the (Safety) Regulations safety • Understand and respond to our development, maintenance and management systems for public customers’ requirements; renewal plans included in the AMP. safety; It is expected that these targets are • Use our skills and expertise to • Assets that could pose a safety achievable other than in the event of continually improve the quality, risk to the public due to their a major incident such as an extreme reliability and security of supply to location or characteristics; storm or earthquake. customers and level of customer service; • The number of asset defects identified and corrected and the • Recruit, train and develop staff to timeframe for corrective actions; effectively manage our assets in a sustainable way; • The number of controls and mitigations applied to high risk • Ensure appropriate facilities, plant, assets; equipment and supervision is provided; • Site visits by leaders to coach and mentor safe practices; and • Utilise effective work planning and control; • Records of consultation with field staff during the planning of work. • Apply a life cycle approach to asset management; • Use our risk management framework to systematically identify hazards and assess and control risks associated with those hazards; • Continuously improve our asset management effectiveness; • Seek out new technologies to improve network efficiency and allow the network to adapt to expected future demands. Network Development Plan The network development plan is Distribution network development A key component of network fundamental in meeting the forecast is driven by the need for additional development is innovation. demand over the planning period. capacity and security across the MainPower’s innovation philosophy It is expected that our development region and includes network is to be an early adopter of new projects will continue to drive our reinforcement in a number of areas. technology, to fully understand lifecycle plans as existing assets are Thus, in addition to the projects the desirability of the technology upgraded to meet demand. Network identified above, on our distribution and be able to comprehensively development in response to growth network, we plan to: frame stakeholder requirement helps us to replace outdated • Create two new GXP and technology viability before technology by replacing assets that feeders. committing to project development. are not intelligent enough or assets The company considers it has a that are too highly loaded. • Create more feeder capacity to the role in facilitating the uptake of new growing eastern side of . We have identified a number of zone technologies and advancing the substation and network constraints • Further develop the feeders economic benefits that are derived likely to occur throughout the surrounding the new Burnt Hill from the integration of smarter planning period. The most pressing substation and continue with sensors, improved internet access, of these are the lack of capacity some 22kV conversion in the distributed energy generation and for growth in the Woodend and area as required for growth or energy storage possibilities. Our Pegasus town areas, at MainPower’s operational requirements. innovation strategy is a stepwise process that identifies ideas for Southbrook substation, and • Create a new Mouse Point feeder innovation through customer at MainPower’s Mouse Point route to the town consultation, stakeholder liaison, substation (Culverden). and Balmoral forest area when survey feedback and observation. The Southbrook and Woodend area required by load growth. constraints have been managed for • Convert overhead lines to some years through incremental underground reticulation where distribution upgrades to enable high social dividends are achieved. load transfers to surrounding areas. • Strengthen the distribution The potential for such upgrades is system to improve storm diminishing and if load continues to resilience. grow a major zone substation build will soon be required. Planning for • Continue with distribution the new substation including land automation investment to ensure acquisition, 66kV (Kilovolt) feeder network reliability improvement source and routes, is continuing. targets are met. The potential piping of the Amuri • Undertake investments to meet irrigation scheme has created further the demand for new connections uncertainty about the need for, and throughout the planning period. timing, of a capacity upgrade at • Continue to seek opportunities to Culverden. Planning for the upgrade implement new technologies to is continuing in order to minimise assist us to meet our long term the lead time should an upgrade objectives. be required. Partial purchase of the Culverden GXP (Grid Exit Point) site is being considered as part of the preparation. This has not been budgeted and would require a separate business case for Board approval. As part of the above upgrades, changes would be required at Transpower’s Southbrook and Culverden GXP’s. We will be endeavouring to maximise the MainPower ownership of such GXP upgrades especially Culverden which will be integrated with an upgrade of our Mouse Point zone substation. Purchase of the Kaiapoi 66kV line and GXP from Transpower is also being investigated.

Asset Lifecycle Plan Risk Management The asset lifecycle plan includes MainPower maintains excellent Risk management is a critical routine and preventative data about the quantity, condition component of asset management, maintenance and asset renewals and performance of its assets. as demonstrated by the inclusion of and refurbishment. Key drivers for This is compiled from historical specific risk management objectives lifecycle planning include: construction records, asset in our service level targets. Risk • Optimising lifecycle costs inspections, testing and field management is central to effective (operation, maintenance, renewal, work. Asset failures and recurring asset stewardship and is particularly replacement and disposal). fault causes are investigated and significant for the management measures to eliminate or mitigate of long lived assets which provide • Assessment of an asset’s the problems are built into the essential services. expected performance. maintenance plan. This information The objectives of risk management • Consequences and probability and the associated inspection and include: of failure (including safety, testing processes provide the basis reliability and environmental for the maintenance and renewals • Safeguarding public and consequences). plan. employee safety; • Interrelationship between lifecycle The key focus areas for our lifecycle • Protection and continuity of plans and network development plan over the planning period electricity supply; plans. include: • Ensuring MainPower is able to Maintenance across the network • Addressing the ongoing risk meet its service level targets; is now primarily condition based of pole failure, in particular to • Efficient protection and operation whereby individual components are ensure we meet our health and of assets; maintained until their condition and safety objectives for our staff, • Protection of shareholder and serviceability has deteriorated to the contractors and the public with commercial interests. point that it creates an unacceptably access to our network. MainPower has conducted risk high risk of failure, which triggers • Managing overhead switchgear studies and analysed its exposure renewal. Maintenance activities performance, maintenance and to major risks – focusing on include: replacement to help ensure our natural hazards, asset failure and • Condition based maintenance; reliability and safety targets are compliance with the Resource met. • Time based preventative Management Act (RMA). Risks may maintenance; • Improving the safety and include strategic risks, operational • Reactive maintenance or repair on reliability of our ground mounted risk, compliance risk, technology breakdown. kiosk switchgear. risk, financial risk and the effects of natural events. Renewals are typically triggered • Improving network resilience where assets have deteriorated to through targeted network MainPower’s risk management and an unsafe condition, or where it component replacements. mitigation actions include: is economically and operationally • Incorporating new technologies • Targeted focus on establishing efficient as adjacent assets are into our replacement program, and maintaining safe operating being replaced. In practice most consistent with our smart grid and work practices; replacements on our network are philosophy. • ISO certification in environmental determined by: • Reduce the impact of tree related management, quality • Reliability based maintenance; faults on our network. management and health and • Natural upgrades of assets due to safety management; growth; • Risk based approach to asset • Changes in fault levels; maintenance, renewal and design; • Additional intelligence or • Prudent network security performance requirements at standards; selected locations. • Emergency response, network contingency and business continuity planning; MainPower maintains excellent • Insurance cover where data about the quantity, economically viable. condition and performance of its assets. Performance The table below summarises the actual versus planned asset management expenditure for the 12 month period ended 31 March 2015.

BUDGET $M ACTUAL $M VARIANCE

Capital Expenditure

Customer Connection 8.791 10.930 24%

System Growth 9.946 10.765 8%

Reliability, Safety and Environment 0.957 0.466 -51%

Asset Replacement and Renewal 3.450 3.205 -7%

Asset Relocations 0.153 0.045 -71%

Subtotal - Capital Expenditure on Asset Management 23.297 25.411 9%

Operational Expenditure

Routine and Corrective Maintenance and Inspection 1.487 1.439 -3%

Asset Replacement and Renewal 0.168 0.202 20%

Vegetation Management 0.617 0.888 44%

Service Interruptions and Emergencies 0.877 1.041 19%

Subtotal - Operational Expenditure on Asset Management 3.149 3.570 13%

Total Direct Expenditure on Distribution Network 26.446 28.981 10%

Overhead to Underground Conversion Expenditure 0.470 0.202 -57%

Key highlights for the 2015 year include:

• Record numbers of network • Purchase of a site for a future • A single major high wind event extensions and new customer Rangiora East zone substation lead to high Service Interruption connections, all completed in a was completed. This caused the expenditure. timely manner. System Growth expenditure • Resource constraints resulted • Completion of 2.1MW (Megawatt) overrun. in lower levels of switchgear distributed generation connection • Reliability, Safety and renewals and line maintenance for the Kate Valley landfill. Environment expenditure was than planned despite the • Slower than expected progress on down due to slow progress of the more extensive use of external Rangiora West 66kV lines but all South Bay Kaikoura underground contractors. 22kV conversion work completed. conversion work, and on the Boat • Relocation of MainPower’s head Harbour area 66kV upgrade. office to Southbrook. In addition, the following table compares our actual and planned service level performance for the 12 month period ended 31 March 2015.

Strategic Outcomes Measures Target Actual

Safety Number of OSH notifiable accidents 0 3 Number of employee lost time injuries 0 12

Compliance Number of regulatory non-compliance enquiries - 0 Percent of SF6 gas lost <1% 0.5% Number of uncontained oil spills 0 0 Number of breaches of resource consents - 0

Quality of Service - SAIDI (normalised) 124 164 Reliability SAIFI (normalised) 1.58 1.4 Faults/100km total 6.2 6.5 Faults/100km 66kV 1.0 0.0 Faults/100km 33kV 1.7 0.8 Faults/100km 22kV 6.8 7. 4 Faults/100km 11kV 6.8 7. 1 Faults/100km SWER 2.0 4.2 Total Interruptions 842 509

Quality of Service - Average customer survey: Customer Deliverables rating >=8 8.4 Overall performance rating >=8 8.0

Risk Management Load able to be delivered by spare capacity - 79% following a sub transmission fault Business continuity plans successfully tested - no

Efficiency and Load Factor 69.1% 67.9% Effectiveness Capacity Utilisation Factor 19.8% 21% - Asset Utilisation Loss Ratio 5.5% 6.2%

- Operational Planned lifecycle expenditure delivered 75% 95% Effectiveness Field staff utilisation 76% 75.3%

- Financial Efficiency Return on investment 6.2% 6.43% Network & Non Network Opex / ICP - $321

Note – customer survey conducted Sept/Oct 2015.

Key highlights for the 2015 year include:

• The network performed reliably • Lost time injuries and OSH • The return on investment was with SAIFI below target although notifiable accidents were both higher than forecast due to the SAIDI was above target. up on previous years although increased consumption. Approximately half the SAIDI the average lost time per overrun was due to the high level injury reduced. We continue to of planned outages involved in the emphasize health and safety Rangiora West upgrade project. practices in our training and The remainder was caused by daily operations, and retain SAIDI - Average minutes customer is a single November wind storm an expectation of no lost time without power during the year. event. injuries which is consistent with SAIFI - Average supply interruptions per this focus. The 2016 year to date customer during the year. figure is much lower. Asset Management Maturity Assessment We have considered the maturity Areas for improvement in the MainPower follows the EEA guide to of our asset management practices current year will focus on: the Commerce Commission Asset using the Commerce Commission’s • Communicating the Asset Management Maturity Assessment asset management maturity Management Plan to all relevant Tool to ensure consistent assessment tool (AMMAT). The parties to a level of detail application of the framework and objective of this assessment appropriate to the receiver’s role use an external auditor to review is to formally review our asset in their delivery (Level 1). our management practices and management practices, and recommend areas for improvement. identify potential areas for asset • Improving the extent to which management improvements. the Asset Management Policy AMMAT identifies asset aligns with the vision and management maturity relative to communicating the policy an objective standard based on appropriately (Level 2). good asset management practices, • Improving the alignment including PAS 55. and consistency of the asset Asset management maturity management policy with other is assessed using a scale of organisational policies and 0-4 (0=Learning, 1= Applying, strategies (Level 2). 2= Embedding, 3= Optimising • Refining the responsibilities for and Integrating, 4= Beyond the delivery of the asset management Reference Standard). We have plan (Level 2). assessed most of our asset • Communicating the importance management processes as Level 2 of meeting the requirements or 3, with the exception of: of the asset management plan PAS 55 is an internationally recognised • MainPower communicates its throughout the organisation Publicly Available Specification for the plans to all relevant parties to a (Level 2). optimised management of physical assets. level of detail appropriate to the receiver’s role in their delivery (Level 1).

For more detailed information, see our full Asset Management Plan – available to download at www.mainpower.co.nz.

MainPower New Zealand Limited 172 Fernside Road, PO Box 346, Rangiora 7440 Telephone 03 311 8300 www.mainpower.co.nz