ENERGY IN TASMANIA REPORT 2015-16 1

ENERGY IN TASMANIA REPORT

2015 –16

DECEMBER 2016

OFFICE OF THE TASMANIAN ECONOMIC REGULATOR 2 ENERGY IN TASMANIA REPORT 2015-16

CONTACT DETAILS

Office of the Tasmanian Economic Regulator

Office hours: 8.45am to 5.00pm, Monday to Friday (except public holidays)

Street address: Level 3, 21 Murray Street, Hobart, Tasmania 7000

Postal address: GPO Box 770, Hobart, Tasmania 7001

Telephone: (03) 6166 4422 or international +61 3 6166 4422

Email: [email protected]

Website: www.economicregulator.tas.gov.au

Printed December 2016

ISBN 978-0-7246-5434-5

Copyright

© Office of the Tasmanian Economic Regulator

ENERGY IN TASMANIA REPORT 2015-16 3

TABLE OF CONTENTS

EXECUTIVE SUMMARY ...... 4

KEY STATISTICS ...... 6

1 ELECTRICITY MARKET SUMMARY ...... 7

2 HYDRO-ELECTRIC CORPORATION (HYDRO TASMANIA) ...... 12

3 AETV PTY LTD ...... 20

4 WOOLNORTH WIND FARM HOLDING PTY LTD ...... 22

5 TASNETWORKS PTY LTD ...... 24

6 BASSLINK PTY LTD ...... 35

7 AURORA ENERGY PTY LTD ...... 37

8 TASMANIAN GAS PIPELINE PTY LTD ...... 42

9 TAS GAS NETWORKS PTY LTD ...... 43

10 TAS GAS RETAIL PTY LTD ...... 45

GLOSSARY OF TERMS ...... 47

4 ENERGY IN TASMANIA REPORT 2015-16

EXECUTIVE SUMMARY

The energy supply industry in Tasmania faced a number of challenges during 2015-16, particularly the outage of the Basslink Interconnector between 20 December 2015 and 14 June 2016 and low storage levels in Hydro Tasmania’s dams. The Basslink outage isolated Tasmania from the mainland electricity grid, requiring Tasmanian based generators to meet the State’s electricity demand without the assistance of imported electricity from Victoria.

Compounding this problem were the prolonged low rainfall conditions that persisted in Hydro Tasmania’s main catchment areas until May 2016. The increased pressure on hydro generation during the Basslink outage forced Hydro Tasmania to reduce its water storage levels to 12.77 per cent by early May 2016, though above average rainfall through May and June of 2016 restored levels to nearly 30 per cent by the end of the financial year.

In order to supplement its electricity generation during the Basslink outage, Hydro Tasmania imported a number of portable diesel generators. These generators contributed approximately 55 GWh to the Tasmanian electricity grid during 2015-16, but did not operate after May 2016 and Hydro Tasmania had decommissioned the majority of them by 30 June 2016.

The Tamar Valley gas-fired power plant, operated by Hydro Tasmania’s subsidiary AETV Pty Ltd, also provided electricity generation capacity during the Basslink outage in 2015-16. However, its availability and generation capacity was limited due to several of its generation units undergoing repair and maintenance over this period.

Tasmanian generators were able to meet all demand for electricity during 2015-16, despite the prolonged unavailability of the Basslink Interconnector and the combined effects of the other factors mentioned above. Hydro Tasmania’s generation for 2015-16 was only 0.8 per cent below its 2014-15 generation.

Despite bushfires, storms and floods causing unplanned outages in various locations around the State, energy transmission and distribution entities in Tasmania also performed well during 2015-16. TasNetworks did not experience any major transmission loss of supply incidents for the year. While severe weather events resulted in there being one extra Major Event Day in 2015-16 (six) than there was in 2014-15 (five), the frequency and duration of electricity supply interruptions to TasNetworks’ distribution customers was not significantly greater during 2015-16 than in the preceding two years.

Tas Gas Networks experienced only one major loss of supply to a geographical area during 2015-16, which occurred due to the Invermay floods in June 2016.

Overall, Tasmanian electricity and natural gas suppliers met most of their respective performance standards during 2015-16. Detailed analysis of the performance of each entity is available in the main body of this report.

Following the Tasmanian Government’s 2015 review of the functions and role of the Tasmanian Economic Regulator (Regulator), a number of amendments were made to the Electricity Supply Industry Act 1995 (ESI Act) relating to performance reporting for the Tasmanian energy sector.

One of these changes was the insertion into the ESI Act of Section 10A. Section 10A requires the Regulator on its own initiative, or if directed by the Minister for Energy and the Treasurer, to prepare a ENERGY IN TASMANIA REPORT 2015-16 5

report on the performance of the Tasmanian energy supply industry (referred to as the state of the industry report in Section 10A of the ESI Act).

In September 2015, the Minster for Energy and the Treasurer directed the Regulator to prepare a state of the energy supply industry report for the 2014-15 financial year. They also stated that, after the publication of the 2014-15 report, the Government’s preference was for publication of a full report to move to a three-yearly timeframe, with key performance information to be made available on an annual basis.

The Regulator believes that the best way of presenting an annual update of performance information is to release an annual shortened version of the Energy in Tasmania (EiT) Report in the two years between the publications of each detailed report. This is the first of these new short format reports, covering the 2015-16 financial year.

The summarised performance data contained within this report is also available in the 2015-16 EiT Performance Data Workbook on the Office of the Tasmanian Economic Regulator’s (OTTER) website.

Unlike previous EiT Reports, this report is structured on the basis of, and focuses on, the licensed entities1 operating in the Tasmanian energy supply industry, rather than on the various activities carried out by the industry (generation, transmission, distribution and retail). This means that Hydro Tasmania, TasNetworks, Aurora Energy and other energy entities each have their own chapter. This change of format is intended to make the report more accessible and useful to readers.

1 Under the National Energy Customer Framework that came into effect on 1 July 2014, electricity retailers in Tasmania no longer require a licence. However, in accordance with a direction issued under Regulation 13 of the Electricity Supply Industry Regulations 2008, the Regulator requires Aurora Energy to report on its retail performance on the same basis as that required by the Australian Energy Regulator. 6 ENERGY IN TASMANIA REPORT 2015-16

KEY STATISTICS

Electricity Industry 2013-14 2014-15 2015-16 National Energy Market information2 Tasmanian demand (GWh) 10 720 10 513 10 487 Tasmanian generation (GWh) 13 814 9 083 9 863 Hydro Tasmania Hydroelectric generation (GWh) 11 925 8 167 8 038 Temporary Diesel generation (GWh) - - 55 Woolnorth Wind Farm Holding Wind generation (GWh) 996 898 987 AETV Thermal generation (GWh) 893 18 769 Basslink2 Imports (GWh) 20 2 203 1 097 Exports (GWh) 3 113 772 473 TasNetworks Supply interruptions (excluding Major Event Days) Annual average outage duration (minutes) 242 209 221 Annual average number of outages per customer 2.05 1.61 1.86 Poor performing distribution communities (out of 101) 38 39 26 Value of GSL payments ($m) 2.93 3.37 1.39 Customers with connected solar PV systems 20 328 22 792 24 867 Solar PV generation (GWh) 43 63 73 Aurora Energy Residential standard retail customers 199 487 204 936 209 762 Aurora Pay As You Go (APAYG) customers 30 640 29 612 26 670 Concession customers (including APAYG) 88 430 91 026 91 410 Business customers 38 022 37 642 37 811 Residential customers on payment plans 2 956 2 376 2 085 Natural Gas Industry 2013-14 2014-15 2015-16 Tas Gas Networks Volume of natural gas distributed (TJ) 2 620 2 684 2 656 Unplanned interruptions 433 265 280 Annual average interruption duration per customer 71 78 59 Aurora Energy Residential customers 3 697 3 836 3 957 Business customers 117 119 121 Customers repaying a debt 124 133 70 Tas Gas Retail Residential customers 6 545 7 146 8 355 Business customers 620 664 788 Customers repaying a debt 2 963 1 752 1 161

2 This information is based on National Electricity Market (NEM) data and may not directly align with other data presented in this report which is based on the annual performance information each entity has reported to the Regulator. ENERGY IN TASMANIA REPORT 2015-16 7

1 ELECTRICITY MARKET SUMMARY

The National Electricity Market (NEM) is a wholesale electricity spot market where supply and demand is met simultaneously in real-time through a centrally-coordinated dispatch process.

The NEM comprises five regional market jurisdictions (Queensland, New South Wales, Victoria, South Australia and Tasmania) connected by a number of interconnectors into a single alternating current system and associated synchronous electricity transmission grid.

All generation is aggregated and scheduled at five-minute intervals during every hour of every day. Generators enter bids for each of their generating units comprising the amount of electricity the generator is willing to sell at each price for each generating unit. The bids are stacked from lowest to highest price with respective quantities offered aggregated. The price bid of the last generator to be dispatched to equalise supply and demand sets the regional dispatch price and the average of the six dispatch prices in each half hour (ie trading interval) sets the spot price, which is paid to all generators within that region for that trading interval irrespective of each generating unit’s bid price.

The Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER) are responsible for overseeing and regulating the NEM. The AEMC is responsible for rule-making in response to requests for rule changes, usually from NEM participants. The AER is responsible for enforcing and monitoring compliance with the NER, as well as for economic regulation of electricity transmission and distribution.

1.1 Tasmanian demand and generation statistics

The Tasmanian electricity generation system comprises hydroelectric, thermal, wind and embedded generators.

No single generator holds an exclusive licence for generation in Tasmania. All generators with capacity greater than five MW must hold a licence issued by the Regulator and be registered as a generator in the NEM unless exempted from registration by AEMO.

Table 1.1 outlines Tasmania’s demand and supply information for 2015-16 and for the preceding four financial years. 8 ENERGY IN TASMANIA REPORT 2015-16

Table 1.1 Tasmanian electricity demand and generation – 2011-12 to 2015-163

2011-12 2012-13 2013-14 2014-15 2015-16 Tasmanian demand (GWh) 10 617 10 622 10 720 10 513 10 487 Tasmanian Generation Hydroelectric 8 421 10 627 11 925 8 167 8 018 Thermal 1 516 1 696 893 18 781 Wind 456 463 996 898 1 009 Temporary Diesel - - - - 55 Basslink imports 1 273 255 20 2 203 1 097 Basslink exports 1 049 2 419 3 113 772 473

Figure 1.1 illustrates Tasmanian electricity demand and generation sources on a NEM week basis for 2015-16. Any shortfall between generation and demand was met by Basslink imports, while generation above demand was exported via Basslink. The cessation of Basslink imports was a result of the Basslink outage that occurred in week 51 of 2015. AETV Pty Ltd (AETV) brought forward the planned restart of its Tamar Valley Power Station (TVPS) thermal power plant and temporary diesel generators were activated due to the outage. By week 25 of 2016, Basslink had been repaired and electricity exports through Basslink had been restarted.

Figure 1.1 Tasmanian electricity demand and generation source – 2015-16

350

300 Hydro

250 Wind Tasmanian Demand 200 Thermal

GWh 150 Temporary 100 Diesel

50

0 28 30 32 34 36 38 40 42 44 46 48 50 52 2 4 6 8 10 12 14 16 18 20 22 24 26 2015 2016 1.2 Wholesale Electricity Costs

As illustrated in Figure 1.2, spot prices in Tasmania increased significantly for a period in the latter half of the 2015-16 financial year due to the Basslink outage. However, despite the increase in the spot price, prices for the majority of Tasmanian electricity consumers were not directly impacted, due to Tasmania’s regulated pricing frameworks (standing offer and wholesale contracts).

3 The data in Table 1.1 is based on National Electricity Market (NEM) data and may not directly align with other data presented in this report which is based on the annual performance information each entity has reported to the Regulator. ENERGY IN TASMANIA REPORT 2015-16 9

Figure 1.2 Tasmanian and Victorian electricity spot prices – 2015-16

300

250

200 TAS VIC

150 GWh

100

50

0 28 30 32 34 36 38 40 42 44 46 48 50 52 2 4 6 8 10 12 14 16 18 20 22 24 26 2015 2016 Under the Tasmanian wholesale contract regulatory framework Hydro Tasmania is required to offer four regulated derivative contracts. This framework includes a legislated derivatives instrument (known as the Wholesale Contract Regulatory Instrument) which specifies the terms and conditions for the contracts and how prices for the contracts are derived. The aim of providing regulated derivative contracts is to reduce the risk faced by retailers operating in the Tasmanian market to a level comparable to the risk facing retailers in other regions of the NEM and consequently increase the likelihood of retailers entering the Tasmanian market.

Under Section 43M(2) of the ESI Act, the Regulator may fix regulated wholesale contract prices if the Regulator is of the opinion that a “supply disruption event” has occurred.

In response to the initial notification of the Basslink outage on 22 December 2015, the Regulator undertook consultation with market participants starting in January 2016. Following consultation with market participants, and having considered delays in rectifying the Basslink outage, the Regulator resolved on 7 March 2016 that the Basslink outage met the relevant requirements of the ESI Act and, therefore, constituted a supply disruption event. However, given feedback from consultation with market participants (who were concerned with increased uncertainty and the potential adverse impacts upon the efficient operation of the market if the Regulator made changes), the Regulator advised that it had made no decision, at that stage, to exercise the legislative option to fix regulated contract prices using a different methodology to that which currently applied.

The Regulator did, however, leave open the option of changing the above position if it was presented with sufficient arguments from market participants on the need to do so. No subsequent submissions were made by market participants and the Basslink outage was resolved in June 2016. Therefore, the Basslink outage did not impact upon regulated electricity wholesale contracting arrangements.

1.3 Retail Market

In Tasmania, electricity is sold by retailers to customers under individually negotiated contracts or regulated tariffs (ie standing offer prices under standard retail contracts), which cover both prices and service standards. Regulated tariffs provide a safety net for small customers and all small customers meeting the conditions for supply are entitled to be supplied by the Regulated Offer Retailer, which, in the Tasmanian market, is Aurora Energy Pty Ltd (Aurora Energy). 10 ENERGY IN TASMANIA REPORT 2015-16

Under the National Energy Customer Framework (NECF), retailers no longer require a licence under the ESI Act to operate in Tasmania and from 1 July 2014, any authorised retailer may enter the Tasmanian market. During 2015-16, three electricity retailers; ERM, Progressive Green and Aurora Energy competed to supply electricity to business customers. Aurora Energy continued to be the sole retailer selling electricity to residential customers.

Table 1.2 Number of Tasmanian electricity customers by customer type – 2011-12 to 2015-16presents the number of Tasmanian electricity customers by type for 2015-16 and for the preceding four financial years.

Table 1.2 Number of Tasmanian electricity customers by customer type – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Total Tasmanian Electricity Customers 265 364 267 103 268 373 272 528 274 649 (Excluding BSI)

Other retailer market share (other than 0.2% 0.3% 0.1% 0.1% 0.1% Aurora Energy)

Total small business customers 36 964 36 363 35 990 35 944 36 177

Other retailer small business market share 0.0% 0.0% 0.0% 0.2% 0.3%

Total large business customers 2 345 2 681 2 256 2 036 2 047

Other retailer large business market share 27% 32% 10% 14% 14%

1.4 Frequency Control Ancillary Services

Frequency Control Ancillary Services (FCAS) maintain the frequency of the power system within frequency operating bands. In general, these services are of two types:

 Regulation FCAS are services that ensure that continual minor frequency deviations during typical load and generation variations are maintained within the normal operating band4; and

 Contingency FCAS are fast, slow and delayed services used for recovering larger frequency deviations that have arisen from contingent events such as the loss of a generating unit, transmission line or the loss of a load.

As the frequency may need to be adjusted up or down, each of these FCAS services can be further categorised as ‘raise’ or ‘lower’ services.

Each type of FCAS has a separate market and FCAS are purchased by AEMO in each of the eight FCAS markets. AEMO’s costs of procuring FCAS are recovered from market participants according to a set of rules.

4 The normal operating band is the range in which frequency deviations, which occur during typical load and generation variations, are tolerated as it is not realistic to maintain a constant frequency of 50 Hz. ENERGY IN TASMANIA REPORT 2015-16 11

In Tasmania, sources of FCAS are:

 Basslink5, where an increase or decrease in imports or exports will affect frequency; and

 Hydro Tasmania; both through its hydro generating units and Tamar Valley Power Station (TVPS) (the Combined Cycle Gas Turbine provides lower contingency FCAS).

The cost of providing ‘lower’ services are reflected in charges to customers6. The cost of providing ‘raise’ services are met by generators and will ultimately be incorporated into wholesale energy prices.

Following a period of very high raise FCAS prices, the Regulator declared, in February 2010, raise FACS services to be ‘declared electrical services’ under Regulation 19(2) of the Electricity Supply Industry (Price Control) Regulations 2003. The Regulator considered Hydro Tasmania had substantial market power in respect of these services and the promotion of competition, efficiency and the public interest required the making of the declaration.

The Regulator determined that an FCAS ‘safety net’ contract would be offered for each year of the Determination, with the Determination commencing on 28 January 2011 and expiring on 31 January 2016.

Following a consultation process, the Regulator decided not to continue with the regulation of FCAS and revoked the Determination effective 31 January 2016. In making this decision, the Regulator noted that it would continue to monitor FCAS pricing to ensure that regulatory action can be taken if evidence is found of inappropriate pricing behaviour.

Figure 1.3 presents FCAS pricing for 2015-16 and for the preceding ten financial years.

Figure 1.3 FCAS pricing – 2005-06 to 2015-16

50 45 40 35 30 25 20

15 FCAS cost cost FCAS ($m) 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

5 Basslink is deemed to be unable to transfer FCAS services while flow is between approximately -50 MW and +50 MW (‘no-go’ zone). 6 For further explanation, refer to OTTER, 2007 Determination of Retail Tariffs on Mainland Tasmania – Information Paper, November 2006. 12 ENERGY IN TASMANIA REPORT 2015-16

2 HYDRO-ELECTRIC CORPORATION (HYDRO TASMANIA)

The Hydro-Electric Corporation, trading as Hydro Tasmania (Hydro Tasmania) is the major licensed electricity generator in Tasmania, and owns and operates 30 hydro power stations. These power stations have a combined generating capacity of 2 281 MW.

Hydro Tasmania also generates electricity on the Bass Strait Islands (Flinders and King Islands) from a combination of solar, wind and diesel sources. The total capacity of Hydro Tasmania’s Bass Strait Islands (BSI) generation is 11.35 MW. Hydro Tasmania also provides electricity distribution and retail services on the BSI. Table 2.1 presents the total energy supplied and peak generation in relation to Hydro Tasmania’s mainland Tasmanian and BSI operations for 2015-16 and for the preceding four financial years.

Since 2013, Hydro Tasmania has been the owner and operator of the TVPS through its wholly owned subsidiary, AETV Pty Ltd. Details about AETV’s performance is covered separately in this Report.

Table 2.1 Energy supplied and peak generation – 2011-12 to 2015-167

2011-12 2012-13 2013-14 2014-15 2015-16

Energy Supplied (GWh) 8 442 10 646 11 941 8 167 8 108

Peak Generation (MW) 2 033 2 117 2 139 2 187 2 161

2.1 Hydro Generation

Hydro generation is the main source of electricity in Tasmania.

Table 2.2 summarises hydro generation volumes for 2015-16 and for the preceding four financial years.

Table 2.2 Hydro generation – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Energy Supplied (GWh) 8 421 10 627 11 925 8 167 8 038

During 2015-16, the electricity supplied by hydro generation was 1.6 per cent less than the previous year. Reduced inflows to water storages, unavailability of the Basslink Interconnector and the impact of major infrastructure projects resulted in Hydro Tasmania using other energy sources to meet Tasmania’s electricity demands during 2015-16.

Hydro Tasmania’s availability factor was below the target level for 2015-16. Hydro Tasmania has reported that, due to the age of its assets and the ongoing need for repair and refurbishment, the availability factor is expected to decline and the planned outage factor is expected to increase in coming years.

7 Includes Bass Strait Islands generation but excludes generation from TVPS and Woolnorth wind farms. ENERGY IN TASMANIA REPORT 2015-16 13

Table 2.3 summarises Hydro Tasmania’s performance in terms of availability, forced outages and planned outages for 2015-16 and for the preceding four financial years.

Table 2.3 Generation performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Target

Availability Factor 87.35% 91.90% 91.04% 85.11% 89.64% >91.00%

Forced Outage Factor 0.85% 0.60% 0.72% 1.20% 1.67% <1.00%

Planned Outage Factor 11.8% 7.50% 8.24% 13.69% 8.69%

2.1.1 Water storages

Hydro Tasmania’s system water storage capacity is 14 437 GWh 8. Since hydro generation is the major source of electricity in Tasmania, this water storage is crucial for energy security in the State. Between 2012 and 2016, Hydro Tasmania was required, by the Minister for Energy, to maintain a minimum storage level of 25 per cent. However, as of June 2016, Hydro Tasmania is required to maintain a minimum system storage level of 30 per cent at 30 June of each year9.

Table 2.4 summarises Hydro Tasmania’s water storage levels as at 30 June for each of the 2011-12 to 2015-16 financial years inclusive.

Table 2.4 Water storages as at 30 June - 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Water Storages (% full) 53.5 32.8 28.0 29.8 28.6

Due to reduced inflows and the impact of the Basslink outage between December 2015 and June 2016, Hydro Tasmania’s water storage levels declined to a low of 12.77 per cent on 2 May 2016. However, in May and June 2016, higher than normal rainfall in catchment areas restored storage levels to almost 30 per cent by 30 June 2016. Figure 2.1 shows water storage levels during 2015-16.

Figure 2.2 shows historical water storage levels from July 2006 to July 2016. Storage levels during this period started from a low point due to the 2006 drought, before rising following the commissioning of Basslink and the end of the drought. Figure 2.2 also illustrates the highly seasonal nature of water storage levels, with storages generally increasing through the spring months and then declining during summer.

8 Excludes Lakes Gardiner, Margaret and Plimsoll. Hydro Tasmania reports against this value for historical consistency. 9 Tasmania energy crisis: Minimum 30pc safe level imposed on Hydro dams (ABC News, 21 June 2016, http://www.abc.net.au) 14 ENERGY IN TASMANIA REPORT 2015-16

Figure 2.1 2015-16 Water storage levels

5 735 40% 35% 4 779 30% 3 823 25% 2 867 20%

15% Capacity Storage Storage (GWH) 1 912 10% 956 5% 0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2015 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2016 2016

Figure 2.2 Historical water storage levels 14 337 100%

11 470 80%

8 602 60%

5 735 40% Capacity

Storage (GWH) Storage 2 867 20%

0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2.1.2 Temporary diesel generation

In response to the low water storage levels and the Basslink outage during 2015-16, Hydro Tasmania used a combination of temporary diesel generation and the reactivation of the TVPS to meet Tasmanian electricity demand. During the Basslink outage period, the temporary diesel generators supplied approximately 55 GWh of electricity. Hydro estimates the cost of running the generators was around $64 million.

2.2 Asset management

Hydro Tasmania spent $44.5 million during 2015-16 on operations and maintenance expenditure (OPEX) to maintain and operate its generation assets. This is a reduction of $4 million from Hydro Tasmania’s OPEX spend in 2014-15. Hydro Tasmania also incurred capital expenditure (CAPEX) totalling $75.6 million for the ongoing refurbishment and modernisation of its assets during 2015-16. ENERGY IN TASMANIA REPORT 2015-16 15

Figure 2.3 illustrates Hydro Tasmania’s past expenditure and budgeted OPEX and CAPEX for the period from 1 July 2005 to 30 June 2020 inclusive. Hydro Tasmania reports that the increase in planned CAPEX in 2016-17 is a result of a renewal and refurbishment program to generation capabilities. This program includes machine refurbishments to a number of Hydro generation stations as well as the upgrade of control and regulation systems.

Figure 2.3 Hydro Tasmania’s OPEX and CAPEX $160 Actual Opex Actual Capex Budgeted Opex Budgeted Capex $140 $120 $100 $80

Million $60 $40 $20 $0 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 2017-18 2019-20

2.3 Bass Strait Islands

Hydro Tasmania provides electricity generation, distribution and retail services on the BSI. The BSI include Flinders and King Islands but exclude Cape Barren Island. The BSI are not connected to a transmission network.

Electricity generated on Flinders Island comes from a combination of four diesel generators with a total capacity of 2.80 MW. On King Island, electricity generation comes from a combination of four diesel generators, five wind turbines and a solar array, with a combined capacity of 8.55 MW.

Table 2.5 shows customer information for Hydro Tasmania’s BSI operations.

Table 2.5 Bass Strait Island customer information - 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Flinders Island

Residential Customers 498 554 551 600 602

Business Customers 149 118 119 140 149

Annual Consumption (MWh) 4 045 3 545

Connected kVA 5 800 5 855 6 245 6 350 6 350

King Island Residential Customers 850 950 939 1 036 1 027

Business Customers 299 209 211 290 279

Annual Consumption (MWh) 10 944 9 188

Connected kVA 16 558 16 558 16 443 16 703 16 703 16 ENERGY IN TASMANIA REPORT 2015-16

2.3.1 Generation performance

Table 4A.6 of the Tasmanian Electricity Code (TEC) sets performance targets for electricity generation on the BSI.

As shown in Table 2.6, King Island did not experience any system black events relating to generation equipment during 2015-16. This is the second consecutive year that no system black events have occurred on King Island. Hydro Tasmania attributes this high-level of performance to the commissioning of the King Island Renewable Energy Integration Project (KIREIP) in 2013.

In contrast to King Island, several major weather events impacted on Flinders Island during 2015-16, causing interruptions to electricity generation and resulting in nine system black events. Hydro Tasmania expects that a new Flinders Island Hub, integrating renewable energy sources into the generation mix and due for commissioning in early 2017, will substantially reduce the occurrence of system black events on the island.

Table 2.6 Bass Strait Islands generation performance – 2011-12 to 2015-16

Flinders Island 2011-12 2012-13 2013-14 2014-15 2015-16 Target

Flinders Island

System black events 7 14 1 3 4 20

Average Restoration time (CAIDI) 21.57 26.40 8 36 10 12.5010 2011-12 2012-13 2013-14 2014-15 2015-16 Target King Island Interruptions 9 3 3 0 0 8

Average Restoration time (CAIDI) 19.89 12.20 11 0 0 13.7511

2.3.2 Distribution system performance

2.3.2.1 King Island

The King Island electricity distribution network consists of four 11 kV overhead feeders of approximately 400 km in total length. There are also several short sections of underground 11 kV cable totalling about 1 250 metres in length.

Table 2.7 summarises the performance of the King Island distribution network during 2015-16 and for the four preceding financial years.

King Island’s distribution SAIFI performance improved during the 2015-16 year. Hydro Tasmania credits this improvement to a significant expansion of vegetation management activities and the carrying out of general asset management activities along with targeted protection upgrades and maintenance programs.

10 This is the target restoration time for outages occurring between 06:00 and 21:59. The target restoration time for outages occurring between 22:00 and 05:59 is 22.50 mins. 11 This is the target restoration time for outages occurring between 06:00 and 21:59. The target restoration time for outages occurring between 22:00 and 05:59 is 23.75 mins. ENERGY IN TASMANIA REPORT 2015-16 17

Table 2.7 King Island distribution performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Limit

Industrial Feeder

SAIFI 3.00 1.80 2.00 0.10 0.00 6

SAIDI 67 108 336 27 1 480

Currie Feeder

SAIFI 6.00 0.00 2.30 0.20 0.09 6

SAIDI 142 1 296 30 8 480

Grassy Feeder

SAIFI 10.80 4.50 9.90 6.70 2.40 8

SAIDI 946 137 2 179 1 074 194 600

Cape Wickham Feeder

SAIFI 9.00 6.00 8.70 5.00 2.41 8

SAIDI 224 567 1 493 549 54 600

2.3.2.2 Flinders Island

The Flinders Island electricity distribution network consists of three 11 kV overhead feeders of approximately 330 km in total length. There is no underground 11 kV feeder cabling on Flinders Island.

Table 2.8 summarises the performance of the Flinders Island distribution network during 2015-16 and for the four preceding financial years.

Table 2.8 Flinders Island distribution performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Limit

Whitemark Feeder

SAIFI 3.00 3.50 1.40 1.50 0.50 6

SAIDI 105 115 51 126 60 480

Palana Feeder

SAIFI 4.40 11.30 4.80 6.90 1.14 8

SAIDI 213 676 299 207 29 600

Lady Barron Feeder

SAIFI 4.00 2.60 6.20 2.80 1.30 8

SAIDI 230 87 413 110 216 600

Flinders Island’s distribution SAIFI performance has improved substantially during 2015-16 year and lies well within the lower bound limit. Hydro Tasmania expects to maintain these standards via a continued focus on targeted maintenance programs. 18 ENERGY IN TASMANIA REPORT 2015-16

2.3.3 Retail performance

Hydro Tasmania’s retail arm, Momentum Energy, sells electricity to customers on the BSI. The TEC requires Hydro Tasmania to report on its BSI retail performance on the same basis as that required of authorised retailers by the Australian Energy Regulator (AER). Momentum Energy, on behalf of Hydro Tasmania, has been providing electricity retail services on the BSI since 2012-13.

Table 2.9 presents a summary of Hydro Tasmania’s BSI retail performance during 2015-16 and for the three preceding financial years.

Table 2.9 Bass Strait Islands retail performance – 2012-13 to 2015-16

Performance measure 2012-13 2013-14 2014-15 2015-16

Call centre

Total calls 1 047 747 517 686

Calls answered in 30 seconds 80% 67% 77% 86%

Average time to answer calls (seconds) 22 26 20 17

Calls abandoned 2% 2% 2% 1%

Complaints

Billing complaints 64 77 39 2

Other 11 5 4 0

Total 75 82 43 2

Customers experiencing payment difficulties (excludes hardship customers)

Number repaying a debt - - 111 257

Average amount of debt - - 56.34 54.14

Customers on hardship program - - 9 25

2.3.4 Community Service Obligation (CSO)

Despite the replacement of some diesel generation with solar PV and wind turbines, due to the islands’ isolation the cost of supplying electricity on the BSI is significantly higher than on mainland Tasmania. To offset this, the Tasmanian Government administers a BSI Community Service Obligation (CSO).

The CSO provides direct concessions to BSI customers who are pensioners and subsidises the costs incurred by Hydro Tasmania in supplying electricity to BSI customers.

The CSO is a contractual arrangement between the Tasmanian Government and Hydro Tasmania, which the parties re-negotiate periodically. In 2015-16, the net cost of the CSO to the Tasmanian Government was $11.3 million12 (see Table 2.10).

12 Hydro Tasmania 2016 Annual Report, page 16. ENERGY IN TASMANIA REPORT 2015-16 19

Table 2.10 CSO payments received by Hydro Tasmania – 2011-12 to 2015-16 ($million)

2011-12 2012-13 2013-14 2014-15 2015-16 8.0 7.7 9.2 9.6 11.3

2.3.5 Price comparison

Noting section 2.3.4, Table 2.11 Electricity price comparison - Momentum (BSI) and Aurora Energy (mainland Tasmania) for 2015-16compares electricity prices paid by customers on the BSI with the regulated standing offer electricity prices paid by residential and business customers on mainland Tasmania during 2015-16, in terms of both supply charges (fixed/service) and energy (usage) charges.

Table 2.11 Electricity price comparison - Momentum (BSI) and Aurora Energy (mainland Tasmania) for 2015-16

Momentum Aurora Energy Aurora Energy Tariff 51 Tariff 31 Residential light Tariff 22 Business light and power and power

Service charge (per daily) 78.84 cents 89.39 cents 96.57 cents

Meter charge (per day) 7.73 cents

Energy (per kWh) 26.97 cents 25.20 cents 34.37 cents (first 500 KWh)

25 23 cents (remaining KWh)

20 ENERGY IN TASMANIA REPORT 2015-16

3 AETV PTY LTD

The TVPS is operated by AETV, which is a wholly owned subsidiary of Hydro Tasmania. The previous owner and operator of TVPS, Aurora Energy, transferred ownership of the facility to Hydro Tasmania on 1 June 2013.

The TVPS consists of a Combined Cycle Gas Turbine (CCGT) with a 208 MW generating capacity and four open cycle gas turbine (OCGT) units with a current combined peak generating capacity of 148 MW.

Table 3.1 summarises the TVPS’s generation output for 2015-16 together with its generation for the preceding four financial years.

The table also illustrates Hydro Tasmania’s changed operation of the TVPS since taking over ownership of the plant. The CCGT did not operate during 2014-15 and after reviewing AETV’s operations, Hydro Tasmania determined that the CCGT was not required and was given permission from the Tasmanian Government, subject to certain conditions being met, to sell the unit in August 2015. The conditions for sale were not met and, in December 2015, Hydro Tasmania announced that it would be restarting the CCGT, as part of the Energy Supply Plan implemented due to low inflows. In January 2016, the Tasmanian Government withdrew permission for Hydro Tasmania to sell the CCGT.

Table 3.1 Generation summary – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Energy Supplied (GWh) 1 516 1 696 893 18 769

Peak Load Generation (MW) 384 363 274 129 318

3.1 Generation performance

During 2015-16, the amount of electricity supplied by the TVPS increased by a factor of more than 40 compared to the previous year. This reflects the requirement on TVPS to provide emergency generation during the period of low water storages and the Basslink outage between December 2015 and June 2016.

In early 2015, AETV received notification from the manufacturer of a fault in one of its OCGT units. This fault required AETV to send the unit overseas for repair, resulting in it being unavailable for generation between September 2015 and March 2016. AETV also identified damage to several components of its other three OCGT units, which also required repair by the original manufacturer. Two of these three units will be repaired and operational again by November 2016, but AETV considers it is not economical to repair the remaining damaged OCGT unit at this time. The damage to these generation units contributed to TVPS exceeding its target forced and planned outage factors during 2015-16. Despite this, AETV was able to meet its whole of station target availability factor for the year.

Table 3.2 summarises TVPS performance in terms of availability, forced outages and planned outages for 2015-16 and for the preceding four financial years. ENERGY IN TASMANIA REPORT 2015-16 21

Table 3.2 Whole-of-station generation performance – 2011-12 to 2015-16

2015-16 2011-12 2012-13 2013-14 2014-15 2015-16 Target

Availability Factor 91% 92% 60.3% 73.7% 40% 40%

Forced Outage Factor 2.4% 3.3% 1% 0.7% 2.9% <2.2%

Planned Outage Factor 6.5% 4.7% 38.7% 25.6% 57.1% 48.7%

3.2 Asset Management

AETV put all capital projects not associated with site safety, environmental management and regulatory compliance on hold during the 2015-16 financial year. The primary focus of AETV’s capital works program during this time was ensuring the continued operational reliability of its OCGT units and improving the efficiency and effectiveness of onsite water treatment.

AETV also focussed its projected capital works program on the forecast ongoing requirements for both the OCGT and CCGT units, with the assumption that the TVPS will only operate during the summer period for the near future.

22 ENERGY IN TASMANIA REPORT 2015-16

4 WOOLNORTH WIND FARM HOLDING PTY LTD

There are three licensed wind farms generating electricity in Tasmania, located at Musselroe, Studland Bay and Bluff Point. The Musselroe Wind Farm consists of 56 turbines with a total generation capacity of 168 MW; the Studland Bay Wind Farm 25 turbines with a total generation capacity of 75.0 MW; and the Bluff Point Wind Farm 37 turbines with a total generation capacity of 64.75 MW. The owner and operator of these three wind farms is a joint venture between Shenhua Clean Energy (SCE) and Hydro Tasmania, known as Woolnorth Wind Farm Holding Pty Ltd (Woolnorth). SCE owns a 75 per cent share in Woolnorth, and Hydro Tasmania owns the remaining 25 per cent13.

Table 4.1 provides a summary of historical electricity generation by the three Woolnorth facilities for 2015-16 and for the preceding four financial years.

Table 4.1 Wind generation summary – 2011-12 to 2015-16

Energy Supplied (GWh) 2011-12 2012-13 2013-14 2014-15 2015-16

Bluff Point 216.0 225.4 251.2 221.1 229.6

Musselroe14 - 88.3 482.3 432.7 514.7

Studland Bay 239.7 237.6 262.1 243.9 242.4

4.1 Generation performance

Wind farms are intermittent generators because both their output and availability factor depends on the strength and direction of the wind. As with other forms of generation, repair and maintenance activities also affect the availability of wind farms. Woolnorth has set an availability factor target of 97 per cent, and met this target at all three of its facilities during 2015-16 as shown in Table 4.2. This table also presents Woolnorth’s generator availability factor for the preceding four financial years.

Table 4.2 Wind turbine generator availability factor – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 2015-16 Target

Bluff Point 96.57% 97.26% 97.39% 96.35% 97.08% 97%

Musselroe - 75.69% 98.33% 98.95% 99.24% 97%

Studland Bay 97.25% 96.70% 97.67% 97.97% 97.12% 97%

4.2 Asset Management

Woolnorth’s major asset management activities for 2015-16 involved repair and replacement of damaged equipment at its three wind farms. Equipment requiring replacement included turbine blades,

13 Hydro Tasmania also owns and operates the Huxley Hill Wind Farm on King Island, which consists of five turbines with a total generation capacity of 2.5 MW. The Hydro Tasmania chapter of this report (Chapter 4) covers electricity generation on King Island. 14 Musselroe Wind Farm was commissioned on 2 May 2013. ENERGY IN TASMANIA REPORT 2015-16 23

generators, gearboxes and connectors. The majority of the damage to this equipment was the result of severe weather conditions.

During 2016-17, Woolnorth plans to upgrade the control software systems at its Bluff Point and Studland Bay wind farms, develop a single operational compliance plan covering all three of its wind farms, and continue to take advantage of periods of low wind for repair and maintenance activities. Woolnorth has not planned any major capital works projects for the coming year.

24 ENERGY IN TASMANIA REPORT 2015-16

5 TASNETWORKS PTY LTD

TasNetworks Pty Ltd (TasNetworks) owns and operates the electricity transmission system in Tasmania, and is the State’s Transmission Network Service Provider (TNSP). The Tasmanian electricity transmission system consists of 1 068 km of 220 kV lines and 1 266 km of 110 kV lines.

TasNetworks is also the State’s Distribution Network Service Provider (DNSP). This distribution network connects to the transmission system at 44 ‘terminal substations’ throughout Mainland Tasmania and supplies electricity to 284 470 installations.

5.1 Transmission performance

The TEC requires TasNetworks, as the TNSP, to report to Regulator annually on the performance of the transmission network. Table 5.1 summarises key transmission system statistics for 2015-16 and for the preceding four financial years.

Table 5.1 Key transmission system statistics – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 System peak demand for period (MW) 1 795 1 703 1 685 1 715 1 747 Unserved energy (%) 0.0025 0.0062 0.0009 0.0008 0.00004 Total system minutes off supply 8.72 20.49 2.92 2.63 0.14

The transmission system peak demand for 2015-16 of 1 747 MW, the highest in the last four years, occurred on 3 August 2015.

5.1.1 Transmission network reliability

TasNetworks reports on the reliability of its transmission network on the basis of the number and duration of any loss of supply (LOS) events. Table 5.2 shows TasNetworks’ reliability performance measures for 2015-16 and the preceding four financial years.

Table 5.2 Transmission network reliability – 2011-12 to 2015-16

LOS duration 2011-12 2012-13 2013-14 2014-15 2015-16 Target > 0.1 system minute 11 11 7 5 0 ≤15 > 1.0 system minute 3 3 0 0 0 ≤2

TasNetworks did not experience any major LOS events during the 2015-16 financial year, continuing a trend of improving network reliability over the past five years.

5.1.2 Plant availability

Through its Service Target Performance Incentive Scheme (STPIS), the AER sets service standard targets that encourage transmission system operators to maintain and improve their performance. TasNetworks uses the STPIS targets for circuit availability as a measure of plant availability. Table 5.3 summarises TasNetworks’ performance against STPIS targets for 2015-16 and for the preceding four financial years. ENERGY IN TASMANIA REPORT 2015-16 25

Table 5.3 Performance against STPIS targets – 2011-12 to 2015-16

Measure 2011-12 2012-13 2013-14 2014-15 2015-16 Target Transmission line circuit availability 98.38 99.67 99.42 99.48 99.74 ≥99.13 (critical) (%) Transmission line circuit availability 99.52 99.31 99.47 99.71 99.75 ≥98.97 (non-critical) (%) Transformer circuit (%) 98.95 99.22 99.39 99.37 99.60 ≥99.28 Capacitor bank (%) 99.80 99.51 99.31 98.10 99.49 ≥99.00

TasNetworks met all STPIS targets for circuit availability in 2015-16, and showed a general improvement in performance compared to 2014-15.

5.1.3 Outage duration

Unplanned outage duration for transmission lines and transformers is a useful measure of the effectiveness of a TNSP’s management plans and operational responses to unexpected events. Table 5.4 shows the average unplanned outage durations for TasNetworks’ assets during 2015-16 and the four preceding financial years, compared against the STPIS targets set by the AER.

Table 5.4 Average unplanned outage duration (minutes) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Target Transmission lines 177 142 174 236 437 ≤326 Transformers 1 660 277 279 498 1 710 ≤712

TasNetworks was unable to meet its 2015-16 unplanned outage target for transmission lines because of bushfire damage to the Sheffield-Fisher 220 kV transmission line, which could not be repaired until it was safe to access the area.

A fault in a 33 kV cable termination at a Kingston 110/33 kV transformer circuit resulted in TasNetworks also exceeding its 2015-16 unplanned outage target for transformers.

5.1.4 Major projects

TasNetworks reported that there are no current or imminent major capital works projects (ie works over $10 million) relating to transmission assets. This continues the trend of reduced capital works expenditure over recent years.

5.2 Distribution performance

The high voltage (HV) distribution network distributes electricity at 44, 33, 22 or 11 kV. There are 404 high voltage distribution feeders in Tasmania, categorised by the predominant supply area they service. The HV distribution network is best characterised as a rural overhead network, as most of the HV feeders and almost all the low voltage (LV) network are overhead cables. Underground cables are restricted to central business districts, subdivisions and commercial centres in urban and suburban areas. 26 ENERGY IN TASMANIA REPORT 2015-16

Distribution substations throughout Tasmania reduce incoming voltage to 230/400 volts and supply the majority of customers through the LV network. There are a number of HV customers with their own distribution substations, which take electricity supply directly at 22 kV and/or 11 kV, while highly energy intensive customers receive supply via dedicated distribution feeders.

Table 5.5 shows the total distribution customer aggregated electricity consumption in Tasmania, measured at the point of supply, for 2015-16 and for the previous four financial years.

Table 5.5 Total distribution customer consumption – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Customer consumption at point of 4 321 4 254 4 112 4 314 4 328 supply (GWh) Maximum demand (MW) 1 022 962 944 953 959

Total customer consumption in 2015-16 increased only slightly above 2014-15 levels. The maximum demand for electricity from the distribution network of 959 MW occurred between 8.00 am and 8.30 am on 4 August 2015.

5.2.1 Overall distribution network performance

The frequency and duration of interruptions to supply provide measures of system reliability in the distribution network. TasNetworks reports these statistics as averages, termed SAIFI and SAIDI, totalled over a 12-month period. SAIFI is the System Average Interruption Frequency Index (measured in number of interruptions), and SAIDI is the equivalent measure for the duration of any interruptions (measured in minutes). Table 5.6 presents SAIFI and SAIDI measures for 2015-16 and the preceding four financial years, representing the frequency and duration of interruptions to supply that an average customer connected to the system would experience during those respective 12-month periods.

Table 5.6 Overall network performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 SAIDI 213 232 362 417 358 SAIFI 1.86 1.76 2.34 2.15 2.22

During the 2015-16 financial year, there were six major event days (MEDs). A MED is a day when, due to extreme events, the SAIDI exceeds a certain threshold set by the Regulator (in 2015-16 that threshold was 6.24 minutes). All MEDs during 2015-16 were associated with storm and flood damage.

Removing MEDs from the SAIDI and SAIFI calculations gives a clearer indication of distribution system performance under ‘normal’ conditions. Table 5.7 provides the same data as Table 5.6, minus MEDs.

Table 5.7 Overall network performance without MEDS– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 SAIDI 213 191 242 209 221 SAIFI 1.86 1.66 2.05 1.61 1.86 ENERGY IN TASMANIA REPORT 2015-16 27

5.2.2 Cause of supply interruptions

TasNetworks’ field crews report on the causes of any supply interruptions once they have identified and repaired the relevant faults. The major identified causes of supply interruption include planned outages, vegetation, weather, wildlife and asset failure.

Figure 5.1 and Figure 5.2 present a breakdown of supply interruption causes and their relative contributions to overall system SAIFI and SAIDI during 2015-16 and the four preceding financial years.

Figure 5.1 Contributions to system SAIFI by cause– 2011-12 to 2015-16

3.0 Weather 2.5 Vegetation 2.0 Planned 1.5 Cause Unknown 1.0

SAIFI (Interruptions) SAIFI Birds and Animals 0.5 Assets 0.0 2011-12 2012-13 2013-14 2014-15 2015-16 SAIFI (including MEDs) Figure 5.2 Contributions to system SAIDI by cause– 2011-12 to 2015-16

500 450 Weather 400 Vegetation 350 300 Planned 250 200 Cause unknown

150 SAIDI SAIDI (Minutes) 100 Birds and animals 50 Assets 0 2011-12 2012-13 2013-14 2014-15 2015-16 SAIDI (including MEDs)

TasNetworks reported that, in 81 per cent of the vegetation related interruptions that occurred during 2015-16, the vegetation causing the outage was outside the designated asset clearance zone.

During 2015-16, severe weather events were the largest contributor to supply interruptions, being responsible for all six of the MEDs during this period. 28 ENERGY IN TASMANIA REPORT 2015-16

5.2.3 Reliability of supply

For the purposes of measuring distribution supply reliability, the Regulator and TasNetworks have divided Tasmania into 101 supply reliability communities, assigning each community to one of five supply reliability categories as follows:

 Critical infrastructure (1 community);

 High density commercial (8 communities);

 Urban and regional centres (32 communities);

 High density rural (33 communities); and

 Low density rural (27 communities).

The TEC provides limits for reliability of supply performance at each category level. Table 5.8 shows TasNetworks’ performance against TEC reliability of supply limits for 2015-16 and for the four preceding financial years.

Table 5.8 Reliability of supply performance– 2011-12 to 2015-16

Category 2011-12 2012-13 2013-14 2014-15 2015-16 Limit

Critical infrastructure SAIFI 0.23 0.28 0.20 0.33 0.25 0.2 SAIDI 26 32 16 54 34 30

High density commercial SAIFI 0.28 0.38 0.40 0.33 0.26 1 SAIDI 33 57 44 26 23 60

Urban and regional centres SAIFI 1.04 0.93 1.36 1.21 1.24 2 SAIDI 86 96 168 162 141 120

High density rural SAIFI 2.23 2.26 3.03 2.81 3.12 4 SAIDI 250 257 499 554 521 480

Low density rural SAIFI 3.64 3.39 4.24 3.91 3.86 6 SAIDI 486 531 718 900 725 600

During 2015-16, TasNetworks performed significantly under the TEC limits for SAIFI in all categories except Critical Infrastructure. TasNetworks attributes this poor performance to multiple switchgear and cable related asset failures over the year.

TasNetworks also exceeded the TEC SAIDI limit for all categories other than High Density Commercial during 2015-16. In most cases, this was due to MEDs caused by storms and floods. ENERGY IN TASMANIA REPORT 2015-16 29

Table 5.9 shows the number of individual communities in each category (aside from Critical Infrastructure) where TasNetworks failed to meet the TEC reliability of supply limits during 2015-16. Table 5.10 shows the total number of communities where TasNetworks failed to meet the TEC reliability of supply limits for 2015-16 and for the four preceding financial years.

Table 5.9 Individual community performance against TEC limits

SAIFI limit Non-complying SAIDI limit Non-complying Non-compliant communities communities in both measures High density commercial (8) 2 0 120 1 0 Urban and regional centres (32) 4 4 240 10 3 High density rural (33) 6 3 600 5 2 Low density rural (27) 8 1 720 8 1

Table 5.10 Non-complying communities– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Non-complying with SAIFI limits 7 6 11 8 8 Non-complying with SAIDI limits 15 17 37 39 24 Non-complying with both measures 4 5 10 8 6

Individual community performance reports are available in the 2015-16 EiT Performance Data Workbook on OTTER’s website.

5.3 Guaranteed service level

There has been a guaranteed service level (GSL) scheme in Tasmania since 1 January 2004. Under this scheme, TasNetworks must make payments to customers who experience supply interruptions greater than the reliability supply threshold set for their particular reliability category. Table 5.11 lists the current reliability supply thresholds for each of the five reliability categories, and the associated GSL payment amounts.

Table 5.11 Reliability supply thresholds and GSL payments

Timely restoration threshold (hours) Reliable supply threshold (number) Critical Infrastructure, High Density >8 >16 10 Commercial and Urban Higher Density Rural >8 >16 13 Lower Density Rural >12 >24 16 GSL Payment $80 $160 $80

Table 5.12 lists the number and amount of GSL payments made by TasNetworks during 2015-16 and for the preceding four financial years. Despite there being a greater number of MEDs in 2015-16 (six) compared to 2014-15 (five), TasNetworks’ total GSL payments in 2015-16 were considerably lower than in 2014-15 ($1 387 600 compared to $3 371 040). 30 ENERGY IN TASMANIA REPORT 2015-16

Table 5.12 GSL payments– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Timely Restoration payments >8 or 12 hours Payments made 4 732 9 503 12 406 14 426 8 016 $ paid 378 560 766 800 992 480 1 084 720 641 280 Timely Restoration payments >16 or 24 hours Payments made 1 187 1 912 10 005 13 514 3 631 $ paid 189 920 307 200 1 600 800 2 118 880 580 960

Reliable supply payments >10 Outages Payments made 439 711 1 442 928 1 477 $ paid 35 120 57 360 115 360 74 080 118 160

Reliable supply payments >13 Outages Payments made 1 342 2 470 1 803 380 394 $ paid 107 360 198 400 144 240 27 280 31 520

Reliable supply payments >16 Outages Payments made 961 1 344 1 009 899 196 $ paid 76 880 107 840 80 720 66 080 15 680

5.4 Complaints about quality and reliability of supply

TasNetworks reports to the Regulator on the performance of its complaints and claims handling processes. Table 5.13 shows the number of quality and reliability of supply complaints received by TasNetworks during 2015-16 and for the preceding four financial years.

Table 5.13 Complaints about supply quality and reliability– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

471 58615 712 537 479

The result for 2015-16 shows a continuation of the downward trend seen over the past three years in the number of complaints received by TasNetworks.

5.5 Quality of supply

Quality of supply refers to the quality of the electricity supply waveform. Deviations from the standard 230/400 volt, 50 Hertz supply waveform can cause interference or interruption to customers’ electricity usage. Several factors affect quality of supply including momentary voltage sags and swells, dips and spikes, harmonics, brownouts and other electrical noise or pollution. Table 5.14 presents TasNetworks’ distribution performance in terms of the various quality of supply indicators during 2015-16 and for the preceding four financial years.

15 Prior to 1 July 2013, Aurora Energy was the Tasmanian DNSP. The data for 2011-12 and 2012-13 was provided by Aurora Energy. ENERGY IN TASMANIA REPORT 2015-16 31

Table 5.14 Quality of supply performance indicators– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Over-voltage events due to high voltage16 injection 10 23 0 1 2 events

Customers receiving over-voltage due to high voltage 0 0 0 12 15 injection17

Over-voltage events due to lightning18 513 413 902 21 81

Customers receiving over-voltage due to lightning19 75 78 73 39 127

Over-voltage events due to voltage regulation or other 75 78 79 129 98 causes20

5.6 Customer service

TasNetworks gathers network performance information through its call centre and reports the information it receives back from field crews regarding faults, repairs undertaken and restoration details.

In August 2015, TasNetworks implemented a new fault messaging system called MMS. This application can place outage information on both call centre phones and the TasNetworks’ website. Customers are now able to input their postcode and receive outage information relating to their specific location, and the system can hold an unlimited number of specific outage messages. If the messages are not sufficient to meet a customer’s needs, or when a customer has a new fault to report, the customer can speak to a member of the fault centre team for assistance.

Table 5.15 lists the number of calls received by through TasNetworks’ fault centre during 2015-16 and for the previous four financial years.

Table 5.15 Number of calls to the fault centre– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Calls to fault centre 160 678 167 223 235 889 185 145 161 364

The continuing decrease in the number of calls received by the fault centre since 2013-14 is likely to reflect, at least to some extent, the improvements TasNetworks has made to its outage messaging system, including MMS.

16 High voltage injection events relate to reported incidents involving contact between HV and LV lines and pass through of transmission over-voltage events. 17 The number of customers receiving over-voltage due to high voltage injection is taken from the number of claims made by customers for damaged equipment relating to such events. 18 Over-voltage events due to lightning relates to the number of reported interruptions where the reported cause was lightning. 19 The number of customers receiving over-voltage due to lightning is taken from the number of claims made by customers for damaged equipment relating to those events. 20 Over-voltage events due to voltage regulation and other causes and number of customers receiving over-voltage due to those events are taken from the number of complaints attended where a recording of the supply voltage has verified the over-voltage situation. 32 ENERGY IN TASMANIA REPORT 2015-16

5.7 Customer Charter payments

Some of TasNetworks’ service standards carry a guarantee, which allows customers to claim a credit to their account within one month of TasNetworks failing to meet a specified service standard. These standards include:

 ensuring that new connections and reconnections are completed by the agreed date;

 providing at least four business days’ notice to customers of planned interruptions to supply; and

 ensuring that faulty streetlights are repaired inside seven business days.

Table 5.16 shows the number and amount of Customer Charter payments made by TasNetworks for 2015-16 and for the previous four financial years.

TasNetworks’ Customer Charter payments can vary considerably from year to year, though in recent years they have been trending downwards. Note that the number of eligible events for Customer Charter payments does not necessarily correlate with the number of payments made in any given year, as customers need to submit a claim to receive payment.

Table 5.16 Customer Charter payments– 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 New Connections Total 2 638 2 206 2 124 2 510 3 018 Completed by scheduled date 2 025 1 436 1 845 2 195 2 251 Customer Charter Payments 672 1 286 534 339 390 $ paid 81 390 134 140 61 210 36 120 41 670

Reconnections Total 32 166 33 302 33 337 30 348 29 913 Completed by scheduled date 31 828 33 066 32 998 29 209 29 851 Customer Charter Payments 0 0 0 0 0 $ paid 0 0 0 0 0

Planned interruptions Total 2 186 2 354 3 728 7 630 8 929 Customer Charter Payments 183 212 30 36 56 $ paid 5 810 6 360 1 020 1 130 1 860

Public Lights Faults reported 2 600 2 549 2 262 2 869 2 441 Faults repaired in 7 Days 1 414 2 002 1 894 2 416 1 312 Faults not repaired in 7 Days 1 186 547 339 338 1 129 Customer Charter Payments 14 15 13 14 11 $ paid 1 980 1 680 990 420 330 ENERGY IN TASMANIA REPORT 2015-16 33

5.8 Embedded generation

Embedded generators are small-scale generation units that connect directly to the distribution network, as distinct from large power stations that transport power into the distribution network via the transmission network. As the DNSP for Tasmania, TasNetworks must monitor and report on the number and capacity of embedded generation units connected to the Tasmanian distribution network.

5.8.1 Embedded generation over 0.5MW

As of 30 June 2016, there were 15 embedded generation units with a greater than 0.5 MW capacity connected to the Tasmanian distribution network. These units include small-scale hydro, biomass, natural gas and wind generators, and have a combined installed generation capacity of 31.42 MW with a 20.87 MW export capacity.

5.8.2 Photo-voltaic generation

As of 30 June 2016 there were 24 867 photo-voltaic generation units connected to the Tasmanian distribution network, with a total generating capacity of 87.5 MW. The number of embedded photo-voltaic units has increased every year since 2006, while the average capacity of photo-voltaic installations increased from 3.3 kW to 3.7 kW between 2014-15 and 2015-16.

Despite the continuing overall increase in embedded photo-voltaic generation, the number of customers applying to connect new photo-voltaic installations to the distribution network has fallen in recent years. This is likely due to the closing and grandfathering of the transitional Feed-in Tariff (FiT) rate for smaller embedded generation systems.

Table 5.17 summarises the details of embedded photo-voltaic generation units connected to the Tasmanian distribution network for 2015-16 and for the previous four financial years.

Table 5.17 Solar PV connections– 2011-12 to 2015-16 2011-12 2012-13 2013-14 2014-15 2015-16 Total generating capacity (MW) 15.7 34.5 62.8 85.8 87.5

Electricity supplied (GWh) 42.5 62.9 72.8

Amount paid to retailers for FiT ($millions) 12.87 13.02

Customers Connected at end of year 7 807 14 587 20 328 22 792 24 867

Transitional FiT rate 18 950 18 665 17 814

New connections 5 926 2 723 2 309 34 ENERGY IN TASMANIA REPORT 2015-16

In accordance with Division 5A of the ESI Act, many customers with embedded generation installations are entitled to a payment from their retailer for the electricity they export into the distribution network. Customers receive either the transitional FiT21 or the standard FiT for installations connected after that date. Customers are only entitled to receive the transitional FiT for billing periods or parts of billing periods ending before 1 January 2019. After that date, customers will be transferred to the standard FiT rate.

21 Transitional FiT customers are those customers that had a qualifying micro distributed generation system installed as at 31 August 2013; or customers that entered into a contract to install a qualifying new micro distributed generation system or extend an existing micro distributed generation system before 31 August 2013 and the new system or extension was installed and connected before 31 August 2014. For customers that had contracts to install or extend a system before 31 August 2013 an application must have also been lodged with and approved by the distributor (TasNetworks) by 31 August 2013. ENERGY IN TASMANIA REPORT 2015-16 35

6 BASSLINK PTY LTD

Basslink is a High Voltage Direct Current electricity interconnector that connects the Tasmanian power system to the Victorian power system via overhead transmission lines and a submarine cable. Basslink Pty Ltd (BPL) is the owner, operator and maintainer of the Basslink infrastructure. The Tasmanian Economic Regulator does not regulate BPL, but has licenced BPL as a transmission service provider.

Basslink allows the export of Tasmanian generated electricity into the NEM and the import of mainland generated power into Tasmania. This link provides a continuous rated export capacity of 500 MW from Tasmania and an import capacity up to a maximum of 480 MW22. A dynamic rated maximum capacity of up to 630 MW is available for limited periods within a 24-hour period for export only.

There are two contracts governing the operation of Basslink: the Basslink Operations Agreement (BOA), and the Basslink Services Agreement (BSA). These two agreements are independent of each other and contain different performance obligations for Basslink23. The BOA is the contractual mechanism between the State of Tasmania and the operators of Basslink and amongst other things, sets out Basslink’s performance targets. The BSA is the agreement between Hydro Tasmania and BPL. It establishes the rights and obligations of both parties regarding the operation of Basslink, and includes a number of financial incentives relating to Basslink’s performance in terms of its availability.

6.1 Basslink performance

The Regulator does not administer any performance measures for Basslink. BPL does however provide annual performance information to the Regulator as required under the conditions of Basslink’s transmission licence.

On Sunday 20 December 2015, a fault occurred on the Basslink submarine cable, resulting in the physical separation of Tasmania from the mainland power grid. Following a repair process which concluded on 14 June 2016, Basslink resumed normal operations. Investigations have yet to determine the exact cause of the outage, although the Tasmanian Government has stated that it was due to an internal fault and not the result of third party damage to the cable24.

On 22 June 2016, a separate unplanned outage caused Basslink to be unavailable for 2 074 minutes. This unplanned outage was caused by a protection trip at the Loy Yang converter station in Victoria. BPL was able to make repairs once fault analysis had been completed.

In the 2015-16 Performance Report it submitted to the Regulator, BPL reported that Basslink was available for 99.6 per cent of the time during 2015-16 as set out in Table 6.1. In reporting this figure, BPL excluded the 20 December 2015 to 14 June 2016 outage.

22 Measured at the Tasmanian connection point. 23 More detail on the contents of these agreements is available in An Independent Review of the Tasmanian Electricity Supply Industry Final Report Volume II, March 2012. The report is available at http://www.electricity.dpac.tas.gov.au/final_report. 24 Response by Vanessa Goodwin MLC to a question from Kerry Finch MLC during the proceedings of the Tasmanian Legislative Council 11 October 2016, as reported in Hansard. 36 ENERGY IN TASMANIA REPORT 2015-16

Table 6.1 Basslink performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Basslink availability (%) 98.67 99.89 98.77 98.71 99.60 Minutes unavailable 6 990 578 6 462 6 780 2 074 Total unplanned outages 3 5 4 2 1

6.2 Basslink flows

Basslink flows depend on Hydro Tasmania’s decisions to export or import electricity in response to NEM market conditions, though Hydro Tasmania can also use Basslink imports to provide security of supply during periods where electricity demand exceeds supply in Tasmania. An important determinant of Hydro Tasmania’s use of Basslink is differences in electricity spot prices between Tasmania and Victoria. Only in exceptional circumstances will Hydro Tasmania require Basslink to operate exclusively in one direction for a prolonged period. It is therefore common for Basslink to operate in both directions even during times when water storages in Tasmania are low.

Figure 6.1 shows Basslink flows for 2015-16. The Basslink outage occurred during a period when Basslink was predominately importing. This import activity reflected the state of Hydro Tasmania’s water storages due to the impact of reduced inflows during the spring and early summer of 2015-16.

Figure 6.1 Basslink flows - 2015-16 80 60 40 20 Basslink - Export 0 28 30 32 34 36 38 40 42 44 46 48 50 52 2 4 6 8 10 12 14 16 18 20 22 24 26 GWh -20 Basslink - Import -40 2015 2016 -60 -80 -100

Figure 6.2 shows annual Basslink flows for the 2005-06 to 2015-16 financial years. Figure 6.2 Annual Basslink flows – 2005-06 to 2015-16 4 000 3 000 2 000 Basslink exports 1 000

GWh Basslink imports 0 Energy transported -1 000 (GWh) -2 000 -3 000 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16

ENERGY IN TASMANIA REPORT 2015-16 37

7 AURORA ENERGY PTY LTD

Aurora Energy is the dominant electricity retailer in Tasmania. Aurora Energy provides both standing offer (regulated) and unregulated electricity products for customers on mainland Tasmania (including Bruny Island). Aurora Energy also retails natural gas.

Under the NECF that came into effect on 1 July 2014, electricity retailers in Tasmania no longer require a licence. However, in accordance with a direction issued under Regulation 13 of the Electricity Supply Industry Regulations 2008, the Regulator requires Aurora Energy to report on its retail performance on the same basis as that required by the Australian Energy Regulator (AER). Table 7.1 presents Aurora Energy’s electricity customer data for 2015-16 and for the preceding four financial years.

Table 7.1 Customers (electricity) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Standing Offer

Residential customers 190 494 194 901 199 487 204 936 209 762

Residential customers with a concession 72 030 74 177 76 325 77 581 (excluding APAYG customers)25

Small business customers 33 467 32 813 32 315 32 885 30 579

Market Offer

Residential customers (APAYG) 35 561 33 158 30 640 29 612 26 670

APAYG Customers with a concession26 15 751 14 253 14 701 13 829

Small business customers 3 497 3 550 3 671 2 996 5 479

Large business customers 1 723 1 816 2 036 1 761 1 753

7.1 Electricity retail performance

Table 7.2 presents a summary of Aurora Energy’s call centre performance for 2015-16 and for the preceding four financial years.

Table 7.2 Call centre performance (electricity) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Total calls 393 233 386 593 359 204 339 521 320 602

Calls answered in 30 seconds (%) 62.5 50.3 74.6 71.5 73.6

Average time to answer calls (seconds) 75 116 34 46 40

Calls abandoned (%) 6.6 10.3 2.2 2.8 3.0

25 Aurora Energy did not begin reporting this figure until 1 July 2012. 26 Aurora Energy did not begin reporting this figure until 1 July 2012. 38 ENERGY IN TASMANIA REPORT 2015-16

Table 7.3 presents a summary of Aurora Energy’s complaints performance for 2015-16 and for the preceding two financial years 27.

Table 7.3 Complaints performance (electricity) – 2013-14 to 2015-16

2013-14 2014-15 2015-16 Billing complaints 3 306 6 174 6 108

Marketing 14 2 0

Customer transfer 12 0 1

Other 974 1 895 1 909

Total 4 306 8 071 8 018

7.2 Electricity customers experiencing payment difficulties

The NECF requires that Aurora Energy provide alternative payment plans for customers experiencing financial difficulties. Aurora Energy also offers several payment options to help customers work through financial difficulties. Aurora Energy also runs the Your Energy Support (YES) program that provides affordable energy options for vulnerable households, and participates in the Centrepay scheme whereby customers receiving Centrelink payments can opt to have the cost of their bills automatically debited from their fortnightly Centrelink payments.

The number of customers who experienced payment difficulties for 2015-16 and for the preceding four financial years is shown in Table 7.4.

Table 7.4 Customers experiencing payment difficulties (electricity) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Centrepay customers28 5 329 5 787 6 142 6 682

Residential customers (excluding YES customers) 5 438 7 076 5 945 4 229 3 676 repaying a debt

Average amount of debt29 $800 $704 $706 $739

Small business customers repaying a debt 487 940 498 274 188

Average amount of debt $1 918 $1 136 $1 138 $885

Residential customers on payment plans 2 694 3 605 2 956 2 376 2 085

Customers on ‘YES’ program30 408 987 1 663 2 065

‘YES’ customers with concession31 371 780 1 345 1 632

27 Aurora Energy changed the way it records complaints during 2013-14, so it is not possible to make meaningful comparisons with data from earlier financial years. 28 Aurora Energy did not provide this option before 2012-13. 29 Aurora Energy did not begin reporting this figure until 1 July 2012. 30 Aurora Energy did not provide this option before 2012-13. 31 Aurora Energy did not provide this option before 2012-13. ENERGY IN TASMANIA REPORT 2015-16 39

7.3 Electricity disconnections and reconnections

Aurora Energy reports to the Regulator on the number of standard metered customers disconnected and/or reconnected to TasNetworks’ electricity distribution network. These numbers include customers using Aurora’s Pay As You Go (APAYG) option whose prepayment meters are able to provide connection information32.

Table 7.5 shows the number of Aurora Energy disconnections and reconnections made during 2015-16 and for the preceding four financial years.

Table 7.5 Disconnections and reconnections (electricity) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Disconnections

Residential 178 1 057 1 555 1 046 1 172

Business 11 53 125 68 83

Reconnections within seven days – same name

Residential 36 382 741 488 524

Business 1 8 22 20 24

Customers disconnected more than once in the 84 50 130 136 70 last 24 months

7.4 Electricity Community Service Agreements (CSA)

Community Service Agreements (CSA) are contractual arrangements between the Tasmanian Government and electricity retailers, under which retailers receive a subsidy in return for providing electricity price concessions to pensioners and Health Care Card holders. Aurora Energy received $38.4 million from the Tasmanian Government to fund its community service obligations during 2015-1633, compared to $37.2 million in 2014-15.

Table 7.6 details the CSA payments received by Aurora Energy during 2015-16 and for the preceding four financial years.

Table 7.6 Community Service Agreement payments received - 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 CSA payments ($million) 31.8 35.4 36.7 37.2 38.4

32 Currently, approximately 30 per cent of APAYG customers have meters that provide this information. 33 Aurora Energy 2016 Annual Report, page 56. 40 ENERGY IN TASMANIA REPORT 2015-16

7.6 Gas retail performance

In addition to its electricity retail activities, Aurora Energy also holds a licence to retail natural gas in Tasmania. Aurora Energy retails gas to approximately 35 per cent of the Tasmanian market.

Table 7.7 shows Aurora Energy’s gas customer data for 2015-16 and for the preceding four financial years. Table 7.8 presents a summary of Aurora Energy’s call centre and complaints performance for 2015-16 and for the preceding four financial years.

Table 7.7 Customer numbers (gas) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Residential customers 3 635 3 781 3 697 3 836 3 957

Business customers 124 128 117 119 121

Table 7.8 Call centre and complaints performance (gas) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Call Centre

Total calls 668 733 356 155 91

Calls answered in 30 seconds (%) 49% 49% 72% 72% 73%

Complaints 1 5 58 119 118

7.7 Gas customers experiencing payment difficulties

Aurora Energy reports to the Regulator on the number of its gas customers experiencing payment difficulties, as shown in Table 7.9.

Table 7.9 Customers experiencing payment difficulties (gas) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Residential customers 50 108 124 133 70

Average amount of debt ($) 461 721 500 569 276

Business customers 0 1 0 0 0

Average amount of debt ($) 0 1 685 0 0 0

ENERGY IN TASMANIA REPORT 2015-16 41

7.8 Gas disconnections due to bad debts and reconnections

Aurora Energy reports to the Regulator on the number of metered gas customers disconnected from TGN’s gas distribution network due to bad debts. Aurora Energy also reports to the Regulator on the number of customers subsequently reconnected to TGN’s gas distribution network.

Table 7.10 shows the number of Aurora Energy gas disconnections due to bad debts together with reconnections made during 2015-16 and for the preceding four financial years. Table 7.10 Disconnections due to bad debts and reconnections (gas) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Disconnections due to bad debts

Residential 9 0 42 53 6134

Business 0 0 0 1 0

Reconnections – same name

Residential 0 0 10 7 8

Business 0 0 0 0 0

34 Includes one disconnection made during 2015-16 due to suspected illegal access. 42 ENERGY IN TASMANIA REPORT 2015-16

8 TASMANIAN GAS PIPELINE PTY LTD

Tasmanian Gas Pipeline Pty Ltd (TGP) holds a pipeline licence (operations) in Tasmania and operates the Tasmanian Gas Pipeline (the pipeline). The pipeline transports natural gas from the Longford Plant in Victoria to Bridgewater in the south and Port Latta in the north-west, entering Tasmania via Bell Bay. Meter stations at various locations along the pipeline allow for connection to local distribution networks and for direct supply connections to major industrial customers.

Under the terms of its licence, TGP is required to report its annual performance data to the Regulator.

Table 8.1 shows TGP’s performance data for 2015-16 and for the previous four financial years.

Table 8.1 Performance data – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Target

Unplanned interruptions to supply 0 0 0 0 2 0

Third-party encroachments 0 0 1 1 1 <5

Unaccounted for gas losses 0.13% 1.1% 1.0% 1.35% 1.19% 1.0%

Environmental incidents 0 0 0 0 0 0

Maintenance plan compliance 100% 99.1% 99.4% 99.7% 96.0% 90%

There were two unplanned supply interruptions during 2015-16, one due to a maintenance error and the other due to a water heater shutdown at a major customer’s site. In response to these two incidents, TGP has completely reviewed its maintenance permit and work system, and upgraded the unit software in the water heater to ensure that these incidents do not re-occur.

TGP recorded a single third-party encroachment (ie some form of unauthorised work occurring within the pipeline easement) during 2015-16. This related to excavation by a property owner to remove a redundant irrigation system. Although the excavation crossed the pipeline at two points, it was too shallow to cause any damage.

Unaccounted for gas losses decreased from 1.35 per cent in 2014-15 to 1.19 per cent in 2015-16. Despite the improvement, this was above TGP’s long-term target of 1.0 per cent. TGP reported that this result was primarily due to low gas flows in the pipeline following the shutdown of peaker generation units at TVPS in May 2016. The Regulator understands that losses can also vary on a daily basis due to a range of factors.

ENERGY IN TASMANIA REPORT 2015-16 43

9 TAS GAS NETWORKS PTY LTD

TGN holds a distribution licence (operations) and maintains and operates the State’s gas distribution network, delivering gas to Tasmanian homes and businesses. The Tasmanian Gas Distribution Code requires TGN to submit to the Regulator an annual return on its performance against a range of measures specified in the Code.

Table 9.1 shows the quantity of natural gas distributed by TGN to its customers during 2015-16 and during the preceding four financial years.

TGN reports on the distribution of gas to customers consuming less than 10 tera joules (TJ) per annum (10 TJ is equivalent to 2.78 GWh) and, separately, in relation to customers consuming more than 10 TJ per annum.

Table 9.1 Gas distribution (GJ) – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

To customers consuming <10TJ 659 792 698 168 814 838 757 460 813 134

To customers consuming >10TJ 1 480 343 1 837 395 1 805 377 1 926 292 1 843 023

Unaccounted for gas (%) 0.25 1.84 -0.71 0.52 -1.57

In 2015-16, customers consuming over 10 TJ annually accounted for 69 per cent of total distributed gas. Nonetheless, the total consumption of distributed gas in Tasmania decreased slightly during 2015-16, due to the reduction in overall consumption by this customer group more than outweighing the increase in distribution to customers consuming less than 10 TJ.

The percentage of unaccounted for gas (ie gas lost from the distribution system) during 2015-16 was negative 1.57, indicating that customers consumed more gas than the distribution system actually delivered. This was due to a timing difference between the gas injected into the distribution system and the meters being read (the meters are read on a rolling quarterly cycle in arrears) as well as an ongoing metering error at several offtakes into the distribution system. At the time of writing, TGN was working through the latter issue with the offtake meter provider.

9.1 Customer numbers

There were 13 246 customers connected to TGN’s distribution network as at 30 June 2016. Only 35 of these customers consumed more than 10 TJ of gas during the year, all of the remaining 13 211 customers consumed less than 10 TJ. 44 ENERGY IN TASMANIA REPORT 2015-16

9.2 Customer complaints

Table 9.2 shows the number of natural gas distribution complaints made directly to TGN during 2015-16 and for the previous four financial years.

Table 9.2 Customer complaints made directly to Tas Gas Networks – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Detectability of gas by odour 132 112 128 111 181

Inadequate gas supply 4 5 3 4 6

Other 52 39 22 12 17

9.3 Reliability of supply

The Gas Distribution Code requires TGN to report on a number of reliability measures. These measures include performance in terms of both planned and unplanned interruptions to supply. Table 9.3 provides details of TGN’s reliability of supply performance for 2015-16 and for the preceding four financial years.

Table 9.3 Reliability of supply performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Planned interruptions 0 0 0 0 0

Unplanned interruptions

Affecting 0-5 customers 313 405 432 263 278

Duration (minutes) 17 310 35 862 31 555 18 917 16 534

Affecting 6-100 customers 3 1 1 2 2

Duration (minutes) 5 633 280 210 1 760 90

Average interruption duration per customer 56 86 71 78 59

Confirmed reports of no gas 313 406 433 265 280

Confirmed reports of no gas as % of the number of 3 3.7 3.7 2.1 2.1 connections

Instances of loss of supply to a geographical area 0 0 0 1 1

In 2015-16, there was a slight increase in the number of unplanned interruptions to gas supply. The single loss of supply to a geographical area was due to flooding at Invermay during June 2016.

ENERGY IN TASMANIA REPORT 2015-16 45

10 TAS GAS RETAIL PTY LTD

Tas Gas Retail (TGR) is a licensed retailer of natural gas in Tasmania and retails to approximately 65 per cent of Tasmanian gas customers. Table 10.1 shows TGR’s gas customer data for 2015-16 and for the preceding four financial years.

Table 10.1 Customer numbers – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Residential customers 5 488 6 258 6 545 7 146 8 355

Business customers 615 613 620 664 788

TGR changed the methodology it uses to extract customer data during 2015-16, to align its reporting more closely with the definition of “customer” under the Gas Act 2000. The Regulator understands that this change has contributed to some of the increase in customers numbers during 2015-16.

Table 10.2 presents a summary of TGR’s call centre and complaints performance for 2015-16 and for the preceding four financial years.

Table 10.2 Call centre and complaints performance – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Call Centre performance

Total calls 10 204 11 871 7 19735 36 8 17237

Calls answered in 30 seconds (%)38 87%

Complaints 78 83 44 33 30

10.1 Customers experiencing payment difficulties

TGR reports to the Regulator on the number of its customers experiencing payment difficulties, as shown in Table 10.3 for 2015-16 and for the preceding four financial years.

As shown on Table 10.3, there was a significant decrease in the number of customers experiencing payment difficulties in 2015-16 compared to 2014-15. TGR reported that it had been working on improving its customer service, especially in relation to early detection of customers in financial difficulty and by offering customers long term payment arrangements. The Regulator understands that this changed approach has led to this decrease during 2015-16.

35 Covers the period from July 2013 to December 2013 only. TGR moved to new offices in January 2014 with a phone system that did not have this reporting capability. 36 TGR was unable to provide call centre performance data for the 2014-15 financial year due to its phone system lacking this reporting capability. 37 Covers the period from November 2015 to June 2016 only. TGR was able to resolve its previous issues in reporting call centre performance during October 2015. 38 TGR’s phone system did not have the capacity to report this measure until November 2015. 46 ENERGY IN TASMANIA REPORT 2015-16

Table 10.3 Customers experiencing payment difficulties - 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16 Residential customers 1 559 1 942 2 705 1 621 1 082

Average amount of debt $308 $474 $585 $852 $843

Business customers 210 180 258 131 79

Average amount of debt $2 144 $3 174 $4 400 $6 116 $7 267

10.2 Disconnections due to bad debts and reconnections

TGR reports to the Regulator on the number of metered customers disconnected from TGN’s gas distribution network due to bad debts. TGR also reports to the Regulator on the number of customers subsequently reconnected to TGN’s gas distribution network.

Table 10.4 shows the number of disconnections due to bad debts together with the number of reconnections made during 2015-16 and for the preceding four financial years.

Table 10.4 Disconnections due to bad debts and reconnections – 2011-12 to 2015-16

2011-12 2012-13 2013-14 2014-15 2015-16

Disconnections due to bad debts

Residential 111 236 412 484 175

Business 6 25 19 42 9

Due to suspected illegal use of gas 2 1 0 3 2

Reconnections – same name

Residential 59 48 125 147 111

Business 2 4 1 21 4

As shown on Table 10.4, there was a significant decrease in the number of disconnections in 2015-16 compared to 2014-15. The Regulator understands that this decrease is due to the work TGR has been carrying out in identifying customers in financial difficulty.

ENERGY IN TASMANIA REPORT 2015-16 47

GLOSSARY OF TERMS

Term Meaning within the context of this report Australian Energy Market Commission. The AEMC is the rule maker for Australian electricity and gas markets. It makes and amends the National Electricity Rules, National AEMC Gas Rules and National Energy Retail Rules, and provides market development advice to governments. Australian Energy Market Operator. AEMO is responsible for operating Australia’s largest gas and electricity markets and power systems, providing critical planning, forecasting AEMO and power systems information, security advice, and services for governments and consumers. Australian Energy Regulator. The AER regulates wholesale and retail energy markets, and AER energy networks, under national energy legislation and rules. Its functions mostly relate to energy markets in eastern and southern Australia. Aurora Energy Tamar Valley Pty Ltd. AETV is a subsidiary company of Hydro Tasmania and AETV operates the Tamar Valley Power Station. Aurora Pay as You Go. APAYG is a prepaid electricity service available to Aurora Energy’s APAYG residential customers. Basslink Operations Agreement. The BOA is the contractual mechanism between the BOA State of Tasmania and the operators of Basslink and, among other things, sets out Basslink’s performance targets. BPL Basslink Pty Ltd. BPL is the owner, operator and maintainer of the Basslink infrastructure. Basslink Services Agreement. The BSA is the agreement between Hydro Tasmania and Basslink Pty Ltd. It establishes the rights and obligations of both parties regarding the BSA operation of Basslink, and includes a number of financial incentives relating to Basslink’s performance in terms of its availability. Bass Strait Islands. The BSI include Flinders and King Islands but exclude Cape Barren BSI Island. Customer Average Interruption Duration Index. CAIDI is a reliability indicator for electric CAIDI power utilities. It is a measure of the average outage duration experienced per customer per year, divided by the average number of outages experienced per customer per year. Capital expenditure. CAPEX refers to the cost of developing or providing non-consumable CAPEX parts to improve or expand a product, business or system. Combined Cycle Gas Turbine. A CCGT uses both a gas and a steam turbine and produces CCGT up to 50 per cent more electricity than a traditional gas-fired plant. The waste heat from the gas turbine heats the steam turbine, which generates extra power. 48 ENERGY IN TASMANIA REPORT 2015-16

Term Meaning within the context of this report Community Service Agreement. CSAs are contractual arrangements between the Tasmanian Government and electricity retailers, under which retailers receive a subsidy CSA in return for providing electricity price concessions to pensioners and Health Care Card holders. Community Service Obligation. The CSO provides direct concessions to Bass Strait Island CSO electricity customers who are pensioners, and subsidises the costs incurred by Hydro Tasmania in supplying electricity to Bass Strait Island customers. Distribution Network Service Provider. DNSPs manage the conversion of electricity from the high voltage transmission network into medium and low voltages, and the transport DNSP of electricity from points along the transmission lines to residential and business customers. Electricity Supply Industry Act 1995 (Tas). An Act to promote efficiency and competition in the electricity supply industry, to provide for a safe and efficient system of electricity generation, transmission, distribution and supply, to provide for the safety of electrical ESI Act installations, equipment and appliances, to enforce proper standards in the performance of electrical work, to protect the interests of consumers of electricity and for related purposes. Frequency Control Ancillary Services. Ancillary services are the specialty services and functions provided by the electricity grid that support the continuous flow of electricity FCAS and ensure supply can continually meet demand. FCAS does this by maintaining the frequency of electricity in the power system between normal operating bands. Feed-in Tariff. A FiT is a pricing mechanism whereby an electricity utility pays a customer FiT for the excess electricity generated by the customer’s micro distributed generation systems and exported to the grid. Guaranteed Service Level. Under the GSL scheme, TasNetworks must make payments to GSL customers who experience supply interruptions greater than the reliability supply threshold set for their particular reliability category. Gigawatt hour. A GWh is a measure of electrical energy equivalent to a power GWh consumption of one billion watts for one hour. HV High voltage. HV refers to voltage greater than 1 kilovolt. King Island Renewable Energy Integration Project. Hydro Tasmania delivered KIREIP with KIREIP the goal of increasing King Island’s renewable energy generation capacity and reducing its dependence on fossil fuels. kV Kilovolt. A kV is a unit of electromotive force equal to one thousand volts. Kilovolt ampere. A kVA is a unit of apparent power in an electrical circuit equal to one kVA thousand volt amperes. kW Kilowatt. A kW is unit of power equal to one thousand watts. Kilowatt hour. A kWh is a measure of electrical energy equivalent to a power consumption kWh of one thousand watts for one hour. ENERGY IN TASMANIA REPORT 2015-16 49

Term Meaning within the context of this report Loss of Supply. A LOS constitutes a short or long-term loss of electric power or natural gas LOS to an area. LV Low voltage. LV refers to voltage less than 1 kilovolt. Major Event Day. A MED is a day when, due to extreme events, the System Average MED Interruption Duration Index exceeds a certain threshold set by the Regulator (in 2015-16 that threshold was 6.24 minutes). MW Megawatt. A MW is unit of power equal to one million watts. Megawatt hour. A MWh is a measure of electrical energy equivalent to a power MWh consumption of one million watts for one hour. National Energy Customer Framework. The NECF is a suite of legal instruments that NECF regulate the sale and supply of electricity and gas to retail customers. National Electricity Market. The NEM comprises five regional market jurisdictions (Queensland, New South Wales, Victoria, NEM South Australia and Tasmania) connected by a number of interconnectors into a single alternating current system and associated synchronous electricity transmission grid.

National Electricity Rules. The NER govern the operation of the National Electricity NER Market. The Rules have the force of law, grounded under the National Electricity Law. Open Cycle Gas Turbine. An OCGT is a combustion turbine fired by liquefied gas that turns OCGT a generator rotor to produce electricity. Operational expenditure. OPEX refers to the ongoing cost of running and maintaining a OPEX product, business, or system. OTTER Office of the Tasmanian Economic Regulator. Photovoltaic. PV systems generate electric power by using solar cells to convert energy PV from the sun into a flow of electrons. System Average Interruption Duration Index. SAIDI is a reliability indicator for electric SAIDI power utilities. It is a measure of the average outage duration experienced per customer per year, reported in minutes. System Average Interruption Frequency Index. SAIFI is a reliability indicator for electric SAIFI power utilities. It is a measure of the average number of outages experienced per customer per year. Shenhua Clean Energy. SCE is a subsidiary of Shenhua Group Corporation Ltd, a leading SCE state-owned mining and energy company in the People’s Republic of China. It holds a 75 per cent share in Woolnorth Wind Farm Holding Pty Ltd. Service Target Performance Incentive Scheme. The purpose of the STPIS is to provide incentives to Transmission Network Service Providers to maintain and improve their level STPIS of service for the benefit of participants in the National Electricity Market and end users of electricity. 50 ENERGY IN TASMANIA REPORT 2015-16

Term Meaning within the context of this report Tasmanian Electricity Code. The TEC provides a statement of the relevant technical standards of the electricity supply industry, an access regime to facilitate new entry, TEC guidance on price setting methodologies, a means of resolving disputes that may arise and establishes advisory committees to assist the Regulator. Tas Gas Networks Pty Ltd. TGN holds a distribution licence (operations), and maintains TGN and operates Tasmania’s gas distribution network. Tasmanian Gas Pipeline Pty Ltd. TGP holds a pipeline licence (operations), and transports TGP natural gas from the Longford Plant in Victoria to Tasmania. TGR Tas Gas Retail Pty Ltd. TGR is a licensed retailer of natural gas in Tasmania. TJ Terajoule. A TJ is a unit of energy equal to one trillion joules. Transmission Network Service Provider. TNSPs manage the high voltage lines that TNSP transmit electricity to cities, towns and across state borders in the five interconnected jurisdictions of the National Electricity Market. Tamar Valley Power Station. TVPS is a thermal electricity generation facility consisting of TVPS a Combined Cycle Gas Turbine and four open cycle gas turbine units. Your Energy Support program. The YES program provides affordable energy options for YES Aurora Energy customers living in households that may struggle to pay their electricity program bills.

52 ENERGY IN TASMANIA REPORT 2015-16