APPLICATION NOTICE

2 July 2010

Maintaining a Reliable Electricity Supply within Central Queensland

Disclaimer

While care was taken in preparation of the information in this document, and it is provided in good faith, Powerlink accepts no responsibility or liability (including without limitation, liability to any person by reason of negligence or negligent misstatement) for any loss or damage that may be incurred by any person acting in reliance on this information or assumptions drawn from it, except to the extent that liability under any applicable Queensland or Commonwealth of Australia statute cannot be excluded.

This document has been prepared for the purpose of inviting information, comment and discussion from interested parties. The document has been prepared using information provided by a number of third parties. It contains assumptions regarding, among other things, economic growth and load forecasts which may or may not prove to be correct. Powerlink makes no representation or warranty as to the accuracy, reliability, completeness or suitability for particular purposes, of the information in this document. All information should be independently verified before assessing any investment proposals.

POWERLINK QUEENSLAND – APPLICATION NOTICE ADDRESSING RELIABILITY OF SUPPLY REQUIREMENTS IN NORTH AND FAR NORTH QUEENSLAND 2007-2010

DOCUMENT PURPOSE

For the benefit of those not familiar with the National Electricity Rules (Rules) and the National Electricity Market (NEM), Powerlink offers the following clarifications on the purpose and intent of this document:

1. The Rules require Powerlink to carry out forward planning to identify future reliability of supply requirements and to issue this type of document for “proposed new large network assets”.

2. The Rules require Powerlink to identify, evaluate and compare both network and non-network options (including generation and demand side management) to determine which can address the future supply requirements at the lowest cost to the market and hence to electricity consumers.

3. This document contains the results of this evaluation and a draft recommended solution to address future supply requirements from the summer of 2013/14. Registered Participants and interested parties are invited to comment on the draft recommendation.

What the document does NOT mean:

A. It does NOT mean that the lights are about to go out. The identified supply requirements are expected to arise some years into the future, assuming that demand for electricity continues to grow. There is enough time between now and then to implement a solution.

B. It does NOT mean that Powerlink has been surprised, or that anything is “out of the ordinary”. On the contrary, it is part of the normal, routine planning processes in the NEM.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 2

CONTENTS

EXECUTIVE SUMMARY ...... 4 1. INTRODUCTION ...... 7 2. BACKGROUND: EXISTING SUPPLY SYSTEM ...... 8 2.1 Geographical Area ...... 8 2.2 Existing Supply Arrangements ...... 8 2.3 Committed Network Developments ...... 9 2.4 Existing and Committed Generation Facilities ...... 9 3. Electricity Demand ...... 11 3.1 Overview ...... 11 3.2 Supply Requirement ...... 11 3.3 Pattern of Use ...... 12 4. Forecast Reliability of Supply Requirements ...... 13 4.1 Planning Criteria for Network Development ...... 13 4.2 Supply and Demand Assumptions...... 13 4.3 Description of Forecast Transmission Network Capability ...... 13 5. OPTIONS CONSIDERED ...... 15 5.1 Non Network Options ...... 15 5.2 Network Options ...... 15 5.2.1 Option 1 – 275kV double circuit line augmentation between Calvale and Larcom Creek (one circuit strung) and 275kV double circuit line rebuild from Larcom Creek to Gladstone ...... 17 5.2.2 Option 2 – 275kV double circuit line augmentation between Calvale and Larcom Creek and 275kV double circuit line rebuild from Larcom Creek to Gladstone ...... 19 5.2.3 Option 2a – 275kV double circuit line augmentation between Calvale and Larcom Creek (alternative circuit arrangement) ...... 21 5.2.4 Option 3 – 275kV double circuit line augmentation between Calvale and Stanwell (one circuit strung) ...... 22 5.2.5 Option 4 – 275kV double circuit line augmentation between Calvale and Stanwell ...... 24 6. SCENARIOS CONSIDERED ...... 26 6.1 Context for Evaluation of Options ...... 26 6.2 Assumed Market Development Scenarios ...... 27 6.2.1 Existing Network and Future Transmission Developments ...... 27 6.2.2 Variations in Load Increase ...... 27 6.2.3 Existing and Committed Generators and Demand Side Developments ...... 27 6.2.4 Potential New Generation ...... 28 7. FORMAT AND INPUTS TO ANALYSIS ...... 29 7.1 Regulatory Test Requirements ...... 29 7.2 Inputs to Analysis ...... 29 7.3 Cost of Network Augmentations ...... 29 8. FINANCIAL ANALYSIS ...... 30 8.1 Present Value Analysis ...... 30 8.2 Sensitivity Analysis ...... 30 8.3 Inter-Network Impact ...... 32 9. CONCLUSIONS ...... 33 10. DRAFT RECOMMENDATION ...... 34 11. CONSULTATION ...... 34

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 3

EXECUTIVE SUMMARY

Introduction

Electricity use in Queensland has exhibited strong growth during the past ten years. Notwithstanding the effects of the brief recent economic slowdown, demand is expected to continue to grow over the next ten years at approximately 2.7% per annum for the Central West and Gladstone zones, with the potential for significant additional mining related load, particularly in the Gladstone area.

Powerlink Queensland recognises the importance of maintaining a reliable electricity supply to its customers and has identified thermal limitations in the electricity transmission network arising within and between the Central West and Gladstone zones. Currently, thermal limitations are managed by operational strategies and redispatch of generation.

In November 2009, Powerlink published a Request for Information (RFI) inviting submissions from proponents of genuine and feasible network support services that maybe able to operate in conjunction with the transmission network to reliably supply forecast demand with respect to transfer capability between the Central West and Gladstone zones as well as beyond to North and South Queensland from mid-2010.

Three submissions were received from generation proponents in response to the RFI. Discussions were undertaken with these parties to better understand the potential options discussed in their submissions.

This Application Notice has been prepared as part of a prescribed process under the National Electricity Rules (NER) for the approval of proposed new large network assets. It contains the results of the planning investigation and economic assessment of feasible supply options. In accordance with the AER Regulatory Test, the supply solution that addresses the reliability requirements at the lowest present value cost is recommended for implementation.

Options Considered

Powerlink issued a Request for Information (RFI) document to Registered Participants and interested parties in November 2009 with respect to maintaining a reliable electricity supply within Central Queensland. The RFI invited submissions from potential non-network solution providers to address future supply requirements between the Central West and Gladstone zones as well as beyond to North and South Queensland by the anticipated required timing of summer 2013/14.

In addition to the RFI consultation process, network augmentation options to address the future supply requirements were developed.

Three submissions were received from generation proponents in response to the RFI. Discussions were undertaken with these parties to better understand the potential options discussed in their submissions. However, having given due consideration to the options offered, Powerlink has determined that either individually or collectively they were insufficient to address the future forecast supply requirements within Central Queensland.

Given the summer 2013/14 timeline and the lead times for transmission development, Powerlink needs to make decisions and commitments in the near future in order to meet its

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 4

reliability obligations. Therefore, in addition to the RFI consultation process, network augmentation options to address the future supply requirements were developed.

Powerlink carried out planning studies and financial analysis to evaluate both the required and feasible network solutions as well as identify the required timing for network augmentation. Powerlink has identified five feasible options to augment the transmission network within Central Queensland.

The following five network augmentation options were evaluated in detail to compare the present value of the costs to Registered Participants, in accordance with the Regulatory Test.

Option 1 275kV double circuit line augmentation between Calvale and Larcom Creek (one circuit strung) and 275kV double circuit line rebuild from Larcom Creek to Gladstone

Option 2 275kV double circuit line augmentation between Calvale and Larcom Creek and 275kV double circuit line rebuild from Larcom Creek to Gladstone

Option 2a 275kV double circuit line augmentation between Calvale and Larcom Creek (alternative circuit arrangement)

Option 3 275kV double circuit line augmentation between Calvale and Stanwell (one circuit strung)

Option 4 275kV double circuit line augmentation between Calvale and Stanwell

Evaluation and Conclusion

The AER Regulatory Test requires that, for reliability augmentations, the recommended option minimises the present value of costs, compared with a number of alternative options, in a majority of reasonable market development scenarios.

The economic analysis outlined in this Application Notice identifies Option 4, construction of a 275kV double circuit transmission line between Calvale and Stanwell by summer 2013/14, as the least-cost solution for the majority of credible scenarios considered over the twenty- five year analysis timeframe. Sensitivity analysis shows this result to be robust under a range of assumptions.

On the basis of the financial analysis and the sensitivity testing, Option 4 would satisfy the Regulatory Test. Consequently, this Application Notice contains a draft recommendation to implement Option 4 to meet the future supply requirements within Central Queensland. The proposed new large network asset comprises:

Construction of 101km of 275kV double circuit transmission line between the existing Calvale and Stanwell 275kV substations by summer 2013/14;

Establishment of two 275kV feeder full circuit breaker and a half bays at Calvale and Stanwell substations by summer 2013/14.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 5

The estimated capital cost of the recommended double circuit transmission line between Calvale and Stanwell is $104.7M in 2009/10 prices.

Powerlink invites submissions on this Application Notice from Registered Participants and interested parties. The closing date for submissions is 13 August, 2010.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 6

1. INTRODUCTION

Electricity demand in Queensland has exhibited strong growth during the past ten years and notwithstanding the effects of the brief recent economic slowdown, demand is expected to continue to grow over the next ten years, with the potential for significant additional mining related load, particularly in the Gladstone area.

Powerlink Queensland has identified thermal limitations in the electricity transmission network arising within and between the Central West and Gladstone zones. Currently, thermal limitations out of Calvale are managed by operational strategies and redispatch of generation to reduce power transfers1. To ensure an ongoing reliable electricity supply to customers in this area as well as beyond to North and South Queensland, Powerlink has undertaken routine planning studies to identify future supply requirements.

Based on the forecast load growth, Powerlink has identified that the operational schemes currently in place become insufficient to continue to meet peak demand. Action will be required from summer 2013/14 to ensure a continued reliable electricity supply, consistent with Powerlink‟s reliability of supply requirements.

This document has been prepared as part of a prescribed National Electricity Rules (NER) process for the approval of new large electricity network assets. Where a network service provider proposes to establish a new large network asset, it is required to issue an „Application Notice‟ under clause 5.6.6 of the NER2. This „Application Notice‟ must contain information regarding:

the reasons the augmentation is required, including, if relevant, why it is considered to be a „reliability augmentation‟ as defined in the NER; feasible options available to address the forecast reliability of supply requirements, including non-network alternatives; the recommended solution, including the timetable for implementation; and why the solution satisfies the Regulatory Test prescribed by the Australian Energy Regulator (AER).

This document contains a draft recommendation for works to be undertaken to meet reliability of supply obligations by the 2013/14 period. This draft recommendation is based on:

the assessment that a decision is now required to ensure a reliable power supply within Queensland; the consultation undertaken by Powerlink to identify potential solutions to address the forecast reliability of supply requirements; and analysis of feasible options in accordance with the Regulatory Test prescribed by the AER.

1 It may also be possible to re-rate the critical transmission lines to take account of favourable ambient weather conditions prevailing on the day, however this measure cannot be relied upon when planning for future supply capacity requirements, where typical conditions need to be assumed. 2 Under the current NER (version 37), clause 11.29.2 (a) provides that the old clause 5.6.6 (as contained in version 29 of the NER) and the regulatory test and the regulatory test application guidelines promulgated from time to time under clause 5.6.5A continue to apply in respect of transmission investments . POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 7

2. BACKGROUND: EXISTING SUPPLY SYSTEM

2.1 Geographical Area

The transmission network within and between the Central West and Gladstone zones is shown on the map below (Figure 1). The map illustrates the connections between Calvale and Stanwell, and Calvale and Wurdong.

Figure 1: Electricity transmission network in the Central West and Gladstone area.

2.2 Existing Supply Arrangements

Thermal limitations which occur within and between the Central West and Gladstone zones arise due to power transfer from the Central West zone to the Gladstone zone as well as beyond to North and South Queensland.

The actual transfer capacity of Powerlink‟s network between the Central West and Gladstone zones is described by limit equations which dynamically maximise the transmission capacity available to electricity market participants at any time. Power transfers are not allowed to exceed these limits, otherwise transmission plant may be thermally overloaded following critical single network contingencies.

The maximum power transfer across this grid section is set by the thermal rating of the Calvale to Wurdong or the Calvale to Stanwell 275kV circuits, or the Calvale 275/132kV

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 8

transformer. Thermal limitations which occur during periods of high power transfer are currently managed by operational strategies and redispatch of generation.

Powerlink identified in its 2009 Annual Planning Report that network limitations within Central Queensland may be addressed by a potential network augmentation involving the construction of a 275kV double circuit transmission line from Calvale to Stanwell.

2.3 Committed Network Developments

Committed works are detailed in Powerlink‟s 2009 Annual Planning Report. The most significant of these works are:

establishment of Larcom Creek 275/132kV Substation in late 2009 (recently completed); construction of a Larcom Creek to Yarwun 275kV transmission line (initially operated at 132kV in 2009 (recently completed); and installation of capacitor Banks at Gladstone and Moura during 2009/10.

2.4 Existing and Committed Generation Facilities

Generation in Queensland is a combination of coal fired, combustion turbine and hydro electric generators. As disclosed in the 2009 Annual Planning Report, Powerlink has been advised that the following generating station in the Central West and Gladstone zones is now committed:

Rio Tinto Aluminium (RTA) Yarwun (gas);

This recently committed change to supply capability in Queensland has been incorporated within Table 1.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 9

Table 1: Existing and Committed Plant connected to the Powerlink Transmission Network and Embedded Scheduled Generators

CAPACITY MW GENERATED (1) LOCATION WINTER SUMMER WINTER SUMMER WINTER SUMMER 2009 2009/10 2010 2010/11 2011 2011/12 Coal Fired Collinsville 187 187 187 187 187 187 Stanwell 1,446 1,390 1,453 1,397 1,460 1,404 Gladstone 1,680 1,680 1,680 1,680 1,680 1,680 Callide A (2) 0 0 0 0 0 0 Callide B 700 700 700 700 700 700 Callide Power Plant 900 900 900 900 900 900 Tarong North 443 443 443 443 443 443 Tarong 1,400 1,400 1,400 1,400 1,400 1,400 Swanbank B (3) 480 480 240 240 120 120 Kogan Creek 744 724 744 724 744 724 Millmerran 852 852 852 852 852 852 Total Coal Fired 8,832 8,756 8,599 8,523 8,486 8,410 Combustion Turbine Townsville 243 235 243 235 243 235 (Yabulu) Mt Stuart 288 387 415 387 415 387 Mackay 32 27 32 27 32 27 Barcaldine 36 36 36 36 36 36 RTA Yarwun (4) - - 167 152 167 152 Roma 68 54 68 54 68 54 Condamine 135 135 135 135 135 135 Oakey (5) 332 275 332 275 332 275 Swanbank E 370 350 370 350 370 350 Braemar 1 504 435 504 435 504 435 Braemar 2 519 462 519 462 519 462 Darling Downs (6) - 605 630 605 630 605 Total Combustion Turbine 2,527 3,001 3,451 3,153 3,451 3,153 Hydro Electric Barron Gorge 60 60 60 60 60 60 Kareeya (including 94 94 94 94 94 94 Koombooloomba) Wivenhoe (7) 500 500 500 500 500 500 Total Hydro Electric 654 654 654 654 654 654 Sugar Mills Invicta 39 39 39 39 39 39 TOTAL ALL STATIONS 12,052 12,450 12,743 12,369 12,630 12,256

Notes: (1) The capacities shown are at the generator terminals and are therefore greater than power station net sent out nominal capacity due to station auxiliary loads and step-up transformer losses. The capacities are nominal as the available rating depends on ambient conditions. Some additional overload capacity is available at some power stations depending on ambient conditions. (2) One generating unit of the Callide A Power Station is to be used in the CS Energy Oxyfuel Clean Coal Project. The experimental nature of this project makes it difficult to predict when this capacity will be available. (3) CS Energy has announced that Swanbank B will be progressively closed, with Units 4 and 2 to be placed in storage in May and June 2010, followed by Unit 1 in April 2011 and Unit 3 in April 2012. (4) Rio Tinto Alcan (RTA) Yarwun is expected to be commissioned in winter 2010. (5) Oakey Power Station is an open-cycle, dual-fuel, gas-fired power station. The generated capacity quoted is based on gas fuel operation. (6) Darling Downs Power Station was commissioned during summer 2009/10. (7) Wivenhoe Power Station is shown at full capacity (500MW). However output can be limited depending on water storage levels in the upper dam.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 10

In addition, there are also a number of small generators embedded in the distribution network that effectively reduce the demand on the transmission system when they are generating. This includes seasonal output from cogeneration facilities at several sugar mills and CSM generation located at several coal mines.

3. Electricity Demand

3.1 Overview

Powerlink coordinates a state-wide electricity demand forecast on an annual basis. Electricity demand forecasts for a ten-year period are obtained from Distribution Network Service Providers (DNSPs), that is ENERGEX, Ergon Energy and Country Energy, and customers at each connection point in Powerlink‟s transmission system. The forecasts take account of demand management programs in place or foreseen by DNSPs, and also the presence of embedded generation, which may reduce the forecast of demand which needs to be supplied via each transmission connection point.

Finalisation of the annual demand forecast includes comparing the local DNSP forecasts with an independent assessment of energy and demand forecasts for the Queensland region carried out by the National Institute of Economic and Industrial Research (NIEIR). This independent assessment includes a review of the impact of new embedded generation.

The electricity demand in Central Queensland is associated with industrial, commercial and residential loads, including development of infrastructure for new and expanded mining facilities – particularly for coal. Notwithstanding the effects of the brief recent economic slowdown, demand is expected to grow, albeit for the next year or two at a slower rate than previously forecast. Following this period, annual demand growth is forecast to return to long- term trend, with the potential for significant additional mining related load, particularly in the Gladstone area and in the Bowen Basin area.

The demand forecast detailed in Powerlink‟s Annual Planning Report 2010 has not included speculative industrial, coal mining or rail electrification loads in the Gladstone and Bowen Basin areas, even though there are a significant number of announced, but as yet uncommitted, development projects in those areas. In order to take account of a credible portion of these as yet uncommitted loads, additional development scenarios have been included in the study (refer to Section 6.2.2)

3.2 Supply Requirement

Electricity usage in Queensland has grown strongly during the past ten years, and subsequent to the abovementioned brief recent economic slowdown, this trend is likely to return to long-term growth over the next ten years.

Electricity demand is forecast to increase by approximately 4.2% per annum across the State, and 2.7% per annum for the Central West and Gladstone zones, over the next ten years.

At times of State peak demand, it is necessary for some of the output from the existing power stations in the Calvale area to flow to the north and east of Calvale in order to maintain a reliable electricity supply to customers across the State. Table 2 below indicates the requirement to export power out of the Calvale area, towards Stanwell and Gladstone, in order to meet future supply needs during an outage of one of the generating units at either the Stanwell or Gladstone Power Stations.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 11

Table 2: Power transfer supply requirements out of the Calvale area (excluding flow on Calvale-Tarong)

YEAR Stanwell PS Unit Gladstone PS Unit Out of Service Out of Service 2010/11 158 92 2011/12 520 452 2012/13 (1) 616 547 2013/14 959 889 2014/15 (2) 1021 973

Note: (1) ERM Braemar 3 Power Station has reached an advanced stage of commitment. Both 300MW units have been assumed to be in-service for summer 2012/13. (2) New capacity to supply total Queensland peak demand is assumed to be located in SWQ

3.3 Pattern of Use

Peak electricity demand in Queensland is experienced in summer, driven by high temperatures, industrial and air conditioning load. Power flows can also be higher during non-availability or low output of local generators, or if output from embedded generators is lower than forecast.

Figure 2 below shows the load profile for the most recent 2008/09 summer peak day and 2008 winter peak demand day delivered from the transmission grid.

Figure 2: State Peak Daily Load Curves - Summer and Winter 2008/09

9,000 Summer Peak 9 February 2009 8,000 Winter Peak 28 July 2008 7,000

6,000

5,000

4,000 Queensland Delivered Demand(MW) Queensland

3,000

0:30 1:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30

10:30 11:30 12:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 22:30 23:30 Half Hour Ending

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 12

4. Forecast Reliability of Supply Requirements

4.1 Planning Criteria for Network Development

Powerlink has reliability and quality of supply obligations under the National Electricity Rules, the Electricity Act, its Transmission Authority and connection agreements with customers. In particular, Powerlink must plan and develop its transmission system in accordance with good electricity industry practice, such that its network must be able to meet forecast electricity demand during an outage of the most critical single network element (known as the N-1 criterion), unless otherwise agreed with affected parties.

Powerlink assesses the future capability of its network and takes action to ensure it continues to meet these performance requirements. The forecast supply requirements relevant to the Central West and Gladstone zones are detailed in this section.

4.2 Supply and Demand Assumptions

In its assessment of future network capability, Powerlink has recognized the following characteristics regarding supply and demand.

Generation

- Account is taken of the dependence of sustained low rainfall conditions which can limit the ability of the hydro generators and coal-fired plant to operate at rated capacity for sustained periods; - The sugar mill generators do not usually operate during summer high demand periods as these occur after the sugar cane crushing season; - The open cycle combustion turbine generators generally have much higher operational costs than other generators due to the high cost of fuel; - The coal fired power station at Collinsville does not usually operate during weekends3; and - The Townsville CCGT does not normally operate on Sunday.

Demand The demand forecast is based on medium economic growth and hot weather conditions (10% PoE).

4.3 Description of Forecast Transmission Network Capability

During periods of high demand, maximum power transfer within and between the Central West and Gladstone zones may be limited by transmission plant thermal capacity following critical contingencies.

Significant industrial demand dominates the load in the Gladstone, Yarwun and Boat Creek areas. Planning studies indicate limitations in supporting northerly and easterly flows out of Calvale emerge in 2013/14 with increasing development load. The forecast growth in supply requirements out of Calvale outlined in Section 3.2 will increase loadings on the high voltage network within Central Queensland, and between the Central West and Gladstone zones.

3 Collinsville may currently operate on weekends under Powerlink‟s Network Support Agreements. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 13

Without action to augment supply, the transfer capability of this part of the transmission network will be insufficient to reliably meet forecast demand following critical contingencies.

The maximum power transfer out of the Calvale area (as shown in Figure 1) is set by the thermal rating of the Calvale to Wurdong or the Calvale to Stanwell 275kV circuits, or the Calvale 275/132kV transformer. Thermal ratings may be exceeded as a result of an outage of either the Stanwell or Wurdong 275kV single circuits which overloads the Calvale 275/132kV transformer and the remaining in-service 275kV circuit. Together with current operational strategies which control circuit loadings, sufficient capacity will be available in this network until summer 2013/14, from which time power flows on the Calvale to Wurdong or the Calvale to Stanwell 275kV circuits will exceed the emergency thermal ratings following an outage of the other circuit.

Operational strategies are managed in the first instance to ensure the security of the power system in accordance with Powerlink‟s obligations. Currently, thermal limitations out of Calvale to supply east and north are managed by operational strategies which include redispatch of generation to reduce power transfers.4 If available, operational strategies extend to opening of the 132kV lines north of Baralaba to limit transfers on the 132kV network delivering power to the north of the State via Blackwater. Planning studies indicate that due to the expected ongoing load growth, the operational schemes currently in place, will be insufficient to continue to meet peak demand.

One of the effects of these operational strategies is to limit the output of the Callide area generators in order to control power flow over the critical circuits out of Calvale. This limit on generator output at times of peak demand requires more expensive generation to operate to meet the demand for electricity. It also potentially requires investment in additional generating capacity earlier than would be required without the limitation. These costs are likely to be relevant when considering options to augment supply.

Based on committed generation and the need for additional supply transfer capability out of Calvale north and east, the operational strategies currently in place are forecast to become insufficient to manage these thermal limitations from summer 2013/14, and may result in an interruption to customer supply, unless action is undertaken to augment supply.

4 It may also be possible to re-rate the critical transmission lines to take account of prevailing ambient weather conditions on the day, however this measure cannot be relied upon when planning for future supply capacity requirements. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 14

5. OPTIONS CONSIDERED

Powerlink identified in its Annual Planning Report published in 2009, an expectation that action would be required to address thermal limitations occurring between the Central West and Gladstone zones. Relevant industry participants and interested parties were consulted in November 20095 regarding these thermal limitations and information was requested on potential non-network options that could address these requirements as an alternative to network augmentation.

The „Request for Information‟ Paper sought to identify feasible non-network options to address the forecast demand requirements between the Central West and Gladstone zones. Powerlink has considered the submissions to the RFI and information provided during subsequent discussions, regarding potential non-network options able to address the requirements from summer 2013/14. Discussion of these options follows.

5.1 Non Network Options

Three submissions were received in response to the Request For Information (RFI) consultation. Taken together, these submissions did not identify sufficient additional capacity to offer a genuine and practicable non-network option to address the future supply requirements within Central Queensland from summer 2013/14.

In order for a potential non-network solution to be considered as a genuine alternative to network augmentation, the solution must deliver reliability outcomes consistent with Powerlink‟s mandated reliability obligations and accept levels of liability similar to those provided by transmission network service providers.

Taking into consideration the following information, Powerlink has determined that the total capacity identified in the submissions received in response to the RFI is insufficient to meet supply requirements.

Ergon Energy Conservation and Demand Management – capacity from Barcaldine Power Station has already been included in Powerlink‟s planning studies ; CSR Sugar – capacity from the cogeneration plant at Pioneer Sugar Mill has already been factored into Powerlink‟s native demand forecast. Stanwell Corporation Limited – the uprating of 15MW for each unit does not provide sufficient additional capacity to reliably meet demand.

No information about new DSM initiatives in Central Queensland was received as part of the RFI consultation process.

5.2 Network Options

In addition to the consultation process to identify feasible non-network alternatives, Powerlink has carried out detailed planning studies to determine the most appropriate network option to address the forecast reliability of supply requirements. These studies included load flow analysis and other technical assessment to determine the capability of potential options to supply future customer electricity demands within Central Queensland.

5 Request for Information document Maintaining a Reliable Electricity Supply within Central Queensland published 12 November, 2009. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 15

This section provides an overview of the supply options identified to address the forecast reliability of supply requirements, with full details of the financial analysis contained in Appendix 2.

The five options comprise:

Proposed Options Considered

Option 1 275kV double circuit line augmentation between Calvale and Larcom Creek (one circuit strung) and 275kV double circuit line rebuild from Larcom Creek to Gladstone

Option 2 275kV double circuit line augmentation between Calvale and Larcom Creek and 275kV double circuit line rebuild from Larcom Creek to Gladstone

Option 275kV double circuit line augmentation between Calvale and Larcom Creek 2a (alternate circuit arrangement)

Option 3 275kV double circuit line augmentation between Calvale and Stanwell (one circuit strung)

Option 4 275kV double circuit line augmentation between Calvale and Stanwell

The economic analysis of options includes future anticipated/modelled projects that may be required to meet reliability obligations during the twenty-five year planning horizon. These anticipated and modelled projects are not recommended for development at this stage in this Application Notice but are included in the economic analysis to ensure that all feasible options are compared on an equivalent basis in accordance with the AER‟s Regulatory Test. The sensitivity of the analysis to these assumptions is tested through the use of market development scenarios. However, it should be noted that projects which are common (in both scope and timing) to all feasible options are excluded from the economic analysis as they have no impact on the ranking of results.

Each of the five feasible options is described below, together with the relevant anticipated/modelled projects6. Full details of the economic analysis are contained in Appendix 2.

6 The AER Regulatory Test defines „anticipated projects‟ as “projects … which have expected commissioning dates within five years” and „modelled projects‟ as “other investments which are likely to be commissioned in response to growing demand…”. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 16

5.2.1 Option 1 – 275kV double circuit line augmentation between Calvale and Larcom Creek (one circuit strung) and 275kV double circuit line rebuild from Larcom Creek to Gladstone Table 3: Option 1 Proposed Augmentation

Date Proposed Augmentation Cost Required ($m, 09/10)

Construction of: 76km of 275kV double circuit transmission line between the existing Calvale and Larcom Creek 275kV substations with one circuit strung $69.7 Establishment of: Two 275kV feeder full circuit breaker and a half bays at Summer Calvale and Larcom Creek 275kV Substations 2013/14 Construction of: Approximately 7.5km of 275kV double circuit transmission line between Gladstone (Calliope River) 275kV Substation and the Yarwun tee; and $39.0 Approximately 10km of 132kV double circuit transmission line between Larcom Creek 275/132kV and Yarwun 132kV Substations Associated substation works Total $108.7

The proposed augmentation for Option 1 comprises the construction of 76km of 275kV double circuit transmission line between Calvale and Larcom Creek 275kV Substations by summer 2013/14 and establishment of 275kV feeder breaker bays at Calvale and Larcom Creek Substations. Transmission line rebuilds from single circuit to double circuit will also be required between Calliope River 275kV Substation and the Yarwun tee (approximately 7.5km) and Larcom Creek 275/132kV to Yarwun tee (approximately 10km) to prevent overloading of the existing Larcom Creek to Gladstone 275kV single circuit (Figure 3). The estimated capital cost of this option is $108.7 million in 2009/10 prices. (This figure includes savings gained through economies of scale and contractor re-engagement costs by constructing both augmentations simultaneously.)

Option 1 increases the transmission capacity out of Calvale but is only effective for up to 7 years before an overload occurs due to an outage of the 275kV circuit between Calvale and Stanwell or between Larcom Creek and Bouldercombe.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 17

Anticipated/Modelled Projects

Date Anticipated/Modelled Projects Cost Required ($M, 09/10) Summer 275kV double circuit line augmentation between Wurdong and 2018/19 Gladstone (string second circuit)7 $11.1 Summer 275kV double circuit line augmentation between Calvale and 2020/21 Stanwell (one circuit strung) $90.3 Summer 275kV double circuit line augmentation between Calvale and 2026/27 Stanwell (string second side) $31.6 Summer 275kV double circuit line augmentation between Calvale and 2032/33 Larcom Creek (string second side via Bouldercombe) $34.2

Figure 3: Option 1 Proposed network augmentation

Broadsound 275 kV

Stanwell 275kV

Bouldercombe 275kV

Larcom Creek 275 kV

Gladstone 275 kV

Calvale 275 kV

Wurdong 275kV

Callide A 132 kV

Gin Gin 275 kV

7 Under a high growth scenario, in order to maintain system reliability to the Boyne Island area, this modelled project may be replaced by construction of a loop into Wurdong with an approximate cost of $19.1 million. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 18

5.2.2 Option 2 – 275kV double circuit line augmentation between Calvale and Larcom Creek and 275kV double circuit line rebuild from Larcom Creek to Gladstone Table 4: Option 2 Proposed Augmentation Date Proposed Augmentation Cost Required ($M, 09/10)

Construction of: 76km of 275kV double circuit transmission line between the existing Calvale and Larcom Creek 275kV substations; Establishment of:

Two 275kV breaker and a half diameters (2 circuit breakers) $91.2 at Calvale Substation; and 275kV breaker and a half diameter (2 circuit breakers) and complete breaker and a half diameter (1 circuit breaker) at Summer Larcom Creek 275kV Substation 2013/14 Construction of: Approximately 7.5km of 275 double circuit transmission line between Gladstone (Calliope River) 275kV Substation and the Yarwun tee; and Approximately 10km of 132kV double circuit transmission $39.0 line between Larcom Creek 275/132kV and Yarwun 132kV Substations Associated substation works

Total $130.2

The proposed augmentation for Option 2 involves construction of 76km of 275kV double circuit transmission line between Calvale and Larcom Creek 275kV Substations and establishment of 275kV feeder bays at Calvale and Larcom Creek Substations. Transmission line rebuilds from single circuit to double circuit will also be required between Gladstone (Calliope River) 275kV Substation and the Yarwun tee (approximately 7.5km) and Larcom Creek 275/132kV and Yarwun tee (approximately 10km) to prevent overloading of the existing Larcom Creek to Gladstone 275kV single circuit (Figure 4). The estimated capital cost of this option is $130.2 million in 2009/10 prices. (This figure includes savings gained through economies of scale and contractor re-engagement costs by constructing both augmentations simultaneously.)

As with Option 1, Option 2 increases the transmission capacity out of Calvale but is only effective for up to 7 years before an overload occurs due to an outage of the 275kV circuit between Calvale and Stanwell or between Larcom Creek and Bouldercombe.

Anticipated/Modelled Projects

Date Anticipated/Modelled Projects Cost Required ($M, 09/10) Summer 275kV double circuit line augmentation between Wurdong and 2018/19 Gladstone (string second circuit) 7 $11.1 Summer 275kV double circuit line augmentation between Calvale and 2020/21 Stanwell (one circuit strung) $90.3 Summer 275kV double circuit line augmentation between Calvale and 2027/28 Stanwell (string second side) $31.6 Summer Circuit Configuration Calvale to Larcom via Bouldercombe 2033/34 $2.0

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 19

Figure 4: Option 2 Proposed network augmentation

Broadsound 275 kV

Stanwell 27 kV

Bouldercombe 275kV

Larcom Creek 275 kV

Gladstone 275 kV

Calvale 275 kV

Wurdong 275kV

Callide A 132 kV

Gin Gin 275 kV

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 20

5.2.3 Option 2a – 275kV double circuit line augmentation between Calvale and Larcom Creek (alternative circuit arrangement) Table 5: Option 2a Proposed Augmentation

Date Proposed Augmentation Cost Required ($m, 09/10)

Construction of: 76km of 275kV double circuit transmission line between the existing Calvale and Larcom Creek 275kV substations (alternative circuit arrangement). Summer Establishment of: 2013/14 Two 275kV breaker and a half diameters (2 circuit breakers) $96.1 at Calvale Substation; and 275kV breaker and a half diameter (2 circuit breakers) and complete breaker and a half diameter (1 circuit breaker) at Larcom Creek 275kV Substation

Total $96.1

The proposed augmentation for Option 2a involves construction of 76km of 275kV double circuit transmission line between Calvale and Larcom Creek 275kV Substations via the Bouldercombe tee and establishment of two 275kV feeder bays at Calvale and Larcom Creek Substations (Figure 5). The estimated capital cost of this option is $96.1 million in 2009/10 prices.

As with Options 1 and 2, Option 2a increases the transmission capacity out of Calvale but is only effective for up to 9 years before an overload occurs due to an outage of the 275kV circuit between Calvale and Stanwell or between Larcom Creek and Bouldercombe

Anticipated/Modelled Projects

Date Anticipated/Modelled Projects Cost Required ($M, 09/10) Summer 2016/17 275kV double circuit line rebuild from Larcom Creek to Gladstone $54.0 Summer 275kV double circuit line augmentation between Wurdong and 2018/19 Gladstone (string second circuit)7 $11.1 Summer 275kV double circuit line augmentation between Calvale and 2022/23 Stanwell (one circuit strung) $90.3 Summer 275kV double circuit line augmentation between Calvale and 2028/29 Stanwell (string second side) $31.6

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 21

Figure 5: Option 2a Proposed network augmentation

Broadsound 275 kV

Stanwell 275 kV

Bouldercombe 275 kV

Larcom Creek 275 kV 855

Gladstone 275 kV

Calvale 275 kV

Wurdong 275 kV

Callide A 132 kV

Gin Gin 275 kV

5.2.4 Option 3 – 275kV double circuit line augmentation between Calvale and Stanwell (one circuit strung) Table 6: Option 3 Proposed Augmentation

Date Proposed Augmentation Cost Required ($m, 09/10) Construction of: 101km of 275kV double circuit transmission line between the existing Calvale and Stanwell 275kV substations (one circuit Summer $90.3 strung) 2013/14 Establishment of: Two 275kV breaker and a half diameters (2 circuit breakers) at Calvale and Stanwell substations Total $90.3

The proposed augmentation for Option 3 comprises construction of a 101km 275kV double circuit transmission line between Calvale and Stanwell with one circuit strung and the associated substation works of establishing one 275kV feeder bays at both Calvale and Stanwell, by summer 2013/14 (Figure 6). The estimated capital cost of this option is $90.3 million in 2009/10 prices. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 22

This option would provide an additional power path between the Central West and Gladstone zones which will assist in reducing the loadings on the existing transmission lines (ie – the power flow is shared over more lines), thereby addressing thermal limitations in the existing network out of Calvale for approximately four years. This will result in increased system stability as well as increase the capability of the transmission network out of Calvale to the north and east.

Anticipated/Modelled Projects

Date Anticipated/Modelled Projects Cost Required ($M, 09/10) Summer 2017/18 Calvale 2nd 275/132kV Transformer $10.1 Summer 275kV double circuit line augmentation between Wurdong and 2018/19 Gladstone (string second circuit)7 $11.1 Summer 275kV double circuit line augmentation between Calvale and 2020/21 Stanwell (string second side) $31.2 Summer 275kV double circuit line augmentation between Calvale and 2032/33 Larcom Creek (alternate circuit) $96.1

Figure 6: Option 3 Proposed network augmentation

Broadsound 275 kV

Stanwell 275kV

Bouldercombe 275kV

Larcom Creek 275 kV

Gladstone 275 kV

Calvale 275 kV

Wurdong 275kV

Callide A 132 kV

Gin Gin 275 kV

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 23

5.2.5 Option 4 – 275kV double circuit line augmentation between Calvale and Stanwell Table 7: Option 4 Proposed Augmentation Date Proposed Augmentation Cost Required ($m, 09/10) Construction of: 101km of 275kV double circuit transmission line between the Summer existing Calvale and Stanwell 275kV substations; and $104.7 2013/14 Establishment of: Two 275kV feeder full circuit breaker and a half bays at Calvale and Stanwell substations Total $104.7

The proposed augmentation for Option 4 comprises construction of a 101km 275kV double circuit transmission line between Calvale and Stanwell and the associated substation works of establishing two 275kV feeder full circuit breaker and a half bays at both Calvale and Stanwell, by summer 2013/14 (Figure 7). The estimated capital cost of this option is $104.7 million in 2009/10 prices.

As with Option 3, Option 4 would provide an additional power path between the Central West and Gladstone zones which will reduce loadings on the existing transmission lines (ie – the power flow is shared over more lines), thereby addressing thermal limitations in the existing network out of Calvale. This will result in increased system stability as well as increase the capability of the transmission network out of Calvale to the north and east.

Anticipated/Modelled Projects

Date Anticipated/Modelled Projects Cost Required ($M, 09/10) Summer 2017/18 Calvale 2nd 275/132kV Transformer $10.1 Summer 275kV double circuit line augmentation between Wurdong and 2018/19 Gladstone (string second circuit)7 $11.1 Summer 275kV double circuit line augmentation between Calvale and 2032/33 Larcom Creek (alternate circuit) $96.1

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 24

Figure 7: Option 4 Proposed network augmentation

Broadsound 275 kV

Stanwell 275 kV

Bouldercombe 275kV

Larcom Creek 275 kV

Gladstone 275 kV

275 kV

Wurdong 275kV

Callide 132 kV A

Gin Gin 275 kV

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 25

6. SCENARIOS CONSIDERED

The Regulatory Test requires the costs and benefits of options to be assessed under a range of reasonable market development scenarios. The scenarios are required to consider forecasts of: demand for electricity (modified where appropriate to take into account demand-side options, economic growth, weather patterns and price elasticity); efficient operating costs of supplying energy to meet forecast demand from existing and future transmission and generation developments; avoidable costs of future transmission and generation developments; ancillary services costs; and capital and operating costs of other network augmentations consistent with the forecast demand and generation scenarios.

6.1 Context for Evaluation of Options

All feasible options to the identified supply requirements must be viewed in the context of wider developments in the National Electricity Market:

Queensland legislation has been in effect since 1 January 2005 requiring Queensland energy retailers to source 13% of their energy from gas-fired generation. The 13% Gas Scheme is designed to deliver on the government policy objectives of diversifying the State's energy mix towards a greater use of gas and encouraging new gas infrastructure in Queensland, while reducing the growth in greenhouse gas emissions. The Queensland government announced in 2007 a policy to increase the requirement for gas fired generation from 13% to 18% by 2020. This policy announcement also includes an increase in generation from renewable energy sources to 10% of generation by 2020; Commonwealth legislation has been in effect since 1 January 2001 to encourage increased generation from renewable energy sources. Commonwealth Policy now increases this target to 20%. Ergon Energy and Powerlink have incorporated independent forecasts of additional renewable energy generation into the forecasts of demand and energy used in assessing future supply requirements; and AEMO‟s Statement of Opportunities (SOO) issued in August 2009 contained information on existing and committed generation developments in Queensland. There is currently a considerable margin between supply capacity and demand, with several large new generating units having been commissioned in Queensland in the past few years. Other committed generation plant is currently under construction. It is expected that increasing electricity demand in Queensland may lead to the commissioning of new, as-yet uncommitted generation from 2012/13 and beyond.

The implementation details of the Commonwealth Government‟s proposed Carbon Pollution Reduction Scheme (or any other similar scheme as may be appointed) are still being developed. However, it is anticipated that, over a period of time following implementation of the scheme (originally mooted for 2013), changes to generator operation and new generation investment is likely to occur and impact the National Electricity Market. A likely indirect impact is that the cost of transmission losses would increase, reflecting the cost of emissions certificates for power stations.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 26

6.2 Assumed Market Development Scenarios

The AER‟s Regulatory Test requires that options to address network requirements be assessed against a number of plausible scenarios. These scenarios need to consider:

The existing system; Future network developments; Variations in load growth; Committed generation and demand side developments; and Potential generation and demand side developments.

The purpose of this approach is to test the present value costs of the solutions being evaluated under a range of plausible scenarios.

6.2.1 Existing Network and Future Transmission Developments No market development scenarios have been developed related to new network developments proposed by Powerlink outside Central Queensland. These are independent of the future supply requirements that are the subject of this report and are considered to be common to all options analysed. Future network developments that are relevant to Central Queensland have been included as anticipated/modelled projects in the analysis.

6.2.2 Variations in Load Increase

As there is the prospect of significant additional demand developments in the Gladstone area, five different levels of demand growth were examined to consider sensitivity to variations in forecast customer electricity demand. The additional scenarios which Powerlink considers it is reasonable to include with respect to this additional demand include Medium growth+200MW in the Gladstone development area and Medium growth+150MW in North Queensland for as yet uncommitted industrial developments. The Medium growth+200MW and the Medium growth+150MW scenarios represent credible proportions of as yet uncommitted mineral processing, coal mining and electrified transport developments in the respective areas.

Scenario Forecast Demand Growth Scenario A Medium growth,10% PoE Scenario B High growth, 10% PoE Scenario C Low growth, 10% PoE Scenario D Medium growth, 10% PoE +200MW Gladstone Scenario E Medium growth, 10% PoE +150MW North Queensland

The forecasts include all known information about existing and planned demand side initiatives, and include independent forecasts of existing and planned local embedded generation.

6.2.3 Existing and Committed Generators and Demand Side Developments

A list of power stations currently operating in Central and North Queensland was provided in Section 2.4 (Table 1). These power stations operate in the competitive National Electricity Market and offer generation capacity to the electricity market. This normal market operation has been accounted for in the analysis.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 27

Powerlink is not aware of any other committed generators proposing establishment in Central Queensland. For this reason, no scenarios have been developed in which the output of existing and/or committed generators is increased. Similarly there are no committed DSM initiatives, either from individual providers or aggregators, relevant to meeting the reliability of supply requirements within Central Queensland. Demand forecasts reflect existing embedded generation and existing DSM in Central Queensland.

6.2.4 Potential New Generation AEMO‟s 2009 Electricity Statement of Opportunities (ESOO) indicated that additional investment in major generation may be required in the medium term. However, Powerlink is not aware of any well-advanced proposals for major new stand-alone generators in the Central Queensland area, hence no market development scenarios have been developed to consider the establishment of major new stand-alone generators in the Central Queensland area.

Smaller local generation or demand side developments may occur in the Central Queensland area, however Powerlink is unaware of any developments likely to affect the required timing for network augmentation addressed by this Application Notice.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 28

7. FORMAT AND INPUTS TO ANALYSIS

7.1 Regulatory Test Requirements

The requirements for the comparison of options to address future supply requirements are contained in the AER‟s Regulatory Test8.

The Regulatory Test requires that, for reliability augmentations to the shared network9, the recommended option be the option that “minimises the present value of costs, compared with a number of alternative options in a majority of reasonable scenarios”.

The AER has also published the Regulatory Test Application Guidelines that provide guidance on the operation and application of the Regulatory Test. From this, costs of options include construction, operating and maintenance costs, the cost of complying with existing and anticipated laws and regulations, and reasonable forecasts of the “efficient operating costs of competitively supplying energy to meet forecast demand”. However, the Regulatory Test specifically excludes indirect costs and costs that cannot be measured as a cost in terms of financial transactions in the electricity market.

7.2 Inputs to Analysis

A solution to meet future supply requirements within Central Queensland as outlined in this document is required to satisfy reliability requirements linked to Schedule 5.1 of the NER, the requirements of the Queensland Electricity Act and Powerlink‟s Transmission Authority10.

According to the AER‟s Regulatory Test, this means that the costs of all options must be compared, and the least cost solution is considered to satisfy the Regulatory Test. The results of this evaluation, carried out using a discounted cash flow model to determine the present value (PV) cost of the various options, are shown in Section 10.

Cost inputs to the economic analysis are described below.

7.3 Cost of Network Augmentations

The cost to implement each of the feasible network options and anticipated/modelled projects outlined in Section 7 have been estimated by Powerlink. Sensitivity studies have been carried out using variations in the total cost estimates of plus or minus 15% (see Section 10.2).

The financial analysis considers all cost impacts of the transmission options to market participants as defined by regulatory processes. The estimated saving in the cost of network losses for each option has been based on equations that predict network losses from local generation and load levels, and an average cost of losses of $25/MWh11. Sensitivity studies have also been carried out on the assumed cost of losses (see Section 10.2).

8 Powerlink is required to evaluate solutions for new transmission developments under the Regulatory Test in accordance with clause 5.6.6 of the National Electricity Rules. 9 Where an option is necessitated principally by the inability to meet the minimum network performance requirements set out in schedule 5.1 of the Rules or in relevant legislation, regulations or any statutory instrument of a participating jurisdiction. 10 Refer Section 4. 11 Network losses are a function of the dimensions and composition of individual network elements, and the power being transferred through them. In heavily loaded systems, additional network elements reduce the amount of power that must be forced through the existing network, and whilst introducing a new loss element, it results in an overall reduction in total losses.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 29

8. FINANCIAL ANALYSIS

The economic analysis undertaken considered the present value cost of alternative options over the twenty-five year period from 2009/10 to 2034/35. Full details of this analysis are contained in Appendix 2.

8.1 Present Value Analysis

Financial analysis was carried out to calculate and compare the present value cost of each option to market participants under the range of assumed market development scenarios.

A discount rate of 9% was selected as a relevant commercial discount rate, and sensitivity analysis was conducted to test this assumption.

Under the Regulatory Test, it is the ranking of the options which is important, rather than the actual present value results. This is because the Regulatory Test requires the recommended option to have the lowest present value cost compared with alternative projects.

The following table is a summary of the economic analysis contained in Appendix 2. It shows the present value cost of each alternative, and identifies the best ranked option, for the range of scenarios considered.

Scenario A Scenario B Scenario C Scenario D Scenario E Medium Load High Load Low Load Medium Load Medium Load Growth, 10% Growth, 10% Growth, 10% Growth, 10% Growth, 10% PoE PoE PoE PoE+ 200MW PoE+ 150MW Gladstone North Discount rate 9% Queensland PV ($M) Rank NPV PV ($M) Rank NPV PV ($M) Rank NPV PV ($M) Rank NPV PV ($M) Rank NPV

Option 1 Calvale to Larcom Creek 275kV DCST (one side strung) $109.52 3 29.421 $165.48 4 38.591 $47.07 4 6.857 $108.38 3 28.284 $121.43 3 39.900

Option 2 Calvale to Larcom Creek 275kV DCST $121.82 5 41.719 $171.32 5 44.434 $56.68 5 16.463 $119.39 5 39.292 $133.72 4 52.194

Calvale to Larcom Creek 275kV DCST (alternate circuit Option 2a arrangement) $117.07 4 36.973 $137.66 3 10.769 $40.85 2 0.635 $117.61 4 37.510 $149.79 5 68.262

Option 3 Calvale to Stanwell 275kV DCST (one side strung) $82.60 2 2.499 $134.74 2 7.856 $40.21 1 0.000 $87.92 2 7.816 $87.18 2 5.654

Option 4 Calvale to Stanwell 275kV DCST $80.10 1 0.000 $126.89 1 0.000 $45.50 3 5.291 $80.10 1 0.000 $81.53 1 0.000

An option satisfies the AER Regulatory Test if it minimises the present value cost in the majority of market development scenarios considered. From the table above, it can be seen that Option 4 satisfies this requirement.

8.2 Sensitivity Analysis

In addition to examining the impact of a range of reasonable scenarios, the sensitivity of the option ranking to other critical parameters was also examined.

The effect of varying these parameters over their credible range was investigated using standard Monte Carlo techniques . Table 8 shows the parameters that were investigated in the sensitivity analysis, the distribution that was assumed for each and the range of values.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 30

Table 8: Parameters investigated in sensitivity analysis

Parameter Distribution Total Cost of The total cost of the proposed augmentation was tested for Transmission sensitivity to variations of plus or minus 15% from the Augmentation expected value. The variation in each cost was modelled as a triangular distribution with the assumption that the costs are statistically independent. This means that the cost of each network component is allowed to vary within plus and minus 15% independently of the over or underspend of the other components.

Cost of losses The sensitivity to the average cost of losses was tested by allowing this parameter to vary randomly between $20/MWh and $30/MWh using a triangular distribution with a mode of $25/MWh.

The Monte Carlo analysis assigns a value to each of the above parameters according to its distribution and then ranks the options. This simulation is done many times (in this case, 1,000 times) to cover a large number of combinations of parameters. The analysis identifies which option is the best ranked option (the option that has the lowest cost on a PV basis for the largest number of samples) and gives the frequency for which this option 'wins'.

The sensitivity of network support costs to changes in weather conditions, economic outlook and possible establishment of new generation plant requirements in Central Queensland was tested through the use of market development scenarios.

In addition to the above sensitivities, the sensitivity of the ranking of options to the discount rate assumption was also investigated by repeating the above analysis with a discount rate of 7%, 9% and 11%. Table 19 below shows the 'winning option' (i.e. Option 4) and the frequency for which it 'wins' for each scenario and discount rate across the range of parameters assessed.

Table 9: Results of sensitivity analysis for varying discount rates

Discount Rate 7% 9% 11% Scenario A - Medium Load Growth, 10% PoE 4 (72%) 4 (67%) 4 (62%) Scenario B - High Load Growth, 10% PoE 4 (91%) 4 (89%) 4 (87%) Scenario C - Low Load Growth, 10% PoE 3 (56%) 3 (56%) 3 (55%) Scenario D - Medium Load Growth, 10% PoE+ 4 (93%) 4 (92%) 4 (90%) 200MW Gladstone Scenario E - Medium Load Growth, 10% PoE+ 4 (87%) 4 (84%) 4 (80%) 150MW North Queensland

As can be seen in this table, the results of the sensitivity analysis are consistent with the base case economic analysis and the outcome is robust in terms of the variations in parameters assessed.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 31

On the basis of the financial analysis and the sensitivity testing, Option 4 is the option that satisfies the AER Regulatory Test. Details of the scope of proposed works included in Option 4 are provided in Appendix 1.

8.3 Inter-Network Impact

Powerlink is required under the National Electricity Rules to assess whether a proposed new large network asset is reasonably likely to have a material inter-network impact. Powerlink has determined that the option which satisfies the Regulatory Test will not impose power transfer constraints or adversely impact on the quality of supply within the adjacent New South Wales network.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 32

9. CONCLUSIONS

The following conclusions have been drawn from the analysis presented in this report:

Powerlink Queensland has identified thermal limitations in the electricity transmission network arising within and between the Central West and Gladstone zones. Action must be taken to ensure a continued reliable electricity supply to customers requirements between the Central West and Gladstone zones as well as beyond to North and South Queensland during critical network contingencies by summer 2013/14.

Such action is necessary to comply with reliability standards which Powerlink must meet as Queensland‟s Transmission Network Service Provider. Interruptions to power supply during a critical 275kV network contingency or large generation unit outage are not consistent with these reliability standards. Augmentations proposed in this document will prevent such interruptions and are therefore classified as „reliability augmentations‟ under the National Electricity Rules.

Powerlink carried out a consultation process in November 2009 in order to identify feasible non-network solutions to address the future supply requirements and has determined that the three submissions received in response to the RFI do not offer, either individually or collectively, any genuine and practicable non-network solutions that address the forecast supply requirements.

Planning studies were undertaken to evaluate potential network options to address the identified thermal limitations within and between the Central West and Gladstone zones. Three network augmentation options were evaluated in detail. All feasible network and non-network options were then evaluated in accordance with the AER Regulatory Test.

The result of the economic analysis under the AER Regulatory Test is that Option 4 is the least-cost solution over the twenty-five year period of analysis for the majority of scenarios considered. Sensitivity testing showed the analysis is robust to variation in capital cost and other assumptions. Option 4 is therefore considered to satisfy the Regulatory Test.

Should the draft recommendation in this Application Notice be adopted, construction of the network augmentation as per Option 4 will commence in 2011 for completion by summer 2013/14.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 33

10. DRAFT RECOMMENDATION

Based on the conclusions drawn from the analysis and the NER requirements relating to Proposed New Large Network Assets, it is recommended that Option 4 be implemented to address forecast reliability of supply requirements within Central Queensland as follows:

Construction of 101km of 275kV double circuit transmission line between the existing Calvale and Stanwell 275kV substations by summer 2013/14;

Establishment of two 275kV feeder full circuit breaker and a half bays at Calvale and Stanwell substations by summer 2013/14.

The estimated cost of these works is $104.7 million in 2009/10 prices.

11. CONSULTATION

In accordance with NER requirements, Powerlink invites submissions from Registered Participants and interested parties on this Application Notice.

Submissions are due by 13 August 2010.

Please address submissions to:

Greg Hesse Manager Regulation Strategies and Development Powerlink Queensland PO Box 1193 Virginia QLD 4014

Tel: (07) 3860 2632 [email protected]

Following consideration of submissions, Powerlink expects to publish a final recommendation in September 2010.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 34

APPENDIX 1 – TECHNICAL DETAILS OF PROPOSED NEW LARGE NETWORK ASSET

Option 4

Option 4 includes the following works:

Date Technical Details Augmentation is Required

Summer Calvale-Stanwell 275kV line augmentation 2013/14 Construct 101km of 275kV double circuit twin phosphorus transmission line between Calvale and Stanwell and recovery of the existing Feeder.

Calvale 275kV Substation Works

Establish 2 x 275kV bays to accommodate 2 circuits from Stanwell 275kV Substation

Stanwell 275kV Substation Works Establish 2 x 275kV bays to accommodate 2 circuits from Calvale 275kV Substation.

Bouldercombe 275kV Substation Works Remote end modifications associated with feeder relocations at Stanwell.

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 35

The proposed network augmentation is highlighted in the network configuration diagram below:

Broadsound 275 kV

Stanwell 275 kV

Bouldercombe 275kV

Larcom Creek 275 kV

Gladstone 275 kV

Calvale 275 kV

Wurdong 275kV

Callide 132 kV A

Gin Gin 275 kV

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 36

APPENDIX 2 – FINANCIAL ANALYSIS

Development Options FY Capex $M FY Capex $M FY Capex $M FY Capex $M FY Capex $M Scenario A Scenario B Scenario C Scenario D Scenario E Option 1 Calvale to Larcom Creek 275kV DCST (one side strung) 2013 69.74 2012 69.74 2017 69.74 2013 69.74 2013 69.74 Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 2013 39.00 2012 39.00 2017 39.00 2013 39.00 2013 39.00 Proposed and modelled projects Wurdong tee 2018 11.07 11.07 11.07 2018 11.07 2018 11.07 Calvale to Stanwell DCST (one side strung) 2020 90.31 2014 90.31 90.31 2020 90.31 2017 90.31 Calvale to Stanwell 275kV DCST (string second side) 2026 31.58 2016 31.58 31.58 2026 31.58 2024 31.58 Calvale to Larcom Creek 275kV DCST (string second side) config 2032 34.24 2021 34.24 34.24 2032 34.24 2033 34.24 Loop 814 into Wurdong 19.06 2018 19.06 19.06 19.06 19.06

Option 2 Calvale to Larcom Creek 275kV DCST 2013 91.22 2012 91.22 2017 91.22 2013 91.22 2013 91.22 Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 2013 39.00 2012 39.00 2017 39.00 2013 39.00 2013 39.00 Proposed and modelled projects Wurdong tee 2018 11.07 11.07 11.07 2018 11.07 2018 11.07 Calvale to Stanwell DCST (one side strung) 2020 90.31 2014 90.31 90.31 2020 90.31 2017 90.31 Calvale to Stanwell 275kV DCST (string second side) 2027 31.58 2017 31.58 31.58 2028 31.58 2026 31.58 Configure Calvale to Larcom as opt 2a 2033 2.00 2021 2.00 2.00 2033 2.00 2032 2.00 Loop 814 into Wurdong 19.06 2018 19.06 19.06 19.06 19.06

Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit) 2013 96.09 2012 96.09 2017 96.09 2013 96.09 2013 96.09 Proposed and modelled projects Wurdong tee 2018 11.07 11.07 11.07 2018 11.07 2018 11.07 Calvale to Stanwell DCST (one side strung) 2022 90.31 2015 90.31 90.31 2021 90.31 2015 90.31 Calvale to Stanwell 275kV DCST (string second side) 2028 31.58 2018 31.58 31.58 2029 31.58 2018 31.58 Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 2016 53.98 53.98 53.98 2016 53.98 2016 53.98 Loop 814 into Wurdong 19.06 2018 19.06 19.06 19.06 19.06

Option 3 Calvale to Stanwell DCST (one side strung) 2013 90.31 2012 90.31 2017 90.31 2013 90.31 2013 90.31 Proposed and modelled projects Calvale 2nd 275/132kV Transformer 2017 10.08 2014 10.08 10.08 2015 10.08 2017 10.08 Wurdong tee 2018 11.07 11.07 11.07 2018 11.07 2018 11.07 Calvale to Stanwell 275kV DCST (string second side) 2020 31.58 2015 31.58 31.58 2016 31.58 2017 31.58 Calvale to Larcom Creek 275kV DCST (alternate circuit) 2032 96.09 2018 96.09 96.09 2032 96.09 2032 96.09 Loop 814 into Wurdong 19.06 2018 19.06 19.06 19.06 19.06

Option 4 Calvale to Stanwell 275kV DCST 2013 104.64 2012 104.64 2017 104.64 2013 104.64 2013 104.64 Proposed and modelled projects Calvale 2nd 275/132kV Transformer 2017 10.08 2014 10.08 10.08 2017 10.08 2017 10.08 Wurdong tee 2018 11.07 11.07 11.07 2018 11.07 2018 11.07 Loop 814 into Wurdong 19.06 2018 19.06 19.06 19.06 19.06 Calvale to Larcom Creek 275kV DCST (alternate circuit) 2032 96.09 2018 96.09 96.09 2032 96.09 2031 96.09

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 37

Scenario A Medium Load Growth, 10% PoE 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 Option 1 Calvale to Larcom Creek 275kV DCST (one side strung)

Calvale to Larcom Creek 275kV DCST (one side strung) 69.74 => TUOS 0 0.000 0.000 0.000 0.000 7.689 7.586 7.484 7.381 7.279 7.176 7.074 6.971 6.868 6.766 6.663 6.561 6.458 6.356 6.253 6.151 6.048 5.946 5.843 5.741 5.638 ==> PV of TUOS $45.89 Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39 => TUOS 0 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66

Proposed and modelled projects

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 ==> PV of TUOS $27.99

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 ==> PV of TUOS $4.27

Calvale to Larcom Creek 275kV DCST (string second side) config as opt 2a 34.24 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.775 3.724 ==> PV of TUOS $0.91 Relative Losses * Losses $ 0.000 -0.001 0.000 0.047 0.226 0.394 0.520 0.519 0.611 0.801 0.171 -0.169 -0.164 -0.164 -0.164 -0.164 -0.598 -0.815 -0.815 -0.815 -0.815 -0.815 -0.272 0.000 0.000 => PV of Loss difference $0.49

Total for Option 1 $109.52 Option 2 Calvale to Larcom Creek 275kV DCST Calvale to Larcom Creek 275kV DCST 94.1 => TUOS 0.000 0.000 0.000 0.000 0.000 10.374 10.235 10.097 9.959 9.820 9.682 9.544 9.406 9.267 9.129 8.991 8.852 8.714 8.576 8.437 8.299 8.161 8.022 7.884 7.746 7.607 ==> PV of TUOS $61.91 Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39.0 => TUOS 0.000 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66

Proposed and modelled projects

Wurdong tee 11.1 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.3 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 ==> PV of TUOS $27.99

Calvale to Stanwell 275kV DCST (string second side) 31.6 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 ==> PV of TUOS $3.58 configure Calvale to Larcom as opt 2a 2.0 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.221 ==> PV of TUOS $0.03

Relative Losses * Losses $ 0.000 0.000 0.000 -0.119 -0.047 0.075 0.149 0.101 0.111 0.276 -0.217 -0.498 -0.498 -0.498 -0.498 -0.498 -0.498 -0.866 -1.050 -1.050 -1.050 -1.050 -0.324 0.013 0.000 => PV of Loss difference -$1.67

Total for Option 2 $121.82 Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit arrangement) Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 8.334 8.192 8.051 7.910 7.769 ==> PV of TUOS $63.23

Proposed and modelled projects

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 ==> PV of TUOS $21.86

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 ==> PV of TUOS $2.95

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 53.98 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.952 5.872 5.793 5.714 5.634 5.555 5.475 5.396 5.317 5.237 5.158 5.079 4.999 4.920 4.841 4.761 4.682 4.603 ==> PV of TUOS $26.12

Relative Losses * Losses $ 0.000 0.000 0.000 -0.106 -0.075 0.005 0.061 0.002 -0.011 0.124 0.257 0.366 -0.256 -0.586 -0.586 -0.586 -0.586 -0.586 -0.922 -1.090 -1.090 -1.090 -0.363 0.000 0.000 => PV of Loss difference -$1.40

Total for Option 2a $117.07 Option 3 Calvale to Stanwell 275kV DCST (one side strung) Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 7.302 ==> PV of TUOS $59.43

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 ==> PV of TUOS $4.38

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 ==> PV of TUOS $9.79

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 ==> PV of TUOS $2.55

Relative Losses * Losses $ 0.000 0.000 0.000 0.189 0.365 0.473 0.634 0.654 0.750 0.837 0.284 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $2.14

Total for Option 3 $82.60 Option 4 Calvale to Stanwell 275kV DCST Calvale to Stanwell 275kV DCST 104.64 => TUOS 0 0.000 0.000 0.000 0.000 11.536 11.382 11.228 11.075 10.921 10.767 10.613 10.459 10.306 10.152 9.998 9.844 9.690 9.536 9.383 9.229 9.075 8.921 8.767 8.614 8.460 ==> PV of TUOS $68.85

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 ==> PV of TUOS $4.38

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 ==> PV of TUOS $2.55

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.00 Total for Option 4 $80.10

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 38

Scenario B High Load Growth, 10% PoE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 Option 1 Calvale to Larcom Creek 275kV DCST (one side strung) Calvale to Larcom Creek 275kV DCST (one side strung) 69.74 => TUOS 0 0.000 0.000 0.000 7.689 7.586 7.484 7.381 7.279 7.176 7.074 6.971 6.868 6.766 6.663 6.561 6.458 6.356 6.253 6.151 6.048 5.946 5.843 5.741 5.638 5.536 ==> PV of TUOS $50.66

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39 => TUOS 0 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 3.096 ==> PV of TUOS $28.33

Proposed and modelled projects

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 ==> PV of TUOS $53.74 Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 2.739 2.693 ==> PV of TUOS $15.28

Calvale to Larcom Creek 275kV DCST (string second side) config as opt 2a 34.24 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.775 3.724 3.674 3.624 3.573 3.523 3.473 3.422 3.372 3.322 3.271 3.221 3.171 ==> PV of TUOS $9.40

Loop 814 into Wurdong 19.06 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.102 2.074 2.046 2.018 1.990 1.962 1.934 1.906 1.878 1.849 1.821 1.793 1.765 1.737 1.709 1.681 ==> PV of TUOS $7.43

Relative Losses * Losses $ 0.000 0.000 0.200 0.562 0.195 0.044 -0.626 -1.165 0.110 0.860 0.913 0.257 -0.025 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.63 Total for Option 1 $165.48 Option 2 Calvale to Larcom Creek 275kV DCST Calvale to Larcom Creek 275kV DCST 94.1 => TUOS 0 0.000 0.000 0.000 10.374 10.235 10.097 9.959 9.820 9.682 9.544 9.406 9.267 9.129 8.991 8.852 8.714 8.576 8.437 8.299 8.161 8.022 7.884 7.746 7.607 7.469 ==> PV of TUOS $68.35

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39.0 => TUOS 0 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 3.096 ==> PV of TUOS $28.33

Proposed and modelled projects

Calvale to Stanwell DCST (one side strung) 90.3 => TUOS 0 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 ==> PV of TUOS $53.74

Calvale to Stanwell 275kV DCST (string second side) 31.6 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 2.739 ==> PV of TUOS $13.74 configure Calvale to Larcom as opt 2a 2.0 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.221 0.218 0.215 0.212 0.209 0.206 0.203 0.200 0.197 0.194 0.191 0.188 0.185 ==> PV of TUOS $0.55

Loop 814 into Wurdong 19.1 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.102 2.074 2.046 2.018 1.990 1.962 1.934 1.906 1.878 1.849 1.821 1.793 1.765 1.737 1.709 1.681 ==> PV of TUOS $7.43 Relative Losses * Losses $ 0.000 0.000 0.023 0.197 -0.140 -0.291 -0.178 -1.137 -0.502 0.214 0.248 0.025 -0.025 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference -$0.82

Total for Option 2 $171.32 Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit arrangement) Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 8.334 8.192 8.051 7.910 7.769 7.627 ==> PV of TUOS $69.80 Proposed and modelled projects

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 ==> PV of TUOS $48.51

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 ==> PV of TUOS $12.31 Loop 814 into Wurdong 19.06 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.102 2.074 2.046 2.018 1.990 1.962 1.934 1.906 1.878 1.849 1.821 1.793 1.765 1.737 1.709 1.681 ==> PV of TUOS $7.43 Relative Losses * Losses $ 0.000 0.000 -0.003 0.106 0.314 -0.168 -0.395 -0.400 -0.184 -0.081 -0.077 -0.029 -0.003 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference -$0.40

Total for Option 2a $137.66 Option 3 Calvale to Stanwell 275kV DCST (one side strung) Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 7.302 7.169 ==> PV of TUOS $65.61

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 0.859 0.844 0.829 ==> PV of TUOS $6.00

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 2.739 2.693 2.646 ==> PV of TUOS $16.97

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 ==> PV of TUOS $37.45

Loop 814 into Wurdong 19.06 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.102 2.074 2.046 2.018 1.990 1.962 1.934 1.906 1.878 1.849 1.821 1.793 1.765 1.737 1.709 1.681 ==> PV of TUOS $7.43 Relative Losses * Losses $ 0.000 0.000 0.257 0.555 0.809 0.298 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $1.30

Total for Option 3 $134.74 Option 4 Calvale to Stanwell 275kV DCST Calvale to Stanwell 275kV DCST 104.64 => TUOS 0 0.000 0.000 0.000 11.536 11.382 11.228 11.075 10.921 10.767 10.613 10.459 10.306 10.152 9.998 9.844 9.690 9.536 9.383 9.229 9.075 8.921 8.767 8.614 8.460 8.306 ==> PV of TUOS $76.01

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 0.859 0.844 0.829 ==> PV of TUOS $6.00

Loop 814 into Wurdong 19.06 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.102 2.074 2.046 2.018 1.990 1.962 1.934 1.906 1.878 1.849 1.821 1.793 1.765 1.737 1.709 1.681 ==> PV of TUOS $7.43 Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 ==> PV of TUOS 37.45 Relative Losses * Loss saving MW 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.00

Total for Option 4 $126.89

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 39

Scenario C Low Load Growth, 10% PoE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 Option 1 Calvale to Larcom Creek 275kV DCST (one side strung)

Calvale to Larcom Creek 275kV DCST (one side strung) 69.74 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 7.689 7.586 7.484 7.381 7.279 7.176 7.074 6.971 6.868 6.766 6.663 6.561 6.458 6.356 6.253 6.151 6.048 ==> PV of TUOS $30.33

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 ==> PV of TUOS $16.96

Proposed and modelled projects

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.003 -0.055 -0.062 -0.054 -0.049 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 -0.047 => PV of Loss difference -$0.22

Total for Option 1 $47.07 Option 2 Calvale to Larcom Creek 275kV DCST Calvale to Larcom Creek 275kV DCST 94.1 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.374 10.235 10.097 9.959 9.820 9.682 9.544 9.406 9.267 9.129 8.991 8.852 8.714 8.576 8.437 8.299 8.161 ==> PV of TUOS $40.92

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39.0 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 ==> PV of TUOS $16.96

Proposed and modelled projects

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.157 -0.290 -0.286 -0.267 -0.257 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 -0.253 => PV of Loss difference -$1.20

Total for Option 2 $56.68 Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit arrangement) Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 8.334 ==> PV of TUOS $41.79

Proposed and modelled projects

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.113 -0.220 -0.221 -0.208 -0.203 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 -0.201 => PV of Loss difference -$0.94

Total for Option 2a $40.85 Option 3 Calvale to Stanwell 275kV DCST (one side strung) Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 ==> PV of TUOS $39.28

Proposed and modelled projects

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.159 0.244 0.230 0.227 0.199 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 0.184 => PV of Loss difference $0.94

Total for Option 3 $40.21 Option 4 Calvale to Stanwell 275kV DCST Calvale to Stanwell 275kV DCST 104.64 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 11.536 11.382 11.228 11.075 10.921 10.767 10.613 10.459 10.306 10.152 9.998 9.844 9.690 9.536 9.383 9.229 9.075 ==> PV of TUOS $45.50

Proposed and modelled projects

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.00

Total for Option 4 $45.50

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 40

Scenario D Medium Load Growth, 10% PoE+ 200MW Gladstone 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 Option 1 Calvale to Larcom Creek 275kV DCST (one side strung)

Calvale to Larcom Creek 275kV DCST (one side strung) 69.74 => TUOS 0 0.000 0.000 0.000 0.000 7.689 7.586 7.484 7.381 7.279 7.176 7.074 6.971 6.868 6.766 6.663 6.561 6.458 6.356 6.253 6.151 6.048 5.946 5.843 5.741 5.638 ==> PV of TUOS $45.89

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39 => TUOS 0 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66

Proposed and modelled projects

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 ==> PV of TUOS $27.99

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 ==> PV of TUOS $4.27

Calvale to Larcom Creek 275kV DCST (string second side) config as opt 2a 34.24 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.775 3.724 ==> PV of TUOS $0.91

Relative Losses * Losses $ 0.000 0.000 0.000 0.047 0.226 0.299 0.378 0.385 0.476 0.662 -0.062 -0.421 -0.403 -0.403 -0.403 -0.403 -0.885 -1.126 -1.126 -1.126 -1.126 -1.126 -0.375 0.000 0.000 => PV of Loss difference -$0.65

Total for Option 1 $108.38 Option 2 Calvale to Larcom Creek 275kV DCST Calvale to Larcom Creek 275kV DCST 94.1 => TUOS 0.000 0.000 0.000 0.000 0.000 10.374 10.235 10.097 9.959 9.820 9.682 9.544 9.406 9.267 9.129 8.991 8.852 8.714 8.576 8.437 8.299 8.161 8.022 7.884 7.746 7.607 ==> PV of TUOS $61.91

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39.0 => TUOS 0.000 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66

Proposed and modelled projects

Wurdong tee 11.1 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.3 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 ==> PV of TUOS $27.99

Calvale to Stanwell 275kV DCST (string second side) 31.6 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 ==> PV of TUOS $2.95 configure Calvale to Larcom as opt 2a 2.0 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.221 ==> PV of TUOS $0.03

Relative Losses * Losses $ 0.000 0.000 0.000 -0.119 -0.047 -0.110 -0.142 -0.209 -0.205 -0.036 -0.583 -0.883 -0.878 -0.878 -0.878 -0.878 -0.878 -0.878 -1.277 -1.477 -1.477 -1.477 -0.503 -0.005 0.000 => PV of Loss difference -$3.46

Total for Option 2 $119.39 Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit arrangement) Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 8.334 8.192 8.051 7.910 7.769 ==> PV of TUOS $63.23

Proposed and modelled projects

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 ==> PV of TUOS $24.80

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 ==> PV of TUOS $2.36

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 53.98 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.952 5.872 5.793 5.714 5.634 5.555 5.475 5.396 5.317 5.237 5.158 5.079 4.999 4.920 4.841 4.761 4.682 4.603 ==> PV of TUOS $26.12

Relative Losses * Losses $ 0.000 0.000 0.000 -0.106 -0.075 -0.148 -0.173 -0.260 -0.271 -0.130 -0.002 -0.597 -0.911 -0.911 -0.911 -0.911 -0.911 -0.911 -0.911 -1.277 -1.460 -1.460 -0.487 0.000 0.000 => PV of Loss difference -$3.21

Total for Option 2a $117.61 Option 3 Calvale to Stanwell 275kV DCST (one side strung) Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 7.302 ==> PV of TUOS $59.43

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 0.859 0.844 ==> PV of TUOS $5.41

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 2.739 2.693 ==> PV of TUOS $15.28

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 ==> PV of TUOS $2.55 Relative Losses * Losses $ 0.000 0.000 0.000 0.189 0.365 0.623 0.308 0.032 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.93

Total for Option 3 $87.92 Option 4 Calvale to Stanwell 275kV DCST Calvale to Stanwell 275kV DCST 104.64 => TUOS 0 0.000 0.000 0.000 0.000 11.536 11.382 11.228 11.075 10.921 10.767 10.613 10.459 10.306 10.152 9.998 9.844 9.690 9.536 9.383 9.229 9.075 8.921 8.767 8.614 8.460 ==> PV of TUOS $68.85

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 ==> PV of TUOS $4.38 Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 ==> PV of TUOS $2.55

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.00 Total for Option 4 $80.10

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 41

Scenario E Medium Load Growth, 10% PoE+ 150MW North Queensland 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 Option 1 Calvale to Larcom Creek 275kV DCST (one side strung)

Calvale to Larcom Creek 275kV DCST (one side strung) 69.738 => TUOS 0 0.000 0.000 0.000 0.000 7.689 7.586 7.484 7.381 7.279 7.176 7.074 6.971 6.868 6.766 6.663 6.561 6.458 6.356 6.253 6.151 6.048 5.946 5.843 5.741 5.638 ==> PV of TUOS $45.89

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 38.997 => TUOS 0 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66 Proposed and modelled projects

Wurdong tee 11.074 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32 Calvale to Stanwell DCST (one side strung) 90.311 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 ==> PV of TUOS $39.28

Calvale to Stanwell 275kV DCST (string second side) 31.584 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 ==> PV of TUOS $5.82

Calvale to Larcom Creek 275kV DCST (string second side) config as34.237 opt 2a => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.775 ==> PV of TUOS $0.44

Relative Losses * Losses $ 0.000 -0.001 0.000 0.047 0.426 0.730 0.903 0.209 -0.196 -0.183 -0.137 -0.028 0.018 0.018 -0.531 -0.806 -0.806 -0.806 -0.806 -0.806 -0.806 -0.084 0.277 0.092 0.000 => PV of Loss difference $0.02

Total for Option 1 $121.43 Option 2 Calvale to Larcom Creek 275kV DCST Calvale to Larcom Creek 275kV DCST 94.1 => TUOS 0.000 0.000 0.000 0.000 0.000 10.374 10.235 10.097 9.959 9.820 9.682 9.544 9.406 9.267 9.129 8.991 8.852 8.714 8.576 8.437 8.299 8.161 8.022 7.884 7.746 7.607 ==> PV of TUOS $61.91

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 39.0 => TUOS 0.000 0.000 0.000 0.000 0.000 4.299 4.242 4.185 4.127 4.070 4.013 3.955 3.898 3.841 3.783 3.726 3.669 3.612 3.554 3.497 3.440 3.382 3.325 3.268 3.210 3.153 ==> PV of TUOS $25.66

Proposed and modelled projects

Wurdong tee 11.1 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32 Calvale to Stanwell DCST (one side strung) 90.3 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 ==> PV of TUOS $39.28

Calvale to Stanwell 275kV DCST (string second side) 31.6 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 ==> PV of TUOS $4.27 configure Calvale to Larcom as opt 2a 2.0 => TUOS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.221 0.218 ==> PV of TUOS $0.05

Relative Losses * Losses $ 0.000 0.000 0.000 -0.119 0.119 0.349 0.458 -0.154 -0.532 -0.516 -0.473 -0.379 -0.338 -0.338 -0.338 -0.338 -0.786 -1.010 -1.010 -1.010 -1.010 -0.288 0.024 0.000 0.000 => PV of Loss difference -$1.77

Total for Option 2 $133.72 Option 2a Calvale to Larcom Creek 275kV DCST (alternate circuit arrangement) Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 10.593 10.452 10.311 10.170 10.028 9.887 9.746 9.605 9.464 9.322 9.181 9.040 8.899 8.757 8.616 8.475 8.334 8.192 8.051 7.910 7.769 ==> PV of TUOS $63.23

Proposed and modelled projects

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 ==> PV of TUOS $48.51

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 ==> PV of TUOS $12.31

Gladstone to Larcom Creek Rebuild 275kV SCST to DCST 53.98 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.952 5.872 5.793 5.714 5.634 5.555 5.475 5.396 5.317 5.237 5.158 5.079 4.999 4.920 4.841 4.761 4.682 4.603 ==> PV of TUOS $26.12

Relative Losses * Losses $ 0.000 0.000 0.000 -0.106 0.050 -0.203 -0.390 -0.502 -0.949 -1.092 -1.096 -1.092 -1.083 -1.083 -1.083 -1.083 -1.083 -1.083 -1.083 -1.083 -1.083 -0.361 0.000 0.000 0.000 => PV of Loss difference -$4.70

Total for Option 2a $149.79 Option 3 Calvale to Stanwell 275kV DCST (one side strung) Calvale to Stanwell DCST (one side strung) 90.31 => TUOS 0 0.000 0.000 0.000 0.000 9.957 9.824 9.691 9.559 9.426 9.293 9.160 9.027 8.895 8.762 8.629 8.496 8.364 8.231 8.098 7.965 7.833 7.700 7.567 7.434 7.302 ==> PV of TUOS $59.43

Proposed and modelled projects network support modelled 4

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 ==> PV of TUOS $4.38

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Stanwell 275kV DCST (string second side) 31.58 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.482 3.436 3.389 3.343 3.296 3.250 3.204 3.157 3.111 3.064 3.018 2.971 2.925 2.879 2.832 2.786 2.739 ==> PV of TUOS $13.74

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 10.311 ==> PV of TUOS $3.98

Relative Losses * Losses $ 0.000 0.000 0.000 0.189 0.458 0.627 0.745 0.261 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $1.34

Total for Option 3 $87.18 Option 4 Calvale to Stanwell 275kV DCST Calvale to Stanwell 275kV DCST 104.64 => TUOS 0 0.000 0.000 0.000 0.000 11.536 11.382 11.228 11.075 10.921 10.767 10.613 10.459 10.306 10.152 9.998 9.844 9.690 9.536 9.383 9.229 9.075 8.921 8.767 8.614 8.460 ==> PV of TUOS $68.85

Proposed and modelled projects

Calvale 2nd 275/132kV Transformer 10.08 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.111 1.096 1.081 1.066 1.052 1.037 1.022 1.007 0.992 0.977 0.963 0.948 0.933 0.918 0.903 0.889 0.874 ==> PV of TUOS $4.38

Wurdong tee 11.07 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.221 1.205 1.188 1.172 1.156 1.140 1.123 1.107 1.091 1.074 1.058 1.042 1.026 1.009 0.993 0.977 ==> PV of TUOS $4.32

Calvale to Larcom Creek 275kV DCST (alternate circuit) 96.09 => TUOS 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.593 10.452 10.311 ==> PV of TUOS $3.98

Relative Losses * Losses $ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 => PV of Loss difference $0.00 Total for Option 4 $81.53

POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 42