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NRS 058: Cost of Supply Methodology

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NRS 058: Cost of Supply Methodology NRS 058(Int):2000 First edition reconfirmed Interim Rationalized User Specification COST OF SUPPLY METHODOLOGY FOR APPLICATION IN THE ELECTRICAL DISTRIBUTION INDUSTRY Preferred requirements for applications in the Electricity Distribution Industry N R S NRS 058(Int):2000 2 This Rationalized User Specification is issued by the NRS Project on behalf of the User Group given in the foreword and is not a standard as contemplated in the Standards Act, 1993 (Act 29 of 1993). Rationalized user specifications allow user organizations to define the performance and quality requirements of relevant equipment. Rationalized user specifications may, after a certain application period, be introduced as national standards. Amendments issued since publication Amdt No . Date Text affected Correspondence to be directed to Printed copies obtainable from South African Bureau of Standards South African Bureau of Standards (Electrotechnical Standards) Private Bag X191 Private Bag X191 Pretoria 0001 Pretoria 0001 Telephone: (012) 428-7911 Fax: (012) 344-1568 E-mail: [email protected] Website: http://www.sabs.co.za COPYRIGHT RESERVED Printed on behalf of the NRS Project in the Republic of South Africa by the South African Bureau of Standards 1 Dr Lategan Road, Groenkloof, Pretoria 1 NRS 058(Int):2000 Contents Page Foreword ................................................................................................................................ 3 Introduction............................................................................................................................. 4 Key words............................................................................................................................... 4 1 Scope................................................................................................................................. 5 2 Normative references........................................................................................................ 5 3 Definitions and abbreviations ........................................................................................... 5 4 Guidelines.......................................................................................................................... 7 4.1 General...................................................................................................................... 7 4.1.1 Overview ........................................................................................................ 8 4.1.2 Purpose of the cost of supply methodology .................................................. 9 4.1.3 Marginal cost vs. average cost approaches.................................................. 9 4.1.4 Factors that influence costs........................................................................... 10 4.1.5 Cost drivers .................................................................................................... 11 4.1.6 Recovery of revenue requirement ................................................................. 11 4.1.7 Time-of-use basis for costs ........................................................................... 11 4.1.8 Network cost allocation considerations ......................................................... 12 4.2 Specific assumptions and principles......................................................................... 13 4.2.1 Ringfencing .................................................................................................... 13 4.2.2 Classification of customer categories............................................................ 14 4.2.3 Pooling of infrastructure: Reduced Network Diagram (RND) ....................... 15 4.2.4 Electrical losses ............................................................................................. 16 4.2.5 Customer groups ........................................................................................... 16 4.2.6 Level of categorization and grouping............................................................. 16 4.2.7 Cost categories .............................................................................................. 17 4.2.8 Annualized network capital costs................................................................... 19 4.2.9 Cost drivers and classification ....................................................................... 20 4.2.10 Allocation of costs to customer groups.......................................................... 23 4.3 Cost allocation methods............................................................................................ 23 4.3.1 Energy cost allocation.................................................................................... 23 4.3.2 Demand cost allocation.................................................................................. 24 4.3.3 Customer costs allocation.............................................................................. 25 4.4 Methodology overview............................................................................................... 25 4.4.1 Separation of costs ........................................................................................ 26 4.4.2 Classification of costs .................................................................................... 27 4.4.3 Allocation of costs .......................................................................................... 27 NRS 058(Int):2000 2 Contents (concluded) Page 4.5 Procedure .................................................................................................................. 28 4.5.1 Network module (Phase 1) ............................................................................ 29 4.5.2 Customer module .......................................................................................... 29 4.5.3 Cost module................................................................................................... 29 4.5.4 Network module (Phase 2) ............................................................................ 30 4.5.5 Consolidation module .................................................................................... 30 4.6 Data and data assumptions − Information requirements ......................................... 34 5 Conclusion......................................................................................................................... 35 Annexes A (informative) Reduced Network Diagram ......................................................................... 36 B (informative) Customer categories.................................................................................... 41 C (informative) Evaluation of Demand Allocation Methods.................................................. 42 D (informative) Reduced Network Diagram (Template for Eskom according to current voltage groupings) ....................................................................................................... 49 E (informative) Weighted Customer Number example........................................................ 50 F.. (informative) Case Study for Average and Excess Method of allocating network .......... 51 G (informative) Bary coincidence factors.............................................................................. 66 3 NRS 058(Int):2000 Foreword This methodology has been prepared on behalf of the Electricity Suppliers Liaison Committee (ESLC) and has been approved by it for use by supply authorities. It was prepared by a Working Group which, at the time of publication, comprised the following members: W O Barnard National Electricity Regulator A de Kok Eskom, Distribution D W Early Cape Town Municipality M J Ellman National Electricity Regulator A Fredericks (Project Leader) Eskom (Technology Group) M Gittings Durban Metro Electricity D A Kruger Chamber of Mines F Kruger Eskom (Transmission) J G Louw Tygerberg City G R Marloth Greater Johannesburg Metropolitan Electricity N J Potgieter Port Elizabeth Municipality M J Smit Pretoria Municipality A J van der Merwe Bloemfontein Municipality D van Renen Eskom (Distribution Services) R Wienand Durban Metropolitan Electricity At the time when the ESLC accepted this edition of NRS 058, the ESLC comprised the following members: R Wienand (Chairman) Director, Durban Metropolitan Electricity M N Bailey Distribution Technology Manager, Distribution Technology, Eskom A J Claasen Manager, Electrical Engineering Standards, SABS F H D Conradie Technology Services International (TSI) N Croucher City Electrical Engineer, Cape Town Municipality P Crowdy Design Manager, Distribution Technology, Eskom J A Ehrich City Electrical Engineer, Pretoria Electricity A H L Fortmann Technical Secretary, AMEU A Fredericks Project Leader, Eskom P A Johnson Technology Standardization Manager, Eskom D A Kruger JCI, for Chamber of Mines of South Africa J G Louw City Electrical Engineer, Tygerberg City D M Michie City Electrical Engineer, Port Elizabeth Municipality A J van der Merwe City Electrical Engineer, Bloemfontein Municipality J S van Heerden Project Engineer, SABS (NETFA) P J S van Niekerk Executive Officer, Greater Johannesburg Metropolitan Electricity H R Whitehead Executive Director, Durban Metropolitan Electricity Annexes A, B, C, D and E are informative. Recommendations for corrections, additions or deletions should be addressed to the NRS Project Manager, Standardization, P O Box 1091, Johannesburg, 2000. NRS 058(Int):2000 4 Introduction There is a need within the Electricity Distribution Industry (EDI) to regulate
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