Pricing guidelines for electricity distributors A handbook for pricing practitioners
November 2016 Contents
Foreword 5
1 Introduction 6
2 Connection Groups 9
3 Residential Group 12
3.1 Low Fixed Charge Group 14
3.2 Volume kWh charges 18
4 General Connection Group 27
5 Temporary Supply 32
6 Unmetered Load 34
7 Large Commercial 41
8 Irrigation 52
9 Power Factor 56
10 Seasonal Pricing 60
11 Documentation & Terminology 62
11.1 Published documentation 63
11.2 Pricing Schedules 66
12 Billing format & processes 71
13 Appendix 78
Appendix 1: Terminology for Street lighting 79
Appendix 2: Distribution Price Categories (<150 kVA) 80
Appendix 3: Distribution Price Categories (>150 kVA) 81
Appendix 4: Example Power Factor Calculations 82
Appendix 5: Metering Installations Characteristics 84
2 Version Control
Version Date of Publication Scope of Document
1.1 September 2015 Version one of the ENA Pricing Guidelines covered the following topics:
• Definitions of small capacity consumer groups, including Residential and General (metering categories 1 and 2 in the Code commonly referred to as “mass market” consumers)
• A definition for temporary supply
• Definitions of common pricing plan components including Uncontrolled, Controlled, Night Only, Night Boost, All Inclusive, Day and Night
• Definition of Summer and Winter periods
• Outlined standardised approaches to pricing documentation, terminology, schedules and billing.
2.0 September 2016 Version two of the Pricing Guidelines reflects some minor changes based on feedback received, and extends the scope to also include:
• Large Commercial pricing structures
• Irrigation
• Unmetered load
• Power factor.
3 Glossary and Abbreviations
Advanced Meter Also called a smart meter. Is a meter with Low Fixed Charge Electricity (Low Fixed Charge Tariff Option the ability to measure energy use at various Regulations for Domestic Consumers) Regulations 2004. time intervals and with operational two-way (LFC Regulations) remote communications capability. Installed at a Category 1 or 2 metering installation point Loss Factor Loss factors are declared by distributors (≤500Amps). and used to reflect the normal difference between energy injected into a network and Connection A point of connection to an electricity energy delivered from the network in the distribution network as identified by an reconciliation process. Installation Control Point (ICP) identifier. Low Fixed Charge Low Fixed Charge. Controlled Meter A meter that measures load where there is (LFC) functionality to control the energy provided to permanently wired appliances (e.g. a hot water Lower South Stipulated in the LFC regulations as cylinder) that are connected to the meter. region consumers supplied by the Arthur’s Pass, Castle Hill, Papanui, and Hororata grid exit Distributor A company that owns or operates the power points, or any grid exit point that is located lines that transport electricity on local further south. networks. Terms also used are ‘distribution company’, ‘lines company’ and ‘network Meter Categories Defined in the Schedule 10.1 of the Code. company’. (1, 2, 3, 4, and 5) See Appendix 6. Electricity An Act that regulates the operation of the Meter register An energy measurement device on a meter. Industry Act 2010 New Zealand electricity industry. (Act) Peak Load Peak half hourly demand, measured in kW or kVA. Electricity The Code sets out the duties and Industry responsibilities that apply to industry Pricing Principles The distribution pricing principles as published Participation Code participants and the Electricity Authority. by the Electricity Commission in March 2010, (Code) adopted by the Electricity Authority. Electricity EIEPs provide a set of standardised formats for Registry The registry is a national database that contains Information business-to-business information exchanges. information on every point of connection Exchange Protocol on local and embedded networks to which a (EIEP) consumer or embedded generator is connected. Electricity Association of all 29 New Zealand electricity ToU Meter Category 3, 4, or 5 metering installation Networks distributors. capable of recording kWh and at least one of Association (ENA) kVArh and kVAh on a half-hourly basis Information Electricity Distribution Information Transmission Conveyance of electricity at high voltages Disclosure (ID) Disclosure Determination 2012. through the Transmission network. Input Electricity Distribution Services Input Transmission New Zealand’s national transmission network Methodology (IM) Methodologies Determination 2012. network (national grid) owned by Transpower New Zealand Limited. Installation See Connection. Control Point Uncontrolled A meter that measures load where there is no (ICP) Meter load control functionality. Kilowatt hour kilowatt hour is also known as a unit of Unaccounted for The difference between reported energy (kWh) electricity and is the basis of retail sales and Energy (UFE) injected into a network and the reported reconciliation of electricity in the market. energy extracted from the network after it has been adjusted using Loss Factors. Legacy meter A meter that measures cumulative energy consumption (kWh) and does not have remote The Electricity Authority also publishes a glossary of key industry communications capability. Installed at a terms on its website. Category 2 ICP or lower (≤500Amps).
4 Foreword
These standardisation guidelines have been prepared to help distributors align their pricing methods and definitions. Though the guidelines are written primarily for the pricing practitioners of distributors and electricity retailers, their over-riding goal is to improve outcomes for large and small consumers.
Standardisation reduces the complexity and number of pricing arrangements between distributors and retailers, which lowers operating costs and barriers to more retail competition, benefitting consumers in the long term.
Version one, published in 2015, focused on pricing structures and terminology used for residential consumers. This version two extends the guidelines to include pricing structures for larger commercial customers.
Work on standardisation followed feedback on an Electricity Networks Association distribution pricing consultation paper issued in May 2015. We listened to stakeholders who recommended a reduction in variance of pricing approaches across New Zealand’s 29 lines companies. They expressed a view that there were benefits in stable and standardised prices which were clear and simple.
The guidelines are an important part of a customer-focussed work programme by ENA members. In addition to standardisation, members are also looking at fundamental pricing reforms. Both work streams are important short and long term steps toward pricing which is less complex and which ultimately reduces costs in the provision of a reliable, safe, and efficient electricity network.
Finally, these guidelines are only effective if they are followed by ENA members. We would strongly encourage all distribution companies to work toward adopting the guidelines in their next and future pricing changes.
Ken Sutherland Chair, Electricity Networks Association
5 1. Introduction
6 1. Introduction
Purpose and Scope This document sets out the Electricity Networks Association’s (ENA) guidelines for the definition, format and structure of electricity delivery pricing (the Guidelines). The initial audience of these guidelines is the pricing practitioners of electricity distribution businesses, or “distributors”. However it is also anticipated that the Guidelines will be helpful to electricity retailers.
These guidelines will help distributors describe and present their prices in a clear and consistent manner for use by retailers, particularly those that operate across multiple network areas. The Guidelines may also assist consumers enquiring about the delivery charges that apply to them.
This is the second version of pricing guidelines for electricity distributors. The first version was published in September 2015 and included:
• Definitions of low capacity consumer groups, including Residential, Low Fixed Charge and General groups that generally fall within metering categories 1 and 2 in the Code (sometimes called “mass market” consumers) • A definition for temporary supply • Definitions of common pricing plan components including Uncontrolled, Controlled, Night Only, Night Boost, All Inclusive, Day and Night, Summer and Winter • Standardised approaches to pricing documentation, terminology, schedules and billing.
This second version reflects some minor changes based on feedback received, and extends the scope to also include:
• Large Commercial pricing structures In some areas the rationale for recommending a particular • Irrigation approach has been included • Unmetered load as it may be useful and assist • Power factor a distributor to align with the Guidelines. • kWh charges for imported energy for small scale distributed generation.
The Guidelines may be reviewed and updated where there are opportunities to achieve more consistent approaches to pricing.
Introduction 7 Use of These Guidelines
These Guidelines represent the ENA’s view of pricing definitions and formats that can be considered by distributors when reviewing their pricing methodologies and schedules. The document includes consumer and technical definitions where relevant.
Consumer definitions are targeted towards those who may have limited knowledge of the electricity sector. Technical definitions provide further supporting information on how the definitions are to be applied.
The Guidelines present either a single proposed approach or, in some cases, a list of suggested options. While it is the ENA’s expectation that distributors will ensure their pricing materially aligns with these Guidelines, it is acknowledged that distributors may adopt different approaches. In this respect, the ENA suggests that distributors explain the reasons for their alternative approach in their pricing methodologies. These guidelines are not a substitute for consultation processes. Distributors are required to consult with retailers in accordance with their Use of System agreements and the Code prior to implementing any changes to pricing structures.
8 2. Connection Groups
9 2. Connection Groups
The main pricing groups are Residential, (including Low Fixed Charge plans), General, Large Commercial, and Individually Priced connections.
Distributors also use a range of specialty pricing groups such as Irrigation, Unmetered Connections and Temporary Supplies. Where there are specialty pricing groups, distributors have specific pricing plans for these type of connections.
Figure 1 below illustrates the consumer pricing groups commonly used by Distributors.
Figure 1. Connection Types and Pricing Groups