MainPower New Zealand Limited.
Asset Management Plan 2016 – 2026
Asset Management Plan 1st April 2016 – 31st March 2026
The information contained herein is confidential to MainPower and may not be reproduced without express permission. Page 2 of 186
Contents
Executive Summary ...... 7 1. Background and Objectives of the AMP ...... 15 1.1 Introduction ...... 15 1.2 Purpose Statement ...... 15 1.3 Corporate Overview ...... 16 1.4 Planning Period ...... 17 1.5 Date Approved by Directors ...... 17 1.6 Description of Stakeholder Interests ...... 17 1.6.1 Identifying Stakeholders ...... 17 1.6.2 Stakeholder Interests ...... 18 1.6.3 Accommodating Stakeholder Interests ...... 19 1.6.4 Managing Conflicting Interests ...... 20 1.7 Accountabilities and Responsibilities for Asset Management ...... 21 1.7.1 Ownership ...... 21 1.7.2 Governance ...... 21 1.7.3 Executive ...... 22 1.7.4 Management ...... 22 1.7.5 Works Implementation ...... 22 1.7.6 Reporting Asset Management Plans and Outcomes ...... 23 1.7.7 Delegated Authorities ...... 23 1.8 Forecasting Assumptions ...... 24 1.8.1 Significant Assumptions ...... 24 1.8.2 Price Inflator Assumptions ...... 25 1.8.3 Sources of Uncertainty ...... 25 1.9 Overview of Asset Management Strategy and Delivery ...... 26 1.9.1 Asset Management Strategy ...... 26 1.9.2 Asset Management Objectives ...... 26 1.10 Overview of Systems and Information Management Data ...... 27 1.10.1 Health and Safety, Quality, and Environmental Systems ...... 27 1.10.2 Asset Management System ...... 28 1.10.3 Integrated Management System ...... 28 1.10.4 Asset Management Information Systems ...... 28 1.10.5 Limitations of Asset Management Data ...... 30 1.11 Description of Key Processes ...... 31 1.11.1 Establishing expenditure plans ...... 32 1.11.2 Managing Routine Asset Inspections and Network Maintenance ...... 32 1.11.3 Planning and Implementing Network Development Processes ...... 32 1.11.4 Measuring Network Performance ...... 33 1.11.5 Documentation, Controls and Review Process ...... 33 1.11.6 Communication and Participation Process ...... 33 2. Assets Covered ...... 35 2.1 Overview ...... 35 2.1.1 Service Area ...... 35
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2.1.2 Load Characteristics ...... 38 2.1.3 Peak Demand and Total Energy Delivered ...... 38 2.1.4 Major Customers ...... 39 2.2 Network Configuration ...... 40 2.2.1 Bulk Supply Configuration ...... 40 2.2.2 Subtransmission System ...... 43 2.2.3 Distribution System ...... 45 2.2.4 Distribution Substations...... 45 2.2.5 Low Voltage Network ...... 45 2.2.6 Secondary assets ...... 46 2.3 Network Assets by Category ...... 46 2.3.1 Subtransmission ...... 47 2.3.2 Zone Substations ...... 47 2.3.3 Distribution and LV Lines ...... 47 2.3.4 Distribution and LV Cables ...... 48 2.3.5 Distribution Substations and Transformers ...... 48 2.3.6 Distribution Switchgear ...... 48 2.3.7 Secondary Assets ...... 49 3. Service Levels ...... 51 3.1 Performance Indicators ...... 51 3.1.1 Safety ...... 51 3.1.2 Compliance ...... 52 3.1.3 Quality of Service ...... 52 3.1.4 Risk Management ...... 53 3.1.5 Efficiency and Effectiveness ...... 53 3.2 Performance Targets ...... 54 3.2.1 Summary of Performance Targets ...... 54 3.2.2 Service Level Targets ...... 54 3.3 Basis of Performance Indicators ...... 56 3.3.1 Setting Safety Performance Targets ...... 56 3.3.2 Setting Compliance Performance Targets...... 57 3.3.3 Setting Service Quality Performance Targets ...... 57 3.3.4 Setting Customer Service Performance Targets ...... 60 3.3.5 Setting Risk Management Performance Targets ...... 60 3.3.6 Setting Efficiency and Effectiveness Performance Targets ...... 61 4. Network Development Planning ...... 63 4.1 Planning Criteria and Assumptions ...... 63 4.1.1 Location...... 63 4.1.2 Capacity ...... 63 4.1.3 Reliability ...... 64 4.1.4 Security ...... 65 4.1.5 Voltage ...... 66 4.1.6 Summary of Planning Criteria ...... 66 4.2 Strategies for Cost Efficiency ...... 67 4.3 Strategies for Energy Efficiency ...... 68 4.4 Strategies for Innovation ...... 68
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4.4.1 Distribution Innovation ...... 69 4.4.2 Current State of MainPower’s Intelligent Network ...... 70 4.4.3 Communication Strategy ...... 70 4.4.4 Ground Fault Neutralisers ...... 71 4.4.5 PV integration ...... 71 4.5 Determining Capacity ...... 71 4.5.1 Conductors and Cables ...... 71 4.5.2 Transformers ...... 71 4.5.3 Overload Ratings ...... 72 4.6 Distributed Generation Policies ...... 72 4.7 Non-Network Solutions ...... 72 4.7.1 Time of Use Metering ...... 72 4.7.2 Demand Side Management ...... 72 4.8 Prioritising Network Development Projects ...... 73 4.9 Demand Forecasts ...... 73 4.9.1 Demand Forecasting Method ...... 73 4.9.2 Information Sources...... 74 4.9.3 Load Forecasts ...... 76 4.9.4 Summary of Load Forecasts ...... 81 4.10 Network Constraints ...... 83 4.11 Network Development Program ...... 84 4.11.1 Transpower Transmission ...... 84 4.11.2 66 kV Transmission Development ...... 84 4.11.3 GXP Development ...... 85 4.11.4 Subtransmission and Zone Substation Development ...... 87 4.11.5 Distribution Development ...... 93 4.12 Total Capital Expenditure 2016 - 2026 ...... 100 5. Lifecycle Planning ...... 105 5.1 Introduction ...... 105 5.2 Key drivers for Lifecycle Asset Management Planning ...... 105 5.2.1 Lifecycle Management Practice ...... 105 5.2.2 Criteria for Maintenance ...... 106 5.2.3 Criteria for Renewal ...... 106 5.2.4 Criteria for Obsolescence ...... 107 5.3 Lifecycle Management Policies and Programmes ...... 107 5.3.1 Maintenance and Renewal Policies and Programs ...... 107 5.3.2 Inspection Programs ...... 108 5.4 Inspection, Maintenance and Renewal by Asset Category ...... 109 5.4.1 Sub transmission, Distribution and LV Overhead Lines ...... 110 5.4.2 Sub-transmission, Distribution and Low Voltage Underground Cables ...... 115 5.4.3 Zone Substations ...... 118 5.4.4 Switchgear ...... 121 5.4.5 Distribution Transformers and Substations ...... 126 5.4.6 Other Network Maintenance and Renewal Programmes ...... 129 5.4.7 Asset Condition Summary ...... 131 5.5 Non-Network Asset Development, Maintenance and Renewal ...... 133
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5.5.1 Description of Non-Network Assets ...... 133 5.5.2 Non-Network Asset Maintenance and Renewal Policies ...... 134 5.5.3 Non-Network Asset Capex ...... 135 5.5.4 Non-Network Asset Maintenance ...... 135 5.6 Total Operating Expenditure 2016 - 2026 ...... 135 6. Risk Management ...... 139 6.1 Introduction ...... 139 6.2 HILP Exposures and Assessments...... 139 6.2.1 Natural Disasters ...... 139 6.2.2 Physical Risks...... 142 6.2.3 Asset Failure ...... 143 6.2.4 Business Risks...... 148 6.3 Risk Mitigation Policies, Practices and Plans ...... 149 6.3.1 Risk Mitigation Measures...... 149 6.3.2 Emergency Response Plans ...... 150 6.3.3 Network Contingency Plans ...... 150 6.3.4 Business Continuity Plan ...... 150 6.4 Insurance Practices ...... 150 7. Performance Evaluation ...... 151 7.1 Physical Performance Compared to Plan ...... 151 7.2 Financial Performance Compared to Plan ...... 152 7.3 Service Level Performance Compared to Plan ...... 154 7.3.1 Reliability ...... 155 7.3.2 Capacity ...... 156 7.3.3 Quality ...... 156 7.3.4 Safety ...... 157 7.3.5 Customer Service ...... 158 7.3.6 Environmental ...... 160 7.3.7 Economic Efficiency ...... 160 7.4 Summary of AMMAT Assessment ...... 161 8. Capability to Deliver ...... 163 8.1 Confirmation AMP Can Be Delivered ...... 163 8.1.1 Overhead Line Work ...... 163 8.1.2 Underground Cable Work ...... 163 8.1.3 Workshop ...... 163 8.1.4 Technical Services ...... 163 8.1.5 Operations ...... 164 8.2 Responsibility for Delivery ...... 164 Appendix 1 – Description of Asset Management Systems ...... 165 Appendix 2 - Disclosure Forecast Expenditure Schedule 11 ...... 167 Appendix 3 - Disclosure Schedule 12 ...... 171 Appendix 4 - Disclosure Asset Management Maturity Assessment Schedule 13 ...... 175
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MainPower New Zealand Limited Asset Management Plan 2016 - 2026
Executive Summary
Introduction MainPower New Zealand Limited (MainPower) and its predecessor have been distributing electricity to the region for nearly 100 years. MainPower delivers a safe, secure and reliable electricity supply to more than 37,000 connected customers in the North Canterbury and Kaikoura region, covering a population base of approximately 65,000. MainPower’s network encompasses a distribution area of 11,180 square kilometres and includes the Waimakariri, Hurunui and Kaikoura districts.
Purpose of the AMP MainPower’s Asset Management Plan (AMP) is an annual document that provides information on asset management processes and practices with a specific focus on service targets and the development, maintenance and replacement plans for our assets. The plan provides our customers and stakeholders with insight and explanation on how we intend to provide electricity distribution services to our customers over the next ten years.
The AMP demonstrates our alignment with best practice asset management processes and compliance with the Commerce Act, Electricity Distribution Information Disclosure Determination 2012.
The information in the AMP aims to ensure that MainPower continues to deliver a level of service to customers in a safe, reliable and economically efficient manner that meets the expectations of stakeholders. Ensuring that our level of service meets customer expectations is consistent with our overall corporate strategic objectives.
Assessing the interests of our stakeholders assists us in defining our asset management targets and objectives. The ownership of MainPower is held in trust by the MainPower Trust on behalf of the community and customers of the region. Our key stakeholders include:
CONNECTED COMMUNITY STAKEHOLDERS PARTNERS CUSTOMERS Customers with an interest in the Customers in the Recipients of our operation of our electricity supply chain services including organisation including that help meet our residential, small to MainPower Trust, connected customers’ medium business, large Government and needs including users, rural (farming) People within the regulators, Transpower, electricity and individually distribution area that representative groups, retailers, other managed customers. are affected by our regional councils, distributors, electrical Connected customers network either in use contractors/suppliers, contractors, and are also preference or during installation property developers, alternative technology shareholders. and maintenance. and the media. provides.
Consultation with our stakeholders has identified expectations and key interests in respect to asset management. The table below summarises how we have defined stakeholder key interests in respect of asset management.
Interest Outcome
Safety Staff, contractors and the public at large must be able to move around and work on our network safely
Compliance MainPower must comply with a number of legislative and regulatory requirements
Service Quality (including Emphasis on supply continuity and restoration is essential to providing a quality reliability, power quality service to our customers. In addition, we are committed to ensuring customers have and customer service) positive experiences in their interactions with MainPower
Risk Management Prudent risk management involves prevention, planning, mitigation and effective response to an event, for the benefit of all stakeholders
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MainPower New Zealand Limited Asset Management Plan 2016 - 2026
Efficiency and Being efficient and effective in our network operations and planning ensures we are Effectiveness able to meet our obligations under the Energy Companies Act to be a successful business, maintain financial viability, innovate, and importantly meet our customers’ needs for fair pricing commensurate with our service levels
Network Challenges MainPower’s network has undergone significant transformation over the past decade, primarily as a result of changing land use and associated customer demand. To meet these challenges, a significant network reinforcement programme continues with a focus on network maintenance and renewal activity. The increasing frequency of major wind and snow storms and increased dependency on power supply has also meant a focus on strengthening security of supply and improving the resilience of our network to reduce the impact of outages.
Ongoing activity following the Canterbury earthquakes is still creating forecasting uncertainty, as the nature and location of demand in Canterbury has fundamentally changed and is still evolving. We are attempting to accommodate these factors in our development program, however there is significant uncertainty over the speed and scale of the changes.
Energy usage patterns are also changing due to changes in customer behaviour, energy efficient appliances and the increase in distributed generation such as solar photovoltaic (PV) connected to the network. It is clear that, although the quantities are small at the moment, PV installations will have a significant impact on the future design and operation of the network.
Ensuring sufficient capacity is available on the network to meet customer demand is a key component of the AMP. The AMP forecasts likely demand by analysis of historical demands together with knowledge of likely future developments. The 10 year trend for strong growth is forecast to continue throughout the planning period, down from the recent post-earthquake peaks. This will continue to require network reinforcement in some areas with new assets being installed to upgrade existing assets before they are due for renewal.
Corporate Strategy MainPower’s Asset Management Program is aligned with its Statement of Corporate Intent (SCI), which establishes MainPower’s corporate strategic objectives for governance, asset management, the operating environment, major projects and reviews, and financial performance. The SCI provides a corporate strategic framework for the organisation and therefore the AMP.
The Annual Strategic Plan and Business Plan embody much of the agreed SCI and also include MainPower’s strategic objectives which are included below.
CUSTOMER AND COMMUNITY FINANCIAL PERFORMANCE Deliver quality services to our Deliver a sustainable financial position. customers and positively engage with our community.
OPERATIONAL EXCELLENCE LICENCE TO OPERATE Achieve excellence in all aspects Maintain our regulatory model. of operations.
HEALTH AND SAFETY PEOPLE Zero harm to people, public property Develop a motivated and high and the environment. performing team.
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MainPower New Zealand Limited Asset Management Plan 2016 - 2026
Asset Management Strategy MainPower’s Asset Management Strategy has been developed to deliver on our Asset Management Policy objectives, which provide the link between the Asset Management Policy and the asset management plans that describe how those objectives are going to be achieved. Our Asset Management Policy objectives are: . Develop and maintain effective Asset Management Systems with commitment, accountability and involvement across the organization; . Apply key sustainability priorities focused around safety, environment, people, culture, community and customers; . Understand and respond to our customers’ requirements; . Use our skills and expertise to continually improve the quality, reliability and security of supply to customers and level of customer service . Recruit, train and develop staff to effectively manage our assets in a sustainable way. . Ensure appropriate facilities, plant, equipment and supervision is provided. . Utilise effective work planning and control. . Apply a life cycle approach to asset management. . Use our risk management framework to systematically identify hazards and assess and control risks associated with those hazards . Continuously improve our asset management effectiveness. . Seek out new technologies to improve network efficiency and allow the network to adapt to expected future demands.
Safety Prioritising safety means providing a safe, reliable network and a healthy work environment. Following a review of our work practices and processes, we have identified new workplace and public safety indicators to help improve our safety performance. Monitoring these key measures will enable us to assess our safety performance and lead to continual improvement.
To improve safety performance we will establish systems to manage and monitor: . The frequency of public safety incidents from our assets, . Public safety KPIs that are being developed by the Electricity Engineers Association, . Compliance with the Electricity (Safety) Regulations safety management systems for public safety, . Assets that could pose a safety risk to the public due to their location or characteristics, . The number of asset defects identified and corrected and the timeframe for corrective actions, . The number of controls and mitigations applied to high risk assets, . Site visits by leaders to coach and mentor safe practices, and . Records of consultation with field staff during the planning of work
Service Levels The implementation of MainPower’s asset management strategy and asset management objectives is achieved by defining key performance indicators and setting performance targets for each indicator.
Section 3 of this AMP sets out how we have determined the key performance indicators relevant to the achievement of our asset management objectives, our targets for the planning period and how these have been set.
Asset management service level measures and targets are reviewed and refined each year to ensure they remain consistent with the needs of our stakeholders and align with our strategic objectives. Target outcomes are consistent with the development, maintenance and renewal plans included in this AMP. It is expected that these targets are achievable other than in the event of a major incident such as an extreme storm or earthquake.
Network Development Plan The network development plan is fundamental in meeting the forecast demand over the planning period. It is expected that our development projects will continue to drive our lifecycle plans as existing assets are upgraded to meet demand. Network development in response to growth helps us to replace outdated technology by replacing assets that are not intelligent enough or assets that are too highly loaded.
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MainPower New Zealand Limited Asset Management Plan 2016 - 2026
We have identified a number of zone substation and network constraints likely to occur throughout the planning period. The most pressing of these are the lack of capacity for growth in the Woodend and Pegasus town areas, at MainPower’s Southbrook substation, and at MainPower’s Mouse Point substation (Culverden).
The Southbrook and Woodend area constraints have been managed for some years through incremental distribution upgrades to enable load transfers to surrounding areas. The potential for such upgrades is diminishing and if load continues to grow a major zone substation build will soon be required. Planning for the new substation including land acquisition, 66kV feeder source and routes, is continuing.
The potential piping of the Amuri irrigation scheme has created further uncertainty about the need for, and timing, of a capacity upgrade at Culverden. Planning for the upgrade is continuing in order to minimise the lead time should an upgrade be required. Partial purchase of the Culverden GXP site is being considered as part of the preparation. This has not been budgeted and would require a separate business case for Board approval.
As part of the above upgrades changes would be required at Transpower’s Southbrook and Culverden GXP’s. We will be endeavouring to maximise the MainPower ownership of such GXP upgrades especially Culverden which will be integrated with an upgrade of our Mouse Point zone substation. Purchase of the Kaiapoi 66kV line and GXP from Transpower is also being investigated.
Distribution network development is driven by the need for additional capacity and security across the region and includes network reinforcement in a number of areas. Thus, in addition to the projects identified above, on our distribution network, we plan to: . Create two new Kaiapoi GXP feeders . Create more feeder capacity to the growing eastern side of Rangiora . Further develop the feeders surrounding the new Burnt Hill substation continue with some 22kV conversion in the area as required for growth or operational requirements . Create a new Mouse Point feeder route to the Culverden town and Balmoral forest area when required by load growth . Convert overhead lines to underground reticulation where high social dividends are achieved . Strengthen the distribution system to improve storm resilience . Continue with distribution automation investment to ensure network reliability improvement targets are met . Undertake investments to meet the demand for new connections throughout the planning period . Continue to seek opportunities to implement new technologies to assist us meet our long term objectives. A summary of the development plan expenditure forecasts is included in section 4.11.4 table 36 and section 4.11.5 table 37.
A key component of network development is innovation. MainPower’s innovation philosophy is to be an early adopter of new technology, to fully understand the desirability of the technology and be able to comprehensively frame stakeholder requirement and technology viability before committing to project development. The company considers it has a role in facilitating the uptake of new technologies and advancing the economic benefits that are derived from the integration of smarter sensors, improved internet access, distributed energy generation and energy storage possibilities. Our innovation strategy is a stepwise process that identifies ideas for innovation through customer consultation, stakeholder liaison, survey feedback and observation.
Asset Lifecycle Plan The asset lifecycle plan includes routine and preventative maintenance and asset renewals and refurbishment. Key drivers for lifecycle planning include: . Optimising lifecycle costs (operation, maintenance, renewal, replacement and disposal) . Assessment of an asset’s expected performance . Consequences and probability of failure (including safety, reliability and environmental consequences) . Interrelationship between lifecycle plans and network development plans. Maintenance across the network is now primarily condition based whereby individual components are maintained until their condition and serviceability has deteriorated to the point that it creates an unacceptably high risk of failure, which triggers renewal. Maintenance activities include:
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MainPower New Zealand Limited Asset Management Plan 2016 - 2026
. Condition based maintenance . Time based preventative maintenance . Reactive maintenance or repair on breakdown.
Renewals are typically triggered where assets have deteriorated to an unsafe condition, or where it is economically and operationally efficient as adjacent assets are being replaced. In practice most replacements on our network are determined by: . Reliability based maintenance . Natural upgrades of assets due to growth . Changes in fault levels . Additional intelligence or performance requirements at selected locations.
MainPower maintains excellent data about the quantity, condition and performance of its assets. This is compiled from historical construction records, asset inspections, testing and field work. Asset failures and recurring fault causes are investigated and measures to eliminate or mitigate the problems are built into the maintenance plan. This information and the associated inspection and testing processes provide the basis for the maintenance and renewals plan.
The key fo