load profiling for the nsw gas mass market
DESCRIPTION
Load Profiling for the NSW Gas Mass MarketTRANSCRIPT
NSW Natural GasAchieving Strategic and Operational Readiness For FRC
2001
Load Profiling for theLoad Profiling for the NSW Gas Mass Market NSW Gas Mass Market
Prepared byTrowbridge Consulting
26 June 2001
P_13072000_energy2000 2
Outline of Presentation
Introduction
Full Retail Competition
Forms of Load Profiling
The Objectives of Load Profiling
Summary of Arrangements for NSW Gas
Retailer Impacts
Key Customer Impacts
Profiling in Electricity and Victorian Gas
Conclusions
1
2
3
4
5
6
7
8
9
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Introduction
The wholesale gas market in NSW is a Contract Carriage Model (compared to Victoria which is a Market Carriage Model.)
There is no current spot market for gas in NSW.
Retailers are expected to bring gas to the market in order to meet its customers load in both terms of timing and volume.
With no time of year price signals (eg: a spot market) timing is less important.
1
P_13072000_energy2000 4
Full Retail Competition
Rollout of full retail competition (FRC) to mass market requires a mechanism for allocating the wholesale energy costs for a franchise area between multiple retailers.
Current contestable customers (> 10TJ pa or 2nd Tier > 1 TJ pa) are daily metered and as such timing and volume is known (with appropriate adjustments for UAFG).
Imposing a metering requirement on the mass market would be cost prohibitive and represent a barrier to competition.
Load profiling enables the allocation of wholesale gas and costs to retailers in the absence of daily metering for all customers.
The primary objective of load profiling is to facilitate FRC.
2
P_13072000_energy2000 5
Forms of Load Profiling
There are two basic forms of load profiling:
Net System Load Profiling (NSLP); and
Load Research Based Profiling.
A third form of profiling (Hybrid NSLP/Load Research Based Profiling) combines elements of these two basic forms.
3
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Forms of Load Profiling
Net system load profiling is the simplest form of profiling.
It refers to the construction of profiles using the interval (daily in gas, half hourly in electricity) metered system load for a defined geographical area.
The net system load broadly represents:
the aggregate energy consumed during a day (gas) or half hour (electricity) by all customers located in an area; less
the energy consumed by customers in that area that are interval metered (eg. large industrial/commercial customers).
Net System Load Profiling
3
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Forms of Load Profiling
The following chart illustrates the net system load shape for the Victorian Wholesale Electricity Market on two different days.
Net System Load For Victoria
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
12
:00
AM
2:0
0 A
M
4:0
0 A
M
6:0
0 A
M
8:0
0 A
M
10
:00
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12
:00
PM
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M
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M
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M
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M
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Time of Day
Pro
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rtio
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f D
ail
y C
on
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pti
on
wit
hin
Half
Ho
ur
Hot Summer Weekend Day
Cold Winter Weekday
3
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Forms of Load Profiling
The following chart illustrates the net system load shape (normalised) for the three network regions in NSW gas.
3
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and
Reconciliation to Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
Daily Load Profiles for Three NetworksProportion of Daily Consumption to Annual Network Consumption
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
Date
Pro
port
ion
of
Daily
Con
sum
pti
on
to A
nn
ual N
etw
ork
Con
sum
pti
on
Network 1 Network 2 Network 3
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Forms of Load Profiling3
Load research based profiling draws on a sample of customers’ historical or live interval metered consumption to construct a profile.
The profiles so constructed can be:
Deemed (ie constructed from engineering or other acceptable estimates eg. street lighting);
Static (ie drawn from a historical sample);
Static Adjusted (ie drawn from a historical sample but adjusted for current effects such as weather); and
Dynamic (ie drawn from a “live” sample).
It is more expensive to construct and maintain/refine.
It must be remembered that a profile is “only a profile”.
Load Research Based Profiling
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The Objectives of Load Profiling4
The primary objective of load profiling is to facilitate FRC.
The secondary objectives are:
Promote an efficient market;
Eliminate barriers to customer choice of retailer;
Minimise barriers to entry for competing retailers;
Protect the legitimate interests of customers;
Minimise cross-subsidies between host (incumbent) and second tier retailers;and
Provide an opportunity for market and technological evolutions.
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The Objectives of Load Profiling4
User equity - history matters (ie. past investment decisions, existing tariff regime)
- price shocks / volatility unfair and undesirable
- some cross subsidies are considered socially desirable
Economic efficiency- user pays
- encourages demand side response / load shifting
Competing Objectives
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The Objectives of Load Profiling
Equity and efficiency objectives cannot be satisfied simultaneously in the short term.
Arguably, the move to more cost reflective pricing should not be pre-empted or driven by the selection of a profiling regime.
Instead, it is considered important for the industry to retain the option (but not be compelled) to gradually embrace cost reflective pricing over time.
This view is at odds with the efficient pricing objective of load profiling which links the effectiveness of competition to the removal of cross-subsidies.
The tension between these two views is expressed in the following slide in the case of the gas market:
4
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“CommunityRating”
“CommunityRating”
• Shippers book capacity and enter into wholesale producer contracts to meet the requirements of their portfolios.
• Costs should be shared evenly across all users.
• Shippers book capacity and enter into wholesale producer contracts to meet the requirements of their portfolios.
• Costs should be shared evenly across all users.
“User Pays”“User Pays”
• Poor load factor customers require shippers to book more capacity and purchase greater MDQ per unit of AQ
• These customers should pay for the incremental “peak period”supply costs whilst good load factor customers should receive appropriate discounts to their end use prices.
• Poor load factor customers require shippers to book more capacity and purchase greater MDQ per unit of AQ
• These customers should pay for the incremental “peak period”supply costs whilst good load factor customers should receive appropriate discounts to their end use prices.
Key Considerations• Load profiling should not force an immediate move to “user
pays”.• In IPART’s words “end users have made decisions on
location, production and investments in energy consuming equipment based on existing pricing structures and
locational differences. It would be inequitable to substantially change prices in the short term”.1
Key Considerations• Load profiling should not force an immediate move to “user
pays”.• In IPART’s words “end users have made decisions on
location, production and investments in energy consuming equipment based on existing pricing structures and
locational differences. It would be inequitable to substantially change prices in the short term”.1
1: IPART Draft Decision of 28 October 1999 on AGLGN’s Access Arrangement (Attachment 7, Economic Principles for Network Pricing).
1: IPART Draft Decision of 28 October 1999 on AGLGN’s Access Arrangement (Attachment 7, Economic Principles for Network Pricing).
The Objectives of Load Profiling4
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Summary of Arrangements for NSW Gas
The Wholesale Gas Market will be balanced based on
Net System Load Profiling (Net Section Load - NSL)
NSL at regional level (Network Section)
Will mean a large number of NSLs (30 or more)
Annual Apportionment (although business rules allow administrator to change)
Forward Reconciliation
Payback over 28 days for Total Reconciliation Amounts (Adjustment to Forecast Withdrawals)
Global Reconciliation (eg: use of equalisation amount)
5
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Summary of Arrangements for NSW Gas5
Key Advantage Key Disadvantage
NSL Simplest form to implement tofacilitate FRC
Does not provide cost reflective pricing
Regionalisationof NSL
Smaller Areas are balancedindividually
Volatility of small areas
Impact of large consumers
Regionalised price signals (not based on truecustomer usage)
AnnualApportionment
Maintains pricing signals incurrent tariffs
Avoids breach of voluntary pricingprinciples
Least Cost Reflective
ForwardReconciliation
No need to recreate Gas Day Does not reflect time of use price signals
28 DayPayback Period
Reduces Risk for Small Portfolios Does not minimise Cummulative ReconciliationBalances
GlobalSettlements
Spread Errors Across allParticipants
Both 1st and 2nd Tier Customers need to beprofiled
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Summary of Arrangements for NSW Gas
Apportionment
Required to allocate the NSL on a daily basis
Used for both forecast withdrawals and deemed (estimated) withdrawals
Carried out at customer level but summed for retailer
Annual Apportionment
Annual consumption (maybe normalised for weather)
No seasonal effects
Quarterly Apportionment
Annual consumption (maybe normalised for weather)
Allows for some seasonal effects
5
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Summary of Arrangements for NSW Gas
Reconciliation Amounts
Calculated as Daily Amount
Difference between
Deemed (Estimated) Withdrawals; and
Actual Withdrawals (from Meter read, adjusted for UAFG)
Actual will have “sculpting factor” applied to get Daily Share from cumulative meter read
Considered as Borrowed or Loaned Gas
5
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Summary of Arrangements for NSW Gas
Forward Reconciliation
Gas Repaid by Adjusting Future Forecast and Deemed (Estimated) Withdrawals
28 Day Payback
Based on Total Reconciliation Amount (TRA) for Day
Each TRA paid back over 28 days
5
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Summary of Arrangements for NSW Gas
Replicating Portfolio (Theoretical)
Even Share of all “profiled” market segments
Large enough portfolio
Even distribution of timing of meter reads
Retailer will replicate NSLP
No Reconciliation Amounts
Host Retailers will (closely) replicate NSLP (particularly initially)
Other Retailers will head towards replicating portfolios if
Target all Mass Market
Win Large Enough Share
5
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Summary of Arrangements for NSW Gas
Effects of Payback (eg: Temperature Sensitive Load)
5
Illustration of Withdrawal Profiles for Retailer with Temperature Sensitive PortfolioBased on Annual Apportionment
0
2,000
4,000
6,000
8,000
10,000
12,000
Janu
ary
Febr
uary
Mar
chApr
ilMay
June Ju
ly
Augus
t
Sept
embe
r
Octob
er
Novem
ber
Decem
ber
Date
Dail
y C
on
sum
pti
on
(G
J)
True Withdrawal
Deemed Withdrawal No Payback
Deemed Withdrawal 100% Payback
P_13072000_energy2000 21
Summary of Arrangements for NSW Gas
Effects on Reconciliation Amounts (Host & Ret2 Replicating, Ret3 Temp Sensitive, Ret4 Baseload)
5
Illustrative Cumulative Reconciliation Amount Annual Apportionment
No PayBackNetwork 1
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
January February March April May June July August September October November December
Date
Cu
mu
lati
ve R
eco
nci
liati
on
Am
ou
nt
GJ
Host Retailer Retailer 1 Retailer 2 Retailer 3
P_13072000_energy2000 22
Summary of Arrangements for NSW Gas
Effects on Reconciliation Amounts
5
Illustrative Cumulative Reconciliation Amount Annual Apportionment100% Forward Payback
Network 1
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
January February March April May June July August September October November December
Date
Cu
mu
lati
ve R
eco
nci
liati
on
Am
ou
nt
GJ
Host Retailer Retailer 1 Retailer 2 Retailer 3
P_13072000_energy2000 23
Summary of Arrangements for NSW Gas
End of Year Cumulative Amount is Caused by
Difference
Weather Experienced
Weather Used for Calculating Apportionment Factors
Example Assumes Current year is colder than that used for apportionment.
Lag caused by Meter Reading Cycle and calculation of Cumulative Reconciliation Amounts.
5
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Retailer Impacts
Profiling solutions attempt to maintain competitive neutrality between retailers with respect to their status ie:
incumbent / host / first-tier Vs
new entrant / second tier.
In the absence of a regulatory price cap, net system load profiling will act to equalise the unit energy costs loaded into a host retailer’s offered price regardless of the true load characteristics of a customer.
The equalisation occurs at the boundary used for the NSLP.
Level Playing Field
6
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Retailer Impacts
Equalisation of Price Loaded for Energy Costs
Equalisation of Energy Costs
1 2 3 4 5 6 7 8 9
Customer Type
Un
it E
nerg
y C
ost
($
/MW
h o
r $
/GJ)
CompetitionForces host to price at NSLP Cost or risk losing customers 6 to 9
Opportunity GainIf Host prices at true energy cost, host will be giving up the opportunity to price in the energy cost faced by the STR for customers 1 to 4
NSLP Cost
6
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There are a number of other issues that concern retailers:
choice of profiling area - must provide for host and new entrant to price off the same profile;
diversification benefits - the net system load will typically exhibit lower volatility than the true profile of small portfolios of customers;
reconciliation of meter reads and losses - unaccounted for energy must be fairly allocated;
informational asymmetry - host has privileged understanding of the load characteristics of its former franchise area;
Retailer Impacts
Other Issues
6
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availability of hedges - there is some prospect that intermediaries will offer hedges based on profiles; and
regulatory risk - appears to fall more heavily on host retailers as second tier retailers have a greater ability to “walk away” from an unprofitable market segment.
Retailer Impacts6
P_13072000_energy2000 28
Retailer Impacts
A number of factors will impact on the regionalised profiles
Localised Weather;
Gas penetration (size of area);
Impact of Large (profiled) customers
Customer Types;
Residential versus Commercial;
Appliance penetration.
Consideration when forecasting NSLP
Impact on volatility of profile.
6
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Retailer Impacts6
Three Different TRS/POTS Profiles
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
Illustration of Daily Load Profiles for Selected POTS/TRSProportion of Daily Consumption to Annual Area Consumption
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
Date
Pro
port
ion
of
Daily
Con
sum
pti
on
to A
nn
ual A
rea C
on
sum
pti
on
TRS/POTS 20 TRS/POTS 15 TRS/POTS 3
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Retailer Impacts6
Historical Net System Profile Load Factors Based on Geographical AreasBroken Down to Individual Trunk Receiving and Packaged Offtake Stations
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
Area
Lo
ad
fact
or
TRS/POTSGroupedNetwork
Region 1 Region 4Region 2 NetworksRegion 5
Illustration of Historical Load Factor for Networks,Geographical Areas, TRS/POTS
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
P_13072000_energy2000 31
Retailer Impacts6
Comparison of Load Factor and Annual Consumption for TRS/POTS
Illustration of Historical Load Factor for Different Trunk Receiving and Packaged Offtake Stations (TRS/POTS) - Note Wilton not included.
20%
25%
30%
35%
40%
45%
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000
Average Annual Consumption GJ
Lo
ad
facto
r
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
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Retailer Impacts6
Comparison of Historical HDDs for different Geographical Areas
Comparision of Annual HDD by Site
0
500
1,000
1,500
2,000
2,500
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
Year
An
nu
al
HD
D
CanberraAirport
Bathurst
ArmidaleUniversity of New England
Albury
Wagga Wagga
BegaMeringo Street
DubboCoorena Road
BankstownAirport
Wollongong
SydneyObservatory Hill
Newcastle
Source: Compiled by Trowbridge Consulting from Data provided by the Bureau of Meteorology
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Retailer Impacts6
Forecast Variations in Load Factor due to Weather
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
Illustration of Geographic and Network Load Factor Variation for Different Weather ScenariosBased on Forecast Consumption
30%
35%
40%
45%
50%
55%
60%
Geographic Area or Network Area
Lo
ad
Fact
or
Max
Average
Min
Max 56% 48% 45% 47% 55% 56% 46%
Average 51% 42% 42% 45% 50% 53% 43%
Min 45% 36% 38% 41% 44% 51% 40%
Region 1 Region 2 Region 4 Region 5 Network 1 Network 2 Network 3
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Retailer Impacts6
Load profiling is generally not mentioned in retailers’ communications with customers. It is commonly regarded as a matter of interest only to retailers for settling their wholesale energy purchase costs;
Regulators have also tended to shy away from communicating with customers on the method used by their retailer to determine the customer’s energy costs;
Numerous customer surveys reveal that customers are mainly interested in the price implications (ie net overall effect of load profiling) of FRC. Customers also generally require a significant price cut before they will be persuaded to switch supplier;
Most customers found the process of switching under a load profiling regime relatively easy and seamless;
Key Observations From Overseas Implementations
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Retailer Impacts6
Some customers have complained about the difficulty of making price comparisons between retailers, particularly in respect of dual fuel offerings;
We are aware of one utility which has had to defend litigation on its adopted load research based profiling approach for agricultural customers on the grounds that the utility did not have sufficient data to produce statistically significant results. Although the utility in question successfully defended the litigation, the case highlights the need for the industry to tread carefully when adopting load research based profiles for some customer classes.
Larger users will be especially price conscious and aware of the savings available from switching suppliers. Transfer/switching rates for these customers are also generally higher.
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Retailer Impacts6
Marketers do not appear to have neglected the lower income/disadvantaged consumers, but the methods employed for marketing to these consumers are clearly different (greater percentage of door to door selling in UK).
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Customer Segments for each Retail Area
Key Customer Impacts7
Tariff Market Consumption Split for AGLGN
Residential56%
Commercial/Industrial44%
Residential
Commercial/Industrial
Tariff Market Consumption Split for GSN
Residential76%
Commercial/Industrial24%
Residential Commercial/Industrial
Tariff Market Consumption Split for AGC
Residential72%
Commercial/Industrial28%
Residential Commercial/Industrial
Source: IPART Issues Paper “Review of the Delivered Price of Natural Gas to Tariff Customers Served from AGL Gas Network in NSW”; May 1998 and “Review of the Delivered Price of Natural Gas in Wagga Wagga and Albury”; October 1999
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Geographical BreakDown of Mass Market (in terms of annual consumption)
Key Customer Impacts7
Source: IPART Issues Paper “Review of the Delivered Price of Natural Gas to Tariff Customers Served from AGL Gas Network in NSW”; May 1998
Geographical Dispersion of Tariff Market Consumption for AGLGN
Sydney79%
Wollongong4%
Newcastle6%
Country Areas11%
Sydney
Wollongong
Newcastle
Country Areas
P_13072000_energy2000 39
Key Customer Impacts
Customers who are “peakier” than the NSLP (temperature sensitive customers) are subsidised by “flatter” (non temperature sensitive).
We explore the key customer impacts of load profiling under the following headings:
The cross subsidies inherent within the existing tariffs; and
Effect on a customer’s bill; and
Incentives for interval metering.
7
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Key Customer Impacts7
Consumer to consumer cross-subsidies exist at present as retail tariffs do not reflect the true energy costs.
A load profiling regime that sought to reflect the customer’s “true” energy purchase costs (eg. a load research based profiling regime) or indeed the installation of daily meters would “undo” a significant level of cross subsidy which currently exists.
This may in lead to breach of the voluntary pricing principles and the risk falls to the incumbent retailer because 2nd tier retailers are not bound to compete for unprofitable segments of the market.
In the absence of a reduction in the non energy components of a customer’s bill, the effective price faced by some customer segments would rise.
Cross Subsidies Inherent Within the Existing Tariffs
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Key Customer Impacts7
Currently in NSW gas, most residential and small business tariffs are based on Uniform Tariffs (No time of Use Signals)
Will this change???
Households with access to gas mains that are actually connected.
AGL Retail Area 60%
Wagga Wagga 80%
Albury 85%
Potential growth (especially in AGL area)
Potential for Tariff Structure to Change
Cross Subsidies Inherent Within the Existing Tariffs
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Key Customer Impacts7
Load profiling only impacts the energy purchase cost component of a customer’s bill.
Victorian Electricity Example
Network Charges46%
Retail Costs11%
Wholesale Energy Costs17%
Retail Gross Margin24%
NEMMCO Charges
2%
Network Charges52%
Retail Costs9%
Wholesale Energy Costs27%
Retail Gross Margin
9%
NEMMCO Charges
3%
Effect on a Customer’s Bill
Source: From Trowbridge Consulting report to Victorian Distributors “Victorian Electricity Load Profiling Study”; March 2000, based on data provided by participants.
Metropolitan General Domestic Customer(Annual Bill $660)
Rural Hot Water Domestic Customer(Annual Bill $810)
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Key Customer Impacts7
Illustration of cross subsidies for NSW residential gas customers under NSLP (ignoring Payback).
Effect on a Customer’s Bill
Comparison of Median Consumer Cross Subsidies by Profiling OptionExpressed as a % of Bills for House Dwellers with 3 Occupants
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Appliance Mix
Cro
ss S
ub
sid
ies
as
% o
f B
ill
Annual NSL
Quarterly NSL
Monthly NSL
Annual NSL -2% 14% -4% -4% 6%
Quarterly NSL -1% 7% -2% -3% 3%
Monthly NSL -1% 4% -2% -2% 2%
CK CH HW CK + HW CH + HW + CK
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
P_13072000_energy2000 44
Key Customer Impacts7
Illustration of cross subsidies for NSW commercial gas customers under NSLP (ignoring Payback).
Effect on a Customer’s Bill
Comparison of Median Consumer Cross Subsidies by Profiling OptionExpressed as a % of Bills for Sample I&C Customers
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Sample Customer
Cro
ss S
ub
sid
ies
as
% o
f B
ill
Annual NSL
Quarterly NSL
Monthly NSL
Annual NSL -5% 27% -6% 32%
Quarterly NSL -3% 20% -4% 23%
Monthly NSL -2% 15% -2% 17%
Small No Heating Small Heating Large No Heating Large Heating
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation to
Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
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Key Customer Impacts7
Payback reduces level of cross subsidies
Depends on class of business
eg: Central Heating Only Customer - reduce from 14% to 10%. (subsidised by others)
Cross subsidies exist in current tariff structure (as discussed)
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Key Customer Impacts
Customers with more desirable load characteristics than NSLP
Reasonable size
Clear economic signals for interval metering
As Metering Costs come down size threshold for economic metering will also reduce
Incentives for Interval Metering
7
P_13072000_energy2000 47
Key Customer Impacts
Incentives for Interval Metering
7
Annual Consumption per Customer Required Before there is a $400 Cross SubsidyBased on EAPL Costs and Annual NSL Profiling
0
100
200
300
400
500
600
700
800
900
1,000
Customer's Load Factor Calculated Using Quarterly Bill Data
An
nu
al
Co
nsu
mp
tio
n R
eq
uir
ed
(G
J)
Consumption 98 289 1,311 1,458 629 453 376
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Mandating of Daily Meters Could be Considered
Retailer has Economic Incentive to Install Meter
Source: From Trowbridge Consulting report to Energy Corporation “Study to identify and Examine Options for Load Profiling and Reconciliation
to Support Effective Retail Competition in the NSW Gas Market”; March 2000, based on data provided by participants.
P_13072000_energy2000 48
Key Customer Impacts
Over time the net system load shape will “deteriorate” but become more representative of the load characteristics of the profiled customers.
Incumbent sets tariffs based on NSLP for all customers
The new NSLP ispeakier but more
representative of
remaining customers
Flatter (Non Peaky)
have economic
incentive to install
interval meters
Flatter/non-peakycustomers areovercharged underNSLP
Evolution of a NSLP Regime
7
P_13072000_energy2000 49
Trowbridge Consulting has undertaken quantification studies in load profiling options for the mass market in:
Victorian Electricity (Vic DBs - public document)
Victorian Gas (DNRE - public document)
NSW Gas (ENCorp)
NSW Electricity (advised NSW retailer on response to MIG paper)
The following summarises the current situation in terms of implementation of profiling for FRC.
Profiling in Electricity and Victorian Gas8
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Victorian Gas
FRC expected to commence in mid 2002
5-10TJ customers contestable from 1 Sept 2001 based on a metering solution for 2nd tier only customers.
Net System Load Profiling will be used as balancing arrangement.
5-10TJ customers can choose between metering or profiling once full contestability implemented.
Profiling at Distribution Business Boundary Area (DBBA)
Partial settlements
Backward Reconciliation (Victoria has a daily spot market)
Apportionment Factors based on customer level “like billing period” data, adjusted for EDDs.
Profiling in Electricity and Victorian Gas8
P_13072000_energy2000 51
NSW Electricity
FRC expected to commence in 1 January 2002.
There has been a staggered approach for 40-100MWh and 100-160MWh commercial customers (based on metering solution for 2nd Tier.)
Net System Load Profiling to settle wholesale market.
NSLP at Local Network Service Provider (LNSP) boundary
Partial settlements
Controlled Load Profiles (CLPs) (basically Off Peak Hot Water) will be “peeled off” NSLP for both 1st and 2nd Tier customers.
CLPs will be based on sampling
Profiling in Electricity and Victorian Gas8
P_13072000_energy2000 52
VIC Electricity
FRC expected to commence in 1 January 2002.
Net System Load Profiling to settle wholesale market.
NSLP will be undertaken at Local Network Service Provider (LNSP) boundary
A Partial settlements regime will operate.
No allowance for “peel-off” of off-peak loads (Hot Water)
Profiling in Electricity and Victorian Gas8
P_13072000_energy2000 53
A simple net system load profiling solution has the potential to afford residential and small commercial & industrial customers the opportunity to share in the benefits of full retail competition.
Implementation must be carefully managed recognising the key customer and retailer impacts.
The single largest risk is that the load profiling solution is “over engineered” to the point where the industry loses sight of the primary objective (ie to facilitate FRC).
In considering the optimal solution for preserving the “load shifting” and energy conservation incentives, we believe there is limited value in refining the profiling solution.
The benchmark against which any such refinements should be measured is the cost of interval metering.
A profile can never be made to “behave like an interval meter”.
Conclusions9