MEL - Meridian Energy

[RTM]

Trustpower are screwed because the RCPD incentives are gone. RCPD stands for Regional Coincidental Peak Demand. This is the method Transpower uses for calculating the distribution networks annual connection charges. The distribution companies usually rebate the companies which own the smaller stations which generate directly into the distribution networks. This is quite lucrative for the companies that own these smaller stations as they can time their generation to reduce the distribution networks peak demand and hence reduce their bill to Transpower.

Meridian have no generators connected to distribution networks (usually referred to as an embedded generator), all of their stations are connected to the transmission grid hence no benefits lost by the dissolution of RCPD. Trustpower is the opposite, most of their generation is embedded. Hence, they will loose a revenue stream.

In addition, Meridian get a massive benefit from the changes in HVDC cost allocation. Currently this is 100% paid for by the owners of South Island power stations. The majority (i'm guessing ~90%) of Meridians generation comes from the SI and hence any changes in this give them a major benefit too. Contact is roughly neutral, Genesis looses a wee bit, Mercury loose a lot (currently they have no SI assets).

Hopefully the above makes sense. The document is incredibly complex (156 pages) and haven't had time to digest it in full yet.

Many thanks for the explanation K14. I think I own all the power companies....so I guess what one loses (TPW) another will gain !
Hope I've got the proportions right, although I suspect not from your description.

Appreciated.

[Joshuatree]

Thanks k14. Im assuming your interpretation is correct thats gold ,if so may be time to short Trustpower down just 7c today.

[Jantar]

Trustpower are screwed because the RCPD incentives are gone...….

In addition, Meridian get a massive benefit from the changes in HVDC cost allocation. Currently this is 100% paid for by the owners of South Island power stations. The majority (i'm guessing ~90%) of Meridians generation comes from the SI and hence any changes in this give them a major benefit too. Contact is roughly neutral, Genesis looses a wee bit, Mercury loose a lot (currently they have no SI assets)……

Thanks K14. Yes you are correct in the relative gains and losses. I suspect Contact will lose fractionally more than they will gain due to the change in HVDC methodology, as their generation is weighted more to the NI. Meridian will be the biggest winner out of the Gentailers for sure. I will also need to read that section in more detail.

[bull....]

Trustpower are screwed because the RCPD incentives are gone. RCPD stands for Regional Coincidental Peak Demand. This is the method Transpower uses for calculating the distribution networks annual connection charges. The distribution companies usually rebate the companies which own the smaller stations which generate directly into the distribution networks. This is quite lucrative for the companies that own these smaller stations as they can time their generation to reduce the distribution networks peak demand and hence reduce their bill to Transpower.

Meridian have no generators connected to distribution networks (usually referred to as an embedded generator), all of their stations are connected to the transmission grid hence no benefits lost by the dissolution of RCPD. Trustpower is the opposite, most of their generation is embedded. Hence, they will loose a revenue stream.

In addition, Meridian get a massive benefit from the changes in HVDC cost allocation. Currently this is 100% paid for by the owners of South Island power stations. The majority (i'm guessing ~90%) of Meridians generation comes from the SI and hence any changes in this give them a major benefit too. Contact is roughly neutral, Genesis looses a wee bit, Mercury loose a lot (currently they have no SI assets).

Hopefully the above makes sense. The document is incredibly complex (156 pages) and haven't had time to digest it in full yet.

cheers good sumary

[Snoopy]

Trustpower are screwed because the RCPD incentives are gone. RCPD stands for Regional Coincidental Peak Demand. This is the method Transpower uses for calculating the distribution networks annual connection charges. The distribution companies usually rebate the companies which own the smaller stations which generate directly into the distribution networks. This is quite lucrative for the companies that own these smaller stations as they can time their generation to reduce the distribution networks peak demand and hence reduce their bill to Transpower.

Meridian have no generators connected to distribution networks (usually referred to as an embedded generator), all of their stations are connected to the transmission grid hence no benefits lost by the dissolution of RCPD. Trustpower is the opposite, most of their generation is embedded. Hence, they will loose a revenue stream.

k14, I am having some difficulty with my understanding of your post. It makes sense for the distributor Transpower to price network charges on 'Regional Coincidental Peak Demand', because that is the time when the network is under most stress. The network needs to be built to be able to handle that maximum level of power buzzing through the transformers and the wires. A smaller power station generating locally presumably means that such generation can be substitute for power being supplied by the mega stations far away. So it means less power need be sent up the main trunk route, and especially less across the HVDC south to north cable. But that extra power is still required locally and so the load on the local network is still the same. So why would Transpower rebate anything? But even if a small generator can make a difference to the power going north (say). Then a big generator could make an even bigger difference. So why wouldn't Genesis, as an example in this case, just crank up Huntly a bit and take all the profit available from lessening the load on the HVDC cable, and leave no excess profit hole for the small local power station to fill?

Finally Trustpower isn't a lines company. If Transpower were going to give a rebate, wouldn't they give it to the local lines company?

SNOOPY

[k14]

k14, I am having some difficulty with your post. It makes sense for the distributor Transpower to price network charges on 'Regional Coincidental Peak Demand', because that is the time when the network is under most stress. The network needs to be built to be able to handle that level of power buzzing through the wires. A smaller power station generating locally presumably means that such generation can be substitute for power being supplied by the mega stations far away. So it means less power need be sent up the main trunk route, and especially less across the HVDC south to north cable. But that extra power is still required locally and so the load on the local network is still the same. So why would Transpower rebate anything? And Trustpower isn't a lines company. If Transpower were going to give a rebate, wouldn't they give it to the local lines company?

SNOOPY

Apologies if I was confusing, its a tricky one to explain. I'll have another crack....

Transpower charges distribution companies (Powerco, Vector, Aurora etc) a set fee for having their distribution network connected to the transmission network. There are a lot of small power stations in NZ (say 40MW or smaller) that are connected directly to the distribution network. Hence, when one of these stations is generating directly into the local distribution grid, the amount of power being drawn off the transmission grid is reduced by the amount that station is generating.

RCPD is the current method that Transpower use to set the MW portion of the yearly fee each distribution company pays for every connection point they have connected to the Transpower grid. Depending on the distribution company and if you own a station that generates into the grid (referred to as an embedded generator) then you can usually negotiate with the distribution company a rate that you will be reimbursed by the distribution company (not Transpower) because if you generate during one of the periods where the RCPD calculation is triggered then that generation is directly reducing the distributions connection charge.

So Trustpower own quite a number of embedded generators. They have been for many years receiving these payments from the distribution companies that their stations feed into. Now this revenue stream will cease to exist. Some of the other companies do to, although I doubt they are as effected as Trustpower. Pioneer will be effected to some extent to I would guess.

Does that make sense? Let me know if any further explanation is required.

[Jantar]

k14, I am having some difficulty with my understanding of your post. It makes sense for the distributor Transpower to price network charges on 'Regional Coincidental Peak Demand', because that is the time when the network is under most stress. The network needs to be built to be able to handle that maximum level of power buzzing through the transformers and the wires. A smaller power station generating locally presumably means that such generation can be substitute for power being supplied by the mega stations far away. So it means less power need be sent up the main trunk route, and especially less across the HVDC south to north cable. But that extra power is still required locally and so the load on the local network is still the same. ........

SNOOPY

To add to what K14 wrote, the RPCD is a regional calculation, not a newtwork specific one. So while a small generator embedded in a network may reduce the regional peak, it usually does not reduce the load on the majority of the transformers and switchgear. This results in perverse outcomes for those networks in a region that do not have embedded generation.

[horus1]

The peak charges should NOT be taken out of the charging mechanism This change to TPM is nonsense and designed to preserve the existing generators and stop solar and new technologies. Anybody young should be going off grid if they can. I understand Transmission Pricing.

[fish]

The peak charges should NOT be taken out of the charging mechanism This change to TPM is nonsense and designed to preserve the existing generators and stop solar and new technologies. Anybody young should be going off grid if they can. I understand Transmission Pricing.

Will this have any effect on Home Solar?

[Snoopy]

Transpower charges distribution companies (Powerco, Vector, Aurora etc) a set fee for having their distribution network connected to the transmission network. There are a lot of small power stations in NZ (say 40MW or smaller) that are connected directly to the distribution network. Hence, when one of these stations is generating directly into the local distribution grid, the amount of power being drawn off the transmission grid is reduced by the amount that station is generating.

RCPD is the current method that Transpower use to set the MW portion of the yearly fee each distribution company pays for every connection point they have connected to the Transpower grid. Depending on the distribution company and if you own a station that generates into the grid (referred to as an embedded generator) then you can usually negotiate with the distribution company a rate that you will be reimbursed by the distribution company (not Transpower) because if you generate during one of the periods where the RCPD calculation is triggered then that generation is directly reducing the distributions connection charge.

So Trustpower own quite a number of embedded generators. They have been for many years receiving these payments from the distribution companies that their stations feed into. Now this revenue stream will cease to exist. Some of the other companies do to, although I doubt they are as effected as Trustpower. Pioneer will be effected to some extent to I would guess.

Does that make sense? Let me know if any further explanation is required.

Thanks for the clarification k14. If a small embedded power station is in your local electricity network, then it makes perfect sense to pay someone to operate it. The payoff for Transpower is to reduce the amount of power that must be channelled into the local network from elsewhere. IOW the local network will put less stress on the wider Transpower network, so it makes sense that Transpower would make a payment to the small embedded generator to reduce peak loads on the wider Transpower network.

What does not make sense to me is why anyone would seek to change this current arrangement!

To add to what K14 wrote, the RPCD is a regional calculation, not a newtwork specific one. So while a small generator embedded in a network may reduce the regional peak, it usually does not reduce the load on the majority of the transformers and switchgear. This results in perverse outcomes for those networks in a region that do not have embedded generation.

So there is a regional arrangement for reimbursing grouped local networks. But if one of those local networks has an embedded power station then that means the owner of that power station is reimbursed. How is that perverse for the other networks in the wider region? Don't all local networks that are part of the regional network benefit, whether they have an embedded power station or not?
It would only be 'unfair' if the local lines company operator owned the small power station (which I think sometimes is the case?)

The peak charges should NOT be taken out of the charging mechanism This change to TPM is nonsense and designed to preserve the existing generators and stop solar and new technologies. Anybody young should be going off grid if they can. I understand Transmission Pricing.

I think horus is right!

SNOOPY