Wheeling Challenges Presentation To AMEU Tariff Committee Utility Services/Electricity Services/ 11 November 2015

Wheeling ChallengesPresentation To AMEU Tariff Committee

Utility Services/Electricity Services/ 11 November 2015

REGULATORY RULES ON NETWORK CHARGES FOR THIRD PARTY TRANSPORTATION OF ENERGY

http://www.galvinpower.org/sites/default/files/Energy_loss.jpg

COMMENTS / VIEWS / DISCUSSION

Slide courtesy of Leshan Moodliar <[email protected]>

BACKGROUND REGULATORY RULES : 3RD PARTY WHEELING

• Nersa released rules regarding 3rd party transportation of energy in March 2012.

• 21 page document that provided guidelines in various aspects of wheeling :

• • Legal Basis

• Objectives

• Geographic Differentiation

• Rural and Urban Reticulation Networks

• General Use-of-

System Charges

• Network Charges

• Reliability Service Charge

• Service and Administration Charge

• Losses Charge

• Connection Charges

• Wheeling Arrangement

• Bypass Network

• Subsidy Contributions

• Reconciliation of Accounts



• On 05 December 2014, NERSA and the following stakeholders met to discuss the rules and find a way forward in terms of enhancing the document and making it more workable prior to entering the public participation process.

• As discussed in the workshop, it was agreed that there is a need for the team to meet over two days ( 19TH & 20TH March) to identify issues/areas of concern, make comments and recommendations on the attached document before small working groups are formed.

• Out of the two-day session, it will then be decided what Task Teams will be established to address the outstanding issues.

• • Written reports on issues/areas of concern and recommendations are due to be submitted by 27

February 2015 at 15h00.•

• A consolidated report together with the agenda was shared with the team on 5 March 2015 in preparation for this two-day workshop.

AMEU ESKOM EIUG

SAIPPA SAREC



• The team did meet @ Birchwood Hotel and each party was allowed time to present their views / suggestions regarding the document.

• It was a tough 2 day session as views were conflicting and debates were interesting to say the least !!!

• I was representing ETE and AMEU. Ekhureleni Metro joined the meeting for a short while in supporting the AMEU views.

• The AMEU does support regulatory rules for the transportation of energy however did not agree with all the proposals as depicted in the document.

• There is limited time for a clauses by clause analysis of the rules today however I would like to point out a few important principles that is contained within the document that will impact Municipalities.

• The context of the meeting was to try and make the introduction of energy to the grid as simple as possible considering that our country in a dire energy crisis.

• NERSA was targeting to have a draft document available for public comment by July 2015.

• Date of next meeting and future steps to be communicated by NERSA.


Model for understanding administrative wheeling arrangement

• The need for a model in principle on how the wheeling arrangements’ will work and the responsibilities on off-setting accounts etc… when wheeling across multiple areas of supply. An illustrative example of a working model must done with multiple scenarios.

NOTIFIED MAXIMUM DEMAND CHARGES

• A local generator will reduce the Eskom NMD, non-generation during the system peak will exceed NMD and trigger Eskom penalties. How will this be treated??

• It is unclear as to what happens to a load customer when the generator fails to deliver electricity onto the grid ? – Who will supply the load and at what cost ?


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NERSA Wheeling Workgroups

• Loss factors• Indexing/Regulated

increases• Network charges• Subsidies


NERSA Generation licence requirements


City of Cape Town Distribution Licence

In theory, subject to NERSA issuing a generation licence, any generator and any consumer should be able to strike up an agreement to sell/purchase energy using Eskom and municipal electrical grids.

That could mean that :• Generators can sell electricity to multiple customers• Customers can purchase electricity from multiple generators


Wheeling- Account Adjustments

Eskom

Cape Town/Munic

Consumer

ImportExportEskom bill to City increased by “E” at WEPS rate

Eskom bill to City decreased by “E” at WEPS rate

Export through separate supply point??City bills Generator for use of network.

City energy bill to Consumer decreased by “E” at ?? local tariff rate??

Normal consumption

“E” kWh wheeled


Legal Agreements required

Examples:

Wheeling electricity from a generator embedded in a Municipal network to consumer in Eskom network:

– PPA between generator and purchaser– Use of network agreement between Generator and Munic– Use of network agreement between Generator and Eskom– Supplemental agreement between the City and Eskom

Wheeling electricity from a generator embedded in Eskom’s network to a consumer in Municipal network :

– PPA between generator and purchaser– Use of network agreement between Generator and Eskom– Use of network agreement between Generator and Munic– Supplemental agreement between the City and Eskom


G

G

GGMunic

On what basis can one choose to give third-party access to only a few select customers (within a tariff class)?

C

C

C

C

C

C

C

CC C44 separate intake

points, on varying tariffs


Legal Agreements required

Every one of the transactions on the previous slide would need either:

Wheeling electricity from a generator embedded in a Municipal network to consumer in Eskom network:

– PPA between generator and purchaser– Use of network agreement between Generator and Munic– Use of network agreement between Generator and Eskom– Supplemental agreement between the City and Eskom

Or:

Wheeling electricity from a generator embedded in Eskom’s network to a consumer in Municipal network :

– PPA between generator and purchaser– Use of network agreement between Generator and Eskom– Use of network agreement between Generator and Munic– Supplemental agreement between the City and Eskom


Wheeling- Account Adjustments

Eskom

Cape Town/Munic

Consumer

ImportExportEskom bill to City increased by “E” at WEPS rate

Eskom bill to City decreased by “E” at WEPS rate

Export through separate supply point??

City bill to Consumer decreased by “E” at ?? local tariff rate??

Normal consumption

“E” kWh wheeled


Balancing of Energy Generation and Consumption

In order to “reconcile” a customer’s account, the municipality will need to know: • How much the customer has consumed• What has been generated by the “supplier (generator)” and what portion of this generation

has been allocated to each “purchaser” embedded in the municipality’s networks.• What intake point of supply is associated with each “purchaser”• How to account for “over generation” not purchased.• The associated “wheeling charges” from Eskom.

For automated billing to be enabled there will have to be standardised meter reading processes, meter reading data format and communication channels between all participating parties

To implement all the above would require:• A standard set of wheeling rules• An electronic/automated “wheeling system” to balance/allocate energy• Electronic billing systems of each participating utility to seamlessly integrate with the

”wheeling system”• Organisational Capacity to implement the above


Wheeling – other issues

• Suitable tariffs will have to be established. The question of how the “rates mark-up” will be levied needs to be solved. (Levy is currently calculated as a % of sales revenue)

• The propensity of NERSA to issue generation licences for generation which requires wheeling

• Rules to handle over generation (banking rules)• Should the City incur additional costs due to the manner in which Eskom

adjusts the City’s bill at its intake points (for cross- Eskom- municipality border wheeling, these costs would have to recovered from either the consumer or the generator.


Is Wheeling Forcing a Square Peg into a Round Hole?

• Current Electricity Industry is highly regulated• Wheeling scenario looks like a deregulated electricity market• Need central/national energy balancing/clearance house.• Need national wheeling rules, and data format and communication

standards.• Recipients of wheeled power in municipalities should not be exempt from

contributing towards the Rates subsidy/levy.

Does deregulating the Electricity Industry not make more sense than

implementing wheeling?

Thank You

For queries contact [email protected]

Documents

Wheeling Challenges Presentation To AMEU Tariff Committee Utility Services/Electricity Services/ 11 November 2015