04Feb

Capacity charges likely to leap

Electricity users and particularly irrigators face a major hike next year this summer in their account’s capacity charge, with many facing the prospect of several thousand dollars extra in fee charges due to Transpower’s charges increasing in Mid Canterbury.

In the world of seasonal electricity demand it seems what goes down must inevitably come back up and that is the experience this year. After a significant slide in the capacity charge this billing season, it has peaked at a new height.

Ruralco has had numerous enquiries from clients about the prospect many face of at least an additional $5000 charge, one that electricity distributors are hoping to be able to work to try and ease through the co-operative efforts of users.

The grid operator Transpower is tasked with delivering electricity to “exit points” on the national grid, from where lines companies distribute power through their own local network. The total cost to Transpower to distribute electricity to the Upper South Island group of lines distribution companies is about $100 million.

The average yearly cost for Transpower to distribute electricity to over the past ten years has been $4 million to the mid Canterbury region, but that cost allocation has become highly volatile in the past three years.

For the 2017-18 financial year it was $9 million, dropping to $4.3 million for 2018/19, but surging up to $14.5 million next year. This has come after the years before experienced almost flat cost levels.

The impact of the $14.5 million charge is that the capacity charge component of a power bill which is about 35c a kW at the $4 million cost will leap to 49c per kW per day.

The reason for the increased volatility is the shifts in summer versus winter electricity demand across the Upper South Island, and weather patterns’ effect upon electricity use in the region.

Historically winter energy demand always outstripped summer. Consequently the region peaked in winter, and winter users paid the bulk of Transpower’s cost. With the growth irrigation the region is now seeing summer demand match winter demand, albeit depending on the prevailing weather for summer – summer peaks will only occur when irrigation demand is high.

Because summer and winter demand are almost at parity, when summer peaks do occur, irrigation customers are now being allocated a share of the costs that previously only affected winter customers.

 

 

This effect is also exacerbated by variances in weather – in a year when a winter is mild and consequent power demand is low will push a greater proportion of the distribution cost onto summer users (irrigators) if their summer is particularly dry.

EA Networks commercial manager Jeremy Adamson cautions it can be easy to question the charge increase based on immediate weather conditions.

Late spring had many irrigators able to stop and take advantage of some good rainfall, with prospects of more to come.

“But the capacity charge has a significant time lag to it. The increase that will be charged come April 1 next year is actually based on the season from September 1 2017 to August 31 2018. Transpower need to wait until the measurement period ends before they can calculate the allocation and pass on the charge at the start of the next financial year.”   

An option being explored to try and take some of the “peakiness” out of irrigation demand is using “voluntary load control” on connected irrigation.

If 50MW can be shaved off the 140MW peak EA Networks experiences at peak times, the capacity charge costs would be smoothed and lowered.

“What is being proposed is working with irrigators on a voluntary basis to offset high transmission costs in the future if they want to avoid higher future costs,” says Jeremy.

Irrigators could determine how much, if any, they can stop their systems over the summer period, on what days and over what times.

Text messages would be sent to co-operating irrigators to alert them to turn off their system.

A reminder to reduce all non-essential irrigation load would be sent on those days, and an alert to reduce loads immediately if the network sees a peak event arising.

The upside of the voluntary scheme is to reverse the $10.2 million regional capacity charge cost faced now, and could set the scene for an automated “smart” system to control participating irrigation equipment in the future.

Having said all this, if current high rainfall continues then it is likely that the increased charge next year will naturally reverse the following year.

Ruralco is urging our customers to talk to the Ruralco Energy team about what your options may be when it comes to opting into a voluntary system – every farm’s irrigation demands differ, and some systems may be more suited to it than others.

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